Note 4 – Business Combination (Successor)

As described in Note 1, on October 4, 2019, the Company acquired sixty percent (60%) of the membership interests of ANC Green Solutions I for $4.0 million in cash, consisting of $3.5 million paid at the closing of the Business Combination and $0.5 million in deferred consideration to be paid on the one- and two- year anniversary of the closing of the Business Combination.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed for the acquisition of ANC Green Solutions I (in thousands):


Accounts receivable	$	176
Prepaid expenses		10
Property and equipment		206
Intangible assets		1,963
Goodwill		4,310
Accounts payable and accrued expenses		(66)
Deferred cash consideration		(500)
Non-controlling interest in ANC Solutions		(2,667)
Cash purchase price, net of cash acquired	$	3,432

The Company identified tradename and customer relationship intangible assets. The tradename and customer relationships will be amortized on a straight-line basis over its estimated useful life (see Note 6).

The goodwill recognized results from such factors as an assembled workforce and management’s industry know-how and is expected to be deductible for income tax purposes.

The acquisition-date fair value of the noncontrolling interest was determined using a market approach based on the transaction price observed in the Business Combination.

The Company recorded approximately $65,000 in transaction costs related to the acquisition of ANC Green Solutions I, which are recorded in General and administrative expense in the consolidated statement of operations for the period October 4, 2019 through December 31, 2019.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Business Combination discussed above as if they had occurred on January 1, 2019. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the Business Combinations had been completed on January 1, 2019, nor does it purport to project the results of operations of the combined company in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the acquired company.


	Year Ended
	December 31,
	2019

Total revenue	$	2,640,290
Net loss		(2,003,167)

For purposes of the pro forma disclosures above, the primary adjustments for the year ended December 31, 2019 include the inclusion of amortization of the intangible assets of $0.3 million and the elimination of transaction costs of $0.1 million.

ANC Green Solutions Potter’s

As described in Note 1, on February 3, 2020, the Company acquired a 60% membership interest in ANC Potter’s for $1.68 million in cash, consisting of approximately $1.5 million paid at closing and $0.147 million in deferred consideration to be paid on the two- year anniversary of the closing of the acquisition.

The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed for the acquisition of ANC Potter’s (in thousands):


Accounts receivable and other current assets	$	107
Property and equipment		234
Right-of-use asset		113
Intangible assets		1,285
Goodwill		1,418
Accounts payable and accrued expenses		(84)
Lease liability		(113)
Notes payable		(139)
Deferred cash consideration		(147)
Non-controlling interest in ANC Green Solutions- Potters		(1,145)
Cash purchase price, net of cash acquired	$	1,529

The Company identified tradename, customer relationship and non-compete intangible assets. The tradename, customer relationship and non-compete intangible assets will be amortized on a straight-line basis over its estimated useful life (see Note 6).

The goodwill recognized results from such factors as an assembled workforce and management’s industry know-how and is expected to be deductible for income tax purposes.

The ANC Potter’s acquisition resulted in a redeemable noncontrolling interest, which has been classified as mezzanine equity due to the option of the noncontrolling shareholders to require the Company to purchase their interest. The acquisition-date fair value of the noncontrolling interest was determined using a market approach based on the transaction price observed in the ANC Potter’s acquisition.

The year ended December 31, 2020 includes the operations of ANC Potter’s for the period from February 3, 2020, the date of acquisition, to December 31, 2020. The consolidated statement of operations for the year ended December 31, 2020, includes revenue of approximately $1.8 million and loss from operations of approximately $0.2 million, including intangible amortization expense, contributed by ANC Potter’s.

In the year ended December 31, 2020, the Company incurred approximately $0.1 million of transaction costs related to the acquisition of ANC Potter’s.

