Attached files
| file | filename |
|---|---|
| EX-99.2 - UNAUDITED FINANCIAL STATEMENTS - EVIO, INC. | evio_ex992.htm |
| EX-99.1 - AUDITED FINANCIAL STATEMENTS - EVIO, INC. | evio_ex991.htm |
| 8-K/A - FORM 8-K/A - EVIO, INC. | evio_8ka.htm |
EXHIBIT 99.3
EVIO, INC.
INDEX TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
| Introduction |
| 2 |
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| |
| Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2018 |
| 3 |
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| |
| Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended March 31, 2018 |
| 4 |
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| Unaudited Pro Forma Condensed Combined Statement of Operations for the year months ended September 30, 2017 |
| 5 |
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| Notes to the Unaudited Pro Forma Condensed Combined Financial Statements |
| 6 |
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| 1 |
EVIO, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Introduction
The unaudited pro forma condensed combined financial statements (the pro forma financial statements) of EVIO, INC. (EVIO) as of and for the six months ended March 31, 2018 and for the year ended September 30, 2017 are derived from the historical audited and unaudited financial statements of EVIO and the historical audited and unaudited financial statements of Keystone Labs, Inc. (Keystone). EVIO acquired a 50% equity interest in Keystone on May 2, 2018.
The pro forma financial statements have been prepared to reflect the effects of the following transactions on the financial statements of EVIO:
|
| 1) | The Acquisition - On May 2, 2018, EVIO Canada, Inc, (“EVIO Canada”), a wholly-owned subsidiary of the Company consummated certain agreements to acquire a 50% interest of Keystone Labs, Inc. (“Keystone”) for $2,495,000 Canadian Dollars ($1,962,095 US Dollars) in cash. |
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|
| 2) | The Share Purchase – On May 2, 2018, EVIO agreed to issue 1,291,391 shares of common stock in exchange for $1,950,000 Canadian Dollars ($1,533,501 US Dollars). |
The unaudited pro forma statements of combined operations (the pro forma statements of operations) for the six months ended March 31, 2018 and for the year ended September 30, 2017, and the unaudited pro forma condensed combined balance sheet (the pro forma balance sheet) as of March 31, 2018, are based upon the historical consolidated financial statements of EVIO and the historical financial statements of Keystone. The pro forma statements of operations have been prepared as if the Acquisition and the Share Purchase occurred on October 1, 2016. The pro forma balance sheet has been prepared as if the Acquisition of Share Purchase occurred on March 31, 2018.
The pro forma financial statements have been prepared based on the assumption that EVIO will not be subject to U.S. federal and state income taxes as it is currently carrying significant loss carry forwards which will offset future income. The pro forma financial statements should be read in conjunction with the accompanying notes and with the underlying historical audited and unaudited financial statements and related notes.
The adjustments to the historical audited and unaudited financial statements are based on currently available information and certain estimates and assumptions. Actual effects of these transactions will differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments are factually supportable, give appropriate effect to the expected impact of the events that are directly attributable to the transactions and, with respect to the pro forma statements of operations only, reflect those items expected to have a continuing impact on EVIO.
The pro forma financial statements are not necessarily indicative of the results that actually would have occurred if the Acquisition and Share Purchase had occurred on the dates indicated or which will be obtained in the future.
The pro forma financial statements should be read in conjunction with:
|
| · | The accompanying notes to the pro forma financial statements; |
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| · | The audited consolidated financial statements of EVIO as of and for the years ended September 30, 2017 and 2016 and the unaudited consolidated financial statements of EVIO as of and for the six months ended March 31, 2018; |
