Attached files
file | filename |
---|---|
EX-99.1 - AUDITED FINANCIAL STATEMENTS OF GLOBAL TECHNICAL SERVICES, INC AND GLOBAL CONTRA - Rekor Systems, Inc. | globalfinancials20162015-.htm |
EX-23.2 - CONSENT OF BD & COMPANY INC., INDEPENDENT AUDITORS - Rekor Systems, Inc. | gtsconsentdraft-8ka.htm |
EX-23.1 - CONSENT OF BD & COMPANY INC., INDEPENDENT AUDITORS - Rekor Systems, Inc. | gcpconsentdraft-8ka.htm |
8-K/A - PRIMARY DOCUMENT - Rekor Systems, Inc. | a8-k20171004globalmergerc.htm |
NOVUME SOLUTIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The
following unaudited pro forma condensed consolidated financial
statements are based on the historical financial statements of
Novume Solutions Inc. (“Novume”) and Global Technical
Services, Inc. and Global Contract Professionals, Inc.
(collectively “Global”) after giving effect to our
acquisition of Global and the assumptions and adjustments described
in the accompanying notes to the unaudited pro forma condensed
consolidated financial statements. We acquired all of the stock of
Global on October 1, 2017. These pro forma condensed consolidated
financial statements also give effect to the acquisitions of
Firestorm Solutions, LLC and Firestorm Franchising, LLC
(“Firestorm”) and Brekford, Inc.
(“Brekford”) which occurred during fiscal year
2017.
The
unaudited pro forma condensed consolidated balance sheet of Novume
and Global as of September 30, 2017 is presented as if the Global
acquisition had occurred on September 30, 2017. The unaudited pro
forma condensed consolidated statement of operations of Novume,
Global, Firestorm and Brekford for the nine months ended September
30, 2017 is presented as if the all of the acquisitions had taken
place on January 1, 2017. The unaudited pro forma condensed
consolidated balance sheet of Novume, Global, Firestorm and
Brekford as of December 31, 2016 is presented as if the Global
acquisition had occurred on December 31, 2016. The unaudited pro
forma condensed consolidated statement of operations of Novume,
Global, Firestorm and Brekford for the fiscal year ended December
31, 2016 is presented as if the all of the acquisitions had taken
place on January 1, 2016.
The
unaudited pro forma condensed consolidated financial information
does not purport to represent what the Company’s results of
operations actually would have been if the acquisition of Global
had occurred on January 1, 2016 or January 1, 2017 or what such
results will be for any future periods or what the consolidated
balance sheet would have been if the acquisition had occurred on
September 30, 2017 or December 31, 2016. The actual results in the
periods following the acquisition may differ significantly from
that reflected in the unaudited pro forma condensed consolidated
financial information for a number of reasons including, but not
limited to, differences between the assumptions used to prepare the
unaudited pro forma condensed consolidated financial information
and the actual amounts and the completion of a final valuation of
the acquisition. In addition, no adjustments have been made for
non-recurring integration plans or operational efficiencies that
may have been achieved if the acquisition had occurred on January
1, 2017 or January 1, 2016.
The
unaudited pro forma condensed consolidated financial information
has been prepared giving effect to the acquisitions, which are
accounted for as a business combination in accordance with the
Financial Accounting Standards Board Accounting Standards
Codification 805, “Business Combinations.” The
unaudited pro forma adjustments are based on management’s
preliminary estimates of the values of the tangible and intangible
assets and liabilities acquired. As a result, the actual
adjustments may differ materially from those presented in the
unaudited pro forma condensed consolidated financial statements. A
change in the unaudited pro forma adjustments of the purchase price
for the acquisition would primarily result in a reallocation
affecting the value assigned to tangible and intangible assets. The
income statement effect of these changes will depend on the nature
and amount of the assets or liabilities adjusted.
