Attached files
Exhibit 99.2
NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2015
(UNAUDITED)
| National Waste Management Holdings, Inc. | Waste Recovery Enterprises, LLC | Gateway Rolloff Services, LP | Pro-forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 471,514 | $ | 30,320 | $ | 132,108 | (100,000 | ) (a) | $ | 533,942 | ||||||||||
| Accounts receivable, net | 217,172 | 115,618 | 203,727 | 536,517 | ||||||||||||||||
| Other current assets | 10,010 | 45,276 | - | 55,286 | ||||||||||||||||
| Due from related party | 8,400 | 46,018 | - | 54,418 | ||||||||||||||||
| Total current assets | 707,096 | 237,232 | 335,835 | (100,000 | ) | 1,180,163 | ||||||||||||||
| Property and equipment, net | 672,627 | 688,997 | - | 1,361,624 | ||||||||||||||||
| Other assets: | ||||||||||||||||||||
| Intangible assets, net | 45,905 | - | - | 45,905 | ||||||||||||||||
| Secured letter of credit | 324,950 | - | - | 324,950 | ||||||||||||||||
| Deposits on landfill acquisition | 225,000 | - | - | 225,000 | ||||||||||||||||
| Other deposits | 8,750 | - | - | 8,750 | ||||||||||||||||
| Other assets | - | - | - | - | ||||||||||||||||
| Note receivable due from related party | - | - | - | - | ||||||||||||||||
| Total other assets | 604,605 | - | - | 604,605 | ||||||||||||||||
| Total assets | $ | 1,984,328 | $ | 926,229 | $ | 335,835 | (100,000 | ) | $ | 3,146,392 | ||||||||||
| Liabilities and Stockholder's Equity (Deficit) | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable and accrued expenses | 65,461 | 67,314 | 231,147 | 363,922 | ||||||||||||||||
| Current portion of long term debt | - | 127,713 | 127,713 | |||||||||||||||||
| Current portion of capital lease obligations | 24,093 | - | 24,093 | |||||||||||||||||
| Due to related party - accrued interest | 27,841 | 606,312 | (606,312 | ) (b) | 27,841 | |||||||||||||||
| Due to related party | - | 30,000 | 26,000 | 56,000 | ||||||||||||||||
| Income taxes payable | 126,287 | - | - | 126,287 | ||||||||||||||||
| Total current liabilities | 243,682 | 831,339 | 257,147 | 725,856 | ||||||||||||||||
| Long-term liabilities: | ||||||||||||||||||||
| Long term debt, net of current portion | - | 127,173 | - | 127,173 | ||||||||||||||||
| Capital lease obligations, net of current portion | 109,614 | - | - | 109,614 | ||||||||||||||||
| Environmental remediation obligation | 424,596 | - | - | 424,596 | ||||||||||||||||
| Loan due shareholder or member | 704,547 | 906,442 | - | 606,312 | (b) | 2,467,301 | ||||||||||||||
| 250,000 | (c) | |||||||||||||||||||
| Long term deferred tax liability | 48,709 | - | 48,709 | |||||||||||||||||
| Total liabilities | $ | 1,531,148 | $ | 1,864,954 | $ | 257,147 | 250,000 | $ | 3,903,249 | |||||||||||
| Commitments and Contingencies | ||||||||||||||||||||
| Stockholders' equity (deficit): | ||||||||||||||||||||
| Common stock, no par value; 250,000,000 shares authorized, 60,451,842 shares issued and outstanding at September 30, 2015 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
| Preferred stock, no par value, 10,000,000 shares authorized, 1 share and 0 shares issued and outstanding as of June 30, 2015 | - | - | - | - | ||||||||||||||||
| Additional paid-in capital | 267,496 | - | - | (250,000 | ) (c) | 367,496 | ||||||||||||||
| 450,000 | (d) | |||||||||||||||||||
| (100,000 | ) (a) | |||||||||||||||||||
| Common stock subscribed | 113,640 | - | (450,000 | ) (d) | (336,360 | ) | ||||||||||||||
| Members' deficit | - | (938,725 | ) | - | 937,729 | (e) | (996 | ) | ||||||||||||
| Partners' capital | - | 78,688 | 78,688 | (e) | 157,376 | |||||||||||||||
| Retained earnings (deficit) | 72,044 | (1,016,417 | ) (f) | (944,373 | ) | |||||||||||||||
