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ESOA Energy Services of America

Filed: 12 Mar 21, 4:50pm

 

Exhibit 99.2

 

ENERGY SERVICES OF AMERICA CORPORATION

 

PRO FORMA FINANCIAL STATEMENTS

 

SEPTEMBER 30, 2020 AND 2019

 

 

 

 

ENERGY SERVICES OF AMERICA CORPORATION

CONSOLIDATED PRO FORMA BALANCE SHEETS

As of September 30, 2020 and 2019

 

  2020  2019 
Assets        
Current assets        
Cash and cash equivalents $10,669,628  $4,124,419 
Accounts receivable-trade  19,277,708   23,031,547 
Allowance for doubtful accounts  (70,310)  (70,310)
Retainages receivable  2,483,809   3,521,561 
Other receivables  9,458   10,008 
Contract assets  6,545,863   6,674,460 
Prepaid expenses and other  3,373,135   2,744,146 
Total current assets  42,289,291   40,035,831 
         
Property, plant and equipment, at cost  55,174,843   53,118,358 
less accumulated depreciation  (37,581,129)  (34,777,157)
Total fixed assets  17,593,714   18,341,201 
         
Acquired intangible assets, net  150,000   150,000 
Goodwill  4,220,829   4,220,829 
Total assets $64,253,834  $62,747,861 
         
Liabilities and shareholders' equity        
Current liabilities        
Current maturities of long-term debt $5,327,398  $5,668,000 
Lines of credit and short term borrowings  509,843   4,025,710 
Accounts payable  5,310,858   3,131,090 
Accrued expenses and other current liabilities  4,274,893   3,566,637 
Contract liabilities  4,851,900   3,455,288 
Total current liabilities  20,274,892   19,846,725 
         
Long-term debt, less current maturities  13,939,207   15,027,869 
Deferred income taxes payable  2,411,305   2,244,693 
Total liabilities  36,625,404   37,119,287 
         
Shareholders' equity        
         
Preferred stock, $.0001 par value        
Authorized 1,000,000 shares, 206 issued at September 30,  2020 and 2019  -   - 
         
Common stock, $.0001 par value        
Authorized 50,000,000 shares 14,839,836 issued and 13,621,406 outstanding at September 30, 2020 and 14,839,836 issued and 13,924,789 outstanding at September 30, 2019  1,484   1,484 
         
Treasury stock, 1,218,430 shares at September 30, 2020 and 915,047 at September 30, 2019  (122)  (91)
         
Additional paid in capital  60,670,699   60,938,896 
Retained earnings (deficit)  (33,043,631)  (35,311,715)
         
         
Total shareholders' equity  27,628,430   25,628,574 
         
Total liabilities and shareholders' equity $64,253,834  $62,747,861 

 

 

 

 

ENERGY SERVICES OF AMERICA CORPORATION

CONSOLIDATED PRO FORMA STATEMENTS OF INCOME

For the years ended September 30, 2020 and 2019

 

  2020  2019 
Revenue $125,320,477  $181,202,687 
         
Cost of revenues  109,636,178   166,033,552 
         
Gross profit  15,684,299   15,169,135 
         
Selling and administrative expenses  10,649,838   9,616,457 
Income from operations  5,034,461   5,552,678 
         
Other income (expense)        
Interest income  53,830   67,275 
Other nonoperating expense  (239,551)  (258,531)
Interest expense  (700,926)  (1,337,178)
Gain on sale of equipment  579,326   258,082 
   (307,321)  (1,270,352)
Income before income taxes  4,727,140   4,282,326 
Income tax expense  1,453,939   1,325,199 
Net income  3,273,201   2,957,127 
Dividends on preferred stock  309,000   309,000 
         
Net income available to common shareholders $2,964,201  $2,648,127 
         
Weighted average shares outstanding-basic  13,804,835   14,064,871 
         
Weighted average shares-diluted  17,238,168   17,498,204 
         
Earnings per share available to common shareholders $0.215  $0.188 
         
Earnings per share-diluted available to common shareholders $0.172  $0.151 

 

 

 

 

  Energy Services of
America Corporation
           Energy Services of
America Corporation
 
  Consolidated Balance
Sheets (Audited)
  West Virginia Pipeline  Pro Forma  Consolidated Pro
Forma Balance Sheets
 
