BRN 8-K
Barnwell Industries Inc (BRN)
8-K
2025-03-20
For: 2025-03-14
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2025
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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(Address of Principal Executive Offices) (Zip Code)
(808 ) 531-8400
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which
registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 |
Entry into a Material Definitive Agreement.
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On March 14, 2025, Barnwell Industries, Inc. (“BII”) and Barnwell of Canada,
Limited (“Barnwell Canada” and, collectively with BII, the “Sellers”), a subsidiary of BII, entered into a
Stock Purchase Agreement with Denise Miyasato, Chad Arima and Eric Elred (collectively the “Buyer”) whereby the Buyer acquired from the Sellers all of the shares of capital stock
of Water Resources International, Inc. (the “Shares”) owned by the Sellers (the “Purchase Agreement”).
Water Resources International, Inc. (“WRI”) explores and develops groundwater resources for government, commercial and private clients in Hawaii and conducts deep drilling and
deep well pumping in Hawaii (the “Business”). The sale and purchase of the Shares (the “Transaction”)
closed (the “Closing”) simultaneously with the execution and delivery of the Purchase Agreement by each of the parties thereto on March 14, 2025 (the “Closing Date”).
The aggregate purchase price for the Shares is $1,050,000 (the “Purchase Price”),
which was paid at Closing by the Buyer as follows: an initial aggregate cash payment of $250,000 and the delivery of a promissory note with a principal amount of $800,000 to the Sellers (the “Promissory Note”). The principal payments on the Promissory Note are to be paid in installments on the following schedule: May 15, 2025: $200,000; June 16, 2025: $150,000; July 15, 2025: $150,000; August 15, 2025: $150,000; and
September 15, 2025: $150,000. The Promissory Note is secured by certain specified assets of WRI.
Although the Transaction was structured as a purchase of stock, the Sellers remain responsible for certain liabilities of WRI (the “Excluded Liabilities”) and have an obligation to pay, satisfy, settle or otherwise extinguish the Excluded Liabilities, if and when they may arise.
The Excluded Liabilities include:
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all obligations relating to any litigation against WRI, its Business, its assets, or Sellers that was commenced prior to the Closing Date or that is commenced after the Closing Date but arises out
of actions or events (other than breach of warranty claims arising out of work performed by the WRI) before the Closing;
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•
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all breach of warranty claims arising out of work performed by WRI prior to the Closing Date, but excluding all breach of warranty or breach of contract claims under certain
specified contracts;
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•
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liquidated damages imposed on WRI for a certain specified pump contract in excess of the amount of the allowance already reserved to cover such damages, if any;
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•
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the cost, if any, in excess of $200,000, to drill a certain specified well;
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all liabilities and obligations of WRI to any current or former shareholder, director, or officer of WRI or to any of its affiliates; and
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all attorneys', brokers', consultants' or other advisors' fees and expenses, and other out-of-pocket costs incurred by BII and Barnwell Canada in connection with the
Transaction.
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In the Purchase Agreement, the Sellers and the Buyer have made customary representations and warranties and have agreed to customary covenants
relating to the Transaction. Subject to certain limitations, the Sellers and the Buyer have agreed to indemnify each other for losses arising from certain breaches of the Purchase Agreement and certain other liabilities.
In connection with the Purchase Agreement, the Sellers also have agreed, for a period of 5 years after the Closing Date, to standard and customary
non-competition, non-solicitation and no-hire provisions relating to WRI and the Business, subject to certain exceptions.
The foregoing description of the Purchase Agreement, and the transactions contemplated thereby, including the Transaction, is included to provide
investors with information regarding its terms. It does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Purchase Agreement, which will be attached as an exhibit to BII’s Quarterly Report
on Form 10-Q to be filed with respect to BII’s second fiscal quarter.
