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EX-99.1 - AUDITED FINANCIAL STATEMENTS OF GLOBAL TECHNICAL SERVICES, INC AND GLOBAL CONTRA - Rekor Systems, Inc.globalfinancials20162015-.htm
EX-23.2 - CONSENT OF BD & COMPANY INC., INDEPENDENT AUDITORS - Rekor Systems, Inc.gtsconsentdraft-8ka.htm
EX-23.1 - CONSENT OF BD & COMPANY INC., INDEPENDENT AUDITORS - Rekor Systems, Inc.gcpconsentdraft-8ka.htm
8-K/A - PRIMARY DOCUMENT - Rekor Systems, Inc.a8-k20171004globalmergerc.htm
 
NOVUME SOLUTIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
The following unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of Novume Solutions Inc. (“Novume”) and Global Technical Services, Inc. and Global Contract Professionals, Inc. (collectively “Global”) after giving effect to our acquisition of Global and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. We acquired all of the stock of Global on October 1, 2017. These pro forma condensed consolidated financial statements also give effect to the acquisitions of Firestorm Solutions, LLC and Firestorm Franchising, LLC (“Firestorm”) and Brekford, Inc. (“Brekford”) which occurred during fiscal year 2017.
 
The unaudited pro forma condensed consolidated balance sheet of Novume and Global as of September 30, 2017 is presented as if the Global acquisition had occurred on September 30, 2017. The unaudited pro forma condensed consolidated statement of operations of Novume, Global, Firestorm and Brekford for the nine months ended September 30, 2017 is presented as if the all of the acquisitions had taken place on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet of Novume, Global, Firestorm and Brekford as of December 31, 2016 is presented as if the Global acquisition had occurred on December 31, 2016. The unaudited pro forma condensed consolidated statement of operations of Novume, Global, Firestorm and Brekford for the fiscal year ended December 31, 2016 is presented as if the all of the acquisitions had taken place on January 1, 2016.
 
The unaudited pro forma condensed consolidated financial information does not purport to represent what the Company’s results of operations actually would have been if the acquisition of Global had occurred on January 1, 2016 or January 1, 2017 or what such results will be for any future periods or what the consolidated balance sheet would have been if the acquisition had occurred on September 30, 2017 or December 31, 2016. The actual results in the periods following the acquisition may differ significantly from that reflected in the unaudited pro forma condensed consolidated financial information for a number of reasons including, but not limited to, differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial information and the actual amounts and the completion of a final valuation of the acquisition. In addition, no adjustments have been made for non-recurring integration plans or operational efficiencies that may have been achieved if the acquisition had occurred on January 1, 2017 or January 1, 2016.
 
The unaudited pro forma condensed consolidated financial information has been prepared giving effect to the acquisitions, which are accounted for as a business combination in accordance with the Financial Accounting Standards Board Accounting Standards Codification 805, “Business Combinations.” The unaudited pro forma adjustments are based on management’s preliminary estimates of the values of the tangible and intangible assets and liabilities acquired. As a result, the actual adjustments may differ materially from those presented in the unaudited pro forma condensed consolidated financial statements. A change in the unaudited pro forma adjustments of the purchase price for the acquisition would primarily result in a reallocation affecting the value assigned to tangible and intangible assets. The income statement effect of these changes will depend on the nature and amount of the assets or liabilities adjusted.
 
These unaudited pro forma condensed consolidated financial statements, including the notes hereto, should be read in conjunction with (i) the historical consolidated financial statements for Novume included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2017; and (ii) the historical audited and unaudited financial statements of Global included as Exhibit 99.1, respectively to Novume’s Form 8-K/A dated November 21, 2017 (amending Novume’s Form 8-K dated October 1, 2017 and filed on October 4, 2017).
 
 
1
 
 
 
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2017
(UNAUDITED)
 
 
 
 
 Novume Solutions, Inc.
 
 
 Global Technical Services, Inc.
 
 
 Global Contract Professionals, Inc.
 
