Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - TWINLAB CONSOLIDATED HOLDINGS, INC. | v426978_8ka.htm |
| EX-99.1 - EXHIBIT 99.1 - TWINLAB CONSOLIDATED HOLDINGS, INC. | v426978_ex99-1.htm |
| EX-99.2 - EXHIBIT 99.2 - TWINLAB CONSOLIDATED HOLDINGS, INC. | v426978_ex99-2.htm |
EXHIBIT 99.3
Unaudited Pro Forma Condensed Combined Financial Information
(Amounts in Thousands Except Share Amounts)
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 100% of the outstanding equity interests of Organic Holdings, LLC (“Organic”). Organic, through its subsidiaries, is engaged in the business of developing and selling premium nutritional supplements, including under the well-known ReserveageTM Nutrition family of brands. Effective August 13, 2015, TCC exercised the option and entered into a Unit Purchase Agreement, as amended (the “Purchase Agreement”), with the owners of the membership interests of Organic (the “Sellers”). The parties subsequently agreed to extend the closing date of the Purchase Agreement to October 5, 2015 when TCC closed the transactions contemplated by the Purchase Agreement and acquired all of the membership units for a purchase price of $37,000. The Company had previously paid the Sellers a non-refundable deposit of $2,000. In addition, the Company paid the Organic warrant holder $339 and assumed an Organic line of credit of $2,372. The Company considers the acquisition of Organic as the acquisition of a business, and the Company is therefore required to make the pro forma disclosures described below.
The unaudited pro forma condensed combined balance sheet as of September 30, 2015 reflects the acquisition of Organic as if such acquisition had occurred on September 30, 2015, combining the consolidated balance sheets of the Company and Organic as of September 30, 2015.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2014 reflects the acquisition of Organic as if it had occurred on January 1, 2014, combining the historical audited statements of operations of the Company and Organic for the year ended December 31, 2014.
The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2015 reflects the acquisition of Organic as if it had occurred on January 1, 2014, combining the historical unaudited statements of operations of the Company and Organic for the nine months ended September 30, 2015.
The unaudited pro forma condensed combined financial information is unaudited and is based upon the historical consolidated financial statements of the Company and of Organic, and certain adjustments directly related to the acquisition that the Company believes are reasonable to give effect to the Organic acquisition.
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, 2014 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, 2015 contained in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the Securities and Exchange Commission; |
| · | Organic’s audited consolidated financial statements and related notes for the year ended December 31, 2014 included as Exhibit 99.1 to this current report on Form 8-K/A; and |
| · | Organic’s unaudited condensed consolidated financial statements and related notes for the nine months ended September 30, 2015 included as Exhibit 99.2 to this current report on Form 8-K/A. |
| 2 |
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
As of September 30, 2015
(Amounts in Thousands Except Share Amounts)
| Twinlab | ||||||||||||||||
| Consolidated | Organic | |||||||||||||||
| Holdings, Inc. | Holdings, LLC | Pro Forma | ||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash | $ | 1,740 | $ | 249 | $ | 37,000 | {b} | $ | 1,650 | |||||||
| (37,000 | ){c} | |||||||||||||||
| (339 | ){c} | |||||||||||||||
| Marketable securities | 67 | - | 67 | |||||||||||||
| Accounts receivable, net | 4,940 | 3,584 | 8,524 | |||||||||||||
| Inventories, net | 9,924 | 4,137 | 14,061 | |||||||||||||
| Prepaid expenses and other current assets | 4,330 | 134 | (2,000 | ){c} | 2,464 | |||||||||||
