UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

________________

 

FORM 8-K/A

(Amendment No. 1 to Form 8-K)

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 6, 2016

SOOUM CORPORATION 
(Name of small business in its charter)

_____________________________________

Minnesota		000-7475		41-0831186
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
		590 Madisen Avenue Suite 1800 New York, New York 10022
(Address of principal executive offices)

 

Registrant's telephone number:  (817) 845-6244

______________________________________

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[   ]

Written communications pursuant to Rule 425 under the Securities Act

[   ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

[   ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

[   ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Explanatory Note

On October 6, 2016, we filed with the Securities and Exchange Commission a Current Report on Form 8-K, which reported the closing of an exchange transaction between the constituent companies. This Amendment No.1 to our Current Report on Form 8-K is being filed to report the financial information that was required to be presented as a result of the closing of the Exchange Transaction described in our earlier Current Report referenced herein. This filing is being made in order to file the subject financial statements required in the original filing on a delayed basis in accordance with Item 9.01 (a) of form 8-K. Except as described herein, no other changes have been made to our Current Report on Form 8-K.

 

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Item 9.01 Financial Statements and Exhibits

 

A. Financial Statements for Business Acquired.  See Attached

B. Pro-Forma Financial Information.  See Attached

C. Exhibits. None

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly autho

	SWORDFISH FINANCIAL, INC.
Dated:  January 24, 2017	By:	/s/ William Westbrook
	Name:	William Westbrook
	Title:	CEO

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Members of Western Grade LLC

 

We have audited the accompanying balance sheets of Western Grade LLC as of December 31, 2015 and 2014, and the related statements of income, comprehensive income, members’ equity, and cash flows for each of the years in the two year period ended December 31, 2015. Western Grade LLC’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Western Grade LLC as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the company will continue as a going concern.  As discussed in Note J to the  financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations the past two years.  These factors raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note J.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ DLL CPAS, LLC
Bonita Springs, FL
January 27, 2017

See Financial Statement Notes

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See Financial Statement Notes

-5-

See Financial Statement Notes

-6-

Western Grade LLC
Show Low, Arizona
STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
Balance - January 1, 2014		$         440,386
Members' Distributions		(211,341)
Net Loss for the Year Ended December 31, 2014		(68,287)
Balance - December 31, 2014 (Audited)		160,758
Net Loss for the Year Ended December 31, 2015		(194,000)
Balance - December 31, 2015 (Audited)		(33,242)
Members' Distributions		(100,046)
Net Loss for the Nine Months Ended September 30, 2016		(796,132)
Balance - September 30, 2016 (Unaudited)		$       (929,420)

See Financial Statement Notes

-7-

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – Years Ended December 31, 2015 and 2014

NOTE A – Basis of Presentation

 

The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.  The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted.

 

NOTE B – Organization and Operations

 

Western Grade LLC was formed as an Arizona Limited Liability Company in 2001.  The latest date this Company can dissolve is December, 2050.  The Company operates as a general industrial contractor within the State of Arizona. Contracts are preformed on a fixed price; fixed price per-unit; and a time and material basis.  Additionally, the Company provides transportation services, primarily hauling and delivering material aggregates.

 

    Material Definitive Agreement

 

On August 25, 2016, SoOum Corp entered into a Securities Purchase Agreement with one hundred percent (100%) of the members (the “Sellers”) of Western Grade LLC.   Upon the closing of the transaction on October 6, 2016, Western Grade LLC members transferred all of their outstanding ownership interests to SoOum Corp. In consideration, SoOum Corp. issued 420,000,000 shares of common stock to the Sellers. The common stock received by the members of Western Grade LLC represent an ownership interest in SoOum Corp of approximately 42%.  Western Grade LLC is now a wholly owned subsidiary of SoOum Corp. See Form 8-K filed by SoOum Corp. on October 6, 2016 for more detail.

 

NOTE C – Summary of Significant Accounting Policies

 

    Summary of Accounting Policies

 

Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application.  Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

    

Method of Accounting

 

The Company maintains its books and prepares its financial statements on the accrual basis of accounting.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.  The Company maintains cash and cash equivalents at financial institutions, which periodically may exceed federally insured amounts.

