Attached files
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| 8-K/A - FORM 8-K/A - TWINLAB CONSOLIDATED HOLDINGS, INC. | v404983_8ka.htm |
| EX-99.1 - EXHIBIT 99.1 - TWINLAB CONSOLIDATED HOLDINGS, INC. | v404983_ex99-1.htm |
| EX-99.2 - EXHIBIT 99.2 - TWINLAB CONSOLIDATED HOLDINGS, INC. | v404983_ex99-2.htm |
| EX-99.3 - EXHIBIT 99.3 - TWINLAB CONSOLIDATED HOLDINGS, INC. | v404983_ex99-3.htm |
EXHIBIT 99.4
Unaudited Pro Forma Condensed Combined Financial Information
Twinlab Consolidated Holdings, Inc. (the “Company”), through its wholly owned subsidiary, Twinlab Consolidation Corporation (“TCC”), entered into an option agreement in September 2014 (the “Option Agreement”) that gave TCC an exclusive option to purchase certain assets of Nutricap Labs, LLC (“Nutricap”), a provider of dietary supplement contract manufacturing services. On February 6, 2015, and pursuant to the Option Agreement as amended and restated, NutraScience Labs, Inc. (“NutraScience”), a subsidiary of TCC, acquired the customer relationships of Nutricap (the “Nutricap Transaction”). The Company considers the acquisition of the Nutricap customer relationships to be an asset acquisition that requires disclosure on the pro forma condensed combined financial information presented below.
The unaudited pro forma condensed combined balance sheet as of September 30, 2014 reflects the Nutricap Transaction as if it had occurred on September 30, 2014, combining and adjusting the consolidated balance sheets of the Company and Nutricap as of September 30, 2014.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 reflects the Nutricap Transaction as if it had occurred on January 1, 2013, combining and adjusting the historical audited statements of operations of the Company and Nutricap for the year ended December 31, 2013.
The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2014 reflects the Nutricap Transaction as if it had occurred on January 1, 2013, combining and adjusting the historical unaudited statements of operations of the Company and Nutricap for the nine months ended September 30, 2014.
The unaudited pro forma condensed combined financial information is unaudited and is based upon the historical consolidated financial statements of the Company and of Nutricap, and certain adjustments directly related to the Nutricap Transaction that the Company believes are reasonable to give effect to the Nutricap Transaction.
The unaudited pro forma condensed combined financial information should be read in conjunction with:
| · | the accompanying notes to the Condensed Combined Pro Forma Financial Information; | |
| · | the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2013 filed with the Securities and Exchange Commission; | |
| · | the Company’s unaudited condensed consolidated financial statements and related notes for the nine months ended September 30, 2014 contained in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 filed with the Securities and Exchange Commission; | |
| · | Nutricap’s unaudited consolidated financial statements and related notes for the nine months ended September 30, 2014 included as Exhibit 99.1 to this current report on Form 8-K/A; | |
| · | Nutricap’s audited consolidated financial statements and related notes for the year ended December 31, 2013 included as Exhibit 99.2 to this current report on Form 8-K/A; and | |
| · | Nutricap’s audited consolidated financial statements and related notes for the year ended December 31, 2012 included as Exhibit 99.3 to this current report on Form 8-K/A. |
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
As of September 30, 2014
(Amounts in Thousands Except Share Amounts)
| Twinlab | |||||||||||||||||
| Consolidated | Nutricap | ||||||||||||||||
| Holdings, Inc. | Labs, LLC | Pro Forma | |||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | ||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash | $ | 21 | $ | 1,364 | $ | (1,364 | ) | {a} | $ | 670 | |||||||
| 7,000 | {b} | ||||||||||||||||
| (6,126 | ) | {c} | |||||||||||||||
| (225 | ) | {d} | |||||||||||||||
| Restricted cash | 378 | - | 378 | ||||||||||||||