| Total current assets | 21,001 | 8,104 | (2,339 | ) | 26,766 | |||||||||||
| Property, plant and equipment, net | 3,463 | 114 | 3,577 | |||||||||||||
| Intangible assets, net | 10,490 | - | 22,453 | {c} | 32,943 | |||||||||||
| Goodwill | 8,818 | - | 16,342 | {c} | 25,160 | |||||||||||
| Other assets | 1,484 | 408 | (386 | ){a} | 1,506 | |||||||||||
| $ | 45,256 | $ | 8,626 | $ | 36,070 | $ | 89,952 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT/MEMBERS’ EQUITY (DEFICIT) | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable | $ | 13,738 | $ | 2,907 | $ | 16,645 | ||||||||||
| Accrued expenses and other current liabilities | 4,562 | 2,395 | 6,957 | |||||||||||||
| Derivative liabilities | 13,599 | - | 13,599 | |||||||||||||
| Notes payable and current portion of long-term debt, net of discount | 13,384 | - | 2,372 | {c} | 15,756 | |||||||||||
| Total current liabilities | 45,283 | 5,302 | 2,372 | 52,957 | ||||||||||||
| Long-term liabilities: | ||||||||||||||||
| Deferred gain on sale of assets | 1,930 | - | 1,930 | |||||||||||||
| Derivative warrant liability | - | 1,655 | (1,655 | ){a} | - | |||||||||||
| Long-term debt, net of current portion and discount | 13,368 | 6,600 | (6,600 | ){a} | 13,368 | |||||||||||
| Total long-term liabilities | 15,298 | 8,255 | (8,255 | ) | 15,298 | |||||||||||
| Total liabilities | 60,581 | 13,557 | (5,883 | ) | 68,255 | |||||||||||
| Commitments and contingencies | ||||||||||||||||
| Stockholders’ equity (deficit)/members’ equity (deficit): | ||||||||||||||||
| Common stock | 249 | - | 130 | {b} | 379 | |||||||||||
| Additional paid-in capital | 203,104 | - | 36,870 | {b} | 239,974 | |||||||||||
| Stock subscriptions receivable | (100 | ) | - | (100 | ) | |||||||||||
| Treasury stock at cost | - | - | ||||||||||||||
| Accumulated deficit | (218,533 | ) | - | (218,533 | ) | |||||||||||
| Accumulated other comprehensive loss | (45 | ) | - | (45 | ) | |||||||||||
| Members’ equity (deficit) | - | (4,931 | ) | 7,869 | {a} | 22 | ||||||||||
| (2,916 | ){c} | |||||||||||||||
| Total stockholders’ equity (deficit)/members’ equity (deficit) | (15,325 | ) | (4,931 | ) | 41,953 | 21,697 | ||||||||||
| $ | 45,256 | $ | 8,626 | $ | 36,070 | $ | 89,952 | |||||||||
See notes to unaudited condensed combined pro forma financial information.
| 3 |
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
Year Ended December 31, 2014
(Amounts in Thousands Except Share Amounts)
| Twinlab | ||||||||||||||||
| Consolidated | Organic | |||||||||||||||
| Holdings, Inc. | Holdings, LLC | Pro Forma | ||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | |||||||||||||
| Net sales | $ | 61,426 | $ | 30,986 | $ | 92,412 | ||||||||||
| Cost of sales | 47,654 | 18,077 | 65,731 | |||||||||||||
| Gross profit | 13,772 | 12,909 | 26,681 | |||||||||||||
| Selling, general and administrative expenses | 25,924 | 10,327 | $ | 1,358 | {f} | 37,609 | ||||||||||
| Income (loss) from operations | (12,152 | ) | 2,582 | (1,358 | ) | (10,928 | ) | |||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (6,388 | ) | (994 | ) | 994 | {d} | (6,388 | ) | ||||||||
| Gain (loss) on change in derivative liabilities | - | (1,450 | ) | 1,450 | {e} | - | ||||||||||
| Other income (expense), net | (2,529 | ) | - | (2,529 | ) | |||||||||||
| Total other income (expense) | (8,917 | ) | (2,444 | ) | 2,444 | (8,917 | ) | |||||||||
| Income (loss) before income taxes | (21,069 | ) | 138 | 1,086 | (19,845 | ) | ||||||||||
| Provision for income taxes | (61 | ) | - | (61 | ) | |||||||||||
| Net income (loss) | $ | (21,130 | ) | $ | 138 | $ | 1,086 | $ | (19,906 | ) | ||||||
| Weighted average number of common shares outstanding – basic and diluted | 213,366,479 | 130,081,551 | {g} | 343,448,030 | ||||||||||||
| Loss per common share – basic and diluted | $ | (0.10 | ) | $ | (0.06 | ) | ||||||||||
See notes to unaudited condensed combined pro forma financial information.
