Attached files
| file | filename |
|---|---|
| 8-K/A - AMENDMENT NO. 1 - HireQuest, Inc. | ccni_8k.htm |
| EX-99.1 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS - HireQuest, Inc. | ccni_ex991.htm |
Exhibit 99.2
Command Center, Inc.
Condensed Combined
Pro Forma Financial Information
(unaudited)
For the Year
Ended December 30, 2011
Table of Contents
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Page
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Introduction
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PF-2
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Condensed Combined Pro Forma Balance Sheets (unaudited)
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PF-3
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Condensed Combined Pro Forma Statements of Operations (unaudited)
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PF-4
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Notes to Condensed Combined Pro Forma Financial Information
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PF-5
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PF-1
Introduction
On January 4, 2012 (effective January 1, 2012), Command Center, Inc., (“CCNI”) through its wholly-owned and newly formed subsidiary Disaster Recovery Services, Inc., entered into an asset purchase agreement (the “Agreement”), with DR Services of Louisiana, LLC (“DRS, LLC”) a Louisiana limited liability company, and Environmental Resource Group, LLC, (“ERG, LLC”) a Louisiana limited liability company. Under the terms of the Agreement, CCNI acquired substantially all of DRS, LLC’s assets in exchange for $300,000 ($150,000 of which was paid at closing and $150,000 to be paid in six subsequent monthly installments of $25,000) and 1.5 million shares of CCNI restricted common stock valued at $390,000. There is also a contingent fee due of up to an additional 1.5 million shares of CCNI restricted common stock based on certain enumerated operating performance standards over the next 2 years, which was valued at $851,727. The amounts of the assets acquired at the acquisition date include tangible property valued at $90,015, other identifiable intangible assets valued at $644,926, and goodwill of $806,786.
The fair value of the 1.5 million shares issued was determined based on the closing price of CCNI’s common stock on the date of issuance. The fair value of the contingent shares to be issued was determined based upon a binomial model where CCNI’s management estimated future amounts of variables in the formula that determines the number of shares to be issued.
As part of the Agreement, the owners of DRS, LLC entered into employment agreements with CCNI with a term of one year in which CCNI agreed to pay them an annual salary, performance related bonuses, and a vehicle allowance. Also as part of the Agreement, the owners of DRS, LLC entered into non-compete agreements with a term of two years.
The condensed combined pro forma financial information is presented as if the acquisition date had been January 1, 2011 (the first day of CCNI’s 2011 fiscal year) and is as of, and for the fiscal year ended, December 30, 2011.
PF-2
Command Center, Inc.
Condensed Combined Pro Forma
Balance Sheets (unaudited)
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ASSETS
Current Assets
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CCNI
Dec. 30, 2011 |
DRS, LLC
Dec. 31, 2011 |
Note
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Adjustments
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Pro Forma
Dec. 30, 2011 |
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Cash
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$ | 1,131,296 | $ | 115,047 | A | $ | 6,892 | $ | 1,131,296 | |||||||||||
| C | (121,939 | ) | ||||||||||||||||||
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Accounts receivable, net of allowance for bad debt
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2,160,072 | 895,312 | A | 5,002 | 2,111,218 | |||||||||||||||
| C | (900,314 | ) | ||||||||||||||||||
| D | (48,854 | ) | ||||||||||||||||||
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Prepaid expenses, deposits and other
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396,908 | - | - | 396,908 | ||||||||||||||||
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Prepaid workers' compensation
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27,632 | - | - | 27,632 | ||||||||||||||||
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Accounts receivable - related party
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- | 39,958 | C | (39,958 | ) | - | ||||||||||||||
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Other receivables - current
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11,028 | 3,934 | A | 34,894 | 11,028 | |||||||||||||||
| C | (3,934 | ) | ||||||||||||||||||
| D | (34,894 | ) | ||||||||||||||||||
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Current portion of workers' compensation deposits
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798,000 | - | - | 798,000 | ||||||||||||||||
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Deferred tax asset