 
Pro Forma Adjustments
 
 
Ref
 
 
Novume Solutions, Inc.
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 $3,762,265 
 $14,447
 $6,487
 $(1,090,037)
 (1) 
 $2,693,162 
Investments
  - 
  - 
  - 
    
    
  - 
Accounts receivable, net
  3,300,742 
 3,103,292
 1,015,174
  - 
    
  7,419,208 
Note receivable, current portion
  300,000 
  645,505 
  - 
  (645,505)
 (3) 
  300,000 
Unbilled receivables
  - 
  - 
  - 
  - 
    
  - 
Inventory
  169,232 
  - 
  - 
  - 
    
  169,232 
Prepaids and other current assets
  253,607 
 118,722
  3,545 
  - 
    
  375,874 
Total current assets
  7,785,846 
 3,881,966
 1,025,206
  (1,735,542)
    
  10,957,476 
Property and equipment, net
  365,036 
 90,457
 23,303
  - 
    
  478,796 
Excess purchase price over net assets
  1,960,345 
  - 
  - 
  3,725,525 
 (1) 
  5,685,870 
Intangibles, net
  2,168,941 
    
    
    
    
  2,168,941 
Note receivable, non-current
  1,649,000 
  - 
  - 
  - 
    
  1,649,000 
Deferred tax asset
  1,184,359 
    
    
    
    
  1,184,359 
Investment at cost
  262,140 
  - 
  - 
  - 
    
  262,140 
Other non-current assets
  39,387 
  - 
  9,241 
  - 
    
  48,628 
TOTAL ASSETS
 $15,415,054 
 $3,972,423
 $1,057,750
 $1,989,983 
    
 $22,435,210 
 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
    
    
    
    
    
    
CURRENT LIABILITIES
    
    
    
    
    
    
Accounts payable and accrued expenses
 $3,290,345 
 $603,888
 $194,930
 $(48,539)
 (1) 
 $4,040,624 
Obligations under other notes payable - current portion
  - 
 2,656,421
 1,402,331
  (645,505)
 (3) 
  3,071,750 
 
    
    
    
  (341,497)
 (1) 
    
Other current liabilities
  72,500 
  69,940 
 23,230
  4,795 
 (2) 
  100,526 
 
    
    
    
  (69,940)
 (1) 
    
Total current liabilities
  3,362,845 
 3,330,249
   1,620,491
  (1,100,686)
    
  7,212,900 
 
    
    
    
    
    
    
LONG - TERM LIABILITIES
    
    
    
    
    
    
Notes payable – stockholders
  1,419,753 
  - 
  - 
  200,000 
 (1) 
  1,619,753 
Other notes payable - net of current portion
  - 
 954,316
  - 
  (954,316)
 (1) 
  - 
Deferred rent, net of current portion
  54,705 
  - 
  - 
  - 
    
  54,705 
Total long-term liabilities
  1,474,458 
 954,316
  - 
  (754,316)
    
  1,674,458 
TOTAL LIABILITIES
  4,837,303 
 4,284,565
 1,620,491
  (1,855,003)
    
  8,887,358 
 
    
    
    
    
    
    
Series A convertible redeemable preferred stock
  3,845,925 
  - 
    
    
    
  3,845,925 
 
    
    
    
    
    
    
STOCKHOLDERS’ (DEFICIT) EQUITY
    
    
    
    
    
    
Common stock
  1,394 
  10,000 
  441 
  (10,441)
 (1) 
  1,431 
 
    
    
    
  37 
 (1) 
    
   Additional paid-in capital
  9,325,795 
  565,984 
 (240,117)
  (325,867)
 (1) 
  9,892,045 
 
    
    
    
  566,250 
 (1) 
    
Preferred Stock
  - 
  - 
  - 
  2,408,610 
 (1) 
  2,408,610 
Treasury Stock
  - 
  (4,464,860)
  - 
  4,464,860 
 (1) 
  - 
Accumulated (Deficit) Earnings
  (2,595,363)
 3,576,734
  (323,065)
  (4,795)
 (2) 
  (2,600,159)
 
    
    
  - 
  (3,253,669)
 (1) 
    
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY
  6,731,826 
  (312,142)
  (562,741)
  3,844,986 
    
  9,701,927 
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
 $15,415,054 
 $3,972,423
 $1,057,750
 $1,989,983 
    
 $22,435,210 
 
 
 
2
 
 
 
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
(UNAUDITED)
 
 
 
 
 Novume Solutions, Inc.
 
 
Brekford Traffic Safety, Inc.
 
