September 7, 2011 - PRO-FORMA FINANCIAL INFORMATION - 8-K/A: Current report filing

Exhibit 99.2

CommereTel Corporation

Unaudited Pro Forma Condensed Consolidated Financial Statements

On April 1, 2011, CommereTel Corporation ("CommerceTel" or the “Company”) completed its acquisition of substantially all of the assets of Adsparq Limited’s (“Adsparq”) Txtstation interactive mobile marketing platform and services. The purchase price for the acquisition was 2,125,000 shares of the Company’s common stock, $26,184 in cash at closing and $250,000 of scheduled cash payments. The $250,000 of scheduled cash payments are due as follows: $25,000 payable on the 60th day following closing and the balance is payable in $25,000 installments at the end of each of the next nine 30-day periods thereafter. The Company assumed none of Adsparq’s liabilities in the transaction, except for the performance obligation of unearned revenue. For a period of one year following the closing of the transaction, half of the shares of common stock issued to Adsparq will be held in escrow as security for Adsparq’s obligations under the agreement.

In connection with the transaction, the Company also issued 300,000 shares of its common stock to the controlling stockholder of Adsparq in consideration of certain indemnification obligations and other agreements. For one year following the closing of the transaction, the shareholder has agreed not to, directly or indirectly, transfer, donate, sell, assign, pledge, hypothecate, grant a security interest in or otherwise dispose or attempt to dispose of all or any portion of shares issued to it (or any interest therein).

The acquisition has been accounted for as a business combination and the Company valued all assets and liabilities acquired at their fair values on the date of acquisition. Accordingly, the assets and liabilities of the acquired entity were recorded at their estimated fair values at the date of the acquisition.

The allocation of the purchase price to assets and liabilities based upon fair value determinations was as follows:

Current assets	$	10,184
Equipment		31,230
Customer contracts		1,026,000
Trade name		36,000
Technology/IP		182,000
Non-compete		1,000
Goodwill		1,426,730
Assumed liabilities – deferred revenue		(20,000	)
Total purchase price	$	2,693,144

The purchase price consists of the following:

Cash	$	26,184
Present value of scheduled cash payments		241,960
Common stock		2,425,000
Total purchase price	$	2,693,144

The following unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the completed acquisition, which was accounted for as a purchase.

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The unaudited pro forma condensed consolidated balance sheet as of March 31, 2011, and the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2010 and three months ended March 31, 2011, are presented herein. The unaudited pro forma condensed consolidated balance sheet was prepared using the historical balance sheets of CommerceTel as of March 31, 2011 and Adsparq as of March 31, 2011. The unaudited pro forma condensed consolidated statements of operations were prepared using the historical statements of operations of CommerceTel for the year ended December 31, 2010 and three months ended March 31, 2011, and the historical statements of operations of Adsparq for the year ended March 31, 2011 and three months ended March 31, 2011.

The unaudited pro forma condensed consolidated balance sheet gives effect to the acquisition as if it had been completed on March 31, 2011, and consolidates the unaudited condensed balance sheets of CommerceTel and the assets acquired from Adsparq. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2010 and three months ended March 31, 2011 give effect to the acquisition as if it had occurred on January 1, 2010.

The unaudited pro forma condensed consolidated financial statements presented are based on the assumptions and adjustments described in the accompanying notes. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes and do not purport to represent what the financial position or results of operations actually would have been if the events described above occurred as of the dates indicated or what such financial position or results would be for any future periods. The pro forma information does not reflect cost savings expected to be realized from the elimination of certain expenses and from synergies expected to be created or the costs to achieve such cost savings or synergies. No assurance can be given that cost savings or synergies will be realized. The unaudited pro forma condensed consolidated financial statements, and the accompanying notes, are based upon the respective historical consolidated financial statements of CommerceTel and Adsparq, and should be read in conjunction with CommerceTel’s historical financial statements and related notes, CommerceTel’s "Management's Discussion and Analysis of Financial Condition and Results of Operation" contained in CommerceTel’s Annual Report on Form 10-K for the year ended December 31, 2010, and Adsparq’s financial statements presented as Exhibit 99.1 to this Current Report Form 8-K/A.

