Attached files
| file | filename |
|---|---|
| EX-99.1 - KT CHEMICALS AUDITED FINANCIALS 2016 - Worldwide Specialty Chemicals Inc. | worldwide_ex9901.htm |
| 8-K/A - AMENDMENT 1 TO FORM 8-K - Worldwide Specialty Chemicals Inc. | worldwide_8ka.htm |
EXHIBIT 99.2
Worldwide Specialty Chemicals Inc.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
DECEMBER 31, 2016
Worldwide Specialty Chemicals Inc.
Unaudited Condensed Combined Financial Information
The accompanying Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2016, and the Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2016 combine the historical Worldwide Specialty Chemicals, Inc. (“WSC”) and KT Chemicals, Inc. (“KT”) balance sheets and statement of operations as if WSC’s acquisition of KT, which occurred on February 15, 2017, had been completed on December 31, 2016 for purposes of the presentation of the Unaudited Pro Forma Condensed Combined Balance Sheet and January 1, 2016 for purposes of the presentation of the Unaudited Pro Forma Condensed Combined Statements of Operations. The accompanying unaudited pro forma condensed combined financial statements have been developed based on, and should be read in conjunction with, the audited financial statements of WSC contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the audited financial statements of KT for the year ended December 31, 2016, which are included as Exhibit 99.1 to the Current Report on Form 8-K to which this exhibit relates. These unaudited pro forma condensed combined financial statements are prepared using the purchase method of accounting with WSC treated as the acquirer.
As indicated in Note (a) to the unaudited pro forma condensed combined financial statements, WSC has made certain adjustments to the December 31, 2016 historical book values of the assets and liabilities of KT to reflect the fair values necessary to prepare the unaudited pro forma condensed combined financial statements. Any excess purchase price over the fair values of net assets acquired has been recorded as goodwill.
The accompanying unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of WSC would have been had the KT merger occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. The unaudited pro forma condensed combined financial statements do not include cost savings, if any, that may be realized from operating efficiencies or restructuring costs, if any, that may be incurred in connection with WSC’s acquisition of KT.
| 2 |
Worldwide Specialty Chemicals Inc.
Unaudited Condensed Combined Balance Sheet
As of December 31, 2016
| WSC | KT | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
| ASSETS | ||||||||||||||||
| CURRENT ASSETS | ||||||||||||||||
| Cash and cash equivalents | $ | 50,202 | $ | 70,064 | $ | (49,018 | ) | (a) | $ | 71,248 | ||||||
| Accounts receivable | 13,600 | 52,312 | (11,878 | ) | (a) | 54,034 | ||||||||||
| Inventory | 7,684 | – | 38,500 | (a) | 46,184 | |||||||||||
| Other current assets | 5,742 | 50 | – | 5,792 | ||||||||||||
| Total current assets | 77,228 | 122,426 | (22,396 | ) | 177,258 | |||||||||||
| GOODWILL | – | – | 2,294,952 | (a) | 2,294,952 | |||||||||||
| FIXED ASSETS, net | – | 390,681 | 67,398 | (a) | 458,079 | |||||||||||
| TOTAL ASSETS | $ | 77,228 | $ | 513,107 | $ | 2,339,954 | $ | 2,930,289 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||||
| Accounts payable | $ | 81,939 | $ | 45,407 | $ | (16,475 | ) | (a) | $ | 110,871 | ||||||
| Accrued expenses | 40,689 | 310,135 | (298,442 | ) | (a) | 52,382 | ||||||||||
| Notes payable | 900,187 | 11,180 | 2,700,000 | (a) | 3,611,367 | |||||||||||
| Total current liabilities | 1,022,815 | 366,722 | 2,385,083 | 3,774,620 | ||||||||||||
| LONG TERM LIABILITIES | ||||||||||||||||
| Notes payable | – | 481,478 | (388,072 | ) | (a) | 93,406 | ||||||||||
| TOTAL LIABILITIES | 1,022,815 | 848,200 | 1,997,011 | 3,868,026 | ||||||||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||
| Preferred stock | – | – | – | |||||||||||||
| Common stock | 682 | 4,000 | (3,948 | ) | (a) | 734 | ||||||||||
| Additional paid-in-capital | 1,049,773 | 38,000 | (30,202 | ) | (a) | 1,057,571 | ||||||||||
| Accumulated deficit | (1,996,042 | ) | (377,093 | ) | 377,093 | (a) | (1,996,042 | ) | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | (945,587 | ) | (355,093 | ) | 342,943 | (937,737 | ) | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 77,228 | $ | 513,107 | $ | 2,339,954 | $ | 2,930,289 | ||||||||
| 3 |
Worldwide Specialty Chemicals Inc.
