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EX-99.3 - UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET OF THE COMPANY - Andover National Corp | f8k100419a1ex99-3_andover.htm |
EX-99.1 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ANC GREEN SOLUTIONS I AS OF AND FOR - Andover National Corp | f8k100419a1ex99-1_andover.htm |
8-K/A - AMENDMENT NO. 1 TO CURRENT REPORT - Andover National Corp | f8k100419a1_andovernational.htm |
Exhibit 99.2
Financial Statements and Supplementary Data.
Index to Unaudited Financial Statements
Legg Holdings, Inc.
(subsequently renamed ANC Green Solutions I, LLC)
September 30, 2019
(subsequently renamed ANC Green Solutions I, LLC)
Consolidated Balance Sheets
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | (Unaudited) | |||||||
Current assets | ||||||||
Cash | $ | 194,510 | $ | 899,653 | ||||
Accounts receivable | 176,705 | 146,811 | ||||||
Prepaid expenses | 9,643 | - | ||||||
Total current assets | 380,858 | 1,046,464 | ||||||
Property and equipment, net | 206,124 | 261,378 | ||||||
Total assets | $ | 586,982 | $ | 1,307,842 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 66,732 | $ | 50,009 | ||||
Notes payable | - | 20,473 | ||||||
Total Current Liabilities | 66,732 | 70,482 | ||||||
Stockholders’ Equity | ||||||||
Common stock, $1 par value; 600 shares authorized, 600 shares issued and outstanding | 600 | 600 | ||||||
Additional paid in capital | 72,757 | 72,757 | ||||||
Retained earnings | 446,893 | 1,164,003 | ||||||
Total stockholders’ equity | 520,250 | 1,237,360 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 586,982 | $ | 1,307,842 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-1
(subsequently renamed ANC Green Solutions I, LLC)
Consolidated Statements of Operations
Nine Months Ended | Nine Months Ended | |||||||
September 30, 2019 | September 30, 2018 | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenue | ||||||||
Lawn care revenue | $ | 1,880,694 | $ | 1,624,324 | ||||
Franchise revenue | 76,331 | 76,229 | ||||||
Total revenue | 1,957,025 | 1,700,553 | ||||||
Operating expenses | ||||||||
Direct costs | 249,461 | 260,340 | ||||||
Selling and marketing | 116,967 | 92,316 | ||||||
General and administrative | 1,118,450 | 1,028,589 | ||||||
Depreciation | 62,108 | 59,056 | ||||||
Total operating expenses | 1,546,986 | 1,440,301 | ||||||
Income from operations | 410,039 | 260,252 | ||||||
Other income (expenses) | ||||||||
Interest expense | (345 | ) | (940 | ) | ||||
Gain on insurance compensation | 120,644 | - | ||||||
Total other income (expenses) | 120,299 | (940 | ) | |||||
Income from operations before income taxes | 530,338 | 259,312 | ||||||
Net Income | $ | 530,338 | $ | 259,312 | ||||
Net income per share – basic and diluted | $ | 883.90 | $ | 432.19 | ||||
Weighted average common shares – basic and diluted | 600 | 600 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-2
(subsequently renamed ANC Green Solutions I, LLC)
Consolidated Statements of Stockholders’ Equity
Common stock | Additional Paid in | Retained | Total Stockholders’ | |||||||||||||||||
Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
Balance as of December 31, 2017 | 600 | $ | 600 | $ | 25,983 | $ | 815,005 | $ | 841,588 | |||||||||||
Shareholder contribution (distribution) | - | - | 46,774 | (3,530 | ) | 43,244 | ||||||||||||||
Net income | - | - | - | 259,312 | 259,312 | |||||||||||||||
Balance as of September 30, 2018 (Unaudited) | 600 | $ | 600 | $ | 72,757 | $ | 1,070,787 | $ | 1,144,144 | |||||||||||
Balance as of December 31, 2018 | 600 | $ | 600 | $ | 72,757 | $ | 1,164,003 | $ | 1,237,360 | |||||||||||
Shareholder distribution | - | - | - | (1,247,448 | ) | (1,247,448 | ) | |||||||||||||
Net income | - | - | - | 530,338 | 530,338 | |||||||||||||||
Balance as of September 30, 2019 (Unaudited) | 600 | $ | 600 | $ | 72,757 | $ | 446,893 | $ | 520,250 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-3
(subsequently renamed ANC Green Solutions I, LLC)
Consolidated Statements of Cash Flows
Nine Months Ended | Nine Months Ended | |||||||
September 30, 2019 | September 30, 2018 | |||||||
Cash Flows from Operating Activities | (Unaudited) | (Unaudited) | ||||||
Net income | $ | 530,338 | $ | 259,312 | ||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Depreciation | 62,108 | 59,056 | ||||||
Loss on disposal of fixed assets | 23,630 | |||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (29,894 | ) | (58,807 | ) | ||||
Prepaid expense | (9,643 | ) | - | |||||
Accounts payable and accrued liabilities | 16,750 | (8,078 | ) | |||||
Net cash provided by operating activities | 593,289 | 251,483 | ||||||
Cash Flows from Investing Activities | ||||||||
Payments for purchase of fixed assets | (48,338 | ) | (53,823 | ) | ||||
Net cash used investing activities | (48,338 | ) | (53,823 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Shareholder contribution | - | 46,774 | ||||||
Shareholder distribution | (1,247,448 | ) | (3,530 | ) | ||||
Repayment to notes payable | (2,646 | ) | (4,554 | ) | ||||
Net cash provided by (used in) financing activities | (1,250,094 | ) | 38,690 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (705,143 | ) | 236,350 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 899,653 | 534,636 | ||||||
Cash, Cash Equivalents and Restricted Cash, end of period | $ | 194,510 | $ | 770,986 | ||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash paid for interest | $ | (345 | ) | $ | (940 | ) | ||
Cash paid for income taxes | $ | - | $ | - |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-4
(subsequently renamed ANC Green Solutions I, LLC)
Notes to Unaudited Consolidated Financial Statements
For The Nine Month Ended September 30, 2019 and 2018
Note 1 – Nature of the Business
Legg Holdings, Inc., an Alabama corporation, is a leading operator and franchisor of residential lawn care programs and services. The Company’s core service offerings provide residential homeowners and commercial customers with year-round monitoring and treatment by focusing on weed and insect control, seeding, and professionally and consistently administered fertilization.