 
Firestorm, LLC & Affiliate (5)
 
 
 Global Technical Services, Inc.
 
 
 Global Contract Professionals, Inc.
 
 
Pro Forma Adjustments
 
 
Ref
 
 
Novume Solutions, Inc.
 
Net revenue
 $11,131,825 
 $2,068,759 
 $36,760 
 $13,650,759 
 $4,936,613 
 $- 
 
 
 
 $31,824,716 
Cost of revenue
  6,017,982 
  778,378 
  6,279 
  12,193,454 
  4,408,811 
  - 
 
 
 
  23,404,904 
Gross Profit
  5,113,843 
  1,290,381 
  30,482 
  1,457,305 
  527,802 
  - 
 
 
 
  8,419,813 
 
    
    
    
    
    
    
 
 
 
    
Operating Expenses
    
    
    
    
    
    
 
 
 
    
Salaries and related expenses
  - 
  1,237,539 
  - 
  - 
  - 
  - 
 
 
 
  1,237,539 
Selling, general and administrative expenses
  8,036,339 
  825,545 
  10,741 
  1,334,855 
  542,020 
  - 
 
 
 
  10,749,500 
Total operating expenses
  8,036,339 
  2,063,084 
  10,741 
  1,334,855 
  542,020 
  - 
 
 
 
  11,987,039 
(Loss) income from operations
  (2,922,496)
  (772,703)
  19,740 
  122,450 
  (14,218)
  - 
 
 
 
    
Other income (expense)
    
    
    
    
    
    
 
 
 
    
Interest (expense) income, net
  (97,624)
  17,546 
  - 
  (157,554)
  (72,323)
  (4,795)
 (2) 
  (314,750)
Change in fair value of derivative liability
  - 
  6,132 
  - 
  - 
  - 
  - 
    
  6,132 
Other income (expense)
  142,283 
  (235,724)
  - 
  10,982 
  (2,511)
  - 
    
  (84,970)
Total other income (expense)
  44,659 
  (212,046)
  - 
  (146,572)
  (74,834)
  (4,795)
    
  (393,588)
Net (loss) income - before taxes and foreign currency
  (2,877,837)
  (984,749)
  19,740 
  (24,122)
  (89,052)
  (4,795)
    
  (3,960,815)
Benefit from income taxes
  964,377 
  2,068,132 
  - 
  - 
  - 
  (2,132,725)
 (4) 
  899,784 
Net (loss) income - from continuing operations
 $(1,913,460)
 $1,083,383 
 $19,740 
 $(24,122)
 $(89,052)
 $(2,137,520)
    
 $(3,061,031)
 
    
    
    
    
    
    
    
    
(Loss) earnings per share - basic and diluted
 $(0.20)
 $0.02 
    
 $(0.55)
 $(2.02)
 $0.05 
 (5) 
 $(0.21)
 
    
    
    
    
    
    
    
    
Weighted average number of shares - basic and diluted
  10,920,866 
  49,311,264 
    
  44,050 
  44,050 
  (46,011,446)
 (5) 
  14,308,784 
 
 
 
3
 
 
 
NOVUME SOLUTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 (UNAUDITED)
 