These
unaudited pro forma condensed consolidated financial statements,
including the notes hereto, should be read in conjunction with
(i) the historical consolidated financial statements for
Novume included in its Quarterly Report on Form 10-Q for the nine
months ended September 30, 2017; and (ii) the historical
audited and unaudited financial statements of Global included as
Exhibit 99.1, respectively to Novume’s Form 8-K/A dated
November 21, 2017 (amending Novume’s Form 8-K dated October
1, 2017 and filed on October 4, 2017).
1
NOVUME SOLUTIONS, INC.
|
PRO FORMA CONDENSED COMBINED BALANCE SHEET
|
AS OF SEPTEMBER 30, 2017
|
(UNAUDITED)
|
|
Novume Solutions, Inc.
|
Global Technical Services, Inc.
|
Global Contract Professionals, Inc.
|
Pro Forma Adjustments
|
Ref
|
Novume Solutions, Inc.
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$3,762,265
|
$14,447
|
$6,487
|
$(1,090,037)
|
(1)
|
$2,693,162
|
Investments
|
-
|
-
|
-
|
|
|
-
|
Accounts
receivable, net
|
3,300,742
|
3,103,292
|
1,015,174
|
-
|
|
7,419,208
|
Note
receivable, current portion
|
300,000
|
645,505
|
-
|
(645,505)
|
(3)
|
300,000
|
Unbilled
receivables
|
-
|
-
|
-
|
-
|
|
-
|
Inventory
|
169,232
|
-
|
-
|
-
|
|
169,232
|
Prepaids
and other current assets
|
253,607
|
118,722
|
3,545
|
-
|
|
375,874
|
Total
current assets
|
7,785,846
|
3,881,966
|
1,025,206
|
(1,735,542)
|
|
10,957,476
|
Property
and equipment, net
|
365,036
|
90,457
|
23,303
|
-
|
|
478,796
|
Excess
purchase price over net assets
|
1,960,345
|
-
|
-
|
3,725,525
|
(1)
|
5,685,870
|
Intangibles,
net
|
2,168,941
|
|
|
|
|
2,168,941
|
Note
receivable, non-current
|
1,649,000
|
-
|
-
|
-
|
|
1,649,000
|
Deferred
tax asset
|
1,184,359
|
|
|
|
|
1,184,359
|
Investment
at cost
|
262,140
|
-
|
-
|
-
|
|
262,140
|
Other
non-current assets
|
39,387
|
-
|
9,241
|
-
|
|
48,628
|
TOTAL
ASSETS
|
$15,415,054
|
$3,972,423
|
$1,057,750
|
$1,989,983
|
|
$22,435,210
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
$3,290,345
|
$603,888
|
$194,930
|
$(48,539)
|
(1)
|
$4,040,624
|
Obligations
under other notes payable - current portion
|
-
|
2,656,421
|
1,402,331
|
(645,505)
|
(3)
|
3,071,750
|
|
|
|
|
(341,497)
|
(1)
|
|
Other
current liabilities
|
72,500
|
69,940
|
23,230
|
4,795
|
(2)
|
100,526
|
|
|
|
|
(69,940)
|
(1)
|
|
Total
current liabilities
|
3,362,845
|
3,330,249
|
1,620,491
|
(1,100,686)
|
|
7,212,900
|
|
|
|
|
|
|
|
LONG
- TERM LIABILITIES
|
|
|
|
|
|
|
Notes
payable – stockholders
|
1,419,753
|
-
|
-
|
200,000
|
(1)
|
1,619,753
|
Other
notes payable - net of current portion
|
-
|
954,316
|
-
|
(954,316)
|
(1)
|
-
|
Deferred
rent, net of current portion
|
54,705
|
-
|
-
|
-
|
|
54,705
|
Total
long-term liabilities
|
1,474,458
|
954,316
|
-
|
(754,316)
|
|
1,674,458
|
TOTAL
LIABILITIES
|
4,837,303
|
4,284,565
|
1,620,491
|
(1,855,003)
|
|
8,887,358
|
|
|
|
|
|
|
|
Series
A convertible redeemable preferred stock
|
3,845,925
|
-
|
|
|
|
3,845,925
|
|
|
|
|
|
|
|
STOCKHOLDERS’
(DEFICIT) EQUITY
|
|
|
|
|
|
|
Common
stock
|
1,394
|
10,000
|
441
|
(10,441)
|
(1)
|
1,431
|
|
|
|
|
37
|
(1)
|
|
Additional