| 4 |
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 2015
(Amounts in Thousands Except Share Amounts)
| Twinlab | ||||||||||||||||
| Consolidated | Organic | |||||||||||||||
| Holdings, Inc. | Holdings, LLC | Pro Forma | ||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | |||||||||||||
| Net sales | $ | 60,215 | $ | 22,524 | $ | 82,739 | ||||||||||
| Cost of sales | 50,816 | 12,555 | 63,371 | |||||||||||||
| Gross profit | 9,399 | 9,969 | 19,368 | |||||||||||||
| Selling, general and administrative expenses | 21,178 | 9,892 | $ | 1,018 | {f} | 32,088 | ||||||||||
| Income (loss) from operations | (11,779 | ) | 77 | (1,018 | ) | (12,720 | ) | |||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (5,280 | ) | (690 | ) | 690 | {d} | (5,280 | ) | ||||||||
| Gain (loss) on change in derivative liabilities | (14,523 | ) | 708 | (708 | ){e} | (14,523 | ) | |||||||||
| Other income (expense), net | 428 | - | 428 | |||||||||||||
| Total other income (expense) | (19,375 | ) | 18 | (18 | ) | (19,375 | ) | |||||||||
| Income (loss) before income taxes | (31,154 | ) | 95 | (1,036 | ) | (32,095 | ) | |||||||||
| Provision for income taxes | (1 | ) | - | (1 | ) | |||||||||||
| Net income (loss) | $ | (31,155 | ) | $ | 95 | $ | (1,036 | ) | $ | (32,096 | ) | |||||
| Weighted average number of common shares outstanding – basic and diluted | 222,344,684 | 130,081,551 | {g} | 352,426,235 | ||||||||||||
| Loss per common share – basic and diluted | $ | (0.14 | ) | $ | (0.09 | ) | ||||||||||
See notes to unaudited condensed combined pro forma financial information.
| 5 |
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, 2015 reflects the Organic acquisition as if it had occurred September 30, 2015, combining the consolidated balance sheets of the Company and of Organic as of September 30, 2015. The accompanying unaudited pro forma condensed combined statements of operations for the year ended December 31, 2014 and the nine months ended September 30, 2015 reflect the Organic acquisition as if it had occurred January 1, 2014. 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 Organic acquisition occurred on the dates indicated.
Summary of Significant Pro Forma Adjustments
{a} To eliminate the assets and liabilities of Organic not acquired or assumed in the acquisition.
{b} To record the issuance of the Company’s common stock to fund the acquisition. Pursuant to two stock purchase agreements, a total of 130,081,551 shares of the Company’s common stock were issued for total proceeds to the Company of $37,000.
{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 | $ | 37,000 | ||
| Deposit paid in 2014 | 2,000 | |||
| Line of credit assumed | 2,372 | |||
| Payment to warrant holder | 339 | |||
| Total purchase price | $ | 41,711 |
The purchase price has been allocated as follows:
| Intangible assets: | ||||
| Customer relationships | $ | 15,600 | ||
| Trade name – Reserveage Nutrition & Resvitale | 5,900 | |||
| Trade name – Rebody | 200 | |||
| Assembled workforce | 753 | |||
| Total intangible assets | 22,453 | |||
| Goodwill | 16,342 | |||
| Other net assets | 2,916 | |||
| Total | $ | 41,711 |
| 6 |
The definite lived intangible assets will be amortized using the straight-line method over the following estimated economic lives (in years):
| Customer relationships | 15 | |||
| Trade name – Rebody | 3 | |||
| Assembled workforce | 3 |
{d} To eliminate the interest expense of Organic.
{e} To eliminate the gain (loss) on change in derivative liabilities of Organic.
{f} To record amortization of the definitive lived intangible assets.
{g} To increase the weighted average number of common shares outstanding by the number of common shares issued to fund the acquisition.
| 7 |