NOTE 3 – ACQUISITIONS

The Company is a leading consolidator of the open-deck freight market in North America. From its inception in late 2008, the Company has successfully acquired ten open-deck trucking companies. Negotiations and discussions with potential targets are an integral part of the Company’s operations, and the Company may be in varying stages of the acquisition process, from infancy to very mature, at any point in time.

Schilli Transportation Services, Inc.

On May 1, 2017 the Company acquired 100% of the outstanding stock of Schilli Transportation Services, Inc. and certain of its affiliates (Schilli), based in Remington, Indiana. Total consideration paid was $27.4 million, consisting of $21.0 million in cash, 232,885 shares of Daseke common stock valued at $2.3 million and $4.0 million of long-term debt refinanced by the Company. The fair value of the 232,885 shares issued was determined based on the closing price of the stock on the acquisition date close. The cash consideration was funded through a delayed draw on May 1, 2017 under the Term Loan Facility.

The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed at estimated fair values as of the acquisition date, which were based, in part, upon outside preliminary appraisals for certain assets. Appraisals have not been completed for the identifiable intangible assets and no value has been allocated to them at this time.

The following is a summary of the preliminary allocation of the purchase price paid to the fair values of the net assets (in thousands):



Accounts receivable	$	8,798
Parts inventory		1,681
Equipment held for sale		2,396
Other assets		2,305
Property and equipment		41,423
Goodwill		10,678
Deferred tax liabilities		(12,287)
Accounts payable and other liabilities		(4,890)
Long-term debt		(22,744)
Total	$	27,360

The purchase price allocation is based on preliminary information and subject to change when additional information concerning final asset and liability values is obtained. We have not completed our assessment of the fair value of purchased intangible assets, property and equipment, inventory, and tax balances. Our final purchase price allocation may result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill, which preliminary allocation is $10.7 million. The acquisition was a stock purchase, therefore the values assigned to the intangible assets and goodwill are not deductible for tax purposes. Approximately $0.4 million of transaction expenses were incurred in the acquisition, which are not deductible for taxes purposes.

Big Freight Systems, Inc.

On May 1, 2017 the Company acquired 100% of the outstanding stock of Big Freight Systems, Inc. (Big Freight) based in Steinbach, Manitoba. Total consideration paid was $16.7 million consisting of $12.4 million in cash, 109,248 shares of Daseke common stock valued at $1.1 million and, the Company assumed approximately $3.2 million of outstanding debt. The fair value of the 109,248 shares issued was determined based on the closing price of the stock on the acquisition date close. Big Freight’s purchase agreement also contains an earn-out for additional cash consideration to be paid on the excess of each of 2017, 2018 and 2019’s earnings before interest, taxes, depreciation and amortization (EBITDA Amount) over 2016’s EBITDA Amount (as defined in the purchase agreement), multiplied by 0.4. The cash consideration was funded through a delayed draw on May 1, 2017 under the Term Loan Facility and cash on hand.

The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed at estimated fair values as of the acquisition date, which were based, in part, on outside preliminary appraisals for certain assets and liabilities. Appraisals have not been completed for the identifiable intangible assets and the contingent consideration for the earn-out, therefore, no value has been allocated to them at this time.

The following is a summary of the preliminary allocation of the purchase price paid to the fair values of the net assets (in thousands):


(all amounts in U.S. dollars)

Accounts receivable	$	4,914
Prepaid and other current assets		576
Property and equipment		11,492
Goodwill		8,280
Other long-term assets		121
Accounts payable		(1,802)
Deferred tax liabilities		(2,440)
Accrued expenses and other liabilities		(2,199)
Long-term debt		(2,293)
Total	$	16,649

The purchase price allocation is based on preliminary information and subject to change when additional information concerning final asset and liability values is obtained. We have not completed our assessment of the fair value of purchased intangible assets, property and equipment, contingent consideration and tax balances. Our final purchase price allocation may result in adjustments to certain assets and liabilities, including the residual amount allocated to goodwill, which preliminary allocation is $8.3 million. The acquisition was a stock purchase, therefore the values assigned to the intangible assets and goodwill are not deductible for tax purposes. Approximately $0.6 million of transaction expenses were incurred in the acquisition, which are not deductible for taxes purposes.

Supplemental Pro Forma Information (Unaudited)

The following supplemental pro forma financial information reflects the Schilli and Big Freight acquisitions as if they occurred on January 1, 2016. This pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the pro forma events taken place on January 1, 2016. Further, the pro forma financial information does not purport to project the future operating results of the consolidated company.



	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2017		2016		2017		2016

Pro forma revenue	$	207,191	$	201,146	$	396,206	$	387,246
Pro forma net income (loss)	$	(3,896)	$	2,195	$	(11,981)	$	2,582