  September 30,  Purchase Entry  Adjusting Entries  September 30, 
  2020  2019  2019  2020  2019  2020  2019 
Assets                     
Current assets                            
Cash and cash equivalents $11,216,820  $4,578,275  $250,000(a) $(93,336)(e) $(703,856)(e) $10,669,628  $4,124,419 
Accounts receivable-trade  18,246,989   21,678,622   -   (322,206)(g)  1,352,925(f)  19,277,708   23,031,547 
Allowance for doubtful accounts  (70,310)  (70,310)      -   -   (70,310)  (70,310)
Retainages receivable  2,483,809   3,521,561   -   -   -   2,483,809   3,521,561 
Other receivables  9,458   10,008   -   -   -   9,458   10,008 
Contract assets  6,545,863   6,659,707   -   (14,753)(g)  14,753(f)  6,545,863   6,674,460 
Prepaid expenses and other  3,338,943   2,734,974   -   25,020(g)  9,172(f)  3,373,135   2,744,146 
Total current assets  41,771,572   39,112,837   250,000   (405,275)  672,994   42,289,291   40,035,831 
                             
Property, plant and equipment, at cost  53,324,843   51,268,358   1,850,000(b)  -   -   55,174,843   53,118,358 
less accumulated depreciation  (36,933,129)  (34,453,157)  -   (324,000)(h)  (324,000)(h)  (37,581,129)  (34,777,157)
Total fixed assets  16,391,714   16,815,201   1,850,000   (324,000)  (324,000)  17,593,714   18,341,201 
                             
Acquired intangible assets, net  -   -   300,000(c)  -   (150,000)(i)  150,000   150,000 
Goodwill  -   -   4,220,829   -   -   4,220,829   4,220,829 
                             
Total assets $58,163,286  $55,928,038  $6,620,829  $(729,275) $198,994  $64,253,834  $62,747,861 
                             
Liabilities and shareholders' equity                            
Current liabilities                            
Current maturities of long-term debt $4,028,900  $4,403,573  $1,512,829(d) $34,071(k) $(248,402)(j) $5,327,398  $5,668,000 
Lines of credit and short term borrowings  509,843   4,025,710   -   -   -   509,843   4,025,710 
Accounts payable  5,222,222   2,919,618   -   (122,836)(g)  211,472(f)  5,310,858   3,131,090 
Accrued expenses and other current liabilities  4,237,172   3,509,373   -   (19,543)(g)  57,264(f)  4,274,893   3,566,637 
Contract liabilities  4,851,900   3,455,288   -   -   -   4,851,900   3,455,288 
Total current liabilities  18,850,037   18,313,562   1,512,829   (108,308)  20,334   20,274,892   19,846,725 
                             
Long-term debt, less current maturities  11,233,705   11,024,296   5,108,000(d)  (1,298,071)(m)  (1,104,427)(l)  13,939,207   15,027,869 
Deferred income taxes payable  2,255,515   1,925,823   -   (163,080)(n)  318,870(n)  2,411,305   2,244,693 
Total liabilities  32,339,257   31,263,681   6,620,829   (1,569,459)  (765,223)  36,625,404   37,119,287 
                             
Shareholders' equity                            
                             
Preferred stock, $.0001 par value, Authorized 1,000,000 shares, 206 issued at September 30, 2020 and 2019  -   -               -   - 
                             
Common stock, $.0001 par value                            
Authorized 50,000,000 shares 14,839,836 issued and 13,621,406 outstanding at September 30, 2020 and 14,839,836 issued and 13,924,789 outstanding at September 30, 2019  1,484   1,484   -   -   -   1,484   1,484 
                             
Treasury stock, 1,218,430 shares at September 30, 2020 and 915,047 at September 30, 2019 (122)  (91)              (122)  (91)
                             
Additional paid in capital  60,670,699   60,938,896   -   -   -   60,670,699   60,938,896 
Retained earnings (deficit)  (34,848,032)  (36,275,932)  -   840,184(o)  964,217(o)  (33,043,631)  (35,311,715)
                             
Total shareholders' equity  25,824,029   24,664,357   -   840,184   964,217   27,628,430   25,628,574 
                             
Total liabilities and shareholders' equity $58,163,286  $55,928,038  $6,620,829  $(729,275) $198,994  $64,253,834  $62,747,861 

 