| Total stockholders' equity (deficit) | 453,180 | (938,725 | ) | 78,688 | (350,000 | ) | (756,857 | ) | ||||||||||||
| Total liabilities and stockholders' equity | $ | 1,984,328 | $ | 926,229 | $ | 335,835 | (100,000 | ) | $ | 3,146,392 | ||||||||||
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NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(UNAUDITED)
| National Waste Management Holdings, Inc. | Waste Recovery Enterprises, LLC | Gateway Rolloff Services, LP | Pro-forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
| Revenues | $ | 1,349,824 | $ | 1,033,296 | $ | 1,741,513 | $ | - | $ | 4,124,633 | ||||||||||
| Cost of revenues | 661,622 | 608,299 | 1,121,188 | - | 2,391,109 | |||||||||||||||
| Gross profit | 688,202 | 424,997 | 620,325 | - | 1,733,524 | |||||||||||||||
| Selling, general and administrative expenses | 380,775 | 399,159 | 728,195 | - | 1,508,129 | |||||||||||||||
| Income from operations | 307,427 | 25,838 | (107,870 | ) | - | 225,395 | ||||||||||||||
| Other income (expenses): | ||||||||||||||||||||
| Gain on sale of assets | - | 28,040 | - | - | 28,040 | |||||||||||||||
| Extinguishment of related party debt | - | (236,100 | ) | - | - | (236,100 | ) | |||||||||||||
| Interest expense | (23,705 | ) | (39,311 | ) | - | - | (63,016 | ) | ||||||||||||
| Other Income (expenses) | (4,807 | ) | 2,504 | 611 | - | (1,692 | ) | |||||||||||||
| Total other income (expenses) | (28,512 | ) | (244,867 | ) | 611 | - | (272,768 | ) | ||||||||||||
| Income before income taxes | 278,915 | (219,029 | ) | (107,259 | ) | - | (47,373 | ) | ||||||||||||
| Income tax expense | 94,045 | - | - | - | 94,045 | |||||||||||||||
| Net income | $ | 184,870 | $ | (219,029 | ) | $ | (107,259 | ) | $ | - | $ | (141,418 | ) | |||||||
| Net income per common share: | ||||||||||||||||||||
| Basic | $ | 0.003 | $ | - | $ | (0.002 | ) | |||||||||||||
| Diluted | $ | 0.003 | $ | - | $ | (0.002 | ) | |||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||||||
| Basic | 60,451,842 | 5,150,000 | (g) | 65,601,842 | ||||||||||||||||
| Diluted | 60,451,842 | 5,150,000 | (g) | 65,601,842 | ||||||||||||||||
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NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
(UNAUDITED)
| National Waste Management Holdings, Inc. | Waste Recovery Enterprises, LLC | Gateway Rolloff Services, LP | Pro-forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
| Revenues | $ | 1,668,354 | $ | 1,502,290 | $ | 2,300,303 | $ | - | $ | 5,470,947 | ||||||||||
| Cost of revenues | 934,251 | 926,588 | 1,532,492 | - | 3,393,331 | |||||||||||||||
| Gross profit | 734,103 | 575,702 | 767,811 | - | 2,077,616 | |||||||||||||||
| Selling, general and administrative expenses | 485,403 | 538,393 | 652,918 | - | 1,676,714 | |||||||||||||||
| Income from operations | 248,700 | 37,309 | 114,893 | - | 400,902 | |||||||||||||||
| Other income (expenses): | ||||||||||||||||||||
| Gain on sale of assets | - | 80,000 | - | - | 80,000 | |||||||||||||||
| Interest expense | (10,610 | ) | (55,697 | ) | - | - | (66,307 | ) | ||||||||||||
| Other income | - | - | 16 | - | 16 | |||||||||||||||
| Other expenses | - | 1,880 | (87 | ) | - | 1,793 | ||||||||||||||
| Total other income (expenses) | (10,610 | ) | 26,183 | (71 | ) | - | 15,502 | |||||||||||||
| Income before income taxes | 238,090 | 63,492 | 114,822 | - | 416,404 | |||||||||||||||
| Income tax expense | 80,951 | - | - | 67,759 | (g) | 148,710 | ||||||||||||||
| Net income | $ | 157,139 | $ | 63,492 | $ | 114,822 | $ | (67,759 | ) | $ | 267,694 | |||||||||
| Net income per common share: | ||||||||||||||||||||
| Basic | $ | 0.003 | $ | $ | 0.004 | |||||||||||||||