The Purchase Agreement governs the contractual rights between the parties in relation to the Transaction. The Purchase Agreement will be filed as an
exhibit to BII’s Quarterly Report on Form 10-Q to provide investors with information regarding the terms of the Purchase Agreement and is not intended to provide, modify or supplement any information about the Sellers or any of their respective
subsidiaries or affiliates, or their respective businesses. In particular, the Purchase Agreement is not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Sellers. The representations
and warranties contained in the Purchase Agreement have been negotiated with the principal purpose of establishing the circumstances in which a party may have the right not to consummate the closing of the Transaction if the representations and
warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties, rather than establishing matters as facts. The representations and warranties may also be subject to contractual
standards of materiality that may be different from those generally applicable under the securities laws to investors or security holders. For the foregoing reasons, the representations and warranties should not be relied upon as statements of
factual information and the information in the Purchase Agreement should be considered in conjunction with the entirety of the factual disclosure about BII in its public reports filed with the Securities and Exchange Commission. Moreover, information
concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in BII’s public disclosures.
| Item 2.01. |
Completion of Acquisition or Disposition of Assets.
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On March 14, 2025, BII and Barnwell Canada, a subsidiary of BII, sold all of the capital stock of Water
Resources International, Inc., pursuant to the Transaction described in Item 1.01 above.
The pro forma financial information required by Item 9.01(b) of Form 8-K is being filed herewith as Exhibit 99.1 to this Current Report.
| Item 9.01. |
Financial Statements and Exhibits.
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(b) Unaudited Pro Forma Condensed Consolidated Financial Information
The following unaudited pro forma condensed consolidated financial statements of Barnwell Industries, Inc. reflecting the sale of WRI are filed as Exhibit 99.1 to this
Current Report and are incorporated herein by reference:
• Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30. 2024 and as of December 30, 2024;
• Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended December 30, 2024 and for the year ended September 30, 2024;
• Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
(d) Exhibits.
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Exhibit
No.
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Description
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Barnwell Industries, Inc. Unaudited Pro Forma Condensed Consolidated Financial Information
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Dated: March 20, 2025
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BARNWELL INDUSTRIES, INC.
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By:
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/s/ Russell M. Gifford
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Name:
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Russell M. Gifford
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Title:
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Executive Vice President and Chief Financial Officer
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Exhibit Index
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Exhibit No.
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Description
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Barnwell Industries, Inc. Unaudited Pro Forma CondensedConsolidated Financial Information
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Exhibit 99.1
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2024
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Barnwell
Industries, Inc.
(Historical)
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Pro Forma Adjustments
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Barnwell
Industries, Inc.
Pro Forma as
Adjusted
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$
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4,505,000
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30,000
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$
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4,535,000
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Accounts and other receivables
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2,770,000
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(580,000
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)
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2,190,000
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Assets held for sale
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69,000
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(69,000
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)
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Note receivable
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800,000
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800,000
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Other current assets
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1,539,000
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(667,000
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)
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872,000
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Total current assets
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8,883,000
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(486,000
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)
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8,397,000
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Assets for retirement benefits
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4,889,000
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4,899,000
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Operating lease right-of-use assets
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39,000
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39,0000
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Property and equipment:
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Proved oil and natural gas properties, net
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16,554,000
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16,554,000
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Drilling rigs and other property and equipment, net
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294,000
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(282,000
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)
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12,000
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Total property and equipment, net
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16,848,000
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(282,000
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)
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16,566,000
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Total assets
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$
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30,669,000
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(768,000
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)
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$
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29,901,000
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$
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1,822,000
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(37,000
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)
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$
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1,785,000
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Accrued capital expenditures
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2,407,000
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2,407.000
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Accrued compensation
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650,000
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(124,000
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)
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526,000
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Accrued operating and other expenses
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1,834,000
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(369,000
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)
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1,465,000
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Current portion of asset retirement obligation
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798,000
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798,000
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Other current liabilities
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301,000
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301,000
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Total current liabilities
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7,812,000
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(530,000
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)
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7,282,000
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Operating lease liabilities
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7,000
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7,000
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Liability for retirement benefits
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1,898,000
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1,898,000
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Asset retirement obligation
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7,790,000
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7,790,000
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Deferred income tax liabilities
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100,000
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100,000
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Total liabilities
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17,607,000
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(530,000
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)
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17,077,000
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Commitments and contingencies
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Equity:
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Common stock, par value $0.50 per share;
authorized, 40,000,000 shares: 10,195,990 issued at
September 30, 2024
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5,098,000
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5,098,000
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||||||||||
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Additional paid-in capital
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7,690,000
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7,690,000
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Retained earnings
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595,000
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(238,000
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)
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357,000
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Accumulated other comprehensive income, net
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1,943,000
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1,943,000
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Treasury stock, at cost: 167,900 shares at
September 30, 2024
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(2,286,000
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)
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(2,286,000
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)
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Total stockholders’ equity
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13,040,000
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(238,000
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)
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12,802,000
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Non-controlling interests
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22,000
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22,000
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Total equity
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13,062,000
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11,774,000
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||||||||||
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Total liabilities and equity
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$
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30,669,000
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(768,000
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)
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$
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29,901,000
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||||||
See accompanying notes to the unaudited pro forma condensed combined financial statements
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For Year Ended September 30, 2024
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Barnwell
Industries, Inc.