 
  (1)
Reflects the impact of the marger of Global Technical Services, Inc. ("GTS") and Global Contract Professional, Inc. ("GCP") (collectively "Global") with Novume Solutions, Inc. ("Novume") on October 1, 2017, including the elimination of Global's equity of $824,505 and the related allocation to excess of purchase price over net assets acquired. Consideration paid as part of this merger include $900,000 in cash, 300,000 shares of Novume common stock, $1,800,000 of Novume Series B Preferred Stock, and debt reduction payments totalling approximately $1,195,554.
  (2)
Reflects interest expense of $4,795 on the discounted $907,407 notes payable issued at 7% per annum by Novume as part of the Firestorm acquisition.
  (3)
Reflects the elimination of intercompany balances between GTS and GCP.
  (4)
Brekford Traffic Safety Inc.'s ("Brekford") vehicle services business (the "Vehicle Services business") was sold to an unrelated third party on February 28, 2017. Brekford met the criteria for the Vehicle Services business to be classified as held for sale in December 2016 as Brekford had entered into a letter of intent with the purchaser and concluded that such sale was probable prior to December 31, 2016. In the three months ended March 31 2017 and 2016, Brekford reported financial results for both operations and discontinued operations. ASC 740-20-45 sets down the general rule for allocating income tax expense or benefit between operations and discontinued operations. The general rule requires the computation of tax expense or benefit by entity taking into consideration all items of income, expense, and tax credits. Next, a computation is made taking into consideration only those items related to continuing operations. Any difference is allocated to items other than continuing operations e.g. discontinued operations. Under these general rules, no tax expense or benefit would be allocated to discontinued operations. An exception to these rules apply under ASC 740-20-45-7 where an entity has 1) a loss from continuing operations and income related to other items such as discontinued operations and 2) the entity would not otherwise recognize a benefit for the loss from continuing operations under the approach described in ASC 740-20-45. This fact pattern applies for the three months ended March 31, 2017 and 2016. Application of this rule exception results in the allocation of tax expense to discontinued operations with an offsetting amount of tax benefit reported by the continuing operations. Overall, Brekford allocated $2,132,725 and $0 of tax expense to net income from discontinued operations and an offsetting tax benefit to net loss from continuing operations in the three months ended March 31 2017 and 2016, respectively. This pro forma adjustments reflects the elimination of this $2,132,725 tax benefit recognized in current operations related to the discontinued operations during the three months ended March 31, 2017.
  (5)
Because Firestorm is an LLC, no earnings per share is calculated.
 
 
 
4
 
 
 
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2016
(UNAUDITED)
 
 
 
 
 Novume Solutions, Inc.
 
 
 Brekford Traffic Safety, Inc.
 
 
Firestorm Solutions LLC and Franchising LLC
 
 
 Global Technical Services, Inc.
 
 
 Global Contract Professionals, Inc.
 
 
Pro Forma Adjustments
 
 
Ref
 
 
 Novume Solutions, Inc.
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 $2,788,587 
 $591,618 
 $3,319 
 $43,239 
 $28,458 
 $(627,038)
 (1) 
 $7,619,698 
 
    
    
    
    
    
  1,865,008 
 (2) 
    
 
    
    
    
    
    
  4,048,394 
 (4) 
    
 
    
    
    
    
    
  (1,121,887)
 (8) 
    
 
    
    
    
    
    
    
    
    
Accounts receivable, net
  1,997,831 
  115,106 
  76,517 
  2,349,756 
  527,054 
  - 
    
  5,066,264 
Inter-company receivable
    
    
  - 
  564,537 
  - 
  (564,537)
 (7) 
  - 
Unbilled receivables
  - 
  314,262 
  - 
  - 
  - 
  - 
    
  314,262 
Note receivable, net
  - 
  - 
  - 
  - 
  - 
    
    
  - 
Inventory
  - 
  221,186 
  - 
  - 
  - 
  - 
    
  221,186 
Prepaids and other current assets
  81,011 
  53,211 
  8,940 
  318,295 
  3,525 
  - 
    
  464,982 
Current assets - discontinued operations
  - 
  1,069,511 
  - 
  - 
  - 
  (1,069,511)
 (4) 
  - 
Total current assets
  4,867,429 
  2,364,894 
  88,776 
  3,275,827 
  559,037 
  2,530,429 
    
  13,686,392 
Property and equipment, net
  119,069 
  208,310 
  - 
  122,748 
  32,952 
  - 
    
  483,079 
Excess of purchase price over net assets acquired
  - 
  - 
  - 
  - 
  - 
  2,044,974
  (1)
  6,259,533
 
    
    
    
    
    
  482,045 
  (3)
    
 
    
    
    
    
    
  3,732,514 
  (8)
    
Notes receivable
  - 
  - 
  - 
  - 
  - 
  2,000,000 
  (4)
  2,000,000 
Investment at cost
  - 
  - 
  - 
  - 
  - 
  1,491,000 
  (4)
  1,491,000 
Non-current assets - discontinued operations
  - 
  40,387 
  - 
  - 
  - 
  (40,387)
  (4)
  - 
Other non-current assets
  496,227 
  9,877 
  49,811 
  - 
  9,241 
  67,491 
  (2)
  395,684 
 
    
    
    
    
    
  (236,963)
  (2)
    
