Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CRAWFORD UNITED Corp | ex99-1.htm |
| EX-23 - EXHIBIT 23 - CRAWFORD UNITED Corp | ex23.htm |
| 8-K/A - FORM 8-K/A - CRAWFORD UNITED Corp | hicka20170814_8ka.htm |
Exhibit 99.2
HICKOK INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL INFORMATION
INDEX
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Page |
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Unaudited Pro Forma Consolidated Combined Balance Sheet as of March 31, 2017 |
1 |
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Unaudited Pro Forma Consolidated Combined Statement of Operations for the Six Months Ended March 31, 2017 |
3 |
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Unaudited Pro Forma Consolidated Combined Statement of Operations for the Year Ended September 30, 2016 |
5 |
On June 1, 2017, Hickok Acquisition A LLC, a wholly owned subsidiary of Hickok Incorporated (the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Air Enterprises Acquisition LLC, a Delaware limited liability company , and Mr. A. Malachi Mixon, III and Mr. William M. Weber, each of whom are the principal members of Air Enterprises (each, a “Member” and collectively with Air Enterprises, the “Sellers”). Hickok Acquisition A LLC since changed its name to Air Enterprises LLC (“AE”). The following unaudited pro forma consolidated combined financial statements give effect to the acquisition of certain assets and certain assumed liabilities of AE.
The acquisition will be a business combination accounted for in accordance with Accounting Standards Codification (ASC) 805, Business Combinations. Accordingly, for accounting purposes, the fair value of the assets received and liabilities assumed will be recorded on the balance sheet. The difference between the purchase price and fair value of the assets acquired, net of liabilities assumed, will be recorded as goodwill and other intangible assets. The intangible assets, other than goodwill, will be amortized to expense over their estimated useful lives. Goodwill is of an indefinite life and will not be amortized but will be tested at least annually for impairment.
Acquisition-related transaction costs (i.e. advisory, legal, accounting, valuation and other professional or consulting fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred and the services are received.
The unaudited pro forma consolidated combined financial statements are based on the Company’s historical financial statements and based upon the Statement of Assets Acquired and Liabilities Assumed of Air Enterprises and based upon the Statement of Revenues and Direct Expenses. These statements are derived from AE’s historical accounting records and do not purport to reflect the assets acquired and the net revenues and direct operating expenses that would have resulted if AE had been a separate, stand-alone company during the periods presented. AE was only a component of the Seller prior to the divestiture and accordingly, historical financial statements in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) have not previously been prepared, nor is it practicable to prepare separate, historical financial statements for AE. The statement of assets acquired and liabilities assumed and the statement of net revenues and direct operating expenses vary from a complete financial statement prepared in accordance with U.S. GAAP because they only include assets acquired and exclude indirect expenses, such as certain general and administrative expenses, interest expenses, income taxes and the allocation of corporate overhead costs. Therefore, the results set forth in the statements of net revenues and direct operating expenses may not be representative of future operations.
The unaudited pro forma consolidated combined balance sheet as of March 31, 2017 and unaudited pro forma consolidated combined statements of operations for the six months ended March 31, 2017 give effect to the transaction as if the acquisition was consummated October 1, 2016. The unaudited pro forma unaudited consolidated combined statements of operations for the year ended September 30, 2016 give effect to the transaction as if the acquisition was consummated October 1, 2015.
The unaudited pro forma consolidated combined financial information should be read together with the Company’s historical financial statements, which are included in the Company’s latest annual report on Form 10-K and quarterly report on Form 10-Q, and Air Enterprises LLC historical information, included herein.
