Unaudited Pro Forma Adjustments. The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2024 and in the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2024 and the year ended December 31, 2023 are as follows:
(a) Reflects the adjustment to record the assets acquired and liabilities assumed, on a relative fair value basis, in the NRO Acquisition along with transfer of consideration (see Note 5 – Preliminary Purchase Price).
(b) Reflects the adjustment to record the Crypto Sale (see Note 3 – Cryptocurrency Asset Sale).
(c) Reflects the adjustment to depreciation expense required to reflect a decrease in the estimated useful life of acquired cryptocurrency mining assets of approximately one year (see Note 2 – Creek Road Miners, Inc. As Adjusted Historical Financial Statement Information).
(d) Reflects the reclassification of stock based compensation to conform to the Company’s financial statement presentation (see Note 2 – Creek Road Miners, Inc. As Adjusted Historical Financial Statement Information).
(e) Reflects the adjustment to interest expense from the conversion of notes payable and the Original Debentures.
(f) Reflects the adjustment for depreciation, depletion and amortization expense associated with the assets acquired in the NRO Acquisition reflecting a decrease in depreciable asset base after the purchase price allocation along with a decrease in the units of production depletion rate primarily due to the depletion of the $66.1 million acquisition costs over total proved reserves.
(g) Reflects the adjustment required to remove the impact of assets not acquired using the information provided by NRO.
(h) Reflects the adjustment to remove the financial statement effect of amounts related to assets that were not acquired and liabilities that were not assumed in the NRO Acquisition.
(i) Reflects the Senior Convertible Note and Subordinated Note proceeds received on October 1, 2024 (see Note 4 – Subsequent Events).
(j) The Combined Pro Forma weighted average shares outstanding include the historical shares of Creek Road Miners, Inc. and Creek Road Miners, Inc. acquisition adjustment pursuant to the requirements of accounting for the Merger as a reverse asset acquisition and as required to properly reflect the Merger as consummated on January 1, 2023.
Unaudited Pro Forma Adjustments. The following is a summary of the unaudited pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial statements based on preliminary estimates, which may change as additional information is obtained.
a. Reflects amounts as originally reported by the Company in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022.
b. Reflects amounts as originally reported by the Company in its Annual Report on Form 10-K for the year ended December 31, 2021.
c. Reflects the elimination of the Enterprise Apps Business assets, liability and historical equity balances including within the Company’s consolidated financial statements. The amount of the actual gain will be calculated based on the net book value of the sold business as of the closing of the Business Combination and therefore could differ from the current estimate.
d. Reflects adjustment for remaining cash contribution of $3.8 million agreed upon within the Separation agreement.
e. Reflects adjustment for the stepped-up value of Inpixon’s investment in Class A and Class B Units of Cardinal Ventures Holdings LLC, which has certain interests in the sponsor of KINS. As such, Inpixon is entitled to an allocation of financial instruments distributed; assuming all public shareholders redeem as a result of the business combination Inpixon expects to receive 600,000 Class A shares of KINS and 2,500,000 private warrants. This results in an investment in equity securities of approximately $6.1 million assuming a $10.00 per share prices and an estimated value of the private warrants being determined based on a trading price of $0.036 per share as of October 14, 2022.
f. Reflects adjustment for reverse stock split of the Company’s authorized and issued and outstanding shares of common stock at a ratio of one (1) share of common stock for every seventy five (75) shares of common stock. The Company executed the reverse stock split on October 7, 2022.
g. Reflects the elimination of the historical revenues and expenses directly to related to the Enterprise Apps Business that will not recur in the Company’s consolidated statement of operations beyond a year from the date of the Business Combination.
h. Reflects management’s estimate of approximately $1.1 million and $.6 million of historical costs mainly executive salaries and benefits in general and administrative and sales and marketing expenses to replace shared personnel that were allocated to the Enterprise Apps Busi...
Unaudited Pro Forma Adjustments. The following notes describe the basis for and/or assumptions regarding the pro forma adjustments included in the Company’s unaudited pro forma statements. All dollar amounts (except share and per share data) presented in the notes to our unaudited consolidated financial statements are stated in thousands of dollars, unless otherwise noted. Amounts may not foot due to rounding.
(a) Recording of the disposition of the transformer business. The amounts include the assets and liabilities attributable to the business being sold.
(b) Recording of the sale proceeds, net of estimated transaction related expenses. Cash proceeds from sale $ 60,500 Note receivable 7,500 Less: estimated transaction costs 5,000 Net proceeds less transaction costs $ 63,000
(c) Recording of repayment of the revolving credit facilities, short term borrowings and debt. Cash proceeds from sale $ 60,500 Less: estimated transaction costs 5,000 Net Cash proceeds from sale 55,500 Repayment of revolving credit facilities (20,982 ) Repayment of term loan B (3,238 ) Total Cash proceeds less repayment of debt $ 31,280
(d) The table below represents the tax expense and related taxes payable associated with sale of PPSI’s transformer business. Income Tax at statutory rate $ 8,751 Book tax differences (3,291 ) Benefit from net operating loss utilization (828 ) Total Income Tax Payable $ 4,632 We have applied an effective tax rate of 25.2% which represents the consolidated group tax for US tax purposes. The Company estimates the taxable income of $21.7 million with respect to the gain on sale of common stocks of the Disposed Companies to be partially offset by federal net operating losses on hand of approximately $3.3 million as of the transaction date. The Company estimates that after utilizing federal, state and local net operating losses they will incur federal, state and local income taxes of approximately $4.6 million.
(e) The estimated gain on the sale of the business if we had completed the sale as of June 30, 2019 is as follows: Net proceeds (Note (b)) $ 63,000 Net assets sold (28,274 ) Pre-tax gain on sale 34,726 Tax expense 4,632 After-tax gain on sale $ 30,094 This estimated gain has not been reflected in the pro forma condensed consolidated statement of operations as it is considered to be nonrecurring in nature and is reflected within equity on the Balance Sheet for the period ended June 30, 2019. No adjustment has been made to the sale proceeds to give effect to any potential post-closin...
Unaudited Pro Forma Adjustments. The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2023 and in the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2023 and year ended December 31, 2022 are as follows:
(a) Reflects the conversion of the AR Debentures into common shares and payment of accrued interest in cash.
(b) Reflects the exercise of Series D B Warrants for $12.0 million and issuance of 2,000,000 shares of Common Stock.
(c) Reflects the reclassification of warrant liabilities, Series D Preferred Stock and Series E preferred stock of the Company, par value $0.01 per share, upon the consummation of the Reverse Stock Split.
(d) Reflect the adjustments to remove the historical financial results of NRO.
(e) Reflects the adjustment for the Company’s Deposit utilized to partially fund the NRO Acquisition.
(f) Reflects the adjustment to record the assets acquired and liabilities assumed, on a relative fair value basis, in the NRO Acquisition along with transfer of consideration.
(g) Reflects the adjustment to record the Crypto Sale.
