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8-K/A - CURRENT REPORT - Rekor Systems, Inc. | form8-ka20180125neosystems.htm |
Exhibit
99.2
The following
unaudited pro forma condensed consolidated financial statements are
based on the historical financial statements of Novume Solutions
Inc., Global Technical Services, Inc. (“GTS”) and
Global Contract Professionals, Inc. (“GCP”)
(collectively “Global”) and NeoSystems,
Inc.(“NeoSystems”) after giving effect to our
acquisition of Global and the anticipated acquisitions of
NeoSystems, and the assumptions and adjustments described in the
accompanying notes to the unaudited pro forma condensed
consolidated financial statements. These pro forma condensed
consolidated financial statements also give effect to the
acquisitions of Firestorm Solutions, LLC and Firestorm Franchising,
LLC (collectively “Firestorm”) and Brekford, Inc.
(“Brekford”) which occurred during fiscal year
2017.
The unaudited pro
forma condensed consolidated balance sheet of Novume, Global and
NeoSystems as of September 30, 2017 is presented as if the Global
and anticipated NeoSystems acquisitions had occurred on September
30, 2017. The unaudited pro forma condensed consolidated statement
of operations of Novume, Global, NeoSystems, 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, NeoSystems, Firestorm and Brekford as of December 31, 2016
is presented as if the Global and anticipated NeoSystems
acquisitions had occurred on December 31, 2016. The unaudited pro
forma condensed consolidated statement of operations of Novume,
Global, NeoSystems, Firestorm and Brekford for the fiscal year
ended December 31, 2016 is presented as if the acquisitions and
planned 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 would
have been if the acquisition of Global and anticipated acquisition
of NeoSystems 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 acquisitions 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 acquisitions. In addition,
no adjustments have been made for non-recurring integration plans
or operational efficiencies that may have been achieved if the
acquisitions 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 combinations 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 acquisitions 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 for the
nine months ended September 30, 2017; and (ii) the historical
audited financial statements of NeoSystems included in Exhibit
99.1.
1
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2017
(UNAUDITED)
|
Novume
Solutions, Inc.
(Restated)
|
Global
Technical Services, Inc.
|
Global
Contract Professionals, Inc.
|
Pro
Forma Adjustments
|
Ref
|
Novume
Solutions, Inc.
(Restated)
|
NeoSystems,
Corp.
|
Pro
Forma Adjustments
|
Ref
|
Novume
Solutions, Inc.
(Restated)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$3,762,265
|
$14,447
|
$6,487
|
$(1,090,037)
|
(1)
|
$2,693,162
|
$2,022,078
|
$(7,250,000)
|
(6)
|
$(2,534,760)
|
Investments
|
-
|
-
|
-
|
-
|
|
-
|
561,780
|
|
|
561,780
|
Accounts receivable,
net
|
3,300,742
|
3,103,292
|
1,015,174
|
-
|
|
7,419,208
|
7,408,726
|
-
|
|
14,827,934
|
Note receivable,
current portion
|
300,000
|
645,505
|
-
|
(645,505)
|
(3)
|
300,000
|
165,742
|
|
|
465,742
|
Unbilled
receivables
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
Inventory
|
169,232
|
-
|
-
|
-
|
|
169,232
|
-
|
-
|
|
169,232
|
Prepaids and other
current assets
|
253,607
|
118,722
|
3,545
|
-
|
|
375,874
|
813,026
|
-
|
|
1,188,900
|
Total current