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912,195 | - | - | 912,195 | ||||||||||||||||
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Total Current Assets
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5,437,131 | 1,054,251 | (1,103,105 | ) | 5,388,277 | |||||||||||||||
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Property and Equipment - Net
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383,014 | 90,805 | B | (790 | ) | 473,029 | ||||||||||||||
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Other Assets
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Workers' compensation risk pool deposit, less current portion
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130,834 | - | - | 130,834 | ||||||||||||||||
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Goodwill
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2,500,000 | - | B | 806,786 | 3,306,786 | |||||||||||||||
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Intangible assets - net
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46,834 | - | B | 644,926 | 691,760 | |||||||||||||||
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Total Other Assets
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2,677,668 | - | 1,451,712 | 4,129,380 | ||||||||||||||||
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Total Assets
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$ | 8,497,813 | $ | 1,145,056 | $ | 347,817 | $ | 9,990,686 | ||||||||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities
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Accounts payable
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$ | 900,174 | $ | 15,771 | C | $ | (15,771 | ) | $ | 900,174 | ||||||||||
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Checks issued and payable
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169,738 | - | - | 169,738 | ||||||||||||||||
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Other current liabilities
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558,821 | 37,406 | C | (2,512 | ) | 509,967 | ||||||||||||||
| D | (34,894 | ) | ||||||||||||||||||
| D | (48,854 | ) | ||||||||||||||||||
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Accrued wages and benefits
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785,665 | - | - | 785,665 | ||||||||||||||||
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Current portion of notes payable, net
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85,400 | C | (85,400 | ) | - | |||||||||||||||
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Note payable - related party
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50,109 | C | (50,109 | ) | - | |||||||||||||||
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Current portion of workers' compensation claims liability
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1,186,661 | - | - | 1,186,661 | ||||||||||||||||
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Total Current Liabilities
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3,601,059 | 188,686 | (237,540 | ) | 3,552,205 | |||||||||||||||
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Long-Term Liabilities
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Warrant liabilities
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983,415 | - | - | 983,415 | ||||||||||||||||
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Workers' compensation claims liability, less current portion
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2,148,675 | - | - | 2,148,675 | ||||||||||||||||
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Total Long-Term Liabilities
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3,132,090 | - | - | 3,132,090 | ||||||||||||||||
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Total Liabilities
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6,733,148 | 188,686 | (237,540 | ) | 6,684,294 | |||||||||||||||
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Stockholders' Equity
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Common stock - 100,000,000 shares, $0.001 par value
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57,606 | - | B | 1,500 | 59,106 | |||||||||||||||
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Additional paid-in capital
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54,952,803 | B | 1,540,227 | 55,489,872 | ||||||||||||||||
| - | C | (1,003,158 | ) | |||||||||||||||||
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Accumulated deficit
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(53,245,744 | ) | 956,370 | A | 46,788 | (52,242,586 | ) | |||||||||||||
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Total Stockholders' Equity
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1,764,664 | 956,370 | 585,357 | 3,306,392 | ||||||||||||||||
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Total Liabilities and Stockholders' Equity
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$ | 8,497,813 | $ | 1,145,056 | $ | 347,817 | $ | 9,990,686 | ||||||||||||
See accompanying notes to condensed combined pro forma financial statements.
PF-3
Command Center, Inc.