| Diluted | $ | 0.003 | $ | $ | 0.004 | |||||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||||||
| Basic | 60,054,444 | 5,150,000 | (h) | 65,204,444 | ||||||||||||||||
| Diluted | 60,054,444 | 5,150,000 | (h) | 65,204,444 | ||||||||||||||||
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NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(UNAUDITED)
| National Waste Management Holdings, Inc. | Waste Recovery Enterprises, LLC | Gateway Rolloff Services, LP | Pro-forma Adjustments | Pro Forma Consolidated | ||||||||||||||||
| Revenues | $ | 1,262,506 | $ | 1,392,323 | $ | 1,863,387 | $ | $ | 4,518,216 | |||||||||||
| Cost of revenues | 576,764 | 868,771 | 1,359,595 | 2,805,130 | ||||||||||||||||
| Gross profit | 685,742 | 523,552 | 503,792 | - | 1,713,086 | |||||||||||||||
| Selling, general and administrative expenses | 515,987 | 503,377 | 786,179 | 1,805,543 | ||||||||||||||||
| Income from operations | 169,755 | 20,175 | (282,387 | ) | - | (92,457 | ) | |||||||||||||
| Other income (expenses): | ||||||||||||||||||||
| Other income | - | 3,327 | 310,922 | 314,249 | ||||||||||||||||
| Other expenses | (9,519 | ) | - | - | (9,519 | ) | ||||||||||||||
| Gain on sale of assets | 10,800 | 12,444 | - | 23,244 | ||||||||||||||||
| Interest expense | - | (63,095 | ) | - | (63,095 | ) | ||||||||||||||
| Total other income (expenses) | 1,281 | (47,324 | ) | 310,922 | - | 264,879 | ||||||||||||||
| Income before income taxes | 171,036 | (27,149 | ) | 28,535 | 172,422 | |||||||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||||
| Net income | $ | 171,036 | $ | (27,149 | ) | $ | 28,535 | $ | - | $ | 172,422 | |||||||||
| Net income per common share: | ||||||||||||||||||||
| Basic | $ | 0.004 | $ | 0.003 | ||||||||||||||||
| Diluted | $ | 0.004 | $ | 0.003 | ||||||||||||||||
| Weighted average number of shares outstanding | ||||||||||||||||||||
| Basic | 47,450,000 | 5,150,000 | 52,600,000 | |||||||||||||||||
| Diluted | 47,450,000 | 5,150,000 | 52,600,000 | |||||||||||||||||
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NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
| (1) | Basis of Presentation |
On October 27, 2015 and December 1, 2015, National Waste Management Holdings, Inc. (the “Company”, “NWMH, Inc.”) acquired Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LLC, respectively. The Chairman of the Company, who is also the largest individual shareholder of the Company, owned 50% of each of these entities prior to closing on the acquisitions; these entities had a high degree of common ownership but were not considered to be under common control, as the ownership percentages and interests are not the same before and after the transaction, and thus a substantive transaction has occurred with economic substance and should be accounted for using the acquisition method of accounting in accordance with the guidance included in the Accounting Standards Codification (“ASC”) 805, Business Combinations. The acquisition method of accounting requires assets and liabilities to be recorded at fair value, including intangible assets, with goodwill as the residual. As of the date of the filing, the purchase price allocation was not complete or available as related to these acquisitions. The pro-forma financial statements are based on the unaudited historical performance of the Companies as of and for the nine months ended September 30, 2015, as well as the financial statements as of and the for the years ended December 31, 2014 and 2013 subject to pro-forma adjustments discussed in Note 2. Assets and liabilities of the acquired entities have been recorded at cost for pro-forma purposes and will be adjusted to fair value once the purchase price allocation is complete.
