EX-99.3 4 f8k100419a1ex99-3_andover.htm UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET OF THE COMPANY AS OF SEPTEMBER 30, 2019 AND STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND YEAR ENDED DECEMBER 31, 2018

Exhibit 99.3

 

Andover National Corporation and Legg Holdings, Inc.

Unaudited Pro Forma Consolidated Financial Statements

 

Table of Contents

 

  Page
   
Pro Forma Consolidated Balance Sheets as of September 30, 2019 PF-1
   
Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2019 PF-2
   
Pro Forma Consolidated Statements of Operations for the year ended December 31, 2018 PF-3
   
Notes to Unaudited Pro Forma Consolidated Financial Statements PF-4

 

 

 

 

Andover National Corporation and Legg Holdings, Inc.

Unaudited Combined Pro Forma Balance Sheets

As of September 30, 2019

 

   Andover National Corporation   Legg Holdings, Inc.   Combined   Pro forma Adjustments   Consolidated pro forma 
Assets                         
Current Assets                         
Cash and cash equivalents  $13,298,414   $194,510   $13,492,924   $(3,500,000)(a)  $9,992,924 
Accounts receivable   -    176,705    176,705    -    176,705 
Prepaid expenses   56,167    9,643    65,810    -    65,810 
Total Current Assets   13,354,581    380,858    13,735,439    (3,500,000)   10,235,439 
                          
Property and equipment, net   -    206,124    206,124    -    206,124 
Right of use assets   -         -    231,540(b)   231,540 
Goodwill   -    -    -    3,687,850(a)   3,687,850 
Total Assets  $13,354,581   $586,982   $13,941,563   $419,390   $14,360,953 
                          
Liabilities and Stockholders’ Equity                         
Current Liabilities                         
Accounts payable and accrued liabilities  $64,935   $66,732   $131,667   $500,000(a)  $631,667 
Total Current Liabilities   64,935    66,732    131,667    500,000    631,667 
Long-Term Liabilities                         
Lease liability   -    -    -    231,540(b)   231,540 
Total Liabilities   64,935    66,732    131,667    731,540    863,207 
                          
Stockholders’ Equity                         
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued   -    -    -    -    - 
Class A common stock, $0.001 par value; 60,000,000 shares authorized, 1,460,757 shares issued and outstanding   1,461    600    2,061    (600)(a)   1,461 
Class B common stock, $0.001 par value; 7,500,000 shares authorized, 121,797 shares issued and outstanding   122    -    122    -    122 
Additional paid in capital   15,348,394    72,757    15,421,151    (72,757)(a)   15,348,394 
Accumulated equity/(deficit)   (2,060,331)   446,893    (1,613,438)   (446,893)(a)   (2,060,331)
    Total Combined    Stockholders’ Equity   13,289,646    520,250    13,809,896    (520,250)   13,289,646 
Noncontrolling interest   -    -    -    208,100(a)   208,100 
Total stockholders’ equity   13,289,646    520,250    13,809,896    (312,150)   13,497,746 
Total Liabilities and Stockholders’ Equity  $13,354,581   $586,982   $13,941,563   $419,390   $14,360,953 

 

 

PF-1

 

 

Andover National Corporation and Legg Holdings, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

 

   Andover National Corporation   Legg Holdings, Inc.         
   For the nine months ended   For the nine months ended         
   September 30,
2019		   September 30,
2019		   Pro Forma
Adjustments		   Consolidated
Pro Forma		 
Revenue                
Service revenue  $14,659   $-   $             -   $14,659 
Lawn care revenue   -    1,880,694    -    1,880,694 
Franchise revenue   -    76,331    -    76,331 
Total revenue   14,659    1,957,025    -    1,971,684 
                     
Operating expenses:                    
Cost of revenue   -    249,461    -    249,461 
Sales and marketing   -    116,967    -    116,967 
General and administrative   1,229,448    1,118,450    -    2,347,898 
Depreciation and amortization   -    62,108    -    62,108 
Total operating expenses   1,229,448    1,546,986    -    2,776,434 
                     
Income (Loss) from operations   (1,214,789)   410,039    -    (804,750)
                     
Other Expenses                    
Unrealized gains from investment   110,518    -    -    110,518 
Gain on insurance compensation   -    120,644    -    120,644 
Interest expense   -    (345)   -    (345)
Total other expenses   110,518    120,299    -    230,817 
                     