HICKOK INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED COMBINED BALANCE SHEET
ASSETS
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Hickok |
Air |
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Incorporated |
Enterprises |
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3/31/2017 |
3/31/2017 |
Pro Forma |
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Unaudited |
Unaudited |
Adjustments |
Combined |
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CURRENT ASSETS: |
||||||||||||||||
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Cash and Cash Equivalents |
$ | 3,174,522 | $ | - | $ | (2,050,000 | )(d) | $ | 1,124,522 | |||||||
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Accounts receivable-less allowance for doubtful accounts |
1,585,503 | 6,149,593 | - | 7,735,096 | ||||||||||||
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Costs in Excess of Billings and estimated costs |
- | 2,639,878 | - | 2,639,878 | ||||||||||||
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Inventories-less allowance for obsolete inventory |
3,218,443 | 696,650 | - | 3,915,093 | ||||||||||||
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Prepaid Expenses and other current assets |
414,025 | 2,261 | - | 416,286 | ||||||||||||
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Total Current Assets |
8,392,493 | 9,488,382 | (2,050,000 | ) | 15,830,875 | |||||||||||
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PROPERTY, PLANT AND EQUIPMENT |
5,291,207 | 2,712,538 | (600,418 | )(a) | 7,403,327 | |||||||||||
|
Less accumulated depreciation |
3,888,340 | 1,935,573 | (1,935,573 | )(a) | 3,888,340 | |||||||||||
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Property, Plant and Equipment, Net |
1,402,867 | 776,965 | 1,335,155 | 3,514,987 | ||||||||||||
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OTHER ASSETS: |
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Goodwill |
1,777,656 | - | 559,510 | (c) | 2,337,166 | |||||||||||
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Intangibles, net of accumulated amortization |
1,192,727 | - | 1,230,000 | (b) | 2,422,727 | |||||||||||
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Deferred income taxes-less valuation allowance of $500,000 |
3,330,600 | - | - | 3,330,600 | ||||||||||||
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Other non-current assets |
750 | - | - | 750 | ||||||||||||
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Total Non-Current Other Assets |
6,301,733 | - | 1,789,510 | 8,091,243 | ||||||||||||
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Total Assets |
$ | 16,097,093 | $ | 10,265,347 | $ | 1,074,665 | $ | 27,437,105 | ||||||||
See accompanying notes to unaudited pro forma consolidated combined financial statements.
HICKOK INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED COMBINED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS EQUITY
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Hickok |
Air |
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Incorporated |
Enterprises |
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3/31/2017 |
3/31/2017 |
Pro Forma |
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Unaudited |
Unaudited |
Adjustments |
Combined |
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CURRENT LIABILITIES: |
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Convertible notes payable - related party |
$ | 200,000 | $ | - | $ | - | 200,000 | |||||||||
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Notes payable - related party |
403,387 | - | - | 403,387 | ||||||||||||
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Leases payable |
51,825 | - | - | 51,825 | ||||||||||||
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Accounts payable |
786,541 | 1,373,216 | - | 2,159,757 | ||||||||||||
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Billings in Excess of Costs & Earnings |
- | 566,254 | - | 566,254 | ||||||||||||
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Accrued payroll and related expenses |
227,695 | - | - | 227,695 | ||||||||||||
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Accrued expenses |
630,835 | 1,200,542 | - | 1,831,377 | ||||||||||||
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Deferred revenue |
631,992 | - | - | 631,992 | ||||||||||||
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Total Current Liabilities |
2,932,275 | 3,140,012 | - | 6,072,287 | ||||||||||||
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LONG-TERM LIABILITIES: |
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Notes payable - related party |
4,185,201 | - | - | 4,185,201 | ||||||||||||
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Bank Debt |
- | - | 8,200,000 | (d) | 8,200,000 | |||||||||||
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Leases payable |
119,825 | - | - | 119,825 | ||||||||||||
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Accrued expenses |
510,451 | - | - | 510,451 | ||||||||||||
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Total Long-Term Liabilities |
4,815,477 | - | 8,200,000 | 13,015,477 | ||||||||||||
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STOCKHOLDERS' EQUITY |
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Common shares - no par value |
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Class A 10,000,000 shares authorized, 2,130,681 and 2,090,394 shares issued |
2,217,151 | - | - | 2,217,151 | ||||||||||||
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Class B 2,500,000 convertible shares authorized, 779,283 shares issued |
710,272 | - | - | 710,272 | ||||||||||||
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Preferred 1,000,000 shares authorized, no shares outstanding |
- | - | - | - | ||||||||||||
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Contributed capital |
1,741,901 | - | - | 1,741,901 | ||||||||||||
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Treasury shares |
(264,841 | ) | (264,841 | ) | ||||||||||||
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Class A - 15,795 shares |
- | - | - | - | ||||||||||||
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Class B - 5,667 and 667 shares |
- | - | - | - | ||||||||||||
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Retained earnings |
3,944,858 | 7,125,335 | (7,125,335 | )(e) | 3,944,858 | |||||||||||
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Total Stockholders' Equity |
8,349,341 | 7,125,335 | (7,125,335 | ) | 8,349,341 | |||||||||||
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Total Liabilities and Stockholders' Equity |
$ | 16,097,093 | $ | 10,265,347 | $ | 1,074,665 | $ | 27,437,105 | ||||||||
See accompanying notes to unaudited pro forma consolidated combined financial statements.
