Range Impact, Inc 8-K/A, filed Sep 22, 2022
Range Impact, Inc. (RNGE)
About this 8-K/A
Range Impact, Inc filed this 8-K/A on September 22, 2022, reporting on events of May 10, 2022.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
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FORM
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Item 8.01 Other Events.
On May 11, 2022, Malachite Innovations, Inc. (the “Company”) filed a Current Report on Form 8-K (the “May 8-K”) reporting that it had entered into a Share Purchase Agreement by and among the Company, Daedalus Ecosciences, Inc., a wholly-owned subsidiary of the Company (“Daedalus Ecosciences”), Range Environmental Resources, Inc., a West Virginia corporation (“Range Environmental Resources”), Range Natural Resources, Inc., a West Virginia corporation (“Range Natural Resources”), Mr. Jeremy Starks and Mr. Joshua Justice (the “Share Purchase Agreement”). This amendment to the May 8-K amends Item 9.01 of the May 8-K and provides the historical financial information required pursuant to Item 9.01(a) of Form 8-K and the pro forma financial information required pursuant to Item 9.01(b) of Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
The following financial statements of Range Environmental Resources, Inc. are included as Exhibit 99.1 hereto and incorporated herein by reference:
● The audited financial statements of Range Environmental Resources, Inc. as of December 31, 2021 and 2020 and for the years then ended.
(b) Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements required pursuant to Item 9.01(b) of Form 8-K are included as Exhibit 99.2 hereto and are incorporated herein by reference:
● Unaudited Pro Forma Consolidated Balance Sheet of Malachite Innovations, Inc. and Range Environmental Resources, Inc., as of March 31, 2022, and Unaudited Pro Forma Consolidated Statements of Operations of Malachite Innovations, Inc. and Range Environmental Resources, Inc. for the year ended December 31, 2021 and for the three months ended March 31, 2022.
(d) Exhibits
| Exhibit No. | Description | |
| 23.1 | Consent of Independent Registered Public Accounting Firm* | |
| 99.1 | Audited financial statements of Range Environmental Resources, Inc. as of December 31, 2021 and 2020, and for the years then ended and accompanying notes * | |
| 99.2 |
| |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MALACHITE INNOVATIONS, INC. | ||
| Dated: September 22, 2022 | By: | /s/ Michael Cavanaugh |
| Name: | Michael Cavanaugh | |
| Title: | Chief Executive Officer | |
EXHIBIT INDEX
* Filed herewith
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-181048) of Stevia First Corp. and the Registration Statement on Form S-8 (No. 333-192398) of Vitality Biopharma, Inc., of our report dated September 14, 2022, relating to the balance sheets as of December 31, 2021 and 2020, and the related statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the financial statements of Range Environmental Resources, Inc., which appears in the Current Report on Form 8-K of Malachite Innovations, Inc., dated September 22, 2022, as amended.
| /s/ MEADEN & MOORE, LTD | |
| Cleveland, Ohio | |
| September 22, 2022 |
Exhibit 99.1
Financial Statements
| F-1 |
To the Shareholders of Range Environmental Resources, Inc.
Opinion
We have audited the financial statements of Range Environmental Resources, Inc., which comprise the balance sheets as of December 31, 2021 and 2020, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Range Environmental Resources, Inc. as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Range Environmental Resources, Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Range Environmental Resources, Inc.’s ability to continue as a going concern for one year after the date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. | |
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. | |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Range Environmental Resources, Inc.’s internal control. Accordingly, no such opinion is expressed. | |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. | |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Range Environmental Resources, Inc.’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
/s/ Meaden & Moore, Ltd.
Cleveland, Ohio
September 14, 2022
| F-2 |
RANGE ENVIRONMENTAL RESOURCES, INC.
BALANCE SHEETS
| December 31, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 85,373 | $ | 121,396 | ||||
| Accounts receivable | 835,966 | 154,328 | ||||||
| Total current assets | 921,339 | 275,724 | ||||||
| Property and equipment, net of accumulated depreciation | 374,153 | 333,255 | ||||||
| Total Assets | $ | 1,295,492 | $ | 608,979 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 94,782 | $ | 22,652 | ||||
| Current portion of long-term debt | 49,204 | 31,236 | ||||||
| Total current liabilities | 143,986 | 53,888 | ||||||
| Long term debt, net of current portion | 161,020 | 125,870 | ||||||
| Notes payable | 268,250 | 199,390 | ||||||
| Total long-term liabilities | 429,270 | 325,260 | ||||||
| Total liabilities | 573,256 | 379,148 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock, par value $0.001 per share; 2 shares authorized; 2 shares issued and outstanding, respectively | 1 | 1 | ||||||
| Retained earnings | 722,235 | 229,830 | ||||||
| Total stockholders’ equity | 722,236 | 229,831 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,295,492 | $ | 608,979 | ||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
RANGE ENVIRONMENTAL RESOURCES, INC.