Loss before taxes   (1,104,271)   530,338    -    (573,933)
                     
Net gain (loss) before noncontrolling interest  $(1,104,271)  $530,338   $-   $(573,933)
Net gain (loss) income attributable to noncontrolling interest        212,135         212,135 
Net Gain (Loss)  $(1,104,271)  $318,203   $-   $(361,798)
                     
Net loss per common share Class A - basic and diluted  $(0.37)            $(0.12)
Net loss per common share Class B - basic and diluted  $(0.83)            $(0.27)
                     
Weighted average common shares – basic and diluted Class A   2,963,334              2,963,334 
Weighted average common shares – basic and diluted Class B   1,338,452              1,338,452 

 

PF-2

 

 

Andover National Corporation and Legg Holdings, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

 

   Andover National Corporation   Legg Holdings, Inc.         
   For the year ended   For the year ended         
   December 31,
2018		   December 31,
2018		   Pro Forma
Adjustments		   Consolidated
Pro Forma		 
Revenue                
Service revenue  $18,836   $-   $            -   $18,836 
Lawn care revenue   -    2,142,043    -    2,142,043 
Franchise revenue   -    93,194    -    93,194 
Total revenue   18,836    2,235,237    -    2,254,073 
                     
Operating expenses:                    
Cost of revenue   -    295,166    -    295,166 
Sales and marketing   -    99,303    -    99,303 
General and administrative   536,999    1,321,439    -    1,858,438 
Depreciation and amortization   -    85,452    -    85,452 
Total operating expenses   536,999    1,801,360    -    2,338,359 
                     
Loss from operations   (518,163)   433,877    -    (84,286)
                     
Other Expenses                    
Interest expense   (18,048)   (1,122)   -    (19,170)
Total other expenses   (18,048)   (1,122)   -    (19,170)
                     
Loss before taxes   (536,211)   432,755    -    (103,456)
                     
Net gain (loss) before noncontrolling interest  $(536,211)  $432,755    -   $(103,456)
Net gain (loss) income attributable to noncontrolling interest   -   $173,102        $173,102 
Net Gain (Loss)  $(536,211)  $259,653    -   $69,646 
                     
Net Income (Loss) per common share — basic and diluted  $(0.20)            $0.03 
                     
Weighted average common shares – basic and diluted   2,719,121              2,719,121 

 

PF-3

 

 

Purchase of Controlling Interest through subsidiary, Andover Environmental Solutions, LLC

 

ANDOVER NATIONAL CORPORATION and LEGG HOLDINGS, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

 

Note 1 – Basis of Presentation

 

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. The primary reason for the business combination was to expand the existing business into new markets, and to increase the revenue through acquisition using cash the Company had available through recent sales of equity securities. The Company was able to obtain control through cash purchase of membership interests in a newly formed subsidiary.

 

The accompanying pro forma consolidated balance sheets presents the accounts of the Company and Legg Holdings, Inc. as if the acquisition occurred as of January 1, 2019. The accompanying pro forma consolidated statements of operations presents the accounts of the Company and Legg Holdings, Inc. for the nine months ended September 30, 2019, and the year ended December 31, 2018, as if the acquisition occurred on January 1, 2019 and January 1, 2018, respectively. The unaudited pro forma consolidated financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical financial statements of Andover National Corporation and Legg Holdings, Inc.

 

The following adjustments would be required if the acquisition occurred as indicated above:

 

a. To allocate the purchase price of $4,000,000 consisting of $3,500,000 in cash and $500,000 holdback pursuant to Section 2.03 of the Membership Interest Purchase.

 

   Purchase Price Allocation 
Cash  $194,510 
Accounts Receivable   176,705 
Prepaid   9,643 
Property and equipment, net   206,124 
Goodwill   3,687,850 
Accounts payable and accrued liabilities   (66,732)
Non-Controlling Interest   (208,100)
Total consideration   4,000,000 
Holdback   500,000 
Cash Paid  $3,500,000 

 

b. To record rental agreement at closing.

 

The unaudited consolidated pro forma financial information is presented for informational purposes only and is subject to a number of uncertainties and assumptions and do not purport to represent what Andover National Corporation actual performance or financial position would have been had the transaction occurred on the dates indicated and does not purport to indicate the financial position or result of operations as of any future date or for any future period.

 

PF-4