(Historical)
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Pro Forma Adjustments
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Barnwell
Industries, Inc.
Pro Forma as
Adjusted
|
||||||||||
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Revenues:
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||||||||||||
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Oil and natural gas
|
$
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17,396,000
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$
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17,396,000
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||||||||
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Contract drilling
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3,612,000
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(3,162,000
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)
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|||||||||
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Sale of interest in leasehold land
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500,000
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500,000
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||||||||||
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Gas processing and other
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216,000
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(38,000
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)
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178,000
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||||||||
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21,724,000
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(3,650,000
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)
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18,074,000
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|||||||||
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Costs and expenses:
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||||||||||||
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Oil and natural gas operating
|
9,849,000
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9,849,000
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||||||||||
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Contract drilling operating
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4,483,000
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(4,483,000
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)
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|||||||||
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General and administrative
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5,598,000
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(468,000
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)
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5,130,000
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||||||||
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Depletion, depreciation, and amortization
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5,106,000
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(156,000
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)
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4,950,000
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||||||||
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Impairment of assets
|
2,885,000
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2,885,000
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||||||||||
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Foreign currency gain
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(10,000
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)
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(10,000
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)
|
||||||||
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Interest expense
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2,000
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(2,000
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)
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|||||||||
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27,913,000
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(5,109,000
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)
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22,804,000
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|||||||||
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Loss before equity in income of affiliates and income taxes
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(6,189,000
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)
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1,459,000
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(4,730,000
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)
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|||||||
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Equity in income of affiliates
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1,071,000
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1,071,000
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||||||||||
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Loss before income taxes
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(5,118,000
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)
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1,459,000
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(3,659,000
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)
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|||||||
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Income tax provision
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213,000
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213,000
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||||||||||
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Net loss
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(5,331,000
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)
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1,459,000
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(3,872,000
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)
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Less: Net earnings attributable to non-controlling interests
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234,000
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234,000
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||||||||||
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Net loss attributable to Barnwell Industries, Inc.
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$
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(5,565,000
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)
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1,459,000
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$
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(4,106,000
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)
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|||||
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Basic and diluted net loss per common share attributable to Barnwell Industries, Inc. stockholders
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$
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(0.56
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)
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$
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(0.41
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)
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||||||
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Weighted-average number of common shares outstanding:
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||||||||||||
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Basic and diluted
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10,017,997
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10,017,997
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||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial statement
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
December 31, 2024
|
Barnwell
Industries, Inc.
(Historical)
|
Pro Forma Adjustments
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Barnwell
Industries, Inc.