STATEMENTS OF OPERATIONS
| Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
| Revenues | $ | 2,484,207 | $ | 1,862,979 | ||||
| Cost of services | (1,159,650 | ) | (1,464,632 | ) | ||||
| Gross Profit | 1,324,557 | 398,347 | ||||||
| Operating Expenses: | ||||||||
| General and administrative | 560,458 | 318,986 | ||||||
| Total operating expenses | 560,458 | 318,986 | ||||||
| Income from operations | 764,099 | 79,361 | ||||||
| Other income (expense): | ||||||||
| Gain on PPP loan forgiveness | 46,200 | - | ||||||
| Other income (expense) | (15,334 | ) | (9,751 | ) | ||||
| Total other income (expense) | 30,866 | (9,751 | ) | |||||
| Net income | $ | 794,965 | $ | 69,610 | ||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
RANGE ENVIRONMENTAL RESOURCES, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2021 AND DECEMBER 31, 2020
| Common Stock | Retained | |||||||||||||||
| Shares | Amount | Earnings | Total | |||||||||||||
| Balance, December 31, 2019 | 2 | $ | 1 | $ | 382,730 | $ | 382,731 | |||||||||
| Shareholder distributions | - | - | (222,510 | ) | (222,510 | ) | ||||||||||
| Net Income | - | - | 69,610 | 69,610 | ||||||||||||
| Balance, December 31, 2020 | 2 | 1 | 229,830 | 229,831 | ||||||||||||
| Shareholder distributions | - | - | (302,560 | ) | (302,560 | ) | ||||||||||
| Net Income | - | - | 794,965 | 794,965 | ||||||||||||
| Balance, December 31, 2021 | 2 | $ | 1 | $ | 722,235 | $ | 722,236 | |||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
RANGE ENVIRONMENTAL RESOURCES, INC.
STATEMENTS OF CASH FLOWS
| Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 794,965 | $ | 69,610 | ||||
| Adjustments to reconcile income from operations to net cash used in operating activities: | ||||||||
| Gain on extinguishment of liabilities | (46,200 | ) | - | |||||
| Depreciation | 76,166 | 60,623 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (681,638 | ) | 137,976 | |||||
| Interest accrued but not paid | 5,625 | 3,190 | ||||||
| Accounts payable and accrued liabilities | 72,130 | (139,395 | ) | |||||
| Net cash provided by operating activities | 221,048 | 132,004 | ||||||
| Cash used in investing activities: | ||||||||
| Equipment purchases | (117,064 | ) | (101,077 | ) | ||||
| Net cash used in investing activities | (117,064 | ) | (101,077 | ) | ||||
| Cash provided by financing activities: | ||||||||
| Proceeds from long-term debt | 90,840 | 43,132 | ||||||
| Payments on long-term debt | (37,722 | ) | (34,080 | ) | ||||
| Shareholder distributions | (302,560 | ) | (222,510 | ) | ||||
| EIDL loan | - | 150,000 | ||||||
| PPP loans | 109,435 | 46,200 | ||||||
| Net cash used in financing activities | (140,007 | ) | (17,258 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (36,023 | ) | 13,669 | |||||
| Cash and cash equivalents - beginning of period | 121,396 | 107,727 | ||||||
| Cash and cash equivalents - end of period | $ | 85,373 | $ | 121,396 | ||||
| Supplemental non-cash transactions: | ||||||||
| Forgiveness of PPP loan | $ | 46,200 | $ | - | ||||
| Fixed assets purchased with debt | $ | 90,840 | $ | 43,132 | ||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
RANGE ENVIRONMENTAL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND DECEMBER 31, 2020
1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Range Environmental Resources, Inc. (the “Company”, “we”, “us” and “our”) was incorporated in the State of West Virginia on January 18, 2019. The Company provides land reclamation, water restoration and environmental consulting services to mining and non-mining customers throughout the Appalachian region. The Company’s land reclamation services seek to return land to pre-mining conditions or repurpose the land for natural, commercial, agricultural or recreational use. The Company’s water restoration services seek to improve rivers, streams and discharges through novel and innovative treatment applications to help customers meet their various regulatory standards and requirements. The Company also provides environmental consulting services to customers typically in connection with land reclamation and water restoration projects. As an additional value-add service, the Company sells water treatment chemicals manufactured by third parties to its customers.
