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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 1/24/20 Vertex Energy Inc. 8-K/A:9 1/17/20 2:328K Loev Corp Filings Inc/FA |
Document/Exhibit Description Pages Size
1: 8-K/A Amendment to Form 8-K HTML 21K
2: EX-99.2 Unaudited Pro Forma Condensed Consolidated HTML 93K
Financial Information
Exhibit 99.2
VERTEX ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On January 1, 2020 (the “Closing Date”), Vertex Refining OH, LLC (“Vertex OH”), a wholly-owned subsidiary of Vertex Energy Operating, LLC (“Vertex Operating”), a wholly-owned subsidiary of Vertex Energy, Inc. (the “Company”); Vertex Operating; and HPRM LLC, which entity was formed as a special purpose vehicle (“Heartland SPV”), completed the transactions described in greater detail below.
On the Closing Date, Vertex Operating transferred ownership of Vertex OH to Heartland SPV, which entity owned and operated the Company’s Columbus, Ohio, Heartland facility, which produces a base oil product that is sold to lubricant packagers and distributors (the “Vertex OH Disposition”). The Company has one refining location in Ohio and collection and storage facilities in Ohio, Kentucky, and West Virginia.
Also on the Closing Date, the transactions contemplated by a Share Purchase and Subscription Agreement (the “Share Purchase Agreement”) by and among Heartland SPV, Vertex Operating, Tensile-Heartland Acquisition Corporation (“Tensile-Heartland”), an affiliate of Tensile Capital Management, an investment fund based in San Francisco, California (“Tensile”), and solely for the purposes of a guaranty in the Share Purchase Agreement, the Company, closed. The transactions contemplated by the Share Purchase Agreement were effective for all purposes as of January 1, 2020.
Pursuant to the Share Purchase Agreement, Tensile-Heartland acquired from the Company and Heartland SPV, a 65% interest in Heartland SPV.
The following unaudited pro forma financial information is based on the Company’s historical consolidated financial statements after giving effect to the Share Purchase Agreement (the “Disposition”).
The unaudited pro forma consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and the unaudited condensed consolidated financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Quarterly Report on Form 10-Q for the period ended September 29, 2019.
The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of what the Company’s financial performance and financial position would have been had the transaction been completed on the dates assumed, nor is the unaudited pro forma financial information necessarily indicative of the results to be expected in any future period.
C:
VERTEX ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2019
ASSETS
| (unaudited) | Historical | Pro
Forma Adjustments Ohio | Pro
Forma Balance Sheet | |||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 2,303,725 | $ | 6,313,653 | (a) | $ | 8,617,378 | |||||
| Restricted cash | 100,088 | — | 100,088 | |||||||||
| Accounts receivable, net | 10,405,711 | (4,605,565 | )(b) | 5,800,146 | ||||||||
| Equity Method Investment | — | 6,200,000 | (c) | 6,200,000 | ||||||||
| FIT receivable | 205,818 | — | 205,818 | |||||||||
| Inventory | 5,878,408 | (473,960 | )(b) | 5,404,448 | ||||||||
| Prepaid expenses | 6,534,981 | (153,700 | )(b) | 6,381,281 | ||||||||
| Total current assets | 25,428,731 | 7,280,428 | 32,709,159 | |||||||||
| Non-current Assets | ||||||||||||
| Fixed assets | 69,437,842 | (11,852,901 | )(b) | 57,584,941 | ||||||||
| Less accumulated depreciation | (23,550,224 | ) | 5,542,047 | (b) | (18,008,177 | ) | ||||||
| Fixed assets, net | 45,887,618 | (6,310,854 | ) | 39,576,764 | ||||||||
| Finance lease right-of-use assets | 904,691 | (881,161 | )(b) | 23,530 | ||||||||
| Operating lease right-of-use assets | 36,242,861 | (603,711 | )(b) | 35,639,150 | ||||||||
| Intangible assets, net | 11,590,876 | (1,378,263 | )(b) | 10,212,613 | ||||||||
| Federal income tax receivable | 68,605 | — | 68,605 | |||||||||
| Other assets | 616,759 | (106,643 | )(b) | 510,116 | ||||||||