HICKOK INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
|
Hickok |
Operations of |
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Incorporated |
Air Enterprises |
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3/31/2017 |
3/31/2017 |
Pro Forma |
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Actual |
(Unaudited) |
Adjustments |
Combined |
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TOTAL SALES |
$ | 5,703,241 | $ | 14,872,188 | $ | - | $ | 20,575,429 | ||||||||
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COSTS AND EXPENSES: |
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Cost of Sales |
3,742,489 | 11,913,037 | - | 15,655,526 | ||||||||||||
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Product Development |
456,326 | 510,815 | - | 967,141 | ||||||||||||
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Selling, General and Administrative Expenses |
1,545,876 | 1,413,130 | 376,333 | (b) | 3,335,339 | |||||||||||
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Interest Charges |
98,961 | - | 127,100 | (d) | 226,061 | |||||||||||
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Legal matter |
(50,000 | ) | - | - | (50,000 | ) | ||||||||||
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Other income |
(5,972 | ) | - | - | (5,972 | ) | ||||||||||
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Total Costs and Expenses |
5,787,680 | 13,836,982 | 503,433 | 20,128,095 | ||||||||||||
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Income (Loss) before Provision for Income Taxes |
(84,439 | ) | 1,035,206 | (503,433 | ) | 447,334 | ||||||||||
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Provision for Income Taxes |
16,127 | - | - | 16,127 | ||||||||||||
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Net Income (Loss) |
$ | (100,566 | ) | $ | 1,035,206 | $ | (503,433 | ) | $ | 431,207 | ||||||
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Earnings (Loss) Per Common Share - Basic |
$ | (0.04 | ) | $ | 0.15 | |||||||||||
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Earnings (Loss) Per Common Share - Diluted |
$ | (0.04 | ) | $ | 0.15 | |||||||||||
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Weighted Average Shares of Common Stock Outstanding - Basic |
2,865,165 | - | 2,865,165 | |||||||||||||
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Weighted Average Shares of Common Stock Outstanding - Diluted |
2,865,165 | - | 2,865,165 | |||||||||||||
See accompanying notes to unaudited pro forma consolidated combined financial statements.
HICKOK INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL INFORMATION
MARCH 31, 2017 PRO FORMA ADJUSTMENTS
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(a) |
Reflects the adjustment in increase the basis in the acquired property plant and equipment to the estimated fair value. |
|
Book value of Fixed Assets - Gross |
2,712,538 | |||
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Accumulated Depreciation |
1,935,573 | |||
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Net Book Value - Fixed |
776,965 | |||
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Fair Market Value of Fixed Assets |
2,112,120 | |||
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Adjustment to Increase Fixed Assets |
1,335,155 |
|
(b) |
Reflects the adjustment of intangible assets acquired by the Company to their estimated fair values, and related amortization expense for the period. The following table summarized the estimated fair values of Air Enterprises identifiable intangible assets and their estimated useful lives. |
|
Useful Life |
Amortization |
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Fair Value |
in Years |
Expense |
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Customer Backlog |
690,000 | 1 | 345,000 | |||||||||
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Non-Compete Agreements |
200,000 | 5 | 20,000 | |||||||||
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Trademarks |
340,000 | 15 | 11,333 | |||||||||
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Total Intangibles, Other than Goodwill |
1,230,000 | 376,333 | ||||||||||
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(c) |
Reflects adjustment to record goodwill associated with the acquisition of Air Enterprises as shown below: |
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Assets Acquired: |
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Current Assets |
9,488,382 | |||
|
Net Property and Equipment |
2,112,120 | |||
|
Intangible Assets |
1,230,000 | |||
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Goodwill |
559,510 | |||
