HireQuest, Inc 8-K/A, filed Mar 24, 2021
HireQuest, Inc. (HQI)
8-K/A
2021-03-24
For: 2021-03-01
View Original
Added on
April 07, 2026
About this 8-K/A
HireQuest, Inc filed this 8-K/A on March 24, 2021, reporting on events of March 1, 2021.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM 8-K
AMENDMENT NO.
1
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): March 1,
2021
HIREQUEST,
INC.
(Exact
name of registrant as specified in its Charter)
|
|
|
|
|
|
|
Delaware
|
|
000-53088
|
|
91-2079472
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
|
(Commission
File
Number)
|
|
(I.R.S.
Employer
Identification
No.)
|
|
111
Springhall Drive, Goose Creek, SC
|
|
29445
|
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
(843)
723-7400
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation
of the registrant under any of the following provisions
(see General Instruction A.2.
below):
☐ Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of Each
Class
|
Trading
Symbol(s)
|
Name of Each
Exchange on Which Registered
|
|
Common Stock,
$0.001 par value
|
HQI
|
The NASDAQ Stock
Market LLC
|
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Introductory
Note.
On March 1, 2021,
HQ Snelling Corporation (“HQ Snelling”), a wholly-owned
subsidiary of HireQuest, Inc. (the “Company”) completed
its acquisition of certain assets and assumption of certain
liabilities (the “Transaction”) of Snelling Staffing,
LLC, Snelling Services, LLC, Snelling Employment, LLC, Snelling
Medical Staffing, LLC, and Snelling Investments, Inc.
(collectively, the “Sellers”) in accordance with the
terms of the Asset Purchase Agreement (the “Purchase
Agreement”) dated January 29, 2021 by and among HQ Snelling,
the Sellers, Snelling Holdings, LLC as Sellers’
Representative, and the Company (solely in its capacity as
guarantor of the obligations of HQ Snelling). The assets acquired
included the working capital of Sellers, customer lists and
agreements, and other items set forth in the Purchase Agreement
which was filed as Exhibit 2.1 to the Company’s Form 8-K
filed with the Securities and Exchange Commission
(“SEC”) on February 1, 2021 as amended by the First
Amendment, filed as Exhibit 2.1 to the Company's Form 8-K filed
with the SEC on March 2, 2021, both of which are incorporated
herein by reference. The total consideration paid was $17.3 million
before working capital adjustments.
This Amendment No.
1 to Current Report on Form 8K/A (the "Form 8-K/A") amends and
supplements the Current Report on Form 8-K filed by the Company
with the Securities and Exchange Commission on March 2, 2021 (the
"Original Report") to include consolidated financial statements of
Sellers and the pro forma financial information required by Items
9.01(a) and 9.01(b), respectively, and to include the exhibits
under Item 9.01(d) of this Form 8-K/A.
Item 9.01 Financial Statements and
Exhibits.
(a)
Financial Statements of
Business Acquired
The audited
consolidated financial statements of Sellers as of and for the
years ended December 27, 2019 and December 28, 2018, and the
related notes thereto, are filed as Exhibit 99.1 to this Form 8K/A
and are incorporated in their entirety into this item by
reference.
The unaudited
consolidated balance sheets of Sellers at September 25, 2020 and
December 27, 2019, the unaudited consolidated statements of
operations of Sellers as of and for the quarters and three quarters
ended September 25, 2020, and September 27, 2019, and the unaudited
consolidated statement of cash flows for the nine months ended
September 25, 2020 and September 27, 2019, and the related notes
thereto, are filed as Exhibit 99.2 to this Form 8-K/A and are
incorporated in their entirety into this item by
reference.
(b)
Pro Forma Financial
Information
The unaudited pro
forma condensed combined financial statements, which include the
unaudited pro forma condensed combined balance sheet as of
September 30, 2020 and the unaudited pro forma condensed combined
statements of operations for the quarter ended September 30, 2020,
the three quarters ended September 30, 2020, and the year ended
December 31, 2019, and the related notes thereto, are filed as
Exhibit 99.3 to this Form 8-K/A and are incorporated in their
entirety into this item by reference.