assets
|
7,785,846
|
3,881,966
|
1,025,206
|
(1,735,542)
|
|
10,971,352
|
11,282,779
|
(7,250,000)
|
|
14,678,828
|
Property and equipment,
net
|
365,036
|
90,457
|
23,303
|
-
|
|
478,796
|
3,272,326
|
-
|
|
3,751,122
|
Excess purchase price
over net assets
|
1,960,345
|
-
|
-
|
3,725,525
|
(1)
|
5,685,870
|
-
|
15,833,617
|
(6)
|
21,519,487
|
Intangibles,
net
|
2,168,941
|
-
|
-
|
-
|
|
2,168,941
|
|
|
|
2,168,941
|
Note receivable,
non-current
|
1,649,000
|
-
|
-
|
-
|
|
1,649,000
|
-
|
-
|
|
1,649,000
|
Deferred tax
asset
|
1,184,359
|
-
|
-
|
-
|
|
1,184,359
|
|
|
|
1,184,359
|
Investment at
cost
|
262,140
|
-
|
-
|
-
|
|
262,140
|
-
|
-
|
|
262,140
|
Other non-current
assets
|
39,387
|
-
|
9,241
|
-
|
|
48,628
|
-
|
-
|
|
48,628
|
TOTAL
ASSETS
|
$15,415,054
|
$3,972,423
|
$1,057,750
|
$1,989,983
|
|
$22,435,210
|
$14,243,678
|
$8,583,617
|
|
$45,262,505
|
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
|
$3,485,624
|
-
|
|
$7,526,248
|
Obligations under other
notes payable - current portion
|
-
|
2,656,421
|
1,402,331
|
(645,505)
|
(3)
|
3,071,750
|
4,979,404
|
-
|
|
8,051,154
|
|
|
|
|
(341,497)
|
(1)
|
|
|
|
|
|
Other current
liabilities
|
72,500
|
69,940
|
23,231
|
4,795
|
(2)
|
100,526
|
468,756
|
-
|
|
569,282
|
|
|
|
|
(69,940)
|
(1)
|
|
|
|
|
|
Total current
liabilities
|
3,362,845
|
3,330,249
|
1,620,492
|
(1,100,686)
|
|
7,212,900
|
8,933,784
|
-
|
|
16,146,684
|
|
|
|
|
|
|
|
|
|
|
|
LONG - TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Notes payable –
stockholders
|
1,419,753
|
-
|
-
|
200,000
|
(1)
|
1,619,753
|
-
|
-
|
|
1,619,753
|
Other notes payable -
net of current portion
|
-
|
954,316
|
-
|
(954,316)
|
(1)
|
-
|
-
|
-
|
|
-
|
Derivative
liability
|
-
|
-
|
-
|
-
|
|
-
|
471,470
|
(471,470)
|
(6)
|
-
|
Deferred compensation
liability
|
-
|
-
|
-
|
-
|
|
-
|
446,678
|
-
|
|
446,678
|
Deferred rent, net of
current portion
|
54,705
|
-
|
-
|
-
|
|
54,705
|
1,834,249
|
-
|
|
1,888,954
|
Total long-term
liabilities
|
1,474,458
|
954,316
|
-
|
(754,316)
|
|
1,674,458
|
2,752,397
|
(471,470)
|
|
3,955,385
|
TOTAL
LIABILITIES
|
4,837,303
|
4,284,565
|
1,620,492
|
(1,855,003)
|
|
8,887,358
|
11,686,181
|
(471,470)
|
|
20,102,069
|
|
|
|
|
|
|
|
|
|
|
|
Series A convertible
redeemable preferred stock
|
4,246,541
|
-
|
-
|
-
|
|
4,246,541 |
-
|
-
|
|
4,246,541
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
(DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
1,394
|
10,000
|
441
|
(10,441)
|
(1)
|
1,431
|
3,591,903
|
(3,591,903)
|
(6)
|
1,651
|
|
|
|
|
38
|
(1)
|
|
|
220
|
(6)
|
|
Additional
paid-in capital
|
8,925,179
|
565,984
|
(240,117)
|
(325,867)
|
(1)
|
9,491,429
|
1,250,383
|
(1,250,383)
|
(6)
|
21,103,794
|
|
|
|
|
566,250
|
(1)
|
|
|
7,999,781
|
(6)
|
|
|
|
|
|
|
(1)
|
|
|
3,612,584
|
(6)
|
|
Preferred
Stock
|
-
|
-
|
-
|
2,408,610
|
(1)
|
2,408,610
|
571
|
(571)
|
(6)
|
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)
|
(2,600,158)
|
(2,285,360)
|
2,285,359
|
(6)
|
(2,600,159)
|
|
|
|
|
(3,253,669)
|
(1)
|
|
|
|
|
|
Other
comprehensive loss
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
-
|
TOTAL STOCKHOLDERS'
(DEFICIT) EQUITY
|
6,331,210
|
(312,142)
|
(562,742)
|
3,844,986
|
|
9,301,311
|
2,557,497
|
9,055,087
|
|
20,913,895
|
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY
|
$15,415,054
|
$3,972,423
|
$1,057,751
|
$1,989,983
|
|
$22,435,210
|
$14,243,678
|
$8,583,617
|
|
$45,262,505
|
2
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
(UNAUDITED)
|
Novume
Solutions, Inc.
