Contract
Exhibit 99.3
As previously reported, on October 10, 2014, MagneGas Corporation (the “Company”), signed a Stock Purchase Agreement (the “Agreement”) with the Xxxxxx X. Xxxxxxxxx Revocable Trust, Xxxxxx X Xxxxxxxxx and Xxxxxxx X. Xxxxx (each, a Seller Party and together, the “Seller Parties”), the holders of all of the issued and outstanding capital stock (the “ESSI Shares”) of Equipment Sales and Service, Inc., a Florida corporation (“ESSI”), pursuant to which the Company agreed to purchase, and the Seller Party agreed to sell, all the ESSI Shares for a total purchase price of Three Million Dollars ($3,000,000).
ESSI operates a business of sales and distribution of gases based from its headquarters in Pinellas Park, Florida.
The closing of the Company’s purchase of the ESSI Shares occurred on October 27, 2014.Upon the closing of this transaction, the Company entered into a lease agreement for the premises at Pinellas Park, Florida that had served as ESSI’s corporate headquarters.
The Company accounted for the assets, liabilities and ownership interests in accordance with the provisions of ASC 805, Business Combinations for acquisitions occurring in years beginning after December 15, 2008 (formerly SFAS No. 141R, Business Combinations). As such, the recorded assets and liabilities acquired were recorded at fair value and any difference in the net asset values and the consideration given will be recorded as a gain on acquisition or as goodwill. The pro forma consolidated balance sheet as of September 30, 2014 and consolidated statement of operations for the nine months then ended for the consolidated entity as if the acquisition had occurred on January 1, 2014 is as follows.
The pro forma results disclosed in the tables below are based on annual audited statements of the Company and ESSI and subsidiaries. Various assumptions were made and are not necessarily indicative of the results of operations that would have occurred had the Company completed this acquisition on January 1, 2014. The audited consolidated financial statements for ESSI for the years ended December 31, 2013 and 2012 are attached.
The consolidated balance sheet and statement of operations as of and for the nine months ended September 30, 2014 is reported on the Company’s Form 10-Q filed on November 10, 2014.
| 1 |
MagneGas Corporation
Proforma Information
| Description | ESSI | MagneGas | Pro Forma | Proforma | ||||||||||||
| 6/30/2014 | 9/30/2014 | Adjustments | Consolidated | |||||||||||||
| Entity | ||||||||||||||||
| Current Assets | ||||||||||||||||
| Cash | 70,758 | 5,113,791 | (3,000,000 | ) | 2,184,549 | |||||||||||
| Accounts Receivable | 206,644 | 72,888 | 279,532 | |||||||||||||
| Inventory | 513,852 | 1,881,154 | 2,395,006 | |||||||||||||
| Prepaid Expense | 6,462 | 400,690 | 407,152 | |||||||||||||
| Current Assets | 797,716 | 7,468,523 | 5,266,239 | |||||||||||||
| Net Fixed Assets | 92,293 | 5,951,932 | 6,044,225 | |||||||||||||
| Net Intangible Assets | - | 494,754 | 494,754 | |||||||||||||
| Investments in Joint Ventures | - | 690,410 | 690,410 | |||||||||||||
| Security Deposits | 45 | 10,654 | 10,699 | |||||||||||||
| Non-current Assets | - | |||||||||||||||
| Goodwill | 2,164,042 | 2,164,042 | ||||||||||||||
| Total Assets | 890,054 | 14,616,273 | (835,958 | ) | 14,670,369 | |||||||||||
| Current Liabilities | ||||||||||||||||
| Accounts Payable | 21,055 | 145,612 | 166,667 | |||||||||||||
| Accrued Expenses | 33,040 | 347,426 | 380,466 | |||||||||||||
| Deferred Revenue | 69,999 | 69,999 | ||||||||||||||
| Customer Deposits | - | |||||||||||||||
| - | ||||||||||||||||
| Current Liabilities | 54,095 | 563,037 | 617,132 | |||||||||||||
| Note Payable - Long Term | 520,000 | 520,000 | ||||||||||||||
| - | 520,000 | 520,000 | ||||||||||||||
| Non-current Liabilities | ||||||||||||||||
| Total Liabilities | 54,095 | 1,083,037 | 1,137,132 | |||||||||||||
| Equity | ||||||||||||||||
| Preferred Stock | - | 1,000 | 1,000 | |||||||||||||
| Common Stock | 500 | 33,582 | (500 | ) | 33,582 | |||||||||||
| Additional Paid-in Capital | 49,500 | 36,987,318 | (49,500 | ) | 36,987,318 | |||||||||||
| Treasury Stock | (216,708 | ) | 216,708 | - | ||||||||||||
| Accumulated Deficit | 1,002,666 | (23,488,664 | ) | (1,002,666 | ) | (23,488,664 | ) | |||||||||
| Equity | - | |||||||||||||||
| Total Shareholders' Equity | 835,958 | 13,533,236 | (835,958 | ) | 13,533,236 | |||||||||||
| Total Liabilities & Equity | 890,054 | 14,616,273 | (835,958 | ) | 14,670,369 | |||||||||||
| 2 |
MagneGas Corporation
Proforma Information
| Description | ESSI | MagneGas | Pro Forma | Proforma | ||||||||||||
| 6/30/2014 | 9/30/2014 | Adjustments | Consolidated | |||||||||||||
| Entity | ||||||||||||||||
| Revenue | 1,048,496 | 516,331 | 1,564,827 | |||||||||||||
| Direct Cost | 563,730 | 328,943 | 892,673 | |||||||||||||
| 484,766 | 187,388 | 672,154 | ||||||||||||||
| Total Operating Expense | 294,479 | 5,125,100 | 5,419,579 | |||||||||||||
| Operating Income/(Loss) | 190,287 | (4,937,712 | ) | (4,747,425 | ) | |||||||||||
| Total Other Income/(Expense) | (50 | ) | 1,809 | 1,759 | ||||||||||||
| Net Income/(Loss) | 190,237 | (4,935,903 | ) | - | (4,745,666 | ) | ||||||||||
| 3 |