The unaudited pro
forma condensed combined financial statements were derived from the
Company's and the Sellers' separate historical consolidated
financial statements. These pro forma financial statements may not
necessarily reflect what the Company's results of operations and
financial position would have been had the Transaction occurred
during the periods presented in the pro forma financial statements,
or what the Company's results of operations and financial position
will be in the future.
(c)
Not
Applicable
(d)
Exhibits
99.1 Audited consolidated financial statements
of Sellers as of and for the years ended December 27, 2019 and
December 28, 2018, and the related notes thereto.
99.2 Unaudited
consolidated balance sheets of Sellers at September 25, 2020 and
December 27, 2019, the unaudited consolidated statements of
operations of Sellers as of and for the quarters and three quarters
ended September 25, 2020, and September 27, 2019, and the unaudited
consolidated statement of cash flows for the nine months ended
September 25, 2020 and September 27, 2019, and the related notes
thereto.
99.3 Unaudited pro forma condensed combined
financial statements, which include the unaudited pro forma
condensed combined balance sheet as of September 30, 2020 and the
unaudited pro forma condensed combined statements of operations for
the quarter ended September 30, 2020, the three quarters ended
September 30, 2020, and the year ended December 31, 2019, and the
related notes thereto.
Cautionary Note Regarding Forward Looking
Statements.
This
Current Report on Form 8-K/A, the Original Report, and the exhibits
attached hereto and thereto and incorporated herein and therein
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 including
statements regarding the acquisition of certain assets of Sellers
and the expected benefits from such transaction including increased
earnings and revenue and the effects of expanded scale. All
statements other than statements of historical facts contained
herein, including the statements identified in the preceding
sentence and other statements regarding our future financial
position and results of operations, liquidity, business strategy,
and plans and objectives of management for future operations, are
forward-looking statements. The words “expect,”
“expectation,” “intend,”
“anticipate,” “will,”
“believe,” “may,” “estimate,”
“continue,” “should,” “plan,”
“could,” “target,” “potential,”
“is likely,” and similar expressions as they relate to
the Company or Sellers are intended to identify forward-looking
statements. We have based these forward-looking statements largely
on management’s expectations and projections regarding future
events, negotiations, and financial trends that we believe may
affect our financial condition, operating performance, business
strategy, and financial needs. These forward-looking statements
involve a number of risks and uncertainties.
Important
factors that could cause actual results to differ materially from
these forward-looking statements include: the possibility that the
anticipated benefits of the asset acquisition will not be realized
or will not be realized within the expected time period; the risk
that Sellers' business may not be integrated successfully; the risk
that disruption from the acquisition may make it more difficult to
maintain existing business and operational relationships; and
several other factors.
Further
information on risks we face is detailed in our filings with the
Securities and Exchange Commission, including our Form 10-K for the
fiscal year ended December 31, 2019, our quarterly reports on Form
10-Q filed since that date, and our current reports on Form 8-K
filed with the SEC on February 1, 2021 and March 2, 2021, and will
be contained in our SEC filings in connection with this
acquisition. Any forward-looking statement made by us herein speaks
only as of the date on which it is made. Factors or events that
could cause our actual results to differ may emerge from time to
time, and it is not possible for us to predict all of them. The
Company undertakes no obligations to publicly update any
forward-looking statements, whether as a result of new information,
future developments or otherwise, except as may otherwise be
required by law.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf
by the undersigned, hereunto duly authorized.
|
|
|
|
|
|
|
|
|
HIREQUEST,
INC.
|
||
|
|
|
(Registrant)
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Date: March 24,
2021
|
|
|
|
/s/ John McAnnar
|
|
|
|
|
|
John
McAnnar
|
|
|
|
|
|
Chief Legal
Officer
|
HireQuest, Inc.