| Marketable securities | 38 | - | 38 | ||||||||||||||
| Accounts receivable, net | 4,860 | 1,255 | (1,255 | ) | {a} | 4,860 | |||||||||||
| Inventories, net | 12,933 | 843 | (843 | ) | {a} | 12,933 | |||||||||||
| Prepaid expenses and other current assets | 4,096 | 442 | (442 | ) | {a} | 3,746 | |||||||||||
| (350 | ) | {c} | |||||||||||||||
| Total current assets | 22,326 | 3,904 | (3,605 | ) | 22,625 | ||||||||||||
| Property, plant and equipment, net | 4,719 | 591 | (591 | ) | {a} | 4,719 | |||||||||||
| Intangible assets, net | 7,681 | - | 3,510 | {c} | 11,191 | ||||||||||||
| Goodwill | - | - | 8,818 | {c} | 8,818 | ||||||||||||
| Other assets | 725 | 100 | (100 | ) | {a} | 3,602 | |||||||||||
| 2,877 | {d} | ||||||||||||||||
| $ | 35,451 | $ | 4,595 | $ | 10,909 | $ | 50,955 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT/MEMBERS’ EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Checks written in excess of cash | $ | 383 | $ | - | $ | $ | 383 | ||||||||||
| Accounts payable | 9,626 | 1,818 | (1,818 | ) | {a} | 9,626 | |||||||||||
| Accrued expenses and other current liabilities | 2,163 | 2,695 | (2,695 | ) | {a} | 4,037 | |||||||||||
| 1,874 | {c} | ||||||||||||||||
| Notes payable and current portion of long-term debt | 13,017 | - | 3,978 | {c} | 16,995 | ||||||||||||
| Total current liabilities | 25,189 | 4,513 | 1,339 | 31,041 | |||||||||||||
| Long-term liabilities: | |||||||||||||||||
| Deferred gain on sale of assets | 2,103 | - | 2,103 | ||||||||||||||
| Long-term debt, net of current portion | 9,012 | - | 7,000 | {b} | 16,012 | ||||||||||||
| Total long-term liabilities | 11,115 | - | 7,000 | 18,115 | |||||||||||||
| Total liabilities | 36,304 | 4,513 | 8,339 | 49,156 | |||||||||||||
| Commitments and contingencies | |||||||||||||||||
| Stockholders’ equity (deficit)/members’ equity: | |||||||||||||||||
| Common stock | 220 | - | 220 | ||||||||||||||
| Additional paid-in capital | 179,595 | - | 2,652 | {d} | 182,247 | ||||||||||||
| Stock subscriptions receivable | (300 | ) | - | (300 | ) | ||||||||||||
| Accumulated deficit | (180,294 | ) | - | (180,294 | ) | ||||||||||||
| Accumulated other comprehensive loss | (74 | ) | - | (74 | ) | ||||||||||||
| Members’ equity | - | 82 | (82 | ) | {a} | - | |||||||||||
| Total stockholders’ equity (deficit)/members’ equity | (853 | ) | 82 | 2,570 | 1,799 | ||||||||||||
| $ | 35,451 | $ | 4,595 | $ | 10,909 | $ | 50,955 | ||||||||||
See notes to unaudited condensed combined pro forma financial information.
| 2 |
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
Year Ended December 31, 2013
(Amounts in Thousands Except Share Amounts)
| Twinlab | |||||||||||||||||
| Consolidated | Nutricap | ||||||||||||||||
| Holdings, Inc. | Labs, LLC | Pro Forma | |||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | ||||||||||||||
| Net sales | $ | 76,230 | $ | 32,671 | $ | 108,901 | |||||||||||
| Cost of sales | 52,647 | 24,652 | 77,299 | ||||||||||||||
| Gross profit | 23,583 | 8,019 | 31,602 | ||||||||||||||
| Selling, general and administrative expenses | 23,391 | 6,783 | $ | 351 | {g} | 30,291 | |||||||||||
| (234 | ) | {h} | |||||||||||||||
| Income from operations | 192 | 1,236 | 117 | 1,311 | |||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest expense, net | (5,547 | ) | (2 | ) | (1,462 | ) | {f} | (7,009 | ) | ||||||||
| 2 | {e} | ||||||||||||||||
| Realized gain on marketable securities | 892 | - | 892 | ||||||||||||||
| Other income (expense), net | 2,014 | 94 | (94 | ) | {e} | 2,014 | |||||||||||
| Total other income (expense) | (2,641 | ) | 92 | (1,554 | ) | (4,103 | ) | ||||||||||
| Income (loss) before income taxes | (2,449 | ) | 1,328 | (1,437 | ) | (2,792 | ) | ||||||||||
| Provision for income taxes | (33 | ) | - | (33 | ) | ||||||||||||
| Net income (loss) | $ | (2,482 | ) | $ | 1,328 | $ | (1,437 | ) | $ | (2,825 | ) | ||||||
| Weighted average number of common shares outstanding – basic and diluted | 199,995,000 | 199,995,000 | |||||||||||||||
| Loss per common share – basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | |||||||||||
See notes to unaudited condensed combined pro forma financial information.