These unaudited pro forma financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These pro forma financial statements do not contain all of the information required for annual financial statements. Accordingly, they should be read in conjunction with the most recent annual and interim financial statements of the Company and Sandland.
These unaudited pro forma financial statements have been compiled from and include:
| (a) | an unaudited pro forma balance sheet combining the unaudited interim consolidated balance sheet of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP as of September 30, 2015, giving effect to the transaction as if it occurred on the respective balance sheet date. |
| (b) | an unaudited interim pro forma consolidated statement of operations combining the unaudited statements of operations of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP for the nine months ended September 30, 2015, and the audited annual statements of operations of the Company and Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP for the years ended December 31, 2014 and 2013. |
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NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
| (2) | Basis of Presentation |
The unaudited pro forma financial statements have been compiled using the significant accounting policies as set out in the unaudited financial statements of the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP for the nine months ended September 30, 2015. It is management’s opinion that these pro forma financial statements include all adjustments necessary for the fair presentation, in all material respects, of the proposed transaction described above in accordance with United States generally accepted accounting principles applied on a basis consistent with the Company, Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP’s accounting policies. No adjustments have been made to reflect the fair value of assets and liabilities of the acquired subsidiaries, the fair value of the restricted stock issued as part of the purchase price of the acquisitions or the potential cost savings that may occur subsequent to completion of the transaction. The pro forma statement of operations does not reflect non-recurring charges or credits directly attributable to the transaction, of which none are currently anticipated.
The unaudited pro forma financial statements are not intended to reflect the financial position of the Company which would have actually resulted had the proposed transaction been effected on the date indicated.
| (3) | PRO FORMA ADJUSTMENTS |
The unaudited pro forma consolidated financial statements do not incorporate the following pro forma assumptions and adjustments:
| (a) | Elimination of certain of the Company’s assets and liabilities upon closing the agreement as follows: |
| a. | Cash - $100,000 – due to a working capital adjustment clause requiring the Company to reimburse one of the previous owners for current assets in excess of liabilities to be calculated 30 days after the closing. The expected adjustment is expected to be equal to the maximum threshold of $100,000 |
| (b) | This accrued interest will be converted to long term debt | |
| (c) | The Company financed $250,000 of the cash portion of these acquisitions with an owner financed note due January 4, 2016 | |
| (d) | $450,000 of the purchase price of one of the acquisitions was financed by a third party who has been promised stock at $1 per share, totaling 450,000 shares of common stock subscribed | |
| (e) | Elimination of partners equity and members in acquired subsidiaries | |
| (f) | Tax affects the previously pass through entities at the estimated statutory tax rate of 38% | |
| (g) | The Company issued restricted common stock of the Company as a portion of the consideration for the acquisitions. 2,750,000 shares were issued as part of the purchase price of Waste Recovery Services, LLC and 2,400,000 shares were issued as part of the purchase price of Gateway Rolloff Services, LP, for a total of 5,150,000 shares of restricted common stock. |
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NATIONAL WASTE MANAGEMENT HOLDINGS, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
| (4) | PRO FORMA EQUITY |
| Note 3 - Pro Forma Equity | |||||||||||||
| Number of | Additional Paid | ||||||||||||
| Common Shares | Par Value | in Capital | |||||||||||
| Issued and outstanding common shares of the Company | 60,451,842 | $ | - | $ | 267,496 | ||||||||
| Restricted shares issued and note payable to acquire Waste Recovery Services, LLC | 2,750,000 | - | (250,000 | ) | |||||||||
| Restricted shares issued, cash paid to acquire Gateway Rolloff Services, LP (net of working capital adjustment of $100,000) | 2,400,000 | - | 350,000 | ||||||||||
| Pro Forma Balance, September 30, 2015 | 65,601,842 | $ | - | $ | 367,496 | ||||||||
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