(Restated)
|
Brekford
Traffic Safety, Inc.
|
Firestorm,
LLC & Affiliate (5)
|
Global
Technical Services Inc.
|
Global
Contract Professionals, Inc.
|
Pro
Forma Adjustments
|
Ref
|
Novume
Solutions, Inc.
(Restated)
|
NeoSystems,
Corp.
|
Pro
Forma Adjustments
|
Novume
Solutions, Inc.
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
$11,131,825
|
$2,068,759
|
$36,760
|
$13,650,759
|
$4,936,613
|
$-
|
|
$31,824,716
|
$23,383,655
|
$-
|
$55,208,371
|
Cost of
revenue
|
6,017,982
|
778,378
|
6,279
|
12,193,454
|
4,408,811
|
-
|
|
23,404,904
|
8,564,289
|
-
|
31,969,193
|
Gross
Profit
|
5,113,843
|
1,290,381
|
30,482
|
1,457,305
|
527,802
|
-
|
|
8,419,813
|
14,819,366
|
-
|
23,239,179
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
expenses
|
-
|
1,237,539
|
-
|
-
|
-
|
-
|
|
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
|
14,259,102
|
-
|
25,008,602
|
Total operating
expenses
|
8,036,339
|
2,063,084
|
10,741
|
1,334,855
|
542,020
|
-
|
|
11,987,039
|
14,259,102
|
-
|
26,246,141
|
Income (loss) from
operations
|
(2,922,496)
|
(772,703)
|
19,740
|
122,450
|
(14,218)
|
-
|
|
(3,567,227)
|
560,264
|
-
|
(3,006,963)
|
Other (expense)
income
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense)
income, net
|
(97,624)
|
17,546
|
-
|
(157,554)
|
(72,323)
|
(4,795)
|
(2)
|
(314,750)
|
(676,553)
|
-
|
(991,303)
|
Change in fair value of
derivative liability
|
-
|
6,132
|
-
|
-
|
-
|
-
|
|
6,132
|
-
|
-
|
6,132
|
Other income
(expense)
|
142,283
|
(235,724)
|
-
|
10,982
|
(2,511)
|
-
|
|
(84,970)
|
13,725
|
-
|
(71,245)
|
Total other (expense)
income
|
44,659
|
(212,046)
|
-
|
(146,572)
|
(74,834)
|
(4,795)
|
|
(393,588)
|
(662,828)
|
-
|
(1,056,416)
|
Net income (loss) -
before taxes and foreign currency
|
(2,877,837)
|
(984,749)
|
19,740
|
(24,122)
|
(89,052)
|
(4,795)
|
|
(3,960,815)
|
(102,564)
|
-
|
(4,063,379)
|
Benefit from income
taxes
|
964,377
|
2,068,132
|
-
|
-
|
-
|
(2,132,725)
|
(4)
|
899,784
|
41,025
|
|
940,809
|
Net income (loss) -
from continuing operations
|
$(1,913,460)
|
$1,083,383
|
$19,740
|
$(24,122)
|
$(89,052)
|
$(2,137,520)
|
|
$(3,061,031)
|
$(61,539)
|
$-
|
$(3,122,570)
|
Loss per share - basic
and diluted
|
$(0.23)
|
$0.02
|
|
$(0.55)
|
$(2.02)
|
$
.05
|
(5)
|
$(0.26)
|
$(0.02)
|
$-
|
$(0.23)
|
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
|
3,507,419
|
(1,315,638)
|
16,500,565
|
(1)
Reflects
the impact of the merger of Global with 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 Series A Preferred Stock, and debt reduction payments totaling
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 Global Technical
Services, Inc. and Global Contract Professional, Inc.
(4)
Brekford’s
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 adjustment 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.
(6)
Reflects
the impact of the merger of NeoSystems with Novume, which is
anticipated to close in the first quarter of 2018, including the
elimination of NeoSystems' equity of $2,556,926 and the related
allocation to excess of purchase price over net assets acquired.
Consideration paid for this merger includes $5,000,000 in cash,
$8,000,000 in Novume common stock, currently estimated at 2,191,781
shares based on closing share price of $3.65 as of November 11,
2017, debt reduction payments totaling approximately $2,250,000,
and assumed fully-vested options under the existing NeoSystems plan
totaling approximately $3,613,000. Pro forma adjustment assumes
that existing notes payable-non current are reclassified as notes
payable-current as a result of this transaction.