(a)Cash acquired in purchase
(b)Property, plant and equipment acquired in purchase at stepped up value
(c)Non-compete valued at $150,000 and customer list valued at $150,000
(d)Debt to finance purchase, $6.5mm, and $120,829 in assume equipment debt
(e)Cash flow effect of adjustments 
(f)From WVP 2019 audited financial statements
(g)Fiscal year 2020 adjustment to net to audited financial statements
(h)Depreciation based on stepped up asset value
(i)Amortization of non-compete intangile asset
(j)Adjustment to reflect $120,829 in payments for paid off within twelve months and a ($127,573) reclass to long-term debt
(k)$34,071 reclass from long-term debt
(l)Long term debt payments of $1,232,000, partially offset by $127,573 reclass from current portion of long-term debt
(m)Long term debt payments of $1,264,000 and $34,071 reclass to current portion of long-term debt
(n)Current year deferred income tax adjustment primarily due to property, plant and equipment aquired in purchase, partially offset by tax amortization of goodwill
(o)Current year net income from WVP audited financial statements, partially offset by pro forma income statement adjustments 

 

 

 

 

  Energy Services of
America Corporation
  West Virginia Pipeline        Energy Services of America
Corporation
 
  Consolidated Statements
of Income (Audited)
  Statements of
Income (Audited)
        Consolidated Pro Forma
Statements of Income
 
  For the years Ended
September 30,
  For the Years Ended
December 31,
  Pro Forma Adjustments  For the years Ended
September 30,
 
  2020  2019  2020  2019  2020  2019  2020  2019 
Revenue $119,194,440  $174,541,155  $6,126,037  $6,661,532  $-  $-  $125,320,477  $181,202,687 
                                 
Cost of revenues  105,693,209   161,861,357   3,899,969   4,152,195   43,000(a)  20,000(a)  109,636,178   166,033,552 
                                 
Gross profit  13,501,231   12,679,798   2,226,068   2,509,337   (43,000)  (20,000)  15,684,299   15,169,135 
                                 
Selling and administrative expenses  9,831,578   8,857,386   818,260   759,071           10,649,838   9,616,457 
Income from operations  3,669,653   3,822,412   1,407,808   1,750,266   (43,000)  (20,000)  5,034,461   5,552,678 
                                 
Other income (expense)                                
Interest income  53,332   58,023   498   9,252   -   -   53,830   67,275 
Other nonoperating (expense) income  (239,862)  (112,814)  311   (145,717)  -   -   (239,551)  (258,531)
Interest expense  (486,246)  (1,064,222)  (8,680)  (14,956)  (206,000)(b)  (258,000)(b)  (700,926)  (1,337,178)
Gain on sale of equipment  579,326   258,082   -   -   -   -   579,326   258,082 
   (93,450)  (860,931)  (7,871)  (151,421)  (206,000)  (258,000)  (307,321)  (1,270,352)
Income before income taxes  3,576,203   2,961,481   1,399,937   1,598,845   (249,000)  (278,000)  4,727,140   4,282,326 
Income tax expense  1,143,186   968,571   -   -   310,753(d)  356,628(c)  1,453,939   1,325,199 
Net income  2,433,017   1,992,910   1,399,937   1,598,845   (559,753)  (634,628)  3,273,201   2,957,127 
Dividends on preferred stock  309,000   309,000   -   -   -   -   309,000   309,000 
Net income available to common shareholders $2,124,017  $1,683,910  $1,399,937  $1,598,845  $(559,753) $(634,628) $2,964,201  $2,648,127 
                                 
Weighted average shares outstanding-basic  13,804,835   14,064,871                   13,804,835   14,064,871 
                                 
Weighted average shares-diluted  17,238,168   17,498,204                   17,238,168   17,498,204 
                                 
Earnings per share available to common shareholders $0.154  $0.120                  $0.215  $0.188 
                                 
Earnings per share-diluted available to common shareholders $0.123  $0.096                  $0.172  $0.151 

 

(a)Depreciation adjustment for the stepped up value of property, plant and equipment
(b)Interest on debt obtained to finance purchase
(c)$431,688 adjustment due to WVP previously filing as an "S" corporation during audited periods, partially offset by a $75,060 tax effect of pro forma adjustments
(d)$377,983 adjustment due to WVP previously filing as an "S" corporation during audited periods, partially offset by a $67,230 tax effect of pro forma adjustments