Pro Forma as
Adjusted |
||||||||||
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ASSETS
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||||||||||||
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Current Assets:
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||||||||||||
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Cash and cash equivalents
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$
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1,957,000
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(98,000
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)
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$
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1,859,000
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||||||
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Accounts and other receivables
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2,403,000
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(428,000
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)
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1,975,000
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||||||||
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Assets held for sale
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69,000
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(69,000
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)
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|||||||||
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Note receivable
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800,000
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800,000
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||||||||||
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Other current assets
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1,547,000
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(608,000
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)
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939,000
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||||||||
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Total current assets
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5,976,000
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(403,000
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)
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5,573,000
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||||||||
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Assets for retirement benefits
|
5,002,000
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5,002,000
|
||||||||||
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Operating lease right-of-use assets
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153,000
|
153,0000
|
||||||||||
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Property and equipment:
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||||||||||||
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Proved oil and natural gas properties, net
|
14,610,000
|
14,610,000
|
||||||||||
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Drilling rigs and other property and equipment, net
|
269,000
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(258,000
|
)
|
11,000
|
||||||||
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Total property and equipment, net
|
14,879,000
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(258,000
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)
|
14,621,000
|
||||||||
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Total assets
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$
|
26,010,000
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(661,000
|
)
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$
|
25,349,000
|
||||||
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LIABILITIES AND EQUITY
|
||||||||||||
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Current liabilities:
|
||||||||||||
|
Accounts payable
|
$
|
1,319,000
|
(25,000
|
)
|
$
|
1,294,000
|
||||||
|
Accrued capital expenditures
|
105,000
|
105,000
|
||||||||||
|
Accrued compensation
|
609,000
|
(77,000
|
)
|
532,000
|
||||||||
|
Accrued operating and other expenses
|
1,575,000
|
(307,000
|
)
|
1,268,000
|
||||||||
|
Current portion of asset retirement obligation
|
938,000
|
938,000
|
||||||||||
|
Other current liabilities
|
788,000
|
(585,000
|
)
|
203,000
|
||||||||
|
Total current liabilities
|
5,334,000
|
(994,000
|
)
|
4,340,000
|
||||||||
|
Operating lease liabilities
|
122,000
|
122,000
|
||||||||||
|
Liability for retirement benefits
|
1,921,000
|
1,921,000
|
||||||||||
|
Asset retirement obligation
|
7,237,000
|
7,237,000
|
||||||||||
|
Deferred income tax liabilities
|
91,000
|
91,000
|
||||||||||
|
Total liabilities
|
14,705,000
|
(994,000
|
)
|
13,711,000
|
||||||||
|
Commitments and contingencies
|
||||||||||||
|
Equity:
|
||||||||||||
|
Common stock, par value $0.50 per share;
authorized, 40,000,000 shares: 10,221,434 issued at
December 31, 2024
|
5,111,000
|
5,111,000
|
||||||||||
|
Additional paid-in capital
|
7,746,000
|
7,746,000
|
||||||||||
|
(Accumulated deficit) retained earnings
|
(1,322,000
|
)
|
333,000
|
(989,000
|
)
|
|||||||
|
Accumulated other comprehensive income, net
|
2,036,000
|
2,036,000
|
||||||||||
|
Treasury stock, at cost: 167,900 shares at
September 30, 2024
|
(2,286,000
|
)
|
(2,286,000
|
)
|
||||||||
|
Total stockholders’ equity
|
11,285,000
|
333,000
|
11,618,000
|
|||||||||
|
Non-controlling interests
|
20,000
|
20,000
|
||||||||||
|
Total equity
|
11,305,000
|
333,000
|
11,638,000
|
|||||||||
|
Total liabilities and equity
|
$
|
26,010,000
|
(661,000
|
)
|
$
|
25,349,000
|
||||||
See accompanying notes to the unaudited pro forma condensed combined financial statements
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For Three Months Ended December 31, 2024
|
Barnwell
Industries, Inc.
(Historical)
|
Pro Forma Adjustments
|
Barnwell
Industries, Inc.