paid-in capital
|
9,325,795
|
565,984
|
(240,117)
|
(325,867)
|
(1)
|
9,892,045
|
|
|
|
|
566,250
|
(1)
|
|
Preferred
Stock
|
-
|
-
|
-
|
2,408,610
|
(1)
|
2,408,610
|
Treasury
Stock
|
-
|
(4,464,860)
|
-
|
4,464,860
|
(1)
|
-
|
Accumulated
(Deficit) Earnings
|
(2,595,363)
|
3,576,734
|
(323,065)
|
(4,795)
|
(2)
|
(2,600,159)
|
|
|
|
-
|
(3,253,669)
|
(1)
|
|
TOTAL
STOCKHOLDERS' (DEFICIT) EQUITY
|
6,731,826
|
(312,142)
|
(562,741)
|
3,844,986
|
|
9,701,927
|
TOTAL
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
$15,415,054
|
$3,972,423
|
$1,057,750
|
$1,989,983
|
|
$22,435,210
|
2
NOVUME SOLUTIONS, INC.
|
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
|
(UNAUDITED)
|
|
Novume Solutions, Inc.
|
Brekford Traffic Safety, Inc.
|
Firestorm, LLC & Affiliate (5)
|
Global Technical Services, Inc.
|
Global Contract Professionals, Inc.
|
Pro Forma Adjustments
|
Ref
|
Novume Solutions, Inc.
|
Net
revenue
|
$11,131,825
|
$2,068,759
|
$36,760
|
$13,650,759
|
$4,936,613
|
$-
|
|
$31,824,716
|
Cost
of revenue
|
6,017,982
|
778,378
|
6,279
|
12,193,454
|
4,408,811
|
-
|
|
23,404,904
|
Gross
Profit
|
5,113,843
|
1,290,381
|
30,482
|
1,457,305
|
527,802
|
-
|
|
8,419,813
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Salaries
and related expenses
|
-
|
1,237,539
|
-
|
-
|
-
|
-
|
|
1,237,539
|
Selling,
general and administrative expenses
|
8,036,339
|
825,545
|
10,741
|
1,334,855
|
542,020
|
-
|
|
10,749,500
|
Total
operating expenses
|
8,036,339
|
2,063,084
|
10,741
|
1,334,855
|
542,020
|
-
|
|
11,987,039
|
(Loss)
income from operations
|
(2,922,496)
|
(772,703)
|
19,740
|
122,450
|
(14,218)
|
-
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
Interest
(expense) income, net
|
(97,624)
|
17,546
|
-
|
(157,554)
|
(72,323)
|
(4,795)
|
(2)
|
(314,750)
|
Change
in fair value of derivative liability
|
-
|
6,132
|
-
|
-
|
-
|
-
|
|
6,132
|
Other
income (expense)
|
142,283
|
(235,724)
|
-
|
10,982
|
(2,511)
|
-
|
|
(84,970)
|
Total
other income (expense)
|
44,659
|
(212,046)
|
-
|
(146,572)
|
(74,834)
|
(4,795)
|
|
(393,588)
|
Net
(loss) income - before taxes and foreign currency
|
(2,877,837)
|
(984,749)
|
19,740
|
(24,122)
|
(89,052)
|
(4,795)
|
|
(3,960,815)
|
Benefit
from income taxes
|
964,377
|
2,068,132
|
-
|
-
|
-
|
(2,132,725)
|
(4)
|
899,784
|
Net
(loss) income - from continuing operations
|
$(1,913,460)
|
$1,083,383
|
$19,740
|
$(24,122)
|
$(89,052)
|
$(2,137,520)
|
|
$(3,061,031)
|
|
|
|
|
|
|
|
|
|
(Loss)
earnings per share - basic and diluted
|
$(0.20)
|
$0.02
|
|
$(0.55)
|
$(2.02)
|
$0.05
|
(5)
|
$(0.21)
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares - basic and diluted
|
10,920,866
|
49,311,264
|
|
44,050
|
44,050
|
(46,011,446)
|
(5)
|
14,308,784
|
3
NOVUME SOLUTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 (UNAUDITED)
(1)
|
Reflects
the impact of the marger of Global Technical Services, Inc. ("GTS")
and Global Contract Professional, Inc. ("GCP") (collectively
"Global") with Novume Solutions, Inc. ("Novume") on October 1,
2017, including the elimination of Global's equity of $824,505 and
