Note 4 – Business Combination

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 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 Potters 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 statement of operations for the three months ended March 31, 2021, includes $0.4 million of revenue and income from operations of $0.3 million contributed by ANC Potter.

The three months ended March 31, 2020 includes the operations of ANC Potter’s for the period from February 3, 2020, the date of acquisition, to March 31, 2020. The condensed consolidated statement of operations for the three months ended March 31, 2021 and March 31, 2020, includes approximately $441,000 and $336,000 of revenue and income from operations , respectively, approximately $259,000 and $29,000 , respectively, contributed by ANC Potter’s.

In the three months ended March 31, 2020, the Company incurred $96,000 of transaction costs related to the acquisition of ANC Potter’s.

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 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 March 31, 2021, 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 condensed consolidated balance sheet.

The following table presents the 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 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 statement of operations for the three months ended March 31,2021, includes $1.1 million of revenue and income from operations of $0.2 million contributed by ANC Smith’s.

The three months ended March 31, 2020 includes the operations of ANC Smith’s for the period from February 28, 2020, the date of acquisition, to March 31, 2020. The condensed consolidated statement of operations for the three months ended March 31, 2020, includes approximately $320,000 of revenue and income from operations of approximately $48,000 contributed by ANC Smith.

In the three months ended March 31, 2020, the Company incurred $96,000 of transaction costs related to the acquisition of ANC Smith’s.

ANC Zodega and subsidiaries

As described in Note 1, in January 20, 2021, the Company acquired a 51% ownership with ANC Green Solutions- Zodega, in consideration for 46,161 shares of the Company's Class A common stock, with a value of approximately $0.6 million.

On January 26, 2021, the Company’s subsidiary ANC Green Solutions- Zodega acquired all of the assets and property of Texas Seasons Corporation through the Company’s indirect subsidiary and ANC Zodega’s wholly owned subsidiary Zodega Landscape Services, LLC for $0.8 million cash, consisting of $0.5 million paid at closing and an aggregate of $0.3 million in deferred consideration to be paid on the one-two-and three year anniversary of the closing of acquisition.

On February 18, 2021, Company’s subsidiary ANC Green Solutions- Zodega acquired all of the assets and property of Greentex Landscaping Inc., through the Company’s indirect subsidiary and ANC Zodega’s wholly owned subsidiary Zodega Landscape Services, LLC for $0.3 million cash, consisting of $0.2 million paid at closing and an aggregate of $0.1 million in deferred consideration to be paid on the one-two-and three year anniversary of the closing of acquisition.

On February 19, 2021, Company’s subsidiary ANC Green Solutions- Zodega acquired all of the assets and property of C.J.’s Yardworks, Inc. through the Company’s indirect subsidiary and ANC Zodega’s wholly owned subsidiary Zodega Landscape Services, LLC for $2.0 million cash, consisting of $1.6 million paid at closing and a $0.4 million promissory note.

On March 12, 2021, the Company’s subsidiary ANC Green Solutions- Zodega acquired all of the assets and property of Lillard Lawn & Landscaping, Inc. through the Company’s indirect subsidiary and ANC Zodega’s wholly owned subsidiary Zodega Landscape Services, LLC for $0.8 million cash, consisting of $0.4 million paid at closing and a $0.4 million promissory note.

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

Purchase Price Allocation- Zodega and subsidiaries


Accounts receivable and other current assets	$	58
Property and equipment		738
Right-of-use asset		501
Intangible assets		—
Goodwill		4,320
Holdback		(29)
Accounts payable and accrued expenses		(91)
Notes payable		(108)
Promissory notes		(820)
Lease liability		(501)
Deferred cash consideration		(341)
Non-controlling interest in Zodega Subsidiaries		(1,951)
Stock purchase price		564
Cash purchase price, net of cash acquired	$	1,212

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 Zodega acquisition resulted in a noncontrolling 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 Zodega’s acquisition.

The three months ended March 31, 2021 includes the operations of Zodega Landscape Services, LLC for the period from January 20, 2021, the date of acquisition, to March 31, 2021, the operations of Zodega Landscape Services, LLC - Texas Seasons for the period from January 26, 2021, the date of acquisition, to March 31, 2021, the operations of Zodega Landscape Services, LLC - Greentex Landscaping from February 18, 2021, the date of acquisition, to March 31, 2021, the operations of Zodega Landscape Services, LLC - C.J.’s Yardworks, Inc. from February 19, 2021, the date of acquisition, to March 31, 2021, the operations of Zodega Landscape Services, LLC - Lillard Lawn & Landscaping, Inc. from March 12, 2021, date of acquisition, to March 31, 2021. The consolidated statement of operations for the three months ended March 31, 2021, includes revenue of approximately $0.9 million and loss from operations of approximately $0.2 million.

In the three months ended March 31, 2021, the Company incurred approximately $0.2 million of transaction costs related to the acquisition of ANC Zodega and Subsidiaries.

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 Potters, ANC Smith and ANC Zodega and Subsidiaries’ acquisition discussed above as if it had occurred on January 1, 2020. 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 Zodega and Subsidiaries’ acquisition had been completed on January 1, 2020, 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.


	Three months ended
	March 31,		March 31,
	2021		2020

Total revenue	$	3,618,709	$	4,106,873
Net loss		(1,036,694)		(642,046)

For purposes of the pro forma disclosures above, the primary adjustments for the three months ended March 31, 2021 and March 31, 2020 include the elimination of transaction costs of approximately $0.2 million. See the MD&A section for further discussion on the Company’s combined results of operations.