| TOTAL ASSETS | $ | 120,740,141 | $ | (2,000,204 | ) | $ | 118,739,937 | |||||
C:
VERTEX ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2019
LIABILITIES, TEMPORARY EQUITY AND EQUITY
| (unaudited) | Historical | Pro
Forma Adjustments Ohio | Pro
Forma Balance Sheet | |||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 7,745,380 | $ | (2,024,190 | )(b) | $ | 5,721,190 | |||||
| Accrued expenses | 2,275,006 | — | 2,275,006 | |||||||||
| Dividends payable | 419,082 | — | 419,082 | |||||||||
| Finance lease liability - current | 214,045 | (203,632 | )(b) | 10,413 | ||||||||
| Operating lease liability - current | 6,005,502 | (286,937 | )(b) | 5,718,565 | ||||||||
| Current portion of long-term debt | 2,794,624 | (1,265,958 | )(d) | 1,528,666 | ||||||||
| Derivative commodity liability | 1,510,573 | — | 1,510,573 | |||||||||
| Revolving note | 5,387,639 | — | 5,387,639 | |||||||||
| Total current liabilities | 26,351,851 | (3,780,717 | ) | 22,571,134 | ||||||||
| Long-term liabilities | ||||||||||||
| Long-term debt | 12,658,000 | (5,734,042 | )(d) | 6,923,958 | ||||||||
| Finance lease liability - long-term | 665,926 | (661,441 | )(b) | 4,485 | ||||||||
| Operating lease liability - long-term | 30,237,359 | (316,774 | )(b) | 29,920,585 | ||||||||
| Derivative warrant liability | 1,149,977 | — | 1,149,977 | |||||||||
| Total liabilities | 71,063,113 | (10,492,974 | ) | 60,570,139 | ||||||||
| TEMPORARY EQUITY | ||||||||||||
| Series B Preferred shares | 10,442,193 | — | 10,442,193 | |||||||||
| Series B-1 Preferred shares | 14,454,821 | — | 14,454,821 | |||||||||
| Redeemable non-controlling interest | 4,000,000 | — | 4,000,000 | |||||||||
| EQUITY | ||||||||||||
| Series A Convertible Preferred stock | 420 | — | 420 | |||||||||
| Common stock | 41,850 | — | 41,850 | |||||||||
| Additional paid-in capital | 79,719,745 | — | 79,719,745 | |||||||||
| Retained earnings (accumulated deficit) | (59,788,939 | ) | 8,492,770 | (e) | (51,296,169 | ) | ||||||
| Total Vertex Energy, Inc. stockholders' equity | 19,973,076 | 8,492,770 | 28,465,846 | |||||||||
| Non-controlling interest | 806,938 | — | 806,938 | |||||||||
| Total equity | 20,780,014 | 8,492,770 | 29,272,784 | |||||||||
| TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY | $ | 120,740,141 | $ | (2,000,204 | ) | $ | 118,739,937 | |||||
C:
VERTEX ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
| (unaudited) | Historical | Pro
Forma Adjustments Ohio | Pro
Forma Statement of Operations | |||||||||
| Revenues | $ | 120,777,263 | $ | (31,530,289 | )(f) | $ | 89,246,974 | |||||
| Cost of revenues | 103,732,086 | (24,325,025 | )(f) | 79,407,061 | ||||||||
| Gross profit | 17,045,177 | (7,205,264 | ) | 9,839,913 | ||||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative expenses | 17,529,784 | (4,894,650 | )(f) | 12,635,134 | ||||||||
| Depreciation and amortization expense | 5,333,485 | (1,377,412 | )(f) | 3,956,073 | ||||||||
| Total operating expenses | 22,863,269 | (6,272,062 | ) | 16,591,207 | ||||||||
| Income (loss) from operations | (5,818,092 | ) | (933,202 | ) | (6,751,294 | ) | ||||||
| Other income (expense) | ||||||||||||
| Other income (expense) | 920,071 | (2,044 | )(f) | 918,027 | ||||||||
| Gain on sale of assets | 31,443 | — | 31,443 | |||||||||
| Gain(loss) on change in derivative liability | 331,715 | (59,346 | )(f) | 272,369 | ||||||||
| Interest expense | (2,322,780 | ) | 542,716 | (f) | (1,780,064 | ) | ||||||
| Total other income (expense) | (1,039,551 | ) | 481,326 | (558,225 | ) | |||||||
| Income (loss) before income tax | (6,857,643 | ) | (451,876 | ) | (7,309,519 | ) | ||||||
| Income tax benefit (expense) | — | — | — | |||||||||
| Minority Interest in Subsidiary | — | — | — | |||||||||
| Net income (loss) | (6,857,643 | ) | (451,876 | ) | (7,309,519 | ) | ||||||
| Net income (loss) attributable to non-controlling interest | (374,862 | ) | — | (374,862 | ) | |||||||
| Net income (loss) attributable to Vertex Energy, Inc. | $ | (6,482,781 | ) | $ | (451,876 | ) | $ | (6,934,657 | ) | |||
| Loss per common share | ||||||||||||