3
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2016
(UNAUDITED)
|
Novume
Solutions, Inc.
|
Brekford,
Inc.
|
Firestorm
Solutions, LLC and Firestorm Franchising, LLC
|
Global
Technical Services, Inc.
|
Global
Contract Professionals, Inc.
|
Pro
Forma Adjustments
|
Ref
|
Novume
Solutions, Inc.
|
NeoSystems,
Corp.
|
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
|
$2,662,891
|
$(7,250,000)
|
(9)
|
$3,032,589
|
|
|
-
|
-
|
-
|
-
|
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
|
5,540,963
|
-
|
|
10,607,227
|
Inter-company
receivable
|
|
-
|
-
|
564,537
|
-
|
(564,537)
|
(7)
|
-
|
-
|
-
|
|
-
|
Unbilled
receivables
|
-
|
314,262
|
-
|
-
|
-
|
-
|
|
314,262
|
-
|
-
|
|
314,262
|
Note receivable,
net
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
206,930
|
-
|
|
206,930
|
Inventory
|
-
|
221,186
|
-
|
-
|
-
|
-
|
|
221,186
|
-
|
-
|
|
221,186
|
Prepaids and other
current assets
|
81,011
|
53,211
|
8,940
|
318,295
|
3,525
|
-
|
|
464,982
|
822,265
|
-
|
|
1,287,247
|
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
|
9,233,049
|
(7,250,000)
|
|
15,669,441
|
Property and equipment,
net
|
119,069
|
208,310
|
-
|
122,748
|
32,952
|
-
|
|
483,079
|
3,643,631
|
-
|
|
4,126,710
|
Excess of purchase
price over net assets acquired
|
-
|
-
|
-
|
-
|
-
|
2,044,974
|
(1)
|
6,259,533
|
-
|
15,936,358
|
(9)
|
22,195,891
|
|
|
|
|
|
|
482,045
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
3,732,514
|
(8)
|
|
|
|
|
|
Notes
receivable
|
-
|
-
|
-
|
-
|
-
|
2,000,000
|
(4)
|
2,000,000
|
-
|
-
|
|
2,000,000
|
Investment at
cost
|
-
|
-
|
-
|
-
|
-
|
1,491,000
|
(4)
|
1,491,000
|
-
|
-
|
|
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
|
614,184
|
-
|
|
1,009,868
|
|
-
|
-
|
-
|
-
|
-
|
(236,963)
|
(2)
|
-
|
-
|
-
|
|
|
TOTAL
ASSETS
|
$5,482,725
|
$2,623,468
|
$138,587
|
$3,398,575
|
$601,230
|
$12,071,102
|
|
$24,315,688
|
$13,490,864
|
$8,686,358
|
|
$46,492,910
|
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
|
$2,805,214
|
-
|
|
$5,170,081
|
Line of
credit
|
-
|
-
|
-
|
2,074,115
|
434,587
|
-
|
|
2,508,702
|
-
|
-
|
|
2,508,702
|
Inter-company
payable
|
-
|
-
|
-
|
-
|
564,537
|
(564,537)
|
(7)
|
-
|
-
|
-
|
|
-
|
Obligations under other
notes payable - current portion
|
-
|
-
|
-
|
421,193
|
-
|
(421,193)
|
(8)
|
-
|
4,491,941
|
-
|
|
4,491,941
|
Capital lease
obligations, current portion
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
110,227
|
-
|
|
110,227
|
Deferred
revenue
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
297,847
|
-
|
|
297,847
|
Current liabilities -
discontinued operations
|
-
|
971,466
|
-
|
-
|
-
|
(971,466)
|
(4)
|
-
|
-
|
-
|
|
-
|
Other current
liabilities
|
-
|
99,918
|
-
|
69,940
|
19,628
|
(137,880)
|
(8)
|
51,606
|
-
|
-
|
|