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CommerceTel Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2011


	Historical						Pro Forma
	CommerceTel			Adsparq			Adjustments				Pro-Forma

Current assets
Cash	$	205,191		$	-		$	(26,184	)	(a)	$	179,007
Accounts receivable		50,227			131,215			(131,215	)	(b)		50,227
Other current assets		91,708			13,333			(3,149	)	(c)		101,892
Total current assets		347,126			144,548			(160,548	)			331,126

Equipment, net		2,737			40,597			(9,367	)	(d)		33,967
Goodwill		-			-			1,426,730		(e)		1,426,730
Intangible assets, net		77,105			-			1,245,000		(f)		1,322,105
Other assets		46,317			377			(377	)	(b)		46,317
Total Assets	$	473,285		$	185,522		$	2,501,438			$	3,160,245


Current liabilities
Accounts payable	$	233,307		$	116,561		$	(116,561	)	(b)	$	233,307
Accrued interest		64,499			17,901			(17,901	)	(b)		64,499
Accrued and deferred personnel compensation		113,285			539,196			(539,196	)	(b)		113,285
Deferred revenue and customer deposits		286,677			55,988			(35,988	)	(g)		306,677
Notes payable, net of discount		889,283			119,340			(119,340	)	(b)		889,283
Cash payment obligation, net of discount		-			-			241,960		(h)		241,960
Derivative liabilities		289,504			-			-				289,504
Other current liabilities		68,692			207,399			(207,399	)	(b)		68,692
Total current liabilities		1,945,247			1,056,385			(794,425	)			2,207,207

Non-current liabilities
Common Stock Liability		128,030			-			-				128,030
Derivative liabilities		81,794			-			-				81,794
Total non-current liabilities		209,824			-			-				209,824
Total liabilities		2,155,071			1,056,385			(794,425	)			2,417,031


Stockholders' equity (deficit)
Common stock		17,854			-			2,425		(i)		20,279
Other comprehensive loss		-			(138,502	)		138,502		(b)		-
Additional paid-in capital		7,202,830			298,082			2,124,493		(i)		9,625,405
Accumulated deficit		(8,902,470	)		(1,030,443	)		1,030,443		(b)		(8,902,470	)
Total stockholders' equity (deficit)		(1,681,786	)		(870,863	)		3,295,863				743,214
Total liabilities and stockholders' equity (deficit)	$	473,285		$	185,522		$	2,501,438			$	3,160,245

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

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CommerceTel Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2011

	Historical						Pro Forma
	CommerceTel			Adsparq			Adjustments				Pro Forma
Revenues

Revenues	$	140,638		$	240,058		$	-			$	380,696
Cost of revenues		79,837			21,892			-				101,729
Gross margin		60,801			218,166			-				278,967

Operating expenses
General & administrative		545,039			150,785			(3,589	)	(j)		692,235
Sales & marketing		57,851			70,462			-				128,313
Engineering, research, & development		128,571			23,847			-				152,418
Depreciation & amortization		-			-			67,530		(k)		67,530
Total operating expenses		731,461			245,094			63,941				1,040,496

Loss from operations		(670,660	)		(26,928	)		(63,941	)			(761,529	)

Other income/(expense)
Interest income		158			-			-				158
Interest expense		(105,408	)		-			-				(105,408	)
Change in fair market value of derivative liabilities		47,693			-			-				47,693
Total other income/(expense)		(57,557	)		-			-				(57,557	)

Income tax benefit/(expense)		-			-			-				-

Net loss	$	(728,217	)	$	(26,928	)	$	(63,941	)		$	(819,086	)

Net loss per share - basic and diluted	$	(0.04	)								$	(0.04	)

Weighted average number of shares
during the period - basic and diluted		17,711,048						2,425,000		(l)		20,136,048

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

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CommerceTel Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2010

	Historical						Pro Forma
	CommerceTel			Adsparq			Adjustments				Pro Forma
Revenues