the related allocation to excess of purchase price over net assets
acquired. Consideration paid as part of this merger include
$900,000 in cash, 300,000 shares of Novume common stock, $1,800,000
of Novume Series B Preferred Stock, and debt reduction payments
totalling approximately $1,195,554.
|
(2)
|
Reflects
interest expense of $4,795 on the discounted $907,407 notes payable
issued at 7% per annum by Novume as part of the Firestorm
acquisition.
|
(3)
|
Reflects
the elimination of intercompany balances between GTS and
GCP.
|
(4)
|
Brekford
Traffic Safety Inc.'s ("Brekford") vehicle services business (the
"Vehicle Services business") was sold to an unrelated third party
on February 28, 2017. Brekford met the criteria for the Vehicle
Services business to be classified as held for sale in December
2016 as Brekford had entered into a letter of intent with the
purchaser and concluded that such sale was probable prior to
December 31, 2016. In the three months ended March 31 2017 and
2016, Brekford reported financial results for both operations and
discontinued operations. ASC 740-20-45 sets down the general rule
for allocating income tax expense or benefit between operations and
discontinued operations. The general rule requires the computation
of tax expense or benefit by entity taking into consideration all
items of income, expense, and tax credits. Next, a computation is
made taking into consideration only those items related to
continuing operations. Any difference is allocated to items other
than continuing operations e.g. discontinued operations. Under
these general rules, no tax expense or benefit would be allocated
to discontinued operations. An exception to these rules apply under
ASC 740-20-45-7 where an entity has 1) a loss from continuing
operations and income related to other items such as discontinued
operations and 2) the entity would not otherwise recognize a
benefit for the loss from continuing operations under the approach
described in ASC 740-20-45. This fact pattern applies for the three
months ended March 31, 2017 and 2016. Application of this rule
exception results in the allocation of tax expense to discontinued
operations with an offsetting amount of tax benefit reported by the
continuing operations. Overall, Brekford allocated $2,132,725 and
$0 of tax expense to net income from discontinued operations and an
offsetting tax benefit to net loss from continuing operations in
the three months ended March 31 2017 and 2016, respectively. This
pro forma adjustments reflects the elimination of this $2,132,725
tax benefit recognized in current operations related to the
discontinued operations during the three months ended March 31,
2017.
|
(5)
|
Because
Firestorm is an LLC, no earnings per share is
calculated.
|
4
NOVUME SOLUTIONS, INC.
|
PRO FORMA CONDENSED COMBINED BALANCE SHEET
|
AS OF DECEMBER 31, 2016
|
(UNAUDITED)
|
|
Novume Solutions, Inc.
|
Brekford Traffic Safety, Inc.
|
Firestorm Solutions LLC and Franchising LLC
|
Global Technical Services, Inc.
|
Global Contract Professionals, Inc.
|
Pro Forma Adjustments
|
Ref
|
Novume Solutions, Inc.