- continued –

-8-

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – Years Ended December 31, 2015 and 2014

NOTE C – Summary of Significant Accounting Policies - continued

 

    Income Taxes

 

The Company, with the consent of its members, elected under the Internal Revenue Code to be an S Corporation, effective January 1, 2006.  Accordingly, the shareholders of an S Corporation are taxed on their proportionate share of the Company’s taxable income.  Therefore no provision or liability for federal income taxes has been included in these financial statements.

 

The Company’s federal and state income tax returns are subject to possible examination by the taxing authorities until the expiration of the related statutes of limitation on those returns.  In general, the federal and state tax returns have, respectively, a three and four-year statute of limitations.

 

                Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

    Contract Receivables

 

Contract receivables are stated at the amount management expects to collect from outstanding balances.  Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on its assessment of the current status of individual accounts.  Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to contract receivables.  Allowance for doubtful accounts was $2,226 and $6,583, at December 31, 2015 and 2014, respectively.

    Property, Equipment and Depreciation

 

Property and equipment are stated at cost, less accumulated depreciation computed using the straight line method over the estimated useful lives as follows:

 

Construction Equipment and Trucks                5 - 7 Years

Office Equipment                                           3 - 7 Years

 

Maintenance and repairs are charged to expense.  The cost of the assets retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts.

 

    Sales Tax

 

The State of Arizona and other local governments impose a transaction privilege (sales) tax on contracts the Company is deemed to be the prime contractor.  The Company performs work as both a general (prime) contractor, and as a subcontractor to other general contractors.  

- continued –

-9-

Western Grade LLC

Show Low, Arizona

NOTES TO UNAUDITED FINANCIAL STATEMENTS – Years Ended December 31, 2015 and 2014

NOTE C – Summary of Significant Accounting Policies - continued

 

    Long – Term Construction Contracts

 

The Company follows the percentage of completion method of accounting for construction contracts.  Income is recognized in the ration that costs incurred bears to estimated total costs.  That method is used because management considers total cost to be the best available measure of progress on the contracts.  Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term.  Adjustments to cost estimates are made periodically, and losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined.  The aggregate of costs incurred and income recognized on uncompleted contracts in excess of related billings is shown as a current asset, and the aggregate of billings on uncompleted contracts in excess of related costs and income recognized is shown as a current liability.

 

Revenue from cost-plus and time and material contracts are recognized currently as the work is preformed and billed.  Revenue from transportation services is recognized currently as the work is performed and billed.

 

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs.  Selling, general and administrative costs are charged to expense as incurred.

NOTE D –Notes Receivable – Related Parties

 

Notes receivable related parties consist of the following at December 31, 2015 and 2014.  All notes are due on demand.

-10-

 

 

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – Years Ended December 31, 2015 and 2014

NOTE E – Property and Equipment

 

    Property and equipment are recorded at cost and consisted of the following:

Depreciation expense for the years ended December 31, 2015 and 2014 was $238,179 and $263,260, respectively.

 

Note F - Notes Payable

 

 Notes payable consisted of the following:

-11-

 

 

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – Years Ended December 31, 2015 and 2014

NOTE F – Notes Payable – continued

 

Interest expense for the years ended December 31, 2015 and 2014 was $64,188 and $94,191, respectively.

 

The Company has a line of credit with Peoples United Equipment Finance in the amount of $1,010,016 bearing interest at 7.25%. The outstanding balance at December 31, 2015 and 2014 was $795,268 and $806,585, respectively.

Note G – Cost, Estimated Profits and Billings on Uncompleted Contracts

 

   Costs, estimated profits and billings on uncompleted contracts consisted of the following:

Note H –  Related Party Transactions

 

During the years ended December 31, 2015 and 2014 the Company purchased materials for $167,490 and $191,654, respectively from Western Materials a company related through common ownership.  Additionally, the Company subleases its office and yard from Western Materials on a month to month basis.  Total rent expense during the year ended December 31, 2015 and 2014 was $13,396 and $61,510, respectively.  