TOTAL ASSETS
 $5,482,725 
 $2,623,468 
 $138,587 
 $3,398,575 
 $601,230 
 $12,071,103
    
 $24,315,688
 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
    
    
    
    
    
    
    
    
CURRENT LIABILITIES
    
    
    
    
    
    
    
    
Accounts payable and accrued expenses
 $1,152,471 
 $738,942 
 $62,847 
 $438,448 
 $56,166 
 $(84,007)
  (8)
 $2,364,867 
Line of credit
  - 
  - 
  - 
  2,074,115 
  434,587 
  - 
    
  2,508,702 
Inter-company payable
    
    
  - 
  - 
  564,537 
  (564,537)
  (7)
  - 
Obligations under other notes payable - current portion
  - 
  - 
  - 
  421,193 
  - 
  (421,193)
  (8)
  - 
Capital lease obligations, current portion
  - 
  - 
  - 
  - 
  - 
    
    
  - 
Deferred revenue
  - 
  - 
  - 
  - 
  - 
  - 
    
  - 
Current liabilities - discontinued operations
    
  971,466 
    
  - 
  - 
  (971,466)
  (4)
  - 
Other current liabilities
  - 
  99,918 
  - 
  69,940 
  19,628 
  (137,880)
  (8)
  51,606 
Total current liabilities
  1,152,471 
  1,810,326 
  62,847 
  3,003,696 
  1,074,918 
  (2,179,083)
    
  4,925,175 
 
    
    
    
    
    
    
    
    
LONG - TERM LIABILITIES
    
    
    
    
    
    
    
    
Notes payable – stockholders
  457,289 
  - 
  - 
  - 
  - 
  200,000 
  (8)
  657,289 
Notes payable - net of current portion
  - 
    
  - 
  682,897 
  - 
  (682,897)
  (8)
  - 
Deferred rent, net of current portion
  56,709 
  6,520 
  - 
  - 
  - 
  - 
    
  63,229 
Derivative liability
  - 
  - 
  - 
  - 
  - 
    
    
  - 
Deferred compensation liability
  - 
  - 
  - 
  - 
  - 
    
    
  - 
Deferred tax liability
  - 
  - 
  - 
  - 
  - 
    
    
  - 
Long-term liabilities - discontinued operations
  - 
  989,520 
  - 
  - 
  - 
  (989,520)
  (4)
  - 
Convertible promissory notes, net of debt discounts and issuance costs
  - 
  299,147 
  - 
  - 
  - 
  907,407 
  (1)
  1,206,554 
Total long-term liabilities
  513,998 
  1,295,187 
  - 
  682,897 
  - 
  (565,010)
    
  1,927,072 
TOTAL LIABILITIES
  1,666,469 
  3,105,513 
  62,847 
  3,686,593 
  1,074,918 
  (2,744,093)
    
  6,852,247 
 
    
    
    
    
    
    
    
    
Series A convertible redeemable preferred stock
  2,269,602 
  - 
  - 
  - 
  - 
  1,865,008 
  (2)
  3,897,647 
 
    
    
    
    
    
  (236,963)
  (2)
    
STOCKHOLDERS’ (DEFICIT) EQUITY
    
    
    
    
    
    
    
    
   Member's (deficit) equity
  - 
  - 
  75,740 
  - 
  - 
  (75,740)
  (1)
  - 
Common stock
  500 
  4,931 
  - 
  10,000 
  441 
  49 
  (1)
  587 
 
    
    
    
    
    
  (4,931)
  (3)
    
 
    
    
    
    
    
  (10,441)
  (8)
    
 
    
    
    
    
    
  38 
  (8)
    
   Additional paid-in capital
  1,976,549 
  11,515,472 
  - 
  565,984 
  - 
  1,203,937 
  (1)
  3,814,227 
 
    
    
    
    
    
  (11,515,472)
  (3)
    
 
    
    
    
    
    
  67,491 
  (2)
    
 
    
    
    
    
    
  (565,984)
  (8)
    
 
    
    
    
    
    
  566,250 
  (8)
    
Preferred Stock
    
    
    
    
    
  2,408,610 
  (8)
  2,408,610 
Treasury Stock, at cost 10,600 shares at December 31, 2016
  - 
  (5,890)
  - 
  (4,464,860)
  - 
  5,890 
  (3)
  - 
 