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
|
7,705,229
|
-
|
|
12,630,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG - TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable –
stockholders
|
457,289
|
-
|
-
|
-
|
-
|
200,000
|
(8)
|
657,289
|
-
|
-
|
|
657,289
|
Notes payable - net of
current portion
|
-
|
-
|
-
|
682,897
|
-
|
(682,897)
|
(8)
|
-
|
177,352
|
-
|
|
177,352
|
Deferred rent, net of
current portion
|
56,709
|
6,520
|
-
|
-
|
-
|
-
|
|
63,229
|
2,032,189
|
-
|
|
2,095,418
|
Derivative
liability
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
471,470
|
(471,470)
|
(9)
|
-
|
Deferred compensation
liability
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
266,223
|
-
|
|
266,223
|
Deferred tax
liability
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
383,645
|
-
|
|
383,645
|
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
|
-
|
-
|
|
1,206,554
|
Total long-term
liabilities
|
513,998
|
1,295,187
|
-
|
682,897
|
-
|
(565,010)
|
|
1,927,072
|
3,330,879
|
(471,470)
|
|
4,786,481
|
TOTAL
LIABILITIES
|
1,666,469
|
3,105,513
|
62,847
|
3,686,593
|
1,074,918
|
(2,744,093)
|
|
6,852,247
|
11,036,108
|
(471,470)
|
|
17,416,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A convertible
redeemable preferred stock
|
2,269,602
|
-
|
-
|
-
|
-
|
1,865,008
|
(2)
|
3,897,647
|
-
|
-
|
|
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
|
3,427,654
|
219
|
(9)
|
806
|
|
-
|
-
|
-
|
-
|
-
|
(4,931)
|
(3)
|
|
|
(3,427,654)
|
(9)
|
|
|
-
|
-
|
-
|
-
|
-
|
(10,441)
|
(8)
|
|
|
|
|
|
|
-
|
-
|
-
|
-
|
-
|
38
|
(8)
|
|
|
|
|
|
Additional
paid-in capital
|
1,976,549
|
11,515,472
|
-
|
565,984
|
-
|
1,203,937
|
(1)
|
3,814,227
|
1,250,383
|
(1,250,383)
|
(9)
|
15,426,592
|
|
-
|
-
|
-
|
-
|
-
|
(11,515,472)
|
(3)
|
|
|
7,999,781
|
(9)
|
|
|
-
|
-
|
-
|
-
|
-
|
67,491
|
(2)
|
|
|
3,612,584
|
(9)
|
|
|
-
|
-
|
-
|
-
|
-
|
(565,984)
|
(8)
|
|
|
|
|
|
|
-
|
-
|
-
|
-
|
-
|
566,250
|
(8)
|
|
|
|
|
|
Preferred
Stock
|
-
|
-
|
-
|
-
|
-
|
2,408,610
|
(8)
|
2,408,610
|
522
|
(522)
|
(9)
|
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
|
(2,223,803)
|
2,223,803
|
(9)
|
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
|
2,454,756
|
9,157,828
|
|
25,178,378
|
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY
|
$5,482,725
|
$2,623,468
|
$138,587
|
$3,398,575
|
$601,230
|
$12,071,102
|
|
$24,315,688
|
$13,490,864
|
$8,686,358
|
|
$46,492,910
|
4
NOVUME SOLUTIONS, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
(UNAUDITED)
|
Novume
Solutions, Inc.
|
Brekford,
Corp.
|
Firestorm
Solutions LLC and Franchising LLC (5)
|
Global
Technical Services, Inc.
|
Global
Contract Professionals, Inc.
|
Pro
Forma Adjustments
|
Ref
|
Novume
Solutions, Inc.
|
NeoSystems,
Corp.
|
Pro
Forma Adjustments
|
Novume
Solutions, Inc.