 

The Company leases a vehicle and equipment from a member of the Company on an as needed basis.  Rent expense was $12,380 and $27,750 for the years ended December 31, 2015 and 2014, respectively.

 

The Company also had some immaterial transactions with related entities during the periods that occurred due to size and convenience of the transactions.

 

Note I –    Leases

 

The Company leases its office space on an annual basis. Rent for the years ended December 31, 2015 and 2014 was $37,839 and $59,462, respectively.

 

 

 

Note J – Going Concern

 

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported recurring losses from operations and negative cash flows from operations for the past 2 years.  As a result, there is an accumulated deficit of at December 31, 2015 and 2014.

-12-

=================================================================================================================

Western Grade LLC

Show Low, Arizona

NOTES TO UNAUDITED FINANCIAL STATEMENTS – For 9 Months Ended September 30, 2016

NOTE A – Basis of Presentation

 

 The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.  The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted.

NOTE B – Organization and Operations

 

Western Grade LLC was formed as an Arizona Limited Liability Company in 2001.  The latest date this Company can dissolve is December, 2050.  The Company operates as a general industrial contractor within the State of Arizona. Contracts are preformed on a fixed price; fixed price per-unit; and a time and material basis.  Additionally, the Company provides transportation services, primarily hauling and delivering material aggregates.

 

Material Definitive Agreement

 

On August 25, 2016, SoOum Corp entered into a Securities Purchase Agreement with one hundred percent (100%) of the members (the “Sellers”) of Western Grade LLC.   Upon the closing of the transaction on October 6, 2016, Western Grade LLC members transferred all of their outstanding ownership interests to SoOum Corp. In consideration, SoOum Corp. issued 420,000,000 shares of common stock to the Sellers. The common stock received by the members of Western Grade LLC represent an ownership interest in SoOum Corp of approximately 42%.  Western Grade LLC is now a wholly owned subsidiary of SoOum Corp. See Form 8-K filed by SoOum Corp. on October 6, 2016 for more detail.

NOTE C – Summary of Significant Accounting Policies

 

    Summary of Accounting Policies

 

Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application.  Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

- continued –

-13-

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – For 9 Months Ended September 30, 2016

NOTE C – Summary of Significant Accounting Policies - continued

 

    Method of Accounting

 

The Company maintains its books and prepares its financial statements on the accrual basis of accounting.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.  The Company maintains cash and cash equivalents at financial institutions, which periodically may exceed federally insured amounts.

 

 Income Taxes

 

 The Company, with the consent of its members, elected under the Internal Revenue Code to be an S Corporation, effective January 1, 2006.  Accordingly, the shareholders of an S Corporation are taxed on their proportionate share of the Company’s taxable income.  Therefore no provision or liability for federal income taxes has been included in these financial statements.

 

 The Company’s federal and state income tax returns are subject to possible examination by the taxing authorities until the expiration of the related statutes of limitation on those returns.  In general, the federal and state tax returns have, respectively, a three and four year statute of limitations.

 

                 Use of Estimates

 

 The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Contract Receivables

 

Contract receivables are stated at the amount management expects to collect from outstanding balances.  Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on its assessment of the current status of individual accounts.  Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to contract receivables.  At September 30, 2016, allowance for doubtful accounts was $58,189.

 

Property, Equipment and Depreciation

 

Property and equipment are stated at cost, less accumulated depreciation computed using the straight line method over the estimated useful lives as follows:

Construction Equipment and Trucks                

5 - 7 Years

Office Equipment                                          

 3 - 7 Years

 

Maintenance and repairs are charged to expense.  The cost of the assets retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts.

- continued –

 

-14-

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – For 9 Months Ended September 30, 2016

NOTE C – Summary of Significant Accounting Policies - continued

 

Sales Tax

 

The State of Arizona and other local governments impose a transaction privilege (sales) tax on contracts the Company is deemed to be the prime contractor.  The Company performs work as both a general (prime) contractor, and as a subcontractor to other general contractors.  