    
    
    
    
    
  4,464,860 
  (8)
    
Accumulated (Deficit) Earnings
  (430,395)
  (11,996,783)
  - 
  3,600,858 
  (474,129)
  (617,717)
  (1)
 7,342,370
 
    
    
    
    
    
  11,996,783 
  (3)
    
 
    
    
    
    
    
  8,390,482 
  (4)
    
 
    
    
    
    
    
  (3,126,729)
  (8)
    
   Other comprehensive loss
  - 
  225 
  - 
  - 
  - 
  (225)
  (3)
  - 
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY
  1,546,654 
  (482,045)
  75,740 
  (288,018)
  (473,688)
  13,187,150
    
 13,565,794
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
 $5,482,725 
 $2,623,468 
 $138,587 
 $3,398,575 
 $601,230 
 $12,071,103
    
 $24,315,688
 
 
 
5
 
 
 
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
(UNAUDITED)
 
 
 
 
  Novume Solutions, Inc.
 
 
Brekford, Inc.
 
 
Firestorm Solutions LLC and Franchising LLC (5)
 
 
 Global Technical Services, Inc.
 
 
 Global Contract Professionals, Inc.
 
 
Pro Forma Adjustments
 
 
Ref
 
 
Novume Solutions, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 $12,128,406 
 $2,534,264 
 $1,195,474 
 $18,116,381 
 $6,272,572 
 $- 
 
 
 
 $40,247,097 
Cost of revenue
  6,959,514 
  827,304 
  686,722 
  16,076,148 
  5,605,520 
  - 
 
 
 
  30,155,208 
Gross Profit
  5,168,892 
  1,706,960 
  508,752 
  2,040,233 
  667,052 
  - 
 
 
 
  10,091,889 
 
    
    
    
    
    
    
 
 
 
    
Operating Expenses
    
    
    
    
    
    
 
 
 
    
Salaries and related expenses
  - 
  1,645,073 
  - 
  - 
  - 
  - 
 
 
 
  1,645,073 
Selling, general and administrative expenses
  5,262,768 
  1,071,272 
  563,897 
  2,313,754 
  896,702 
 490,680
 
(9)
 
 10,599,073
Total operating expenses
  5,262,768 
  2,716,345 
  563,897 
  2,313,754 
  896,702 
 490,680
 
 
 
 12,244,146
(Loss) income from operations
  (93,876)
  (1,009,385)
  (55,145)
  (273,521)
  (229,650)
 (490,480)
 
 
 
  (2,152,257)
Other (expense) income
    
    
    
    
    
    
 
 
 
    
Interest expense
  (165,079)
  (402,168)
  - 
  (125,015)
  (71,621)
  (63,519)
(6)
  (827,402)
Change in fair value of derivative liability
  - 
  74,676 
  - 
  - 
  - 
    
    
  74,676 
Other income (expense)
  - 
  - 
  12,596 
  2,074 
  (682)
    
    
  13,988 
Loss on extinguishment of debt
  - 
  (291,911)
  - 
  - 
  - 
    
    
  (291,911)
Total other (expense) income
  (165,079)
  (619,403)
  12,596 
  (122,941)
  (72,303)
  (63,519)
    
  (1,030,649)
Net loss - before taxes and foreign currency
  (258,955)
  (1,628,788)
  (42,549)
  (396,462)
  (301,953)
  (554,199)
    
  (3,182,649)
Benefit from income taxes / income tax expense
  219,971 
  230,900 
  - 
  - 
  - 
  - 
    
  450,871 
Net loss - from continuing operations
  (38,984)
  (1,397,888)
  (42,549)
  (396,462)
  (301,953)
  (554,199)
    
  (2,732,035)
Net income from discontinued operations
  - 
  343,485 
    
  - 
  - 
  (343,485)
(4)
  - 
Net loss
 $(38,984)
 $(1,054,403)
 $(42,549)
 $(396,462)
 $(301,953)
 $(897,684)
    
 $(2,732,035)
 
    
    
    
    
    
    
    
    
Loss per share - basic and diluted
 $(0.01)
 $(0.02)
    
 $(9.00)
 $(6.85)
 $0.01
(5)
 $(0.19)
 