| 3 |
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2014
(Amounts in Thousands Except Share Amounts)
| Twinlab | |||||||||||||||||
| Consolidated | Nutricap | ||||||||||||||||
| Holdings, Inc. | Labs, LLC | Pro Forma | |||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | ||||||||||||||
| Net sales | $ | 47,135 | $ | 21,649 | $ | 68,784 | |||||||||||
| Cost of sales | 36,020 | 15,936 | 51,956 | ||||||||||||||
| Gross profit | 11,115 | 5,713 | 16,828 | ||||||||||||||
| Selling, general and administrative expenses | 19,768 | 5,074 | $ | 263 | {g} | 24,939 | |||||||||||
| (166 | ) | {h} | |||||||||||||||
| Income (loss) from operations | (8,653 | ) | 639 | 97 | (8,111 | ) | |||||||||||
| Other income (expense): | |||||||||||||||||
| Interest expense, net | (5,368 | ) | (4 | ) | (1,069 | ) | {f} | (6,437 | ) | ||||||||
| 4 | {e} | ||||||||||||||||
| Other income (expense), net | 9 | 187 | (187 | ) | {e} | 9 | |||||||||||
| Total other income (expense) | (5,359 | ) | 183 | (1,252 | ) | (6,428 | ) | ||||||||||
| Income (loss) before income taxes | (14,012 | ) | 822 | (1,155 | ) | (14,539 | ) | ||||||||||
| Provision for income taxes | (34 | ) | - | (34 | ) | ||||||||||||
| Net income (loss) | $ | (14,046 | ) | $ | 822 | $ | (1,155 | ) | $ | (14,573 | ) | ||||||
| Weighted average number of common shares outstanding – basic and diluted | 211,131,007 | 211,131,007 | |||||||||||||||
| Loss per common share – basic and diluted | $ | (0.07 | ) | $ | (0.07 | ) | |||||||||||
See notes to unaudited condensed combined pro forma financial information.
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NOTES TO UNAUDITED CONDENSED COMBINED
PRO FORMA
FINANCIAL INFORMATION
(Amounts in Thousands)
Basis of Presentation
The accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2014 reflects the Nutricap Transaction as if it had occurred September 30, 2014, combining and adjusting the consolidated balance sheets of the Company and of Nutricap as of September 30, 2014. The accompanying unaudited pro forma condensed combined statements of operations for the year ended December 31, 2013 and the nine months ended September 30, 2014 combine and adjust the consolidated statements of operations as if the Nutricap Transaction had occurred December 31, 2013. The unaudited condensed combined pro forma financial information is not intended to reflect the financial position and results that would have actually resulted had the Nutricap Transaction occurred on the dates indicated.
Summary of Significant Pro Forma Adjustments
{a} To eliminate the assets and liabilities of Nutricap not acquired or assumed in the acquisition.
{b} To record debt financing obtained to fund the asset acquisition. The financing consists of two long-term debt obligations of $2,000 and $5,000. The $2,000 note payable bears interest at 12% per annum and matures in November 2019. Interest is payable monthly commencing in February 2015 with payments of principal due on a quarterly basis commencing November 2017. The $5,000 note payable bears interest at 12% per annum and matures in February 2020. Interest is payable monthly commencing in February 2015 with payments of principal due on a quarterly basis commencing March 2017.
{c} To record the purchase price and allocation of the purchase price. The aggregate consideration for the purchased assets is comprised of the following:
| Cash ($8,000 reduced by customer deposits of $1,874) | $ | 6,126 | ||
| Deposit paid in 2014 | 350 | |||
| Novation contract deposit credit liability | 1,874 | |||
| Short-term notes payable to Nutricap | 3,978 | |||
| Total purchase price | $ | 12,328 |
The purchase price has been allocated as follows:
| Customer relationships | $ | 3,510 | ||
| Goodwill | 8,818 | |||
| Total | $ | 12,328 |
The customer relationships will be amortized over an estimated economic life of ten years using the straight-line method.
The short-term notes payable to Nutricap include a promissory note of $2,500 bearing interest at a rate of 6% per annum and maturing 60 days after the closing of the acquisition and a promissory note of $1,478 bearing interest at a rate of 3% per annum, payable in 12 equal monthly installments of principal and interest commencing in February 2015.
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{d} To record deferred financing costs of the financing for the acquisition. The amount is comprised of the $2,652 estimated value of warrants issued to the lenders using the Black-Scholes option pricing model and recorded to additional paid-in capital and $225 cash costs.
{e} To eliminate the non-operating income and expenses of Nutricap.
{f} To record additional interest expense, including the amortization of deferred financing costs, attributable to the loans obtained to finance the acquisition.
{g} To record amortization of the cost of customer relationships.
{h} To eliminate the depreciation expense of Nutricap as Nutricap property and equipment was not acquired. The Company and Nutricap entered into short-term agreements for certain transition services and a short-term rental agreement for the use of Nutricap facilities. The Company does not believe the pro forma selling, general and administrative expenses for the year ended December 31, 2013 and the nine months ended September 30, 2014 would be materially different than historical amounts for Nutricap resulting from these transition agreements.
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