 

Long – Term Construction Contracts

 

The Company follows the percentage of completion method of accounting for construction contracts.  Income is recognized in the ration that costs incurred bears to estimated total costs.  That method is used because management considers total cost to be the best available measure of progress on the contracts.  Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term.  Adjustments to cost estimates are made periodically, and losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined.  The aggregate of costs incurred and income recognized on uncompleted contracts in excess of related billings is shown as a current asset, and the aggregate of billings on uncompleted contracts in excess of related costs and income recognized is shown as a current liability.

 

Revenue from cost-plus and time and material contracts are recognized currently as the work is preformed and billed.  Revenue from transportation services is recognized currently as the work is performed and billed.

 

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs.  Selling, general and administrative costs are charged to expense as incurred.

 

NOTE D –Notes Receivable – Related Parties

 

Notes receivable related parties consist of the following at September 30, 2016.  All notes are due on demand.

 

 

-15-

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – For 9 Months Ended September 30, 2016

NOTE E – Property and Equipment

 

 Property and equipment are recorded at cost and consisted of the following:

September 30,	2016
Construction Equipment and Trucks	$2,831,764
Office Equipment	72,179
	$ 2,903,943
Less:  Accumulated Depreciation	2,506,181
Net Property and Equipment	$    397,762

Depreciation expense for the nine months ended September 30, 2016 was $ 166,642.

Note F -Notes Payable

 

Notes payable consisted of the following:

September 30,	2016
Ally
Installment note payable of $773 per month including principal and interest at 4%.  Secured by vehicle.	$   19,012
Catapillar Financial Services
Installment note payable of $2,116 per month including principal and interest at 4.42%.  Secured by equipment.	54,970
Chase
Installment note payable of $748 per month including principal and interest at 7.04%.  Secured by vehicle.	9,540
Financial Pacific
Installment note payable of $1,179 per month including principal and interest at 8.1%.  Secured by equipment.	3,078
John Deere
Installment notepayable of $1,505 per month including principal and interest at 8.4%. Secured by equipment.	45,472
Total Notes Payable	$   132,072
Less:  Amount Due Within One Year	59,751
Amount Due After One Year	$   72,321

 

Interest expense for the nine months ended September 30, 2016 was $113,440.

 

The Company has a line of credit with Peoples United Equipment Finance in the amount of $1,010,016 bearing interest at 7.25%. The outstanding balance at September 30, 2016 was $959,088.

 

-16-

 

Western Grade LLC

Show Low, Arizona

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS – For 9 Months Ended September 30, 2016

Note G – Cost, Estimated Profits and Billings on Uncompleted Contracts

 

Costs, estimated profits and billings on uncompleted contracts consisted of the following:

September 30,	2016
Costs Incurred on Uncompleted Contracts	$       5,981
Estimated Profits	814
Total	6,795
Billings on Uncompleted Contracts	(58,355)
	$    (51,560)
Included in the Balance Sheet Under the Following Captions:
Costs and Estimated Profits in Excess of Billings on Uncompleted Contacts	$      2,590
Billings in Excess of Costs and Estimated Profits on Uncompleted Contracts	(54,150)
Total	$   (51,560)

Note H – Related Party Transactions

 

During the nine months ended September 30, 2016 the Company purchased materials for $229,281 from Western Materials a company related through common ownership. Included in accounts payable at September 30, 2016 was $79,757 to Western Materials.  Additionally, the Company subleases its office and yard from Western Materials on a month to month basis.  Total rent expense during the nine months ended September 30, 2016 was $7,539.  

 

The Company leases a vehicle and equipment from a member of the Company on an as needed basis.  Rent expense was $4,925 for the nine months ended September 30, 2016.

 

The Company also had some immaterial transactions with related entities during the periods that occurred due to size and convenience of the transactions.

 

Note I – Leases

     

The Company leases its office space on an annual basis. Rent for the nine months ended September 30, 2016 was $21,625.

 

Note J – Backlog

 

The estimated gross revenue to be performed on uncompleted projects and signed contracts at September 30, 2016 was $499,000.