Condensed Combined Pro Forma
Statements of Operations (unaudited)
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CCNI
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DRS, LLC
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Fiscal Year Ended
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Pro Forma
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Dec. 30, 2011
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Dec. 31, 2011
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Note
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Adjustments
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Dec. 30, 2011
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Revenue
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$ | 81,920,997 | $ | 4,990,161 | A | $ | 378,419 | $ | 87,237,048 | |||||||||||
| D | $ | (52,529 | ) | |||||||||||||||||
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Cost of staffing services
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63,279,204 | 3,736,143 | A | 322,576 | 67,285,394 | |||||||||||||||
| D | (52,530 | ) | ||||||||||||||||||
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Gross Profit
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18,641,793 | 1,254,018 | 55,843 | 19,951,655 | ||||||||||||||||
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Selling, general and administrative expenses
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17,314,170 | 924,264 | A | 9,055 | 18,247,489 | |||||||||||||||
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Depreciation and amortization
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441,087 | - | - | 441,087 | ||||||||||||||||
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Income (Loss) From Operations
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886,536 | 329,754 | 46,788 | 1,263,079 | ||||||||||||||||
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Interest expense and other financing expense
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(1,124,197 | ) | (25,215 | ) | - | (1,149,412 | ) | |||||||||||||
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Change in fair value of warrant liability
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179,369 | - | - | 179,369 | ||||||||||||||||
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Net Income before income taxes
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(58,292 | ) | 304,539 | A | 46,788 | 293,036 | ||||||||||||||
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Provision for income tax
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912,195 | - | - | 912,195 | ||||||||||||||||
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Net Income (Loss)
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$ | 853,903 | $ | 304,539 | $ | 46,788 | $ | 1,205,231 | ||||||||||||
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Net Income (Loss) per Share:
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Basic
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$ | 0.02 | $ | 0.20 | $ | 0.02 | ||||||||||||||
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Diluted
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$ | 0.01 | $ | 0.20 | $ | 0.02 | ||||||||||||||
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Weighted average common shares outstanding:
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Basic
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56,859,426 | 1,500,000 | 58,359,426 | |||||||||||||||||
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Diluted
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61,367,518 | 1,500,000 | 62,867,518 | |||||||||||||||||
See accompanying notes to condensed combined pro forma financial statements.
PF-4
Command Center, Inc.
Notes to Condensed CombinedPro Forma Financial Statements
December 30, 2011
NOTE A – CONTRACT ALLOCATIONS
The owners of DRS, LLC ran certain contracts through ERG, LLC based upon workers’ compensation requirements. These contracts resulted in ERG, LLC having revenue of $378,419, cost of staffing services of $322,576, and other costs of $9,055 resulting in net income of $46,788. These contracts also resulted in ERG, LLC having cash of $6,892, accounts receivable of $5,002, and other receivables of $34,894 at year end. These amounts in the adjustments column relate to the resulting account balances related to ERG.
NOTE B – ACQUISITION OF ASSETS AND ACTIVITIES
The amounts of the assets acquired by CCNI in the acquisition include tangible property valued at $90,015, other identifiable intangible assets valued at $644,926, and goodwill of $806,786. The $790 adjustment in net property and equipment is the difference between DRS, LLC’s net book value and what the fair value of the property was determined to be when acquired. The increase in equity is due to the owners of DRS, LLC being issued 1.5 million shares of CCNI restricted common stock in connections with the acquisition and resulting valuation of the assets acquired.
NOTE C – ELIMINATIONS UNDER THE ACQUISITION AGREEMENT
Not all of the assets and liabilities of DRS, LLC and ERG, LLC were acquired or assumed by CCNI in the acquisition. Assets not acquired include cash attributable to DRS, LLC and ERG, LLC of $115,047 and $6,892, respectively, accounts receivable attributable to DRS, LLC and ERG, LLC of 895,312 and 5,002, respectively, related party receivable attributable to DRS, LLS of $39,958, and other receivables attributable to ERG, LLC of $3,934. Liabilities not assumed include other current liabilities attributable to DRS, LLC of $2,512, note payable attributable to DRS, LLC of $85,400, and note payable – related party attributable to DRS, LLC of $50,109.
NOTE D – INTERCOMPANY ELIMINATIONS
In late 2011, CCNI and DRS, LLC began utilizing the services of each other. Due to this relationship, DRS, LLC reported revenue and CCNI reported cost of sales of $52,529. This relationship also resulted in CCNI having a liability to DRS, LLC and DRS, LLC having a receivable from CCNI of $48,854. Also in 2011, DRS, LLC utilized the service of ERG, LLC. This resulted in ERG, LLC having a receivable from DRS, LLC and DRS, LLC having a liability to ERG, LLC of $34,894. These amounts in the adjustments column relate to the elimination of inter-company transactions that would have been eliminated upon consolidation.
PF-5