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| · | The audited financial statements of Keystone for the year ended July 31, 2017, as filed as an exhibit to this Form 8-K; and |
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| · | The unaudited financial statements of Keystone for the nine months ended April 30, 2018, as filed as an exhibit to this Form 8-K. |
| 2 |
| EVIO, INC. | ||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET | ||||||||||||||||
| MARCH 31, 2018 | ||||||||||||||||
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| ||||||||
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| EVIO |
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| Keystone |
|
| Pro Forma Adjustments |
|
| Combined |
| ||||
| ASSETS | ||||||||||||||||
| Current assets |
|
|
|
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|
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|
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|
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| ||||
| Cash |
| $ | 3,021,247 |
|
| $ | 7,436 |
|
| $ | (428,594 | )a |
| $ | 2,600,089 |
|
| Accounts receivable, net of allowances |
|
| 215,540 |
|
|
| 73,522 |
|
|
| - |
|
|
| 289,062 |
|
| Prepaid expenses |
|
| 91,603 |
|
|
| 1,013 |
|
|
| - |
|
|
| 92,616 |
|
| Other current assets |
|
| 63,546 |
|
|
| - |
|
|
| - |
|
|
| 63,546 |
|
| Note receivable, current portion |
|
| 100,000 |
|
|
| - |
|
|
| - |
|
|
| 100,000 |
|
| Total current assets |
|
| 3,491,936 |
|
|
| 81,971 |
|
|
| (428,594 | ) |
|
| 3,145,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property and equipment, net of accumulated depreciation |
|
| 1,616,796 |
|
|
| 55,473 |
|
|
| - |
|
|
| 1,672,269 |
|
| Security deposits |
|
| 564,215 |
|
|
| - |
|
|
| - |
|
|
| 564,215 |
|
| Note receivable, net of current portion |
|
| 1,239,987 |
|
|
| - |
|
|
| - |
|
|
| 1,239,987 |
|
| Convertible note receivable, related party |
|
| 200,000 |
|
|
| - |
|
|
| - |
|
|
| 200,000 |
|
| Intangible assets, net of accumulated amortization |
|
| 945,146 |
|
|
| - |
|
|
| 961,345 |
|
|
| 1,906,491 |
|
| Goodwill |
|
| 3,249,834 |
|
|
| - |
|
|
| 2,716,027 | b |
|
| 5,965,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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| Total assets |
| $ | 11,307,914 |
|
| $ | 137,444 |
|
| $ | 3,248,778 |
|
| $ | 14,694,136 |
|
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| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Accounts payable and accrued liabilities |
| $ | 698,672 |
|
| $ | 30,597 |
|
| $ | - |
|
| $ | 729,269 |
|
| Client deposits |
|
| 49,696 |
|
|
| - |
|
|
| - |
|
|
| 49,696 |
|
| Deferred revenue |
|
| 27,000 |
|
|
| - |
|
|
| - |
|
|
| 27,000 |
|
| Interest payable |
|
| 296,886 |
|
|
| - |
|
|
| - |
|
|
| 296,886 |
|
| Capital lease obligation, current |
|
| 140,184 |
|
|
| - |
|
|
| - |
|
|
| 140,184 |
|
| Derivative liability |
|
| 3,123,223 |
|
|
| - |
|
|
| - |
|
|
| 3,123,223 |
|
| Convertible notes payable, net of discounts |
|
| 718,187 |
|
|
| - |
|
|
| - |
|
|
| 718,187 |
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| Loans payable, current, net of discounts |
|
| 975,192 |
|
|
| - |
|
|
| - |
|
|
| 975,192 |
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| Loans payable, related party, current |
|
| 153,155 |
|
|
| - |
|
|
| - |
|
|
| 153,155 |
|
| Total current liabilities |
|
| 6,182,195 |
|
|
| 30,597 |
|
|
| - |
|
|
| 6,212,792 |
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|
|
|
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|
|
|
|
|
|
|
|
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| Convertible debentures payable, net of discounts |
|
| 353,889 |
|
|
| - |
|
|
| - |
|
|
| 353,889 |
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| Capital lease obligation, net of current portion |
|
| 313,444 |
|
|
| - |
|
|
| - |
|
|
| 313,444 |
|
| Loans payable, net of current portion |
|
| 53,475 |
|
|
| - |
|
|
| - |
|
|
| 53,475 |
|
| Loans payable, related party, net of current portion, net of discounts |
|
| 1,190,428 |
|
|
| 153,071 |
|
|
| - |
|
|
| 1,343,499 |
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| Total liabilities |
|
| 8,093,431 |
|
|
| 183,668 |
|
|
| - |
|
|
| 8,277,099 |
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|
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|
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| Stockholders' equity |
|
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|
|