Basis of Presentation
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Revenue Recognition
The Company applies the following standards and recognizes revenue when (1) services have been provided pursuant to an agreed-upon equipment and labor hourly rate sheet or a fixed amount for a project, (2) products have been shipped to and accepted by the customer, and (3) amounts are reasonably assured of collection, including the consideration of the customer’s ability and intention to pay when the amount is due. The Company primarily invoices customers and recognizes revenue on a periodic basis for equipment and labor hours provided to a customer on a particular job based on an agreed-upon hourly rate sheet or a fixed amount for a project. The Company also invoices customers and recognizes revenue for equipment mobilization fees and materials and supplies required to complete a project. The Company invoices for the sales of chemicals and recognizes revenue when the products are delivered to the customer’s designated site. Costs for equipment, labor and chemicals are generally expensed as incurred since the projects are generally short-term and not subject to a contract.
The Company’s performance obligations are satisfied at the point in time when the services are performed or when products are received by the customer, which is when the customer has title and the significant risks and rewards of ownership.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. From time to time, the Company’s cash account balances exceed the balances covered by the Federal Deposit Insurance System. The Company has never suffered a loss due to such excess balances.
| F-7 |
Accounts Receivable
Trade accounts receivable are stated at the amount management expects to collect from the balances outstanding at year end. Based on management’s assessment, it has concluded that losses on balances outstanding at year end will be immaterial and, therefore, no allowances were recorded in 2021 or 2020.
Property and Equipment
Equipment is carried at cost. Expenditures for maintenance and repairs are charged to cost of services. Additions and betterments are capitalized. The cost and related accumulated depreciation of equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reflected in the current year’s earnings.
| December 31, 2021 | December 31, 2020 | |||||||
| Equipment | $ | 374,153 | $ | 333,255 | ||||
| Depreciation expense | $ | 76,166 | $ | 60,623 | ||||
The Company provides for depreciation of equipment using the straight-line method for both financial reporting and federal income tax purposes over the estimated six year useful lives of the equipment.
The Company assesses the recoverability of its property, plant, and equipment by determining whether the depreciation of the assets over their remaining lives can be recovered through projected future cash flows generated by the assets. There were no assets identified for impairment.
Fair Value of Financial Instruments
FASB ASC 825, “Financial Instruments” requires that the Company disclose estimated fair values of financial instruments. Financial instruments held by the Company include, among others, accounts receivable, accounts payable and long-term debt. The carrying amounts reported in the balance sheets for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value.
Leases
FASB 842 will require the Company to determine whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. The standard is effective for fiscal years beginning after December 15, 2021.
Subsequent Events
Management evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through September 14, 2022, which is the date the financial statements were available to be issued.
| F-8 |
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning April 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
2. NOTES PAYABLE
The Company was granted two loans (the “PPP loans”) from United Bank for $46,200 on April 12, 2020, and for $109,435 on March 9, 2021, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act.
The PPP loans mature on April 12, 2022, and March 9, 2023, respectively, and each bears interest at a rate of 1% per annum, with the first six months of interest deferred.
On July 13, 2021, and August 19, 2022, respectively, the Company received notice that the SBA had reviewed the forgiveness application of the Company’s PPP loans and provided forgiveness of the entire principal of the PPP loans plus accrued interest, and the Company recognized a gain on extinguishment of the PPP loan of $46,200 during the year ended December 31, 2021.
On June 17, 2020. The Company was granted an SBA Disaster Loan. The SBA Disaster Loan in the amount of $150,000, matures on June 17, 2050, and bears interest at a rate of 3.75% per annum.
3. LONG-TERM DEBT OBLIGATIONS
Long-term debt consists of debt on vehicles and equipment, which serves as the collateral. Interest rates range from 3.69% to 8.99% for 2021 and range from 3.69% to 7.13% for 2020. The debt matures from 2022 through 2027.