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$2,788,587
|
$591,618
|
$3,319
|
$43,239
|
$28,458
|
$(627,038)
|
(1)
|
$7,619,698
|
|
|
|
|
|
|
1,865,008
|
(2)
|
|
|
|
|
|
|
|
4,048,394
|
(4)
|
|
|
|
|
|
|
|
(1,121,887)
|
(8)
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable, net
|
1,997,831
|
115,106
|
76,517
|
2,349,756
|
527,054
|
-
|
|
5,066,264
|
Inter-company
receivable
|
|
|
-
|
564,537
|
-
|
(564,537)
|
(7)
|
-
|
Unbilled
receivables
|
-
|
314,262
|
-
|
-
|
-
|
-
|
|
314,262
|
Note
receivable, net
|
-
|
-
|
-
|
-
|
-
|
|
|
-
|
Inventory
|
-
|
221,186
|
-
|
-
|
-
|
-
|
|
221,186
|
Prepaids
and other current assets
|
81,011
|
53,211
|
8,940
|
318,295
|
3,525
|
-
|
|
464,982
|
Current
assets - discontinued operations
|
-
|
1,069,511
|
-
|
-
|
-
|
(1,069,511)
|
(4)
|
-
|
Total
current assets
|
4,867,429
|
2,364,894
|
88,776
|
3,275,827
|
559,037
|
2,530,429
|
|
13,686,392
|
Property
and equipment, net
|
119,069
|
208,310
|
-
|
122,748
|
32,952
|
-
|
|
483,079
|
Excess
of purchase price over net assets acquired
|
-
|
-
|
-
|
-
|
-
|
2,044,974
|
(1)
|
6,259,533
|
|
|
|
|
|
|
482,045
|
(3)
|
|
|
|
|
|
|
|
3,732,514
|
(8)
|
|
Notes
receivable
|
-
|
-
|
-
|
-
|
-
|
2,000,000
|
(4)
|
2,000,000
|
Investment
at cost
|
-
|
-
|
-
|
-
|
-
|
1,491,000
|
(4)
|
1,491,000
|
Non-current
assets - discontinued operations
|
-
|
40,387
|
-
|
-
|
-
|
(40,387)
|
(4)
|
-
|
Other
non-current assets
|
496,227
|
9,877
|
49,811
|
-
|
9,241
|
67,491
|
(2)
|
395,684
|
|
|
|
|
|
|
(236,963)
|
(2)
|
|
TOTAL
ASSETS
|
$5,482,725
|
$2,623,468
|
$138,587
|
$3,398,575
|
$601,230
|
$12,071,103
|
|
$24,315,688
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
$1,152,471
|
$738,942
|
$62,847
|
$438,448
|
$56,166
|
$(84,007)
|
(8)
|
$2,364,867
|
Line
of credit
|
-
|
-
|
-
|
2,074,115
|
434,587
|
-
|
|
2,508,702
|
Inter-company
payable
|
|
|
-
|
-
|
564,537
|
(564,537)
|
(7)
|
-
|
Obligations
under other notes payable - current portion
|
-
|
-
|
-
|
421,193
|
-
|
(421,193)
|
(8)
|
-
|
Capital
lease obligations, current portion
|
-
|
-
|
-
|
-
|
-
|
|
|
-
|
Deferred
revenue
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
Current
liabilities - discontinued operations
|
|
971,466
|
|
-
|
-
|
(971,466)
|
(4)
|
-
|
Other
current liabilities
|
-
|
99,918
|
-
|
69,940
|
19,628
|
(137,880)
|
(8)
|
51,606
|
Total
current liabilities
|
1,152,471
|
1,810,326
|
62,847
|
3,003,696
|
1,074,918
|
(2,179,083)
|
|
4,925,175
|
|
|
|
|
|
|
|
|
|
LONG
- TERM LIABILITIES
|
|
|
|
|
|
|
|
|
Notes
payable – stockholders
|
457,289
|
-
|
-
|
-
|
-
|
200,000
|
(8)
|