    
    
    
    
    
    
    
    
Weighted average number of shares - basic and diluted
  3,958,619 
  47,357,787 
    
  44,050 
  44,050 
  (37,095,722)
(5)
  14,308,784 
 
 
 
6
 
 
 
NOVUME SOLUTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016

 
 
  (1)
Reflects the financial impact of the Firestorm Solutions, LLC and Firestorm Franchising, LLC (collectively "Firestorm") acquisitions by Novume on January 25, 2017, including the elimination of the Firestorm equity, the acquisition consideration paid of $500,000 in cash, the net present value of the $1,000,000 notes payable to be issued, 488,094 shares of common stock in the aggregate to be issued to the Firestorm principals valued at $2 per share, the warrants to be issued to purchase 325,398 Novume Common Shares valued at $227,700 and excess of purchase price consideration over net asset values as of December 31, 2016. Included in cash paid is $127,037 in cash that would ahve been remitted for interest expense on the notes payable issued by Novume for the Firestorm acquisition. Amounts recorded include the impact of the amortization of the excess of purchase price consideration over net asset values of $490,680 for the year ended December 31, 2016.
  (2)
Reflects the impact of the second and third closings of Novume's convertible preferred stock and warrants offering net of offering costs. The aggregate gross proceeds of the second and third closings for 200,757 Units was $2,007,570 and offering costs netted against the gross proceeds were $142,565 for net proceeds of $1,865,008. The Company also eliminated on a pro forma basis $216,842 of costs that were paid in 2016 and deferred as of December 31, 2016. The fair value of $67,491 related to the 50,189 warrants issued related to the second and third closings were recorded to equity.
  (3)
Reflects the impact of the Brekford Traffic Safety Inc. ("Brekford"), including the elimination of Brekford's equity of $482,045 as of December 31, 2016 and the related allocation to excess of purchase price over net assets acquired. Equity consideration and related intangible assets will be finalized included upon approval and completion of the merger.
  (4)
Reflects the consideration received of $4,048,394 in net cash and $2,000,000 in notes receivable and disposition of Brekford's vehicle services business (the "Vehicle Services business") which was sold to an unrelated third party on February 28, 2017. Brekford met the criteria for the Vehicle Services business to be classified as held for sale in December 2016 as Brekford had entered into a letter of intent with the purchaser and concluded that such sale was probable prior to December 31, 2016. As such, Brekford reported the Vehicle Services business as discontinued operations in Brekford's consolidated financial statements as of December 31, 2016 and for the years ended December 31, 2016 and 2015, respectively. The Company eliminated current assets - discontinued operations of $1,069,511, non-current assets - discontinued operations of $40,387, current liabilities - discontinued operations of $971,466 and long term liabilities - discontinued operations of $989,520 that were recorded on Brekford's balance sheet as of December 31, 2016. The Company also recorded the cost investment of $1,491,000 related to the 19.9% retained ownership (estimated fair value after the purchase price allocation for the Brekford merger) and a net adjustment to accumulated earnings of $6,883,827 representing the gain on sale of the discontinued operations. For the income statement, Brekford's reported net income from discontinued operations in fiscal year 2016 of $343,485 and in fiscal year 2015 of $573,659 were eliminated.
  (5)
Because Firestorm is an LLC, no earnings per share is calculated.
  (6)
Reflects interest expense of $63,519 on the discounted $907,407 notes payable issued at 7% per annum by Novume as part of the Firestorm acquisition for the year ended December 31, 2016.
  (7)
Reflects the elimination of intercompany balances between Global Technical Services, Inc. and Global Contract Professionals, Inc.
  (8)
Reflects the impact of the merger of Global Technical Services, Inc. and Global Contract Professionals, Inc. (collectively"Global") with Novume on October 1, 2017, including the elimination of TeamGlobal's negative equity of $822,724 and the related allocation to excess of purchase price over net assets acquired. Consideration paid for this merger include $900,000 in cash, 300,000 shares of Novume's common stock, $1,800,000 of Series B Preferred Stock, and debt reduction payments totalling approximately $1,195,554.
 (9)
Reflects amortization expense of $490,680 on the excess of purchase price consideration over net asset values related to the acquistion of Firestorm for the year ended December 31, 2016.
 
 
 
7