Unaudited Pro Forma Condensed Combined Financial
Information
The following unaudited pro forma financial information presents
the unaudited pro forma condensed combined balance sheet and
unaudited pro forma condensed combined statements of income based
upon the combined historical financial statements of HireQuest,
Inc. (“HQI” or the “Company”) and Snelling
Staffing, LLC (“Snelling”), after giving effect to the
Asset Purchase Agreement (the “Snelling Agreement”)
between Snelling and HQ Snelling Corporation (“HQ
Snelling”), a wholly-owned subsidiary of the Company, and the
adjustments described in the accompanying notes.
On March 1, 2021, the Company completed its acquisition of certain
assets of Snelling in accordance with the terms of the Snelling
Agreement dated January 29, 2021. Pursuant to the Snelling
Agreement, HQ Snelling acquired substantially all of the operating
assets and assumed certain liabilities of Snelling for a purchase
price of $17.3 million, subject to customary adjustments for net
working capital. The transaction will be financed with cash-on-hand
and the Company’s credit facility with Truist
Bank.
The unaudited pro forma condensed combined balance sheet as of
September 30, 2020 reflects the transaction as if it occurred on
September 30, 2020. The unaudited pro forma condensed combined
statement of operations for the year ended December 31, 2019
and for the three and nine months ended September 30, 2020 reflect
the transaction as if it occurred on January 1, 2019.
The unaudited pro forma condensed combined financial information is
for informational purposes only and does not purport to present
what our results would actually have been had these transactions
actually occurred on the dates presented or to project our results
of operations or financial position for any future period. You
should read the information set forth below together with the notes
to the pro forma condensed combined financial statements, the
Annual Report of the Company on Form 10-K for the year ended
December 31, 2019 and the Quarterly Report of the Company on Form
10-Q for the nine months ended September 30, 2020, and the audited
financial statements of Snelling for the fiscal years ended
December 27, 2019 and December 28, 2018 and the unaudited financial
statements for the fiscal quarters ended September 25, 2020 and
September 27, 2019 included as Exhibit 99.1.
HireQuest, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2020
|
|
HireQuest,
Inc.
|
Snelling Staffing, LLC
|
Pro forma adjustments
|
Pro forma condensed combined
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
|
$10,297,147
|
$781,378
|
$(10,381,378)
|
A
|
$697,147
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
24,024,564
|
12,781,033
|
(256,343)
|
B
|
36,549,254
|
|
Notes
receivable
|
2,144,118
|
-
|
-
|
|
2,144,118
|
|
Prepaid expenses,
deposits, and other assets
|
1,179,333
|
1,147,134
|
(870,493)
|
C
|
1,455,974
|
|
Prepaid workers'
compensation
|
1,978,509
|
-
|
-
|
|
1,978,509
|
|
Workers'
compensation trust
|
-
|
7,193,529
|
(7,193,529)
|
D
|
-
|
|
Total current
assets
|
39,623,671
|
21,903,074
|
(18,701,743)
|
|
42,825,002
|
|
Property and
equipment, net
|
2,958,998
|
1,075,316
|
(1,075,316)
|
D
|
2,958,998
|
|
Intangible assets,