657,289
|
Notes
payable - net of current portion
|
-
|
|
-
|
682,897
|
-
|
(682,897)
|
(8)
|
-
|
Deferred
rent, net of current portion
|
56,709
|
6,520
|
-
|
-
|
-
|
-
|
|
63,229
|
Derivative
liability
|
-
|
-
|
-
|
-
|
-
|
|
|
-
|
Deferred
compensation liability
|
-
|
-
|
-
|
-
|
-
|
|
|
-
|
Deferred
tax liability
|
-
|
-
|
-
|
-
|
-
|
|
|
-
|
Long-term
liabilities - discontinued operations
|
-
|
989,520
|
-
|
-
|
-
|
(989,520)
|
(4)
|
-
|
Convertible
promissory notes, net of debt discounts and issuance
costs
|
-
|
299,147
|
-
|
-
|
-
|
907,407
|
(1)
|
1,206,554
|
Total
long-term liabilities
|
513,998
|
1,295,187
|
-
|
682,897
|
-
|
(565,010)
|
|
1,927,072
|
TOTAL
LIABILITIES
|
1,666,469
|
3,105,513
|
62,847
|
3,686,593
|
1,074,918
|
(2,744,093)
|
|
6,852,247
|
|
|
|
|
|
|
|
|
|
Series
A convertible redeemable preferred stock
|
2,269,602
|
-
|
-
|
-
|
-
|
1,865,008
|
(2)
|
3,897,647
|
|
|
|
|
|
|
(236,963)
|
(2)
|
|
STOCKHOLDERS’
(DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
Member's
(deficit) equity
|
-
|
-
|
75,740
|
-
|
-
|
(75,740)
|
(1)
|
-
|
Common
stock
|
500
|
4,931
|
-
|
10,000
|
441
|
49
|
(1)
|
587
|
|
|
|
|
|
|
(4,931)
|
(3)
|
|
|
|
|
|
|
|
(10,441)
|
(8)
|
|
|
|
|
|
|
|
38
|
(8)
|
|
Additional
paid-in capital
|
1,976,549
|
11,515,472
|
-
|
565,984
|
-
|
1,203,937
|
(1)
|
3,814,227
|
|
|
|
|
|
|
(11,515,472)
|
(3)
|
|
|
|
|
|
|
|
67,491
|
(2)
|
|
|
|
|
|
|
|
(565,984)
|
(8)
|
|
|
|
|
|
|
|
566,250
|
(8)
|
|
Preferred
Stock
|
|
|
|
|
|
2,408,610
|
(8)
|
2,408,610
|
Treasury
Stock, at cost 10,600 shares at December 31, 2016
|
-
|
(5,890)
|
-
|
(4,464,860)
|
-
|
5,890
|
(3)
|
-
|
|
|
|
|
|
|
4,464,860
|
(8)
|
|
Accumulated
(Deficit) Earnings
|
(430,395)
|
(11,996,783)
|
-
|
3,600,858
|
(474,129)
|
(617,717)
|
(1)
|
7,342,370
|
|
|
|
|
|
|
11,996,783
|
(3)
|
|
|
|
|
|
|
|
8,390,482
|
(4)
|
|
|
|
|
|
|
|
(3,126,729)
|
(8)
|
|
Other
comprehensive loss
|
-
|
225
|
-
|
-
|
-
|
(225)
|
(3)
|
-
|
TOTAL
STOCKHOLDERS' (DEFICIT) EQUITY
|
1,546,654
|
(482,045)
|
75,740
|
(288,018)
|
(473,688)
|
13,187,150
|
|
13,565,794
|
TOTAL
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
$5,482,725
|
$2,623,468
|
$138,587
|
$3,398,575
|
$601,230
|
$12,071,103
|
|
$24,315,688
|
5
NOVUME SOLUTIONS, INC.
|
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
|
FOR THE YEAR ENDED DECEMBER 31, 2016
|
(UNAUDITED)
|
|
Novume Solutions, Inc.
|
Brekford, Inc.
|
Firestorm Solutions LLC and Franchising LLC (5)
|
Global Technical Services, Inc.
|
Global Contract Professionals, Inc.
|
Pro Forma Adjustments
|
Ref
|
Novume Solutions, Inc.