Pro Forma as
Adjusted
|
||||||||||
|
Revenues:
|
||||||||||||
|
Oil and natural gas
|
$
|
3,897,000
|
$
|
3,897,000
|
||||||||
|
Contract drilling
|
543,000
|
(543,000
|
)
|
|||||||||
|
Gas processing and other
|
37,000
|
37,000
|
||||||||||
|
4,477,000
|
(543,000
|
)
|
3,934,000
|
|||||||||
|
Costs and expenses:
|
||||||||||||
|
Oil and natural gas operating
|
2,496,000
|
2,496,000
|
||||||||||
|
Contract drilling operating
|
720,000
|
(720,000
|
)
|
|||||||||
|
General and administrative
|
1,281,000
|
(118,000
|
)
|
1,163,000
|
||||||||
|
Depletion, depreciation, and amortization
|
928,000
|
(24,000
|
)
|
904,000
|
||||||||
|
Impairment of assets
|
613,000
|
613,000
|
||||||||||
|
Foreign currency loss
|
351,000
|
351,000
|
||||||||||
|
6,389,000
|
(862,000
|
)
|
5,527,000
|
|||||||||
|
Loss before equity in income of affiliates and income taxes
|
(1,912,000
|
)
|
319,000
|
(1,593,000
|
)
|
|||||||
|
Equity in income of affiliates
|
-
|
-
|
||||||||||
|
Loss before income taxes
|
(1,912,000
|
)
|
319,000
|
(1,593,000
|
)
|
|||||||
|
Income tax provision
|
7,000
|
7,000
|
||||||||||
|
Net loss
|
(1,919,000
|
)
|
319,000
|
(1,600,000
|
)
|
|||||||
|
Less: Net earnings attributable to non-controlling interests
|
(2,000
|
)
|
(2,000
|
)
|
||||||||
|
Net loss attributable to Barnwell Industries, Inc.
|
$
|
(1,917,000
|
)
|
319,000
|
$
|
(1,598,000
|
)
|
|||||
|
Basic and diluted net loss per common share
attributable to Barnwell Industries, Inc.
stockholders
|
$
|
(0.19
|
)
|
$
|
(0.16
|
)
|
||||||
|
Weighted-average number of common shares outstanding:
|
||||||||||||
|
Basic and diluted
|
10,047,173
|
10,047,173
|
||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial statement
1. Description of the Disposition and Basis of Presentation
The Disposition
On March 14, 2025, Barnwell Industries, Inc. (“BII”) and Barnwell of Canada, Limited (“Barnwell Canada” and, collectively with BII, the “Sellers”), a subsidiary of BII,
entered into a Stock Purchase Agreement with Denise Miyasato, Chad Arima and Eric Eldred (collectively the “Buyer”) whereby the Buyer acquired from the Sellers all of the shares of capital stock of Water Resources International, Inc. (the “Shares”)
owned by the Sellers (the “Purchase Agreement”), hereafter referred to as the Transaction. Water Resources International, Inc. (“WRI”) explores and develops groundwater resources for government, commercial and private clients in Hawaii and conducts
deep drilling and deep well pumping in Hawaii (the “Business”). The sale and purchase of the Shares (the “Transaction”) closed (the “Closing”) simultaneously with the execution and delivery of the Purchase Agreement by each of the parties thereto on
March 14, 2025 (the “Closing Date”).
The aggregate purchase price for the Shares is $1,050,000 (the “Purchase Price”), which was paid at Closing by the Buyer as follows: an initial aggregate cash payment of
$250,000 and the delivery of a promissory note with a principal amount of $800,000 to the Sellers (the “Promissory Note”). The principal payments on the Promissory Note are to be paid in installments on the following schedule: May 15, 2025:
$200,000; June 16, 2025: $150,000; July 15, 2025: $150,000; August 15, 2025: $150,000; and September 15, 2025: $150,000. The Promissory Note is secured by certain specified assets of WRI.
The Basis of Presentation
The unaudited pro forma condensed consolidated financial statements and related notes are prepared in accordance with Article 11 of Regulation S-X. While the historical
consolidated financial statements reflect the Company’s past financial results, the pro forma condensed consolidated financial statements are included solely for informational purposes and are intended to illustrate how the Transaction might have
affected the historical consolidated financial statements had it been completed earlier, as indicated herein:
• The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2024, as adjusted, gives effect to the Disposition Adjustments as if they had occurred
or become effective on September 30, 2024;
• The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2024, as adjusted, gives effect to the Disposition Adjustments as if they had occurred
or become effective on December 31, 2024;
• The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended September 30, 2024 and for the three months ended December 31, 2024, as
adjusted, give effect to the Disposition Adjustments as if they had occurred or become effective on October 1, 2023.
The unaudited pro forma condensed consolidated financial statements Disposition Adjustments column presents adjustments for the removal of historical operations of the
Divested Business and the addition of intercompany revenue and expense from continuing operations of the Company previously eliminated within consolidation to illustrate the separation and transfer of the operations, assets, and liabilities of the
Company’s historical financial results in accordance with ASC 205 and ASC 360 to Buyer for each respective period.