|
Net
revenue
|
$12,128,406
|
$2,534,264
|
$1,195,474
|
$18,116,381
|
$6,272,572
|
$-
|
|
$40,247,097
|
$29,821,204
|
$-
|
$70,068,301
|
Cost of
revenue
|
6,959,514
|
827,304
|
686,722
|
16,076,148
|
5,605,520
|
-
|
|
30,155,208
|
11,659,346
|
-
|
41,814,554
|
Gross
Profit
|
5,168,892
|
1,706,960
|
508,752
|
2,040,233
|
667,052
|
-
|
|
10,091,889
|
18,161,858
|
-
|
28,253,747
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
expenses
|
-
|
1,645,073
|
-
|
-
|
-
|
-
|
|
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
|
(10)
|
10,599,073
|
20,256,251
|
-
|
30,855,324
|
Total operating
expenses
|
5,262,768
|
2,716,345
|
563,897
|
2,313,754
|
896,702
|
490,680
|
|
12,244,146
|
20,256,251
|
-
|
32,500,397
|
Income (loss) from
operations
|
(93,876)
|
(1,009,385)
|
(55,145)
|
(273,521)
|
(229,650)
|
(490,680)
|
|
(2,152,257)
|
(2,094,393)
|
-
|
(4,246,650)
|
Other (expense)
income
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(165,079)
|
(402,168)
|
-
|
(125,015)
|
(71,621)
|
(63,519)
|
(6)
|
(827,402)
|
(1,229,479)
|
|
(2,056,881)
|
Change in fair value of
derivative liability
|
-
|
74,676
|
-
|
-
|
-
|
-
|
|
74,676
|
806,568
|
-
|
881,244
|
Other income
(expense)
|
-
|
-
|
12,596
|
2,074
|
(682)
|
-
|
|
13,988
|
25,077
|
-
|
39,065
|
Loss on extinguishment
of debt
|
-
|
(291,911)
|
-
|
-
|
-
|
-
|
|
(291,911)
|
-
|
-
|
(291,911)
|
Total other (expense)
income
|
(165,079)
|
(619,403)
|
12,596
|
(122,941)
|
(72,303)
|
(63,519)
|
|
(1,030,649)
|
(397,834)
|
-
|
(1,428,483)
|
Net income (loss) -
before taxes and foreign currency
|
(258,955)
|
(1,628,788)
|
(42,549)
|
(396,462)
|
(301,953)
|
(554,199)
|
|
(3,182,906)
|
(2,492,227)
|
-
|
(5,675,133)
|
Benefit from income
taxes / income tax expense
|
219,971
|
230,900
|
-
|
-
|
-
|
-
|
|
450,871
|
1,385,252
|
-
|
1,836,123
|
Net income (loss) -
from continuing operations
|
(38,984)
|
(1,397,888)
|
(42,549)
|
(396,462)
|
(301,953)
|
(554,199)
|
|
(2,732,035)
|
(1,106,975)
|
-
|
(3,839,010)
|
Net income from
discontinued operations
|
-
|
343,485
|
-
|
-
|
-
|
(343,485)
|
(4)
|
-
|
-
|
|
-
|
Net income
(loss)
|
$(38,984)
|
$(1,054,403)
|
$(42,549)
|
$(396,462)
|
$(301,953)
|
$(897,684)
|
|
$(2,732,035)
|
$(1,106,975)
|
$-
|
$(3,839,010)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - basic
and diluted
|
$(0.01)
|
$(0.02)
|
|
$(9.00)
|
$(6.85)
|
$0.01
|
(5)
|
$(0.19)
|
$(0.32)
|
$-
|
$(0.23)
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
3,503,419
|
(1,311,638)
|
16,500,565
|
5
(1)
Reflects
the financial impact of the 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 have 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 redeemable,
convertible Series A Preferred Stock and Unit 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
Unit Warrants issued related to the second and third closings were
recorded to equity.
(3)
Reflects
the impact of the Brekford merger with Novume on August 28, 2017,
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 the 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 years ended December 31, 2016 and
2015.
(7)
Reflects
the elimination of intercompany balances between Global Technical
Services, Inc. and Global Contract Professional, Inc.
(8)
Reflects the impact of the merger of Global with
Novume on October 1, 2017 including the elimination of Global's
negative equity of $822,724 and the related allocation to excess of
purchase price over net assets acquired. Consideration paid for
this merger includes $900,000 in cash, 300,000 shares of Novume's
common stock, $1,800,000 of Series A Preferred Stock, and debt
reduction payments totaling approximately
$1,195,554.
(9)
Reflects
the impact of the anticipated merger of NeoSystems with Novume in
the first quarter of 2018, including the elimination of NeoSystems'
equity of $2,454,756 and the related allocation to excess of
purchase price over net assets acquired. Consideration paid for
this merger includes $5,000,000 in cash, $10,000,000 in Novume
common stock, currently estimated at 2,739,726 shares based on
closing share price of $3.65 as of November 11, 2017, debt
reduction payments totaling approximately $2,250,000 and the value
of assumed fully-vested options under the existing NeoSystems
option plan totaling approximately $3,613,000.
(10)
Reflects
amortization expense of $490,680 on the excess of purchase price
consideration over net asset values related to the acquisition of
Firestorm for the year ended December 31, 2016.
6