Note K – Going Concern

 

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported recurring losses from operations and negative cash flows from operations for the past 2 years.  As a result, there is an accumulated deficit of at September 30, 2016.

 

 

-17-

============================================================================================================================================

SoOum Corp.
New York, New York
PRO FORMA BALANCE SHEETS
		SoOum Corp.	Western Grade LLC	Pro Forma adjustments		Pro Forma Consolidated
				as of closing date		as of closing date
		9/30/2016	9/30/2016	10/6/2016		10/6/2016
ASSETS
Cash and Cash Equivalants		$               7,102	$               115,038	$                   —		$           122,140
Accounts Receivable - Net of Allowance for Doubtful Accounts		—	243,331			243,331
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts		—	2,590			2,590
Employee Advances		—	5,275			5,275
Notes Receivable - Related Parties		—	152,091			152,091
Prepaid Expenses		10,000	—			10,000
Total Current Assets		17,102	518,325			535,427
Property and Equipment - Net of Accumulated Depreciation		—	397,762			397,762
Goodwill		—	—	3,029,420	A, B	3,029,420
TOTAL ASSETS		$             17,102	$               916,087	$        3,029,420		$        3,962,609
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Current Liabilities
Line of Credit		$                   —	$               959,088	$                   —		959,088
Notes Payable - Due Within One Year		—	59,751	—		59,751
Notes Payable - Affiliates		12,467	—	—		12,467
Convertible Notes Payable - Net of Discounts of $36,667		131,058	—	—		131,058
Derivative Liability		491,173	—	—		491,173
Accounts Payable		22,360	410,980	—		433,340
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts		—	54,150	—		54,150
Accrued Expenses		566,040	39,684	—		605,724
Total Current Liabilities		1,223,098	1,523,653	—		2,746,751
Other Liabilities
Notes Payable - Due After One Year		—	72,321	—		72,321
Note Payable - Member		—	249,533	—		249,533
Total Liabilities		1,223,098	1,845,507	—		3,068,605
Stockholders' Equity (Deficit)
Common Stock; $0.0001 Par, 5,000,000,000 Shares Authorized; 526,817,927 Shares Issued and Outstanding		10,682	—	42,000	A	52,682
Preferred Stock; $0.0001 Par, 50,000,000 Shares Authorized; 25,000,000 Shares Issued and Outstanding		2,500	—	—		2,500
Preferred Stock; Class B $0.0001 Par, 10,000,000 Shares Authorized; 9,100,000 Shares Issued and Outstanding		910	—	—		910
Preferred Stock; Class C $0.0001 Par, 10,000,000 Shares Authorized; 1,690,000 Shares Issued and Outstanding		169	—	—		169
Additional Paid- In-Capital		7,850,291	—	2,058,000	A	9,908,291
Deficit		(9,070,548)	(929,420)	929,420	B	(9,070,548)
Total Shareholders' Equity (Deficit)		(1,205,996)	(929,420)	3,029,420		894,004
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$             17,102	$               916,087	$        3,029,420		$        3,962,609

A        Reflect acquistion of Western Grade LLC - 420,000,000 shares Common at FMV of $2,100,000 at 100% control
B         Reflect merger of Western Grade LLC into SoOum Corp.

See Financial Statement Notes

-18-

SoOum Corp.
New York, New York
PRO FORMA STATEMENT OF OPERATIONS
			SoOum Corp.	Western Grade LLC	Pro Forma adjustments		Pro Forma Consolidated
			for the Nine Months Ended	for the Nine Months Ended	as of closing date		as of closing date
			9/30/2016	9/30/2016	10/6/2016		10/6/2016
Sales			$                           3,756	$                    1,963,899	$                   —		$         1,967,655
Cost of Sales			935	1,533,792	—		1,534,727
Gross Profit			2,821	430,107	—		432,928
Expenses
General and Administrative			279,280	1,247,752	—		1,527,032
Total Expenses			279,280	1,247,752	—		1,527,032
Loss Before Other Income and Expense			(276,459)	(817,645)	—		(1,094,104)
Other Income and (Expense)
Gain on Sale of Assets			—	5,160	—		5,160
Gain on Derivative			362,330	—	—		362,330
Interest Expense			(596,205)	(2,703)	—		(598,908)
Leased Employee Income			—	19,056	—		19,056
Write Off of Liabilities			6,550,616	—	—		6,550,616
Total Other Income and (Expense)			6,316,741	21,513	—		6,338,254
Income (Loss) from Operations Before
Provision for Taxes			6,040,282	(796,132)	—		5,244,150
Provision for Taxes			—	—	—		—
Net Income (Loss) for the Period			$                     6,040,282	$                     (796,132)	—		$         5,244,150
Basic and Diluted Net Loss Per Share			$                             0.08		$                   —
Weighted Average Shares Outstanding			74,317,927		—