Legg Lawncare, Inc., an Alabama corporation and wholly owned by Legg Holdings, Inc., owns and operates a business that provides commercial and residential lawncare, landscaping and hardscaping, irrigation, mosquito, termite, and pest control services throughout Northern Alabama and other neighboring localities.
Legg SMS Franchising, Inc., an Alabama corporation and wholly owned by Legg Holdings, Inc., owns and operates a business that is the master franchisor for outdoor insect control service businesses operating independently throughout the United States.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. The balance sheet at December 31, 2018 has been derived from the audited financial statements at that date. For further information, refer to the financial statements and footnotes thereto included in Legg Holdings, Inc. annual financial statements for the twelve months ended December 31, 2018.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.
Note 3 – Fixed Assets
As of September 30, 2019 and December 31, 2018, the Company’s fixed assets consisted of the following:
September 30, 2019 | December 31, 2018 | |||||||
Vehicles | $ | 357,222 | $ | 377,932 | ||||
Equipment | 302,264 | 292,272 | ||||||
Leasehold improvements | 9,990 | 9,990 | ||||||
Office equipment | 6,433 | 4,664 | ||||||
Total property and equipment | 675,909 | 684,858 | ||||||
Less: Accumulated depreciation | (469,785 | ) | (423,480 | ) | ||||
Property and equipment, net | 206,124 | 261,378 |
During the nine months ended September 30, 2019, we disposed five trucks in aggregate value of $100,316 with accumulated depreciation of $58,830, recorded $23,630 loss of disposal of assets and Mr. Legg contributed a truck to the Company in amount of $43,027, this truck was fully depreciated. Depreciation expense for the nine months ended September 30, 2019 and 2018 was $62,108 and $59,056, respectively. During the nine months ended September 30, 2019, we recorded aggregate amount of $120,644 from gain on issuance claims related to fire damage to company assets.
F-5
Note 4 – Accounts Payable and Accrued Liabilities
As of September 30, 2019 and December 31, 2018, the Company’s current liabilities consisted of the following:
September 30, 2019 | December 31, 2018 | |||||||
Accrued operating expenses | $ | 38,264 | $ | 30,212 | ||||
Accrued payroll | 28,468 | 19,797 | ||||||
Accounts payable and accrued liabilities | $ | 66,732 | $ | 50,009 |
Note 5 – Notes Payable
On August 30, 2017, we entered into a loan agreement in the amount of $39,669 related to the purchase of a truck. The note is due on August 30, 2022, and bears an annual interest rate of 3.29%. The loan is payable in 59 monthly installments of $493.86. During the nine months ended September 30, 2019, we repaid $2,646 in principal and the truck was totaled beyond repair, and we used $17,827 of insurance proceeds to pay off the remaining balance. The outstanding balance as of September 30, 2019 was $0.
Note 6 – Capital Stock
As of December 31, 2018, 2017 and 2016, there were 500 founder shares of Legg Lawncare, Inc., outstanding and 100 founder shares of Legg SMS Franchising, Inc., outstanding.
Note 7 – Related Party Transactions
Shareholder contribution for the nine months ended September 30, 2019 and 2018 was $0 and $46,774, respectively. Shareholder distribution for the nine months ended September 30, 2019 and 2018 was $1,247,448 and $3,530, respectively.
Note 8 – Subsequent Events
On October 4, 2019, Andover Environmental Solutions LLC (“Andover Environmental”), a wholly-owned subsidiary of Andover National Corporation, entered into a Membership Interest Purchase Agreement with the Company and Heath L. Legg, pursuant to which Andover Environmental purchased from seller sixty percent (60%) of the membership interests of ANC Green Solutions I, LLC, a Delaware limited liability company, for $4,000,000 in cash, subject to certain adjustments. Prior to entry into the Membership Interest Purchase Agreement, Legg Holdings, Inc. was renamed by Heath L. Legg to ANC Green Solutions I, LLC.
F-6