Revenues	$	919,216		$	960,231		$	-			$	1,879,447
Cost of revenues		417,870			87,567			-				505,437
Gross margin		501,346			872,664			-				1,374,010

Operating expenses
General & administrative		1,163,479			603,139			(14,356	)	(m)		1,752,262
Sales & marketing		225,783			281,848			-				507,631
Engineering, research, & development		405,819			95,388			-				501,207
Depreciation & amortization		-			-			270,120		(n)		270,120
Total operating expenses		1,795,081			980,375			255,764				3,031,220

Loss from operations		(1,293,735	)		(107,711	)		(255,764	)			(1,657,210	)

Other income/(expense)
Interest expense		(120,388	)		-			(8,040	)	(o)		(128,428	)
Change in fair market value of derivative liabilities		(14,861	)		-			-				(14,861	)
Gain on debt extinguishment		199,401			-			-				199,401
Total other income/(expense)		64,152			-			(8,040	)			56,112

Income tax benefit/(expense)		-			-			-				-

Net loss	$	(1,229,583	)	$	(107,711	)	$	(263,804	)		$	(1,601,098	)

Net loss per share - basic and diluted	$	(0.14	)							$	$	(0.14	)

Weighted average number of shares during the period - basic and diluted		8,950,585						2,425,000		(q)		11,375,585

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

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CommerceTel Corporation

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

The accompanying unaudited pro forma condensed consolidated financial statements present the pro forma results of operations and financial position of CommerceTel and Adsparq on a combined basis based on the historical financial information of each company and after giving effect to the acquisition of Adsparq by CommerceTel. The acquisition was recorded using the acquisition method of accounting.

The unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2011 combines the historical results for CommerceTel as of March 31, 2011 and the historical results for Adsparq as of March 31, 2011, as if the acquisition had occurred on March 31, 2011. The unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2011, combines the historical results for CommerceTel for the three months ended March 31, 2011 and the historical results for Adsparq for the three months ended March 31, 2011, as if the acquisition had occurred on January 1, 2010. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2010 combines the historical results for CommerceTel for the twelve months ended December 31, 2010 and the historical results for Adsparq for the twelve months ended March 31, 2011, as if the acquisition had occurred on January 1, 2010.

Note 2. Pro Forma Adjustments

(a)	Represents the cash paid at closing of the acquisition

(b)	Represents elimination of the assets, liabilities and equity that were not acquired in the transaction

(c)	Represents the current assets of $10,184 acquired in the acquisition net of the current assets not acquired.

(d)	To reflect the estimated fair value of fixed assets acquired in the acquisition.

(e)	To reflect the estimated amount of goodwill resulting from the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired.

(f)	To reflect the estimated fair value of identifiable intangible assets acquired in the acquisition.

(g)	To reflect the $20,000 of assumed liabilities net of the liabilities not assumed in the acquisition.

(h)	To reflect the $241,960 obligation recorded at closing which represented the present value of the $250,000 cash payment obligation over the subsequent periods.

(i)	To reflect the common stock issued as consideration in the acquisition net of Adsparq additional paid in capital not acquired in the transaction.

(j)	To reflect the elimination of depreciation expense within Adsparq historical financial statements for the three months ended March 31, 2011.

(k)	Represents the amortization and depreciation of $62,325 and $5,205, respectively, related to the fair value of identifiable amortizable intangible assets and fixed assets acquired in the transaction, as if the acquisition had been completed on January 1, 2010.

(l)	To reflect the issuance of 2,425,000 shares of common stock on the date of acquisition.

(m)	To reflect the elimination of depreciation expense within Adsparq historical financial statements for the year ended December 31, 2011.

(n)	Represents the amortization and depreciation of $249,300 and $20,820, respectively, related to the fair value of identifiable amortizable intangible assets and fixed assets acquired in the transaction, as if the acquisition had been completed on January 1, 2010.

(o)	To reflect the issuance of 2,425,000 shares of common stock on the date of acquisition.

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Form: 8-K/A

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