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| Series A Convertible Preferred Stock, Par Value $0.0001; 1,850,000 authorized |
|
| - |
|
|
| 193,893 |
|
|
| (193,893 | )b |
|
| - |
|
| Series B Convertible Preferred Stock, Par Value $0.0001; 5,000,000 authorized |
|
| 500 |
|
|
| - |
|
|
| - |
|
|
| 500 |
|
| Series C Convertible Preferred Stock, Par Value $0.0001; 500,000 authorized |
|
| 50 |
|
|
| - |
|
|
| - |
|
|
| 50 |
|
| Series D Convertible Preferred Stock, Par Value $.0001; 1,000,000 authorized |
|
| 55 |
|
|
| - |
|
|
| - |
|
|
| 55 |
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| Common Stock, Par Value $.0001, 1,000,000,000 authorized |
|
| 1,607 |
|
|
| - |
|
|
| 129 | c |
|
| 1,736 |
|
| Additional Paid In Capital |
|
| 12,925,708 |
|
|
| - |
|
|
| 1,533,372 | c |
|
| 14,459,080 |
|
| Accumulated Deficit |
|
| (10,258,765 | ) |
|
| (240,117 | ) |
|
| 240,117 | b |
|
| (10,258,765 | ) |
| Total stockholders' equity |
|
| 2,669,155 |
|
|
| (46,224 | ) |
|
| 1,579,725 |
|
|
| 4,202,656 |
|
| Non-controlling interest |
|
| 545,328 |
|
|
| - |
|
|
| 1,669,053 | b |
|
| 2,214,381 |
|
| Total equity |
|
| 3,214,483 |
|
|
| (46,224 | ) |
|
| 3,248,778 |
|
|
| 6,417,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and stockholders' equity |
| $ | 11,307,914 |
|
| $ | 137,444 |
|
| $ | 3,248,778 |
|
| $ | 14,694,136 |
|
| a | Cash paid for acquisition of $1,962,095 less cash received via common stock issuance for cash of $1,533,501 | ||||||||||||
| b | Elimination of Keystone net equity and recording of goodwill and intangible assets and non-controlling interest | ||||||||||||
| c | Record 1,291,391 common shares issued for cash totaling $1,533,501 | ||||||||||||
| 3 |
| EVIO, INC. | ||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS | ||||||||||||||||
| SIX MONTHS ENDED MARCH 31, 2018 | ||||||||||||||||
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| ||||||||
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| EVIO |
|
| Keystone |
|
| Pro Forma Adjustments |
|
| Combined |
| ||||
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Testing services |
| $ | 1,576,360 |
|
| $ | 209,468 |
|
| $ | - |
|
| $ | 1,785,828 |
|
| Consulting services |
|
| 102,816 |
|
|
| - |
|
|
| - |
|
|
| 102,816 |
|
| Total revenue |
|
| 1,679,176 |
|
|
| 209,468 |
|
|
| - |
|
|
| 1,888,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Testing services |
|
| 1,360,840 |
|
|
| 232,002 |
|
|
| - |
|
|
| 1,592,842 |
|
| Consulting services |
|
| 88,992 |
|
|
| - |
|
|
| - |
|
|
| 88,992 |
|
| Depreciation and amortization |
|
| 84,819 |
|
|
| - |
|
|
| - |
|
|
| 84,819 |
|
| Total cost of revenue |
|
| 1,534,651 |
|
|
| 232,002 |
|
|
| - |
|
|
| 1,766,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Gross margin |
|
| 144,525 |
|
|
| (22,534 | ) |
|
| - |
|
|
| 121,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 3,033,369 |
|
|
| 51,727 |
|
|
| - |
|
|
| 3,085,096 |
|
| Depreciation and amortization |
|
| 141,156 |
|
|
| - |
|
|
| 95,904 | a |
|
| 237,060 |
|
| Total operating expenses |
|
| 3,174,525 |
|
|
| 51,727 |
|
|
| 95,904 |
|
|
| 3,322,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| (3,030,000 | ) |
|
| (74,261 | ) |
|
| (95,904 | ) |
|
| (3,200,165 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net of interest income |
|
| (1,387,188 | ) |
|
| - |
|
|
| - |
|
|
| (1,387,188 | ) |
| Loss on settlement of debt and account payable |
|
| (56,093 | ) |
|
| - |
|
|
| - |
|
|
| (56,093 | ) |
| Gain (loss) on change in fair market value of derivative liabilities |
|
| 1,794,091 |
|
|
| - |
|
|
| - |
|
|
| 1,794,091 |
|
| Other income |
|
| - |
|
|
| 57,227 |
|
|
| - |
|
|
| 57,227 |
|
| Total other income (expense) |
|
| 350,810 |
|
|
| 57,227 |
|
|
| - |
|
|
| 408,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
| $ | (2,679,190 | ) |
| $ | (17,034 | ) |
| $ | (95,904 | ) |
| $ | (2,792,128 | ) |
| Gain (loss) attributable to non-controlling interest |
|
| (12,796 | ) |
|
| (8,517 | ) |
|
| - |
|
|
| (21,313 | ) |
| Net loss attributable to EVIO, Inc. |
| $ | (2,666,394 | ) |
| $ | (8,517 | ) |
| $ | (95,904 | ) |
| $ | (2,770,815 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Net loss per common share, basic and diluted |
| $ | (0.20 | ) |
|
|
|
|
|
|
|
|
| $ | (0.19 | ) |
| Weighted average common shares outstanding, basic and diluted |
|
| 13,519,957 |
|
|
|
|
|
|
| 1,291,391 |
|
|
| 14,811,348 |
|
| a | Six months of amortization expense on intangible assets acquired | ||||||||||||