Unaudited Pro forma Financial Information

The following pro forma financial information presents the combined results of operations for the Company and gives effect to the ANC Potter’s acquisition discussed above as if it had occurred on January 1, 2019. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the ANC Potters acquisition had been completed on January 1, 2019, nor does it purport to project the results of operations of the combined company in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the acquired company and does not include the pro forma effect of the other business combinations which occurred during the periods presented.


	Year Ended December 31,
	2020		2019
Total revenue	$	7,895,195	$	4,819,389
Net loss		(3,033,509)		(340,758)

For purposes of the pro forma disclosures above, the primary adjustments for the year ended December 31, 2020 include the amortization of intangible assets of approximately $16,000 and the elimination of transaction costs of approximately $0.1 million. For purposes of the pro forma disclosures above, the primary adjustments for the year ended December 31, 2019 include amortization of intangible assets of approximately $0.2 million.

ANC Green Solutions Smith’s

As described in Note 1, on February 28, 2020, the Company acquired a 60% membership interest in ANC Smith’s for $3.0 million cash, consisting of $2.6 million paid at closing and an aggregate of $0.4 million in deferred consideration to be paid on the one- and two- year anniversary of the closing of acquisition. In addition, the ANC Smith’s acquisition agreement provides that the Smith Seller is entitled to an amount, if any, by which the final working capital, as defined in the agreement, delivered by the Smith Seller is greater than the target working capital provided for in the agreement, (the “Smith Working Capital Adjustment”). As of December 31, 2020, the Company’s preliminary estimate of the Smith Working Capital Adjustment due to Smith Seller is $0.9 million and is included in Current portion of deferred consideration on the Company’s consolidated balance sheet.

The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed for the acquisition of ANC Smith’s (in thousands):


Accounts receivable and other current assets	$	167
Property and equipment		1,117
Intangible assets		1,537
Goodwill		2,186
Accounts payable and accrued expenses		(80)
Deferred cash consideration		(1,276)
Non-controlling interest in ANC Green Solutions- Smith		(2,000)
Cash purchase price, net of cash acquired	$	1,651

The Company identified tradename, customer relationship and non-compete intangible assets. The tradename, customer relationships and non-compete intangible assets will be amortized on a straight-line basis over its estimated useful life (see Note 6).

The goodwill recognized results from such factors as an assembled workforce and management’s industry know-how and is expected to be deductible for income tax purposes.

The ANC Smith’s acquisition resulted in a redeemable noncontrolling interest, which has been classified as mezzanine equity due to the option of the noncontrolling shareholders to require the Company to purchase their interest. The acquisition-date fair value of the noncontrolling interest was determined using a market approach based on the transaction price observed in the acquisition of ANC Smith’s.

The year ended December 31, 2020 includes the operations of ANC Smith’s for the period from February 28, 2020, the date of acquisition, to December 31, 2020. The consolidated statement of operations for the year ended December 31, 2020, includes revenue of approximately $3.3 million and income from operations, including amortization expense, of approximately $0.3 million contributed by ANC Smith’s.

During the year ended December 31, 2020, the Company incurred approximately $0.1 million of transaction costs related to the acquisition of ANC Smith’s.

Unaudited Pro forma Financial Information

The following pro forma financial information presents the combined results of operations for the Company and gives effect to the ANC Smith’s acquisition discussed above as if it had occurred on January 1, 2019. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the ANC Smith’s acquisition had been completed on January 1, 2019, nor does it purport to project the results of operations of the combined company in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the acquired company and does not include the pro forma effect of the other business combinations which occurred during the periods presented.


	Year Ended December 31,
	2020		2019
Total revenue	$	8,170,261	$	6,248,542
Net loss		(3,040,376)		(155,570)

For purposes of the pro forma disclosures above, the primary adjustments for the year ended December 31, 2020 include the amortization of intangible assets of approximately $0.05 million and the elimination of transaction costs of approximately $0.1 million. For purposes of the pro forma disclosures above, the primary adjustments for the year ended December 31, 2019 include amortization of intangible assets of approximately $0.3 million.