net
|
186,705
|
4,502,628
|
6,226,378
|
E
|
10,915,711
|
|
Notes receivable,
net of current portion and reserve
|
6,377,779
|
-
|
-
|
|
6,377,779
|
|
Other
assets
|
-
|
295,979
|
(295,979)
|
D
|
-
|
|
Total
assets
|
$49,147,153
|
$27,776,997
|
$(13,846,660)
|
|
$63,077,490
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
$5,499
|
$2,527,630
|
$(2,288,551)
|
F
|
$244,578
|
|
Other current
liabilities
|
1,664,854
|
8,156,281
|
(8,156,281)
|
D
|
1,664,854
|
|
Accrued benefits
and payroll taxes
|
2,088,119
|
-
|
-
|
|
2,088,119
|
|
Due to
franchisees
|
2,311,372
|
458,782
|
-
|
|
2,770,154
|
|
Risk management
incentive program liability
|
1,018,994
|
-
|
-
|
|
1,018,994
|
|
Revolving line of
credit
|
-
|
-
|
7,700,000
|
G
|
7,700,000
|
|
Current portion of
debt
|
-
|
47,663,416
|
(47,663,416)
|
D
|
-
|
|
Workers'
compensation claims liability
|
3,165,056
|
2,218,409
|
-
|
|
5,383,465
|
|
Total current
liabilities
|
10,253,894
|
61,024,518
|
(50,408,248)
|
|
20,870,164
|
|
Workers'
compensation claims liability, net of current portion
|
1,743,128
|
3,314,067
|
-
|
|
5,057,195
|
|
Franchisee
deposits
|
1,459,335
|
-
|
-
|
|
1,459,335
|
|
Debt, net of
current portion
|
-
|
25,006
|
(25,006)
|
D
|
-
|
|
Other long-term
liabilities
|
-
|
4,549,337
|
(4,549,337)
|
D
|
-
|
|
Deferred tax
liability
|
273,185
|
-
|
-
|
|
273,185
|
|
Total
liabilities
|
13,729,542
|
68,912,928
|
(54,982,591)
|
|
27,659,879
|
|
Equity
|
|
|
|
|
|
|
Total HireQuest,
Inc. stockholders equity
|
35,417,611
|
-
|
-
|
|
35,417,611
|
|
Total Snelling
member equity
|
-
|
(41,135,931)
|
41,135,931
|
H
|
-
|
|
Total stockholders'
equity
|
35,417,611
|
(41,135,931)
|
41,135,931
|
|
35,417,611
|
|
Total liabilities
and stockholders' equity
|
$49,147,153
|
$27,776,997
|
$(13,846,660)
|
|
$63,077,490
|
See
notes to pro forma condensed combined financial
statements.
HireQuest, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations for
the
Three Months Ended September 30, 2020
|
|
HireQuest, Inc.
|
Snelling Staffing, LLC
|
Pro forma adjustments
|
Pro forma condensed combined
|
|
|
Franchise
royalties/Revenue
|
$3,218,606
|
$21,378,487
|
$-
|
|
$24,597,093
|
|
Cost
of sales
|
-
|
16,322,627
|
-
|
|
16,322,627
|
|
Service
revenue
|
164,074
|
-
|
-
|
|
164,074
|
|
Total
revenue
|
3,382,680
|
5,055,860
|
-
|
|
8,438,540
|
|
Selling,
general and administrative expenses
|
1,357,725
|
4,836,389
|
-
|
|
6,194,114
|
|
Depreciation
and amortization
|
32,438
|
123,826
|
178,817
|
A
|
335,081
|
|
Income
(loss) from operations
|
1,992,517
|
95,645
|
(178,817)
|
|
1,909,345
|
|
Other
miscellaneous income
|
392,709
|
-
|
-
|
|
392,709
|
|
Interest
and other financing expense
|
(10,035)
|
(1,214,405)
|
-
|
|
(1,224,440)
|
|
Net income (loss)
before income taxes
|
2,375,191
|
(1,118,760)
|
(178,817)
|
|
1,077,614
|
|
Provision for
income taxes
|
404,058
|
22,500
|
43,989
|
B
|
470,547
|
|
Net income
(loss)
|
$1,971,133
|
$(1,141,260)
|
$(222,806)
|
|
$607,067
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
$0.15
|
|
|
|
$0.04
|
|
Diluted
|
$0.15
|
|
|
|
$0.04
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
Basic
|
13,573,086
|
|
|
|
13,573,086
|
|
Diluted
|
13,574,863
|
|
|
|
13,574,863
|
See
notes to pro forma condensed combined financial
statements.