| 4 |
| EVIO, INC. | ||||||||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS | ||||||||||||||||
| YEAR ENDED SEPTEMBER 30, 2017 | ||||||||||||||||
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|
|
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| ||||||||
|
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| EVIO |
|
| Keystone |
|
| Pro Forma Adjustments |
|
| Combined |
| ||||
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Testing services |
| $ | 2,696,227 |
|
| $ | 354,667 |
|
| $ | - |
|
| $ | 3,050,894 |
|
| Consulting services |
|
| 324,803 |
|
|
| 17,095 |
|
|
| - |
|
|
| 341,898 |
|
| Total revenue |
|
| 3,021,030 |
|
|
| 371,762 |
|
|
| - |
|
|
| 3,392,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Testing services |
|
| 2,282,164 |
|
|
| 319,504 |
|
|
| - |
|
|
| 2,601,668 |
|
| Consulting services |
|
| 70,505 |
|
|
| - |
|
|
| - |
|
|
| 70,505 |
|
| Depreciation and amortization |
|
| 103,854 |
|
|
| 8,158 |
|
|
| - |
|
|
| 112,012 |
|
| Total cost of revenue |
|
| 2,456,523 |
|
|
| 327,662 |
|
|
| - |
|
|
| 2,784,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
| 564,507 |
|
|
| 44,100 |
|
|
| - |
|
|
| 608,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 2,454,209 |
|
|
| 98,133 |
|
|
| - |
|
|
| 2,552,342 |
|
| Depreciation and amortization |
|
| 181,139 |
|
|
| - |
|
|
| 191,808 | a |
|
| 372,947 |
|
| Total operating expenses |
|
| 2,635,348 |
|
|
| 98,133 |
|
|
| 191,808 |
|
|
| 2,925,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| (2,070,841 | ) |
|
| (54,033 | ) |
|
| (191,808 | ) |
|
| (2,316,682 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net of interest income |
|
| (1,011,150 | ) |
|
| - |
|
|
| - |
|
|
| (1,011,150 | ) |
| Loss on settlement of debt and account payable |
|
| (22,170 | ) |
|
| - |
|
|
| - |
|
|
| (22,170 | ) |
| Impairment loss |
|
| (200,000 | ) |
|
| - |
|
|
| - |
|
|
| (200,000 | ) |
| Gain (loss) on change in fair market value of derivative liabilities |
|
| (285,887 | ) |
|
| - |
|
|
| - |
|
|
| (285,887 | ) |
| Other income |
|
| - |
|
|
| 70,620 |
|
|
| - |
|
|
| 70,620 |
|
| Total other income (expense) |
|
| (1,519,207 | ) |
|
| 70,620 |
|
|
| - |
|
|
| (1,519,207 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
| $ | (3,590,048 | ) |
| $ | 16,587 |
|
| $ | (191,808 | ) |
| $ | (3,835,889 | ) |
| Gain (loss) attributable to non-controlling interest |
|
| (29,855 | ) |
|
| 8,294 |
|
|
| - |
|
|
| (21,561 | ) |
| Net loss attributable to EVIO, Inc. |
| $ | (3,560,193 | ) |
| $ | 8,293 |
|
| $ | (191,808 | ) |
| $ | (3,814,328 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per common share, basic and diluted |
| $ | (0.37 | ) |
|
|
|
|
|
|
|
|
| $ | (0.35 | ) |
| Weighted average common shares outstanding, basic and diluted |
|
| 9,628,206 |
|
|
|
|
|
|
| 1,291,391 |
|
|
| 10,919,597 |
|
| a | Twelve months of amortization expense on intangible assets acquired | ||||||||||||
| 5 |
EVIO, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The pro forma financial statements are based upon the historical consolidated financial statements of EVIO and the historical financial statements of Keystone. The pro forma adjustments have been prepared as if the Acquisition and Share Purchase occurred on (i) October 1, 2016 in the case of the pro forma statements of operations and (ii) March 31, 2018 in the case of the pro forma balance sheet.
2. Pro Forma Adjustments
The adjustments are based on currently available information and certain estimates and assumptions. The actual effects of these transactions will differ from the pro forma adjustments. A general description of the adjustments is provided as follows:
|
| (a) | The acquisition of 50% of the equity interests in Keystone for a cash payment of $2,495,000 Canadian Dollars ($1,962,095 US Dollars). |
|
|
|
|
|
| (b) | The issuance of 1,291,391 shares of EVIO common stock in exchange for cash proceeds of $1,950,000 Canadian Dollars ($1,533,501 US Dollars). |
3. Pro Forma Net Loss per Common Share, Basic and Diluted
Pro forma net loss per weighted average common shares outstanding is determined by dividing the pro forma net loss by the weighted average number of common shares outstanding for the period, assuming the closing of the transactions described in Note 2 occurred on October 1, 2016. As a result of the pro forma adjustments described in Note 2, there are estimated to be 1,291,391 additional common shares outstanding.
| 6 |