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$12,128,406
|
$2,534,264
|
$1,195,474
|
$18,116,381
|
$6,272,572
|
$-
|
|
$40,247,097
|
Cost
of revenue
|
6,959,514
|
827,304
|
686,722
|
16,076,148
|
5,605,520
|
-
|
|
30,155,208
|
Gross
Profit
|
5,168,892
|
1,706,960
|
508,752
|
2,040,233
|
667,052
|
-
|
|
10,091,889
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Salaries
and related expenses
|
-
|
1,645,073
|
-
|
-
|
-
|
-
|
|
1,645,073
|
Selling,
general and administrative expenses
|
5,262,768
|
1,071,272
|
563,897
|
2,313,754
|
896,702
|
490,680
|
(9)
|
10,599,073
|
Total
operating expenses
|
5,262,768
|
2,716,345
|
563,897
|
2,313,754
|
896,702
|
490,680
|
|
12,244,146
|
(Loss)
income from operations
|
(93,876)
|
(1,009,385)
|
(55,145)
|
(273,521)
|
(229,650)
|
(490,480)
|
|
(2,152,257)
|
Other
(expense) income
|
|
|
|
|
|
|
|
|
Interest
expense
|
(165,079)
|
(402,168)
|
-
|
(125,015)
|
(71,621)
|
(63,519)
|
(6)
|
(827,402)
|
Change
in fair value of derivative liability
|
-
|
74,676
|
-
|
-
|
-
|
|
|
74,676
|
Other
income (expense)
|
-
|
-
|
12,596
|
2,074
|
(682)
|
|
|
13,988
|
Loss
on extinguishment of debt
|
-
|
(291,911)
|
-
|
-
|
-
|
|
|
(291,911)
|
Total
other (expense) income
|
(165,079)
|
(619,403)
|
12,596
|
(122,941)
|
(72,303)
|
(63,519)
|
|
(1,030,649)
|
Net
loss - before taxes and foreign currency
|
(258,955)
|
(1,628,788)
|
(42,549)
|
(396,462)
|
(301,953)
|
(554,199)
|
|
(3,182,649)
|
Benefit
from income taxes / income tax expense
|
219,971
|
230,900
|
-
|
-
|
-
|
-
|
|
450,871
|
Net
loss -
from continuing operations
|
(38,984)
|
(1,397,888)
|
(42,549)
|
(396,462)
|
(301,953)
|
(554,199)
|
|
(2,732,035)
|
Net
income from discontinued operations
|
-
|
343,485
|
|
-
|
-
|
(343,485)
|
(4)
|
-
|
Net
loss
|
$(38,984)
|
$(1,054,403)
|
$(42,549)
|
$(396,462)
|
$(301,953)
|
$(897,684)
|
|
$(2,732,035)
|
|
|
|
|
|
|
|
|
|
Loss
per share - basic and diluted
|
$(0.01)
|
$(0.02)
|
|
$(9.00)
|
$(6.85)
|
$0.01
|
(5)
|
$(0.19)
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares - basic and diluted
|
3,958,619
|
47,357,787
|
|
44,050
|
44,050
|
(37,095,722)
|
(5)
|
14,308,784
|
6
NOVUME SOLUTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(1)
|
Reflects
the financial impact of the Firestorm Solutions, LLC and Firestorm
Franchising, LLC (collectively "Firestorm") acquisitions by Novume
on January 25, 2017, including the elimination of the Firestorm
equity, the acquisition consideration paid of $500,000 in cash, the
net present value of the $1,000,000 notes payable to be issued,
488,094 shares of common stock in the aggregate to be issued to the
Firestorm principals valued at $2 per share, the warrants to be
issued to purchase 325,398 Novume Common Shares valued at $227,700
and excess of purchase price consideration over net asset values as
of December 31, 2016. Included in cash paid is $127,037 in cash
that would ahve been remitted for interest expense on the notes
payable issued by Novume for the Firestorm acquisition. Amounts
recorded include the impact of the amortization of the excess of
purchase price consideration over net asset values of $490,680 for
the year ended December 31, 2016.