4. MAJOR CUSTOMER AND CONCENTRATION OF CREDIT RISK
Sales to the Company’s two largest customers were 99% of total sales for both 2021 and 2020.
Accounts receivable from the same two customers were 97% (2021) and 100% (2020), respectively, of total accounts receivable.
5. INCOME TAXES
As an “S” Corporation, the Company passes through its taxable income to its shareholders each year as earned, and thus pays no corporate income tax itself.
6. SUBSEQUENT EVENTS
On May 11, 2022, the Company entered into a Share Purchase Agreement by and among the Company, Malachite Innovations, Inc. (“Malachite”), Daedalus Ecosciences, Inc., a wholly-owned subsidiary of Malachite (“Daedalus Ecosciences”), Range Natural Resources, Inc., a West Virginia corporation formed in May 2022 (“Range Natural Resources”), and the shareholders of the Company (the “Share Purchase Agreement”), under which Malachite issued a total of 10,000,000 shares of Malachite’s common stock to Mr. Starks and Mr. Justice and Daedalus Ecosciences paid cash consideration in an amount equal to $1,000,000 to the shareholders for 80% of the outstanding common stock of each of the Company and Range Natural Resources.
Subsequent to May 11, 2022, a dispute arose between Malachite and one of the shareholders related to certain representations made by the shareholder in the Share Purchase Agreement. On July 12, 2022, Malachite entered into a Separation Agreement, by and among Malachite, Daedalus Ecosciences, Range Environmental Resources, Range Natural Resources, the shareholder and his wife (the “Separation Agreement”). Under the terms of the Separation Agreement, the shareholder: a) acknowledged that his employment with the Company and Range Natural Resources was terminated for cause effective June 30, 2022; b) returned the 5,000,000 shares of Malachite’s common stock that had been issued to him under the terms of the Share Purchase Agreement; c) transferred his 10% interest in each of the Company and Range Natural Resources to Daedalus Ecosciences; and d) paid Daedalus Ecosciences the sum of $250,000.
| F-9 |
Exhibit 99.2
Malachite Innovations, Inc. and Subsidiaries
Summary of Unaudited Pro Forma Consolidated Financial Information
On May 11, 2022, Malachite Innovations, Inc. (the “Company”), completed its acquisition of Range Environmental Resources, Inc. (“Range Environmental”) (such acquisition referred to as the “Acquisition”). Pursuant to the terms of a share purchase agreement (the “Purchase Agreement”), the stockholders of Range Environmental exchanged 80% of the outstanding capital stock of Range Environmental and Range Natural Resources, Inc. (Range Natural”) for 10,000,000 shares of the Company’s common stock and cash consideration of $1,000,000. The shares of the Company’s common stock were valued at the closing market price of the Company’s common stock on May 11, 2022 of $0.15 per share resulting in an aggregate initial purchase price of $2,500,000 for the Acquisition (the “Initial Purchase Price”).
Subsequent to May 11, 2022, a dispute arose between the Company and Mr. Justice, one of the owners of Range Environmental, relating to certain representations made by Mr. Justice in the Purchase Agreement. On July 12, 2022, the Company entered into a Separation Agreement, by and among the Company, Daedalus Ecosciences, Range Environmental, Range Natural, Mr. Justice and Mrs. Christine Justice, who is Mr. Justice’s wife (the “Separation Agreement”). Under the terms of the Separation Agreement, Mr. Justice: a) acknowledged that his employment with Range Environmental and Range Natural was terminated for cause effective June 30, 2022; b) returned the 5,000,000 shares of the Company’s common stock that had been issued to him under the terms of the Purchase Agreement; c) transferred his 10% interest in each of Range Environmental and Range Natural to Daedalus Ecosciences; and d) paid Daedalus Ecosciences the sum of $250,000. By virtue of these transactions, the Initial Purchase Price of $2,500,000 was reduced by $1,000,000, representing the combined value of the return to the Company of 5,000,000 shares of Company common stock and $250,000, to $1,500,000 (the “Adjusted Purchase Price”).
