EX-99.2 3 f8k100419a1ex99-2_andover.htm UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF ANC GREEN SOLUTIONS I AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

Exhibit 99.2

 

Financial Statements and Supplementary Data.

 

Index to Unaudited Financial Statements

 

Legg Holdings, Inc.

(subsequently renamed ANC Green Solutions I, LLC)

September 30, 2019

 

  Page
   
Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (Unaudited) F-1
   
Consolidated Statements of Operations for the nine months ended September 30, 2019 and 2018 (Unaudited) F-2
   
Consolidated Statements of Stockholders’ Equity for the nine months ended September 30, 2019 and 2018 (Unaudited) F-3
   
Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (Unaudited) F-4
   
Notes to Unaudited Consolidated Financial Statements for the nine months ended September 30, 2019 and 2018 F-5

 

 

 

 

Legg Holdings, Inc.

(subsequently renamed ANC Green Solutions I, LLC) 

Consolidated Balance Sheets

 

   September 30,   December 31, 
   2019   2018 
Assets  (Unaudited)     
Current assets        
Cash  $194,510   $899,653 
Accounts receivable   176,705    146,811 
Prepaid expenses   9,643    - 
Total current assets   380,858    1,046,464 
           
Property and equipment, net   206,124    261,378 
Total assets  $586,982   $1,307,842 
           
Liabilities and Stockholders’ Equity          
Current liabilities          
Accounts payable and accrued liabilities  $66,732   $50,009 
Notes payable   -    20,473 
Total Current Liabilities   66,732    70,482 
           
Stockholders’ Equity          
Common stock, $1 par value; 600 shares authorized, 600 shares issued and outstanding   600    600 
Additional paid in capital   72,757    72,757 
Retained earnings   446,893    1,164,003 
Total stockholders’ equity   520,250    1,237,360 
Total Liabilities and Stockholders’ Equity  $586,982   $1,307,842 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

F-1

 

 

Legg Holdings, Inc.

(subsequently renamed ANC Green Solutions I, LLC)

Consolidated Statements of Operations

 

   Nine Months Ended   Nine Months Ended 
   September 30, 2019   September 30, 2018 
   (Unaudited)   (Unaudited) 
Revenue        
Lawn care revenue  $1,880,694   $1,624,324 
Franchise revenue   76,331    76,229 
Total revenue   1,957,025    1,700,553 
           
Operating expenses          
Direct costs   249,461    260,340 
Selling and marketing   116,967    92,316 
General and administrative   1,118,450    1,028,589 
Depreciation   62,108    59,056 
Total operating expenses   1,546,986    1,440,301 
           
Income from operations   410,039    260,252 
           
Other income (expenses)          
Interest expense   (345)   (940)
Gain on insurance compensation   120,644    - 
Total other income (expenses)   120,299    (940)
           
Income from operations before income taxes   530,338    259,312 
           
Net Income  $530,338   $259,312 
           
Net income per share – basic and diluted  $883.90   $432.19 
           
Weighted average common shares – basic and diluted   600    600 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

F-2

 

 

Legg Holdings, Inc.

(subsequently renamed ANC Green Solutions I, LLC)

Consolidated Statements of Stockholders’ Equity

 

   Common stock   Additional Paid in   Retained   Total Stockholders’ 
   Shares   Amount   Capital   Earnings   Equity 
Balance as of December 31, 2017   600   $600   $25,983   $815,005   $841,588 
Shareholder contribution (distribution)   -    -    46,774    (3,530)   43,244 
Net income   -    -    -    259,312    259,312 
Balance as of September 30, 2018 (Unaudited)   600   $600   $72,757   $1,070,787   $1,144,144 
                          
Balance as of December 31, 2018   600   $600   $72,757   $1,164,003   $1,237,360 
Shareholder distribution   -    -    -    (1,247,448)   (1,247,448)
Net income   -    -    -    530,338    530,338 
Balance as of September 30, 2019 (Unaudited)   600   $600   $72,757   $446,893   $520,250 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

F-3

 

 

Legg Holdings, Inc.

(subsequently renamed ANC Green Solutions I, LLC)

Consolidated Statements of Cash Flows

 

   Nine Months Ended   Nine Months Ended 
  

September 30,

2019

  

September 30,

2018

 
Cash Flows from Operating Activities  (Unaudited)   (Unaudited) 
Net income  $530,338   $259,312 
Adjustments to reconcile net loss to net cash used in operating activities          
Depreciation   62,108    59,056 
Loss on disposal of fixed assets   23,630      
Changes in operating assets and liabilities:          
Accounts receivable   (29,894)   (58,807)
Prepaid expense   (9,643)   - 
Accounts payable and accrued liabilities   16,750    (8,078)
Net cash provided by operating activities   593,289    251,483 
           
Cash Flows from Investing Activities          
Payments for purchase of fixed assets   (48,338)   (53,823)
Net cash used investing activities   (48,338)   (53,823)
           
Cash Flows from Financing Activities          
Shareholder contribution   -    46,774 
Shareholder distribution   (1,247,448)   (3,530)
Repayment to notes payable   (2,646)   (4,554)
Net cash provided by (used in) financing activities   (1,250,094)   38,690 
           
Net increase (decrease) in cash, cash equivalents and restricted cash   (705,143)   236,350 
           
Cash, cash equivalents and restricted cash, beginning of period   899,653    534,636 
           
Cash, Cash Equivalents and Restricted Cash, end of period  $194,510   $770,986 
           
           
Supplemental Disclosures of Cash Flow Information:          
Cash paid for interest  $(345)  $(940)
Cash paid for income taxes  $-   $- 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

F-4

 

 

Legg Holdings, Inc.

