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).
| 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. | | | 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 |
| 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 | | 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) | | $4,040,624 |
| Obligations under other notes payable - current portion | - | 2,656,421
| 1,402,331
| (645,505) | | 3,071,750 |
| | | | | (341,497) | | |
| Other current liabilities | 72,500 | 69,940 | 23,230
| 4,795 | | 100,526 |
| | | | | (69,940) | | |
| 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 | | 1,619,753 |
| Other notes payable - net of current portion | - | 954,316
| - | (954,316) | | - |
| 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 | 4,246,541
| - | | | | 4,246,541
|
| | | | | | | |
| STOCKHOLDERS’ (DEFICIT) EQUITY | | | | | | |
| Common stock | 1,394 | 10,000 | 441 | (10,441) | | 1,431 |
| | | | | 37 | | |
| Additional paid-in capital | 8,925,179
| 565,984 | (240,117) | (325,867) | | 9,491,429
|
| | | | | 566,250 | | |
| Preferred Stock | - | - | - | 2,408,610 | | 2,408,610 |
| Treasury Stock | - | (4,464,860) | - | 4,464,860 | | - |
| Accumulated (Deficit) Earnings | (2,595,363) | 3,576,734
| (323,065) | (4,795) | | (2,600,159) |
| | | | - | (3,253,669) | | |
| TOTAL STOCKHOLDERS' (DEFICIT) EQUITY | 6,331,210
| (312,142) | (562,741) | 3,844,986 | | 9,301,311
|
| TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $15,415,054 | $3,972,423
| $1,057,750
| $1,989,983 | | $22,435,210 |
| 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. | | | Novume Solutions, Inc. (Restated) |
| 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 | $(0.23) | $0.02 | | $(0.55) | $(2.02) | $0.05 | (5) | $(0.26) |
| | | | | | | | | |
| 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 |
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. |
| NOVUME SOLUTIONS, INC. |
| PRO FORMA CONDENSED COMBINED BALANCE SHEET |
| AS OF DECEMBER 31, 2016 |
| (UNAUDITED) |
| | | Brekford Traffic Safety, Inc. | Firestorm Solutions LLC and Franchising LLC | Global Technical Services, Inc. | Global Contract Professionals, 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
|
| NOVUME SOLUTIONS, INC. |
| PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS |
| FOR THE YEAR ENDED DECEMBER 31, 2016 |
| (UNAUDITED) |
| | | | Firestorm Solutions LLC and Franchising LLC (5) | Global Technical Services, Inc. | Global Contract Professionals, 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 |
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.
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(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.
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