Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.19.2
Acquisitions
6 Months Ended
Jun. 30, 2019
Business Combinations [Abstract]  
Acquisitions

NOTE 4 – ACQUISITIONS

 

January Stock Purchase:

 

On January 16, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with Melvin Ruyle Family Living Trust (the “Seller”) and Tyler Welders Supply, Inc., a Texas corporation (“TWS”) for the purchase of all of the issued and outstanding capital stock of TWS by the Company (“Transaction”). Under the terms of the SPA, the Company purchased one hundred percent (100%) of TWS’s issued and outstanding capital stock for the gross purchase price of $2,500,000 (“TWS Stock”). Effective at closing, the Company will assume business operations at its new location in Texas.

 

The preliminary allocation of the consideration transferred is as follows:

 

Cash   $ 2,500,000  
Total purchase price   $ 2,500,000  
         
Accounts receivable   $ 572,264  
Cash     43,394  
Inventory     571,699  
Customer relationships     250,000  
Cylinders and trucks     182,549  
Accounts payable assumed     (652,578 )
Total purchase price allocation   $ 967,327  
         
Goodwill   $ 1,532,673  

 

February Stock Purchase:

 

On February 15, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with Melvin Ruyle, Jered Ruyle and Janson Ruyle (collectively, the “Seller”) and Cylinder Solutions, Inc., a Texas corporation (“CS”) for the purchase of all of the issued and outstanding capital stock of CS by the Company (“Transaction”). Under the terms of the SPA, the Company purchased one hundred percent (100%) of CS’s issued and outstanding capital stock for the gross purchase price of $1,500,000 (“CS Stock”). Effective at closing, the Company assumed business operations at its new location in East Texas.

 

The preliminary allocation of the consideration transferred is as follows:

 

Cash   $ 1,500,000  
Total purchase price   $ 1,500,000  
         
Accounts receivable   $ 13,902  
Cash     25,931  
Cylinders and trucks     336,081  
Accounts payable assumed     (40,911 )
Total purchase price allocation   $ 335,004  
         
Goodwill   $ 1,164,996  

 

February Asset Purchase:

 

On February 22, 2019, Taronis Technologies, Inc. (the “Company”) entered into an Asset Purchase Agreement (“Agreement”) with Complete Cutting and Welding Supplies, Inc., a California corporation (the “Seller”) for the purchase of substantially all of the Seller’s tangible and intangible business assets (“Transaction”). Under the terms of the Agreement, the Company purchased from the Seller substantially all of the Seller’s right, title an interest to the Seller’s business assets and certain other assumed liabilities. The total purchase price paid was $2,500,000 cash. The Agreement includes certain other terms and conditions which are typical in asset purchase agreements.

 

The allocation of the consideration transferred is as follows:

 

Cash   $ 2,500,000  
Total purchase price   $ 2,500,000  
         
Accounts receivable   $ 455,705  
Customer relationships     250,000  
Cylinders and trucks     377,655  
Accounts payable assumed     (316,333 )
Total purchase price allocation   $ 767,027  
         
Goodwill   $ 1,732,973  

 

All goodwill recorded as part of the purchase price allocations is currently anticipated to be tax deductible.

 

Water Pilot, LLC Stock Purchase:

 

On May 31, 2019, the Company entered into a Limited Liability Company Unit Purchase and Sale Agreement (“Agreement”) with the sellers listed on the signature page thereto (the “Sellers”) and Water Pilot, LLC, a Florida limited liability company, for the purchase of fifty-one percent (51%) ownership in Water Pilot, LLC. The purchase price for the ownership interest or “Units” was $1,275,000 payable in shares of the Company’s restricted common stock (“Stock Consideration”). The Stock Consideration was priced based on the five (5) day Volume Weighted Average Price of the Company’s common stock immediately preceding the closing date of the Agreement. At closing, the Company was named the Manager of Water Pilot, LLC and took control of the business. The Agreement also included terms and conditions which are standard in similarly situated purchase agreements. The transaction closed on May 31, 2019. The company recorded the full amount to intangible assets.

 

The allocation of the consideration transferred is as follows:

 

Stock Issued   $ 1,275,000  
Total purchase price   $ 1,275,000  
         
Developed technology   $ 1,275,000  
Total purchase price allocation   $ 1,275,000  
         
Goodwill   $ -  

 

The following unaudited proforma financial information presents the consolidated results of operations of the Company with NG Enterprises Acquisition, LLC, MWS Green Arc Acquisition, LLC, Trico Welding Supplies, Inc., Paris Oxygen Company, Latex Welding Supply, Inc., United Welding Specialties of Longview, Inc., Tyler Welders Supply, Cylinder Solutions, Complete Cutting and Welding Supplies and Water Pilot, LLC for the three and six months ended June 30, 2019 and 2018, as if the above discussed acquisitions had occurred on January 1, 2018 instead of January 19, 2018, February 16, 2018, April 3, 2018, October 17, 2018, October 22, 2018, October 26, 2018, January 16, 2019, February 15, 2019, February 22, 2019 and May 31, 2019, respectively. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

 

    For the three months ended
June 30,
    For the six months ended
June 30,
 
    2019     2018     2019     2018  
Revenues     5,803,945       5,656,244       11,279,238       11,245,774  
Gross Profit     2,649,752       2,531,265       5,208,232       4,635,668  
Operating Loss     (4,871,623 )     (3,485,788 )     (13,944,138 )     (7,023,886 )
Net Loss     (4,811,602 )     (3,413,974 )     (13,863,590 )     (7,213,808 )
Weighted Average Common Stock Outstanding     27,912,957       798,608       21,742,677       559,400  
Loss per Common Share – Basic and Diluted     (0.17 )     (4.27 )     (0.64 )     (12.90 )