|
(2)
|
Reflects
the impact of the second and third closings of Novume's convertible
preferred stock and warrants offering net of offering costs. The
aggregate gross proceeds of the second and third closings for
200,757 Units was $2,007,570 and offering costs netted against the
gross proceeds were $142,565 for net proceeds of $1,865,008. The
Company also eliminated on a pro forma basis $216,842 of costs that
were paid in 2016 and deferred as of December 31, 2016. The fair
value of $67,491 related to the 50,189 warrants issued related to
the second and third closings were recorded to equity.
|
(3)
|
Reflects
the impact of the Brekford Traffic Safety Inc. ("Brekford"),
including the elimination of Brekford's equity of $482,045 as of
December 31, 2016 and the related allocation to excess of purchase
price over net assets acquired. Equity consideration and related
intangible assets will be finalized included upon approval and
completion of the merger.
|
(4)
|
Reflects the consideration received of $4,048,394
in net cash and $2,000,000 in notes receivable and disposition of
Brekford's vehicle services business (the "Vehicle Services
business") which was sold to an unrelated third party on February
28, 2017. Brekford met the criteria for the Vehicle Services
business to be classified as held for sale in December 2016 as
Brekford had entered into a letter of intent with the purchaser and
concluded that such sale was probable prior to December 31, 2016.
As such, Brekford reported the Vehicle Services business as
discontinued operations in Brekford's consolidated financial
statements as of December 31, 2016 and for the years ended December
31, 2016 and 2015, respectively. The Company eliminated current
assets - discontinued operations of $1,069,511, non-current assets
- discontinued operations of $40,387, current liabilities -
discontinued operations of $971,466 and long term liabilities -
discontinued operations of $989,520 that were recorded on
Brekford's balance sheet as of December 31, 2016. The Company also
recorded the cost investment of $1,491,000 related to the 19.9%
retained ownership (estimated fair value after the purchase price
allocation for the Brekford merger) and a net adjustment to
accumulated earnings of $6,883,827 representing the gain on sale of the discontinued
operations. For the income statement, Brekford's reported net
income from discontinued operations in fiscal year 2016 of $343,485
and in fiscal year 2015 of $573,659 were
eliminated.
|
(5)
|
Because
Firestorm is an LLC, no earnings per share is
calculated.
|
(6)
|
Reflects
interest expense of $63,519 on the discounted $907,407 notes
payable issued at 7% per annum by Novume as part of the Firestorm
acquisition for the year ended December 31,
2016.
|
(7)
|
Reflects
the elimination of intercompany balances between Global Technical
Services, Inc. and Global Contract Professionals, Inc.
|
(8)
|
Reflects
the impact of the merger of Global Technical Services, Inc. and
Global Contract Professionals, Inc. (collectively"Global") with
Novume on October 1, 2017, including the elimination of
TeamGlobal's negative equity of $822,724 and the related allocation
to excess of purchase price over net assets acquired. Consideration
paid for this merger include $900,000 in cash, 300,000 shares of
Novume's common stock, $1,800,000 of Series B Preferred Stock, and
debt reduction payments totalling approximately
$1,195,554.
|
(9)
|
Reflects
amortization expense of $490,680 on the excess of purchase price
consideration over net asset values related to the acquistion of
Firestorm for the year ended December 31, 2016.
|
7