| Basic | $ | (0.28 | ) | $ | (0.01 | ) | $ | (0.29 | ) | |||
| Diluted | $ | (0.28 | ) | $ | (0.01 | ) | $ | (0.29 | ) | |||
| Shares used in computing earnings/(loss) per common share | ||||||||||||
| Basic | 40,626,700 | 40,626,700 | 40,626,700 | |||||||||
| Diluted | 40,626,700 | 40,626,700 | 40,626,700 | |||||||||
C:
VERTEX ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
| (unaudited) | Historical | Pro
Forma Adjustments Ohio | Pro
Forma Statement of Operations | |||||||||
| Revenues | $ | 180,720,661 | $ | (41,207,747 | )(f) | $ | 139,512,914 | |||||
| Cost of revenues | 151,314,039 | (32,083,426 | )(f) | 119,230,613 | ||||||||
| Gross profit | 29,406,622 | (9,124,321 | ) | 20,282,301 | ||||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative expenses | 21,927,264 | (6,622,407 | )(f) | 15,304,857 | ||||||||
| Depreciation and amortization expense | 6,991,010 | (1,561,018 | )(f) | 5,429,992 | ||||||||
| Total operating expenses | 28,918,274 | (8,183,425 | ) | 20,734,849 | ||||||||
| Income (loss) from operations | 488,348 | (940,896 | ) | (452,548 | ) | |||||||
| Other income (expense) | ||||||||||||
| Other income (expense) | 659 | (659 | )(f) | — | ||||||||
| Gain(loss) on change in derivative liability | 763,716 | — | 763,716 | |||||||||
| Gain/(Loss) on sale of assets | 45,553 | — | 45,553 | |||||||||
| Interest expense | (3,281,855 | ) | 765,176 | (f) | (2,516,679 | ) | ||||||
| Total other income (expense) | (2,471,927 | ) | 764,517 | (1,707,410 | ) | |||||||
| Income (loss) before income tax | (1,983,579 | ) | (176,379 | ) | (2,159,958 | ) | ||||||
| Income tax benefit (expense) | — | — | — | |||||||||
| Net income (loss) | (1,983,579 | ) | (176,379 | ) | (2,159,958 | ) | ||||||
| Net income (loss) attributable to non-controlling interest | 234,188 | — | 234,188 | |||||||||
| Net income (loss) attributable to Vertex Energy, Inc. | $ | (2,217,767 | ) | $ | (176,379 | ) | $ | (2,394,146 | ) | |||
| Loss per common share | ||||||||||||
| Basic | $ | (0.23 | ) | $ | (0.00 | ) | $ | (0.23 | ) | |||
| Diluted | $ | (0.23 | ) | $ | (0.00 | ) | $ | (0.23 | ) | |||
| Shares used in computing earnings/(loss) per common share | ||||||||||||
| Basic | 35,411,264 | 35,411,264 | 35,411,264 | |||||||||
| Diluted | 35,411,264 | 35,411,264 | 35,411,264 | |||||||||
C:
VERTEX ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
| 1. | BASIS OF PRESENTATION |
The accompanying unaudited pro forma consolidated financial statements give effect to the pro forma adjustments necessary to reflect the Share Purchase and Subscription Agreement between Vertex Energy, Inc. (the “Company”) and Tensile Capital Management (“Tensile”) as if the transaction occurred at the beginning of the periods presented in the pro forma statements of operations and as of September 30, 2019, in the pro forma balance sheet.
| 2. | PRO FORMA ADJUSTMENTS |
The unaudited pro forma consolidated statements of operations and balance sheet reflect the effect of the following pro forma adjustments:
| (a) | Estimated total cash proceeds received for the Vertex OH sale net of Vertex OH’s cash balance included in the sale and the repayment of outstanding term loans. |
| (b) | Elimination of assets and liabilities associated with the Vertex OH sale. |
| (c) | Estimated increase in equity method investment for the remaining fair value of the non-controlling financial interest in Vertex OH of 35%. |
| (d) | Estimated paydown of outstanding term loans |
| (e) | Estimated gain on the Vertex OH sale, reflected as an addition to the Company’s retained earnings as of September 30, 2019. |
| (f) | Reduction of revenue and expenses associated with the Vertex OH sale. |
C:
| This ‘8-K/A’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| Filed on: | 1/24/20 | |||
| For Period end: | 1/17/20 | 8-K, SC 13D | ||
| 1/1/20 | ||||
| 9/30/19 | 10-Q | |||
| 9/29/19 | ||||
| 12/31/18 | 10-K, 4, 424B3 | |||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/09/21 Vertex Energy Inc. 10-K 12/31/20 108:15M Workiva Inc Wde… FA01/FA 2/25/21 Vertex Energy Inc. S-8 2/25/21 6:482K Loev Corp Filings Inc/FA |