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Total Assets Acquired |
13,390,012 | |||
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Liabilities Assumed |
3,140,012 | |||
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Net Assets Acquired |
10,250,000 |
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(d) |
Reflects the cash used and new debt incurred to finance the acquisition of Air Enterprises as shown below: |
|
Interest |
Interest |
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|
Rate |
Expense |
|||||||||||
|
Term Loan A Debt |
2,000,000 | 3.1 | % | 31,000 | ||||||||
|
Revolving Credit Facility |
6,200,000 | 3.1 | % | 96,100 | ||||||||
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Total Debt |
8,200,000 | 127,100 | ||||||||||
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Cash used |
2,050,000 | |||||||||||
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Debt incurred |
8,200,000 | |||||||||||
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Total purchase price |
10,250,000 | |||||||||||
|
(e) |
Represents the elimination of the historical equity of Air Enterprises LLC |
HICKOK INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 31, 2016
|
Hickok |
Operations of |
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Incorporated |
Air Enterprises |
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9/30/2016 |
12/31/2016 |
Pro Forma |
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Actual |
(Unaudited) |
Adjustments |
Combined |
|||||||||||||
|
TOTAL SALES |
$ | 6,645,780 | $ | 40,610,068 | $ | - | $ | 47,255,848 | ||||||||
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COSTS AND EXPENSES: |
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Cost of Sales |
4,334,815 | 31,288,109 | - | 35,622,924 | ||||||||||||
|
Product Development |
1,050,157 | 1,143,680 | - | 2,193,837 | ||||||||||||
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Selling, General and Administrative Expenses |
2,145,937 | 3,586,991 | 752,667 | (a) | 6,485,595 | |||||||||||
|
Interest Charges |
59,386 | - | 254,200 | (b) | 313,586 | |||||||||||
|
Legal matter |
(2,270,567 | ) | - | - | (2,270,567 | ) | ||||||||||
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Other income |
(7,196 | ) | - | - | (7,196 | ) | ||||||||||
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Total Costs and Expenses |
5,312,532 | 36,018,780 | 1,006,867 | 42,338,179 | ||||||||||||
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Income (Loss) before Provision for Income Taxes |
1,333,248 | 4,591,288 | (1,006,867 | ) | 4,917,669 | |||||||||||
|
Provision for Income Taxes |
(3,299,600 | ) | - | - | (3,299,600 | ) | ||||||||||
|
Net Income (Loss) |
$ | 4,632,848 | $ | 4,591,288 | $ | (1,006,867 | ) | $ | 8,217,269 | |||||||
|
Earnings (Loss) Per Common Share - Basic |
$ | 2.38 | $ | 4.23 | ||||||||||||
|
Earnings (Loss) Per Common Share - Diluted |
$ | 2.38 | $ | 4.23 | ||||||||||||
|
Weighted Average Shares of Common Stock Outstanding - Basic |
1,943,625 | - | 1,943,625 | |||||||||||||
|
Weighted Average Shares of Common Stock Outstanding - Diluted |
1,943,625 | - | 1,943,625 | |||||||||||||
See accompanying notes to unaudited pro forma consolidated combined financial statements.
HICKOK INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL INFORMATION
SEPTEMBER 30, 2016 PRO FORMA ADJUSTMENTS
|
(a) |
Reflects the adjustment of intangible assets acquired by the Company to their estimated fair values, and related amortization expense for the period. The following table summarized the estimated fair values of Air Enterprises identifiable intangible assets, their estimated useful lives and related amortization expense. |
|
Useful Life |
Amortization |
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|
Fair Value |
in Years |
Expense |
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|
Customer Backlog |
690,000 | 1 | 690,000 | |||||||||
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Non-Compete Agreements |
200,000 | 5 | 40,000 | |||||||||
|
Trademarks |
340,000 | 15 | 22,667 | |||||||||
|
Total Intangibles, Other than Goodwill |
1,230,000 | 752,667 | ||||||||||
|
(b) |
Reflects the cash used and new debt incurred to finance the acquisition of Air Enterprises as shown below: |
|
Interest |
Interest |
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|
Rate |
Expense |
|||||||||||
|
Term Loan A Debt |
2,000,000 | 3.1 | % | 62,000 | ||||||||
|
Revolving Credit Facility |
6,200,000 | 3.1 | % | 192,200 | ||||||||
|
Total Debt |
8,200,000 | 254,200 | ||||||||||
|
Cash used |
2,050,000 | |||||||||||
|
Debt incurred |
8,200,000 | |||||||||||
|
Total purchase price |
10,250,000 | |||||||||||