See Financial Statement Notes

-19-

 

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SoOum Corp.
New York, New York
PRO FORMA BALANCE SHEETS
		SoOum Corp.	Western Grade LLC	Pro Forma adjustments		Pro Forma Consolidated
				as of closing date		as of closing date
		12/31/2015	12/31/2015	10/6/2016		10/6/2016
ASSETS
Cash and Cash Equivalants		$                   41	$                 93,374	$                    —		$             93,415
Accounts Receivable - Net of Allowance for Doubtful Accounts		—	778,116	—		778,116
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts		—	734	—		734
Employee Advances		—	5,275	—		5,275
Notes Receivable - Related Parties		297	161,918	—		162,215
Prepaid Expenses		—	—	—		—
Total Current Assets		338	1,039,417	—		1,039,755
Property and Equipment - Net of Accumulated Depreciation		—	664,245	—		664,245
Goodwill		—	—	2,133,242	A, B	2,133,242
TOTAL ASSETS		$                  338	$             1,703,662	$         2,133,242		$         3,837,242
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Current Liabilities
Line of Credit		$                    —	$               795,268	$                    —		$            795,268
Notes Payable - Due Within One Year		441,421	91,629	—		533,050
Notes Payable - Affiliates		1,102,785	—	—		1,102,785
Judgements Payable		1,138,264	—	—		1,138,264
Convertible Notes Payable - Net of Discounts of $5,371		120,187	—	—		120,187
Derivative Liability		256,273	—	—		256,273
Deferred Retirement Benefits		438,782	—	—		438,782
Accounts Payable		844,542	637,150	—		1,481,692
Advances from Shareholders		149,185	—	—		149,185
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts		—	625	—		625
Accrued Expenses		2,866,180	11,211	—		2,877,391
Total Current Liabilities		7,357,619	1,535,883	—		8,893,502
Other Liabilities
Notes Payable - Due After One Year		—	198,662	—		198,662
Note Payable - Member		—	2,359	—		2,359
Total Liabilities		7,357,619	1,736,904	—		9,094,523
Stockholders' Deficit
Common Stock; $0.0001 Par, 5,000,000,000 Shares Authorized; 480,788,382 Shares Issued and Outstanding		6,079	—	42,000	A	48,079
Preferred Stock; $0.0001 Par, 50,000,000 Shares Authorized; 25,000,000 Shares Issued and Outstanding		2,500	—	—		2,500
Preferred Stock; Class B $0.0001 Par, 10,000,000 Shares Authorized; 9,100,000 Shares Issued and Outstanding		910	—	—		910
Preferred Stock; Class C $0.0001 Par, 10,000,000 Shares Authorized; 1,690,000 Shares Issued and Outstanding		169	—	—		169
Additional Paid- In-Capital		7,743,891	—	2,058,000	A	9,801,891
Deficit		(15,110,830)	(33,242)	33,242	B	(15,110,830)
Total Shareholders' Deficit		(7,357,281)	(33,242)	2,133,242		(5,257,281)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$                  338	$             1,703,662	$         2,133,242		$         3,837,242

	A	Reflect acquisition of Western Grade LLC - 420,000,000 shares Common at FMV of $2,100,000 at 100% control
	B	Reflect merger of Western Grade LLC into SoOum Corp.