HireQuest, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations for
the
Nine Months Ended September 30, 2020
|
|
HireQuest, Inc.
|
Snelling Staffing, LLC
|
Pro forma adjustments
|
Pro forma condensed combined
|
|
|
Franchise
royalties
|
$9,563,135
|
$64,768,429
|
$-
|
|
$74,331,564
|
|
Cost
of sales
|
-
|
49,894,333
|
-
|
|
49,894,333
|
|
Service
revenue
|
840,515
|
-
|
-
|
|
840,515
|
|
Total
revenue
|
10,403,650
|
14,874,096
|
-
|
|
25,277,746
|
|
Selling,
general and administrative expenses
|
6,542,171
|
15,004,723
|
-
|
|
21,546,894
|
|
Depreciation
and amortization
|
96,654
|
407,521
|
536,450
|
A
|
1,040,625
|
|
Income
(loss) from operations
|
3,764,825
|
(538,148)
|
(536,450)
|
|
2,690,227
|
|
Other
miscellaneous income
|
932,254
|
-
|
-
|
|
932,254
|
|
Interest
and other financing expense
|
(39,174)
|
(3,625,810)
|
-
|
|
(3,664,984)
|
|
Net income before
income taxes
|
4,657,905
|
(4,163,958)
|
(536,450)
|
|
(42,503)
|
|
Provision for
income taxes
|
654,592
|
67,500
|
131,967
|
B
|
854,059
|
|
Net income
(loss)
|
$4,003,313
|
$(4,231,458)
|
$(668,417)
|
|
$(896,562)
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
Basic
|
$0.30
|
|
|
|
$(0.07)
|
|
Diluted
|
$0.30
|
|
|
|
$(0.07)
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
Basic
|
13,551,507
|
|
|
|
13,551,507
|
|
Diluted
|
13,553,619
|
|
|
|
13,553,619
|
See
notes to pro forma condensed combined financial
statements.
HireQuest,
Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations for
the
Year Ended December 31, 2019
|
|
HireQuest, Inc.
|
Snelling Staffing, LLC
|
Pro forma adjustments
|
Pro forma condensed combined
|
|
|
Franchise
royalties
|
$14,673,636
|
$123,344,233
|
$-
|
|
$138,017,869
|
|
Cost
of sales
|
-
|
91,571,809
|
-
|
|
91,571,809
|
|
Service
revenue
|
1,202,824
|
-
|
-
|
|
1,202,824
|
|
Total
revenue
|
15,876,460
|
31,772,424
|
-
|
|
47,648,884
|
|
Selling,
general and administrative expenses
|
12,692,297
|
27,803,694
|
-
|
|
40,495,991
|
|
Depreciation
and amortization
|
400,132
|
607,706
|
715,267
|
A
|
1,723,105
|
|
Income
(loss) from operations
|
2,784,031
|
3,361,024
|
(715,267)
|
|
5,429,788
|
|
Other
miscellaneous income
|
751,077
|
-
|
-
|
|
751,077
|
|
Interest
and other financing expense
|
(559,585)
|
(4,519,991)
|
-
|
|
(5,079,576)
|
|
Net income before
income taxes
|
2,975,523
|
(1,158,967)
|
(715,267)
|
|
1,101,289
|
|
Provision for
income taxes
|
3,480,996
|
78,825
|
175,956
|
B
|
3,735,777
|
|
Net
loss from continuing operations
|
$(505,473)
|
$(1,237,792)
|
$(891,223)
|
|
$(2,634,488)
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
|
|
|
|
Continuing
operations
|
$(0.05)
|
|
|
|
$(0.21)
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
11,588,776
|
|
|
|
11,588,776
|
See
notes to pro forma condensed combined financial
statements.
HireQuest, Inc.
Notes to Pro Forma Condensed Combined Financial
Statements.
Note 1 – Basis of Presentation
The historical financial information has been adjusted to give pro
forma effect to events that are directly attributable to the
Snelling Agreement and expected to have a continuing impact on the
combined results. The pro forma adjustments are preliminary and
based on estimates. They have been prepared to illustrate the
estimated effect of the Link Agreement and certain other
adjustments.