The unaudited pro forma condensed consolidated financial statements do not project the Company’s future consolidated financial statements, nor are they intended to
represent or indicate the actual consolidated financial statements that the Company would have had if the Transaction had occurred on the indicated dates. Furthermore, the unaudited pro forma condensed consolidated financial statements do not reflect
the realization of any expected cost savings, synergies, or dis-synergies resulting from the Transaction, and they do not encompass all actions that the Company may undertake subsequent to the closing of the Transaction.
2. Pro Forma Adjustments
Adjustments included in the Pro Forma Adjustments column in the accompanying unaudited pro forma condensed consolidated financial statements include the following:
Disposition Adjustments: Pro Forma Adjustments to historical financial results directly attributable to the Transaction in accordance with ASC 205. This reflects the
separation of the discontinued operations, including the elimination of associated assets, liabilities, equity, and income (loss) attributable to the Transaction, that were included in the Company’s historical financial statements. In accordance with
ASC 205, the amounts exclude general corporate overhead costs that were historically allocated to the Divested Business and do not meet the requirements to be presented in discontinued operations.
The adjustment to Cash and cash equivalents and Note receivable includes the pro forma impact of the Disposition as of September 30, 2024. The final sales price is
subject to change based on adjustments to transaction costs and post-closing working capital adjustments. Thus, the final net cash proceeds and gain or loss on the Disposition will be determined subsequent to the closing of the Transaction and may
differ from the adjustment.
For purposes of the Unaudited Pro Forma Condensed Consolidated Balance Sheet, the estimated pro forma loss on sale is recognized in Stockholders’ Equity based on the
historical net carrying value as of September 30, 2024, of the Divested Business rather than as of the closing date of the Transaction. The final gain or loss on disposition will be calculated based on the final amount of consideration received,
carrying value of the Divested Business at the closing date, and the finalization of the Company’s current fiscal period tax provision. As a result, the pro forma gain reflected herein may differ from the actual gain or loss on the Transaction
recorded as of the closing date.
The estimated pro forma loss on disposal has not been reflected in the Unaudited Pro Forma Condensed Consolidated Statements of Operations, as this amount pertains to
discontinued operations and does not have a continuing impact on the Company’s consolidated results.
|
Pro forma Disposition Adjustments Assuming at September 30, 2024
|
||||
|
Net cash proceeds from the Transaction
|
$
|
250,000
|
||
|
Note receivable from the Transaction
|
800,000
|
|||
|
Total proceeds from the Transaction
|
1,050,000
|
|||
|
Net assets of the Divested Business
|
(1,288,000
|
)
|
||
|
Pre-tax loss on sale
|
(238,000
|
)
|
||
|
Estimated income tax expense/benefit
|
-
|
|||
|
Estimated after-tax loss on sale and adjustment to retained earnings
|
$
|
(238,000
|
)
|
|
|
Pro forma Disposition Adjustments Assuming at December 31, 2024
|
||||
|
Net cash proceeds from the Transaction
|
$
|
250,000
|
||
|
Note receivable from the Transaction
|
800,000
|
|||
|
Total proceeds from the Transaction
|
1,050,000
|
|||
|
Net assets of the Divested Business *
|
(1,303,000
|
)
|
||
|
Pre-tax loss on sale
|
(252,000
|
)
|
||
|
Estimated income tax expense/benefit
|
-
|
|||
|
Estimated after-tax loss on sale
|
(252,000
|
)
|
||
|
Adjustment to reflect $585,000 deposit on sale of drilling rig as gain on sale at time of Disposition*
|
585,000
|
|||
|
Adjustment to accumulated deficit
|
$
|
333,000
|
||
*The historical balance sheet at December 31, 2024 reflected the $585,000 deposit on the sale of a WRI drilling rig to a party other than the Buyer as a liability.
However, the sale of the drilling rig by WRI was consummated in February 2025 and therefore the net assets sold to Buyer as of the Transaction date included the derecognition of the deposit liability and corresponding recognition of the gain on the
sale of the drilling rig.