(subsequently renamed ANC Green Solutions I, LLC) 

Notes to Unaudited Consolidated Financial Statements

For The Nine Month Ended September 30, 2019 and 2018

 

Note 1 – Nature of the Business

 

Legg Holdings, Inc., an Alabama corporation, is a leading operator and franchisor of residential lawn care programs and services. The Company’s core service offerings provide residential homeowners and commercial customers with year-round monitoring and treatment by focusing on weed and insect control, seeding, and professionally and consistently administered fertilization.

 

Legg Lawncare, Inc., an Alabama corporation and wholly owned by Legg Holdings, Inc., owns and operates a business that provides commercial and residential lawncare, landscaping and hardscaping, irrigation, mosquito, termite, and pest control services throughout Northern Alabama and other neighboring localities.

 

Legg SMS Franchising, Inc., an Alabama corporation and wholly owned by Legg Holdings, Inc., owns and operates a business that is the master franchisor for outdoor insect control service businesses operating independently throughout the United States.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. The balance sheet at December 31, 2018 has been derived from the audited financial statements at that date. For further information, refer to the financial statements and footnotes thereto included in Legg Holdings, Inc. annual financial statements for the twelve months ended December 31, 2018.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

 

Note 3 – Fixed Assets

 

As of September 30, 2019 and December 31, 2018, the Company’s fixed assets consisted of the following:

 

  

September 30,

2019

  

December 31,

2018

 
Vehicles  $357,222   $377,932 
Equipment   302,264    292,272 
Leasehold improvements   9,990    9,990 
Office equipment   6,433    4,664 
Total property and equipment   675,909    684,858 
Less: Accumulated depreciation   (469,785)   (423,480)
Property and equipment, net   206,124    261,378 

 

During the nine months ended September 30, 2019, we disposed five trucks in aggregate value of $100,316 with accumulated depreciation of $58,830, recorded $23,630 loss of disposal of assets and Mr. Legg contributed a truck to the Company in amount of $43,027, this truck was fully depreciated. Depreciation expense for the nine months ended September 30, 2019 and 2018 was $62,108 and $59,056, respectively. During the nine months ended September 30, 2019, we recorded aggregate amount of $120,644 from gain on issuance claims related to fire damage to company assets.

 

F-5

 

 

Note 4 – Accounts Payable and Accrued Liabilities

 

As of September 30, 2019 and December 31, 2018, the Company’s current liabilities consisted of the following:

 

  

September 30,

2019

  

December 31,

2018

 
Accrued operating expenses  $38,264   $30,212 
Accrued payroll   28,468    19,797 
Accounts payable and accrued liabilities  $66,732   $50,009 

 

Note 5 – Notes Payable

 

On August 30, 2017, we entered into a loan agreement in the amount of  $39,669 related to the purchase of a truck. The note is due on August 30, 2022, and bears an annual interest rate of 3.29%. The loan is payable in 59 monthly installments of $493.86. During the nine months ended September 30, 2019, we repaid $2,646 in principal and the truck was totaled beyond repair, and we used $17,827 of insurance proceeds to pay off the remaining balance. The outstanding balance as of September 30, 2019 was $0.

 

Note 6 – Capital Stock

 

As of December 31, 2018, 2017 and 2016, there were 500 founder shares of Legg Lawncare, Inc., outstanding and 100 founder shares of Legg SMS Franchising, Inc., outstanding.

 

Note 7 – Related Party Transactions

 

Shareholder contribution for the nine months ended September 30, 2019 and 2018 was $0 and $46,774, respectively. Shareholder distribution for the nine months ended September 30, 2019 and 2018 was $1,247,448 and $3,530, respectively.

 

Note 8 – Subsequent Events

 

On October 4, 2019, Andover Environmental Solutions LLC (“Andover Environmental”), a wholly-owned subsidiary of Andover National Corporation, entered into a Membership Interest Purchase Agreement with the Company and Heath L. Legg, pursuant to which Andover Environmental purchased from seller sixty percent (60%) of the membership interests of ANC Green Solutions I, LLC, a Delaware limited liability company, for $4,000,000 in cash, subject to certain adjustments.  Prior to entry into the Membership Interest Purchase Agreement, Legg Holdings, Inc. was renamed by Heath L. Legg to ANC Green Solutions I, LLC.

 

F-6