Note 2 – Preliminary Purchase Price Allocation
Under the purchase method of accounting, the total purchase price
of $17.3 million allocated to the tangible and intangible assets
acquired and liabilities assumed by the Company based on their
preliminary estimated fair values. The fair value assessments are
preliminary and are based upon available information and certain
assumptions which the Company believes are reasonable. Actual
results may differ materially from the unaudited pro forma
condensed combined financial statements.
|
Description
|
Amount
|
|
Fair
value of franchise agreements assumed
|
$10,729,006
|
|
Accounts
receivable
|
12,524,690
|
|
Other
current assets
|
276,641
|
|
Current portion of
workers' compensation claims liability
|
(2,218,409)
|
|
Other
current liabilities
|
(697,861)
|
|
Workers'
compensation claims liability, net of current portion
|
(3,314,067)
|
|
Total
allocated purchase price
|
$17,300,000
|
The preliminary purchase price as shown in the table above is
allocated to the tangible and intangible assets acquired and
liabilities assumed by the Company based on their preliminary
estimated fair values. The fair value assessments are preliminary
and are based upon available information and certain assumptions
which the Company believes are reasonable. Actual results may
differ materially from the unaudited pro forma condensed combined
financial statements.
Note 3 – Adjustments to the Unaudited Pro Forma Condensed
Combined Balance Sheet
(A) -Adjustments to cash:
|
Description
|
Amount
|
|
Borrowing
on line of credit
|
$7,700,000
|
|
Cash
consideration paid for Snelling Staffing, LLC
|
(17,300,000)
|
|
Snelling
cash balance not acquired
|
(781,378)
|
|
Pro
forma adjustment to cash
|
$(10,381,378)
|
(B) -
Accounts receivable not acquired.
(C) - Adjustments to prepaid expenses, deposits and other
assets:
|
Description
|
Amount
|
|
Snelling
prepaid expenses, deposits and other assets
|
$(1,147,134)
|
|
Prepaid
rents and rent deposits assumed
|
276,641
|
|
Pro
forma adjustment to accounts receivable
|
$(870,493)
|
(D) -
Assets not acquired and liabilities not assumed pursuant to the
Snelling Agreement.
(E) - Adjustments to intangible assets:
|
Description
|
Amount
|
|
Fair
value of franchisee agreements assumed
|
$10,729,006
|
|
Snelling
intangible assets not acquired
|
(4,502,628)
|
|
Pro
forma adjusted intangible assets
|
$6,226,378
|
(F) - Adjustments to accounts payable:
|
Description
|
Amount
|
|
Snelling
accounts payable
|
$(2,527,630)
|
|
Accounts
payable assumed in Snelling Agreement
|
239,079
|
|
Pro
forma adjustment to accounts payable
|
$(2,288,551)
|
(G) - Borrowing to facilitate Snelling
transaction.
(H) - Adjustment to Snelling’s historical
equity.
Note 4 – Adjustments to the Unaudited Pro Forma Condensed
Combined Statement of Income
(A) -The newly acquired intangible assets consisting of franchise
agreements will be amortized on a straight-line basis over their
estimated useful lives. The fair value assessment is preliminary
and any changes to the preliminary values will have a direct impact
on future earnings via amortization expense.
|
Description
|
Estimated fair value
|
Estimated useful life
|
Three months ended September 30, 2020
|
Nine months ended September 30, 2020
|
Year ended December 31, 2019
|
|
Franchise
agreements
|
$10,729,006
|
15 Years
|
$178,817
|
$536,450
|
$715,267
|
|
Pro
forma adjustment to amortization expense
|
|
|
$178,817
|
$536,450
|
$715,267
|
(B)
- To record the income tax impact of the pro forma adjustments (A)
above.
|
Description
|
Three months ended September 30, 2020
|
Nine months ended September 30, 2020
|
Year ended December 31, 2019
|
|
Pro
forma change in income before income tax
|
$178,817
|
$536,450
|
$715,267
|
|
Combined
Federal and State statutory rate
|
24.6%
|
24.6%
|
24.6%
|
|
Sub-total
|
$43,989
|
$131,967
|
$175,956
|