Unaudited Condensed Combined Statement of Operations
For the year ended December 31, 2016
| WSC | KT | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
| REVENUE | $ | 40,014 | $ | 1,155,395 | $ | (40,014 | ) | (b) | $ | 1,155,395 | ||||||
| COST OF GOODS SOLD | 6,517 | 509,136 | (40,014 | ) | (b) | 475,639 | ||||||||||
| Gross profit | 33,497 | 646,259 | – | (b) | 679,756 | |||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative | 924,478 | 294,859 | – | 1,219,337 | ||||||||||||
| Selling | 118,280 | 207,401 | – | 325,681 | ||||||||||||
| Depreciation, amortization and impairment of license agreements | 843,151 | 51,421 | 8,964 | (c) | 903,536 | |||||||||||
| Total operating expenses | 1,885,909 | 553,681 | 8,964 | 2,448,554 | ||||||||||||
| OTHER EXPENSE | 63,021 | 25,589 | (16,258 | ) | (d) | 72,352 | ||||||||||
| NET INCOME (LOSS) | $ | (1,915,433 | ) | $ | 66,989 | $ | 7,299 | $ | (1,841,150 | ) | ||||||
| Basic and diluted - loss per share | (0.41 | ) | (0.36 | ) | ||||||||||||
| Weighted average shares - basic and diluted | 4,617,918 | 520,000 | (e) | 5,137,918 | ||||||||||||
| 4 |
Worldwide Specialty Chemicals Inc. and Subsidiary
(a) The pro forma condensed combined balance sheet has been adjusted to reflect allocation of the purchase price to identifiable net assets acquired and liabilities assumed. The purchase price allocation included within these pro forma condensed combined financial statements is based upon a purchase price of $2,700,000 in cash to be paid by February 15, 2018 and 520,000 shares of the Company’s common stock valued at $0.015 per share for a total stock value of $7,800 to KT Chemicals stockholders in exchange for all outstanding shares of KT Chemicals’ common stock. The transaction resulted in recording assets, liabilities and goodwill at fair value as follows (unaudited):
| Total consideration | $ | 2,707,800 | ||
| The assets acquired and liabilities assumed were as follows: | ||||
| Assets acquired: | ||||
| Cash | $ | 21,046 | ||
| Inventory | 38,500 | |||
| Accounts receivable | 40,434 | |||
| Property and equipment, net | 458,079 | |||
| Total tangible assets | 558,059 | |||
| Liabilities assumed: | ||||
| Accounts payable | 28,932 | |||
| Accrued expenses | 11,693 | |||
| Capital lease | 104,586 | |||
| Total liabilities | 145,211 | |||
| Net acquired assets | 412,848 | |||
| Goodwill | 2,294,952 | |||
| Total | $ | 2,707,800 |
These adjustments are to record the effect of the purchase accounting to the fair value of the assets acquired as of December 31, 2016 including removal of liabilities of KT which did not transfer in the purchase and elimination of KT historical net book value in equity accounts.
(b) In 2016, the Company became a sales representative for KT, selling a line of specialty chemicals used for decontamination of radioactive and other hazardous materials and for cleaning of cementitious surfaces. The sales representative agreement provide that KT pay the Company a commission on sales made by the Company in the United States. This adjustment eliminates the intercompany transactions associated with this arrangement.
(c) Adjustment to record depreciation for assets acquired effective January 1, 2016.
(d) Adjustment to remove interest on related party debt at KT not included in transaction.
(e) Adjustment to record effect of shares issued in acquisition to weighted average shares outstanding.
| 5 |