As required by Accounting Standards Codification Topic 805-20, the Company will allocate the Adjusted Purchase Price to the acquired assets and assumed liabilities based on their estimated fair value at the acquisition date. The fair values of the assets acquired, as set forth below, are considered provisional and subject to adjustment as additional information is obtained through the purchase price measurement period (a period of up to one year from the closing date of the Acquisition). The provisional allocation of the Adjusted Purchase Price is based on management’s preliminary estimates. Once management completes its analysis to finalize the purchase price allocation, it is reasonably possible that there could be changes to the preliminary values. The primary areas of the purchase price allocation that are not yet finalized relate to identifiable tangible assets and goodwill.
The unaudited pro forma consolidated balance sheet as of March 31, 2022, gives effect to the Acquisition as if it had occurred on March 31, 2022. The unaudited pro forma consolidated statement of operations for the year ended December 31, 2021, is presented as if the Acquisition was consummated on January 1, 2021, the beginning of the Company’s 2021 fiscal year. The unaudited pro forma consolidated statement of operations for the three months ended March 31, 2022, is presented as if the Acquisition was consummated on January 1, 2022, the beginning of the Company’s 2022 fiscal year. The historical financial data has been adjusted to give pro forma effect to events that are (1) directly attributable to the Acquisition, and (2) factually supportable.
The unaudited pro forma consolidated financial information presented herein is provided for illustrative purposes only. The unaudited pro forma consolidated financial information is based on management’s estimate of the effects of the Acquisition, had such transaction occurred on the dates indicated, based on currently available information and certain assumptions and estimates that the Company believes are reasonable under the circumstances. The unaudited pro forma consolidated financial information is not necessarily indicative of the results of operations or financial position that actually would have been achieved had the Acquisition been consummated on the dates indicated, or that may be achieved in the future.
The unaudited pro forma consolidated financial information presented herein should be read in conjunction with the financial statements of Range Environmental Resources, Inc. contained elsewhere in this Current Report on Form 8-K/A, as filed with the Securities and Exchange Commission, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on March 31, 2022, and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, as filed with the Securities and Exchange Commission on May 10, 2022.
Malachite Innovations, Inc.
Pro Forma Consolidated Balance Sheet
March 31, 2022
(unaudited)
| Malachite Innovations Inc. | Range Environmental Resources, Inc. | Pro Forma Adjustments | Pro Forma Total | |||||||||||||
| (unaudited) | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash | $ | 44,162 | $ | 87,058 | $ | - | $ | 131,220 | ||||||||
| Accounts receivable, net | - | 853,311 | - | 853,311 | ||||||||||||
| Prepaid expenses | 884 | - | - | 884 | ||||||||||||
| Total current assets | 45,046 | 940,369 | - | 985,415 | ||||||||||||
| Property and equipment, net of accumulated depreciation | - | 400,886 | 182,114 | (1) | 583,000 | |||||||||||
| Deposits | 8,892 | - | - | 8,892 | ||||||||||||
| Operating lease asset | - | 130,630 | - | 130,630 | ||||||||||||
| Goodwill | - | - | 779,165 | (2) | 779,165 | |||||||||||
| Total Assets | 53,938 | 1,471,885 | 961,279 | 2,487,102 | ||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable and accrued liabilities | 133,553 | 286,998 | - | 420,551 | ||||||||||||
| Current portion of long-term debt | - | 49,625 | - | 49,625 | ||||||||||||
| Line of Credit | 750,000 | - | - | 750,000 | ||||||||||||
| Total current liabilities | 883,553 | 336,623 | - | 1,220,176 | ||||||||||||
| Long-term debt, net of current portion | - | 197,661 | - | 197,661 | ||||||||||||
| Notes payable | - | 268.250 | - | 268.250 | ||||||||||||
| Operating lease liability | - | 130,630 | - | 130,630 | ||||||||||||
| Total long-term liabilities | - | 596,541 | - | 596,541 | ||||||||||||
| Total liabilities | 883,553 | 933,164 | - | 1.816,717 | ||||||||||||
| Stockholders’ deficit | ||||||||||||||||
| Common stock | 51,250 | 1 | 5,000 | (3) | 56,250 | |||||||||||
| (1) | (4) | |||||||||||||||
| Additional paid-in capital | 48,707,787 | - | 1,495,000 | (3) | 50,202,787 | |||||||||||
| Retained earnings (accumulated deficit) | (49,588,652 | ) | 538,720 | (538,720 | )(4) | (49,588,652 | ) | |||||||||
| Total stockholders’ equity (deficit) | (829,615 | ) | 538,721 | 961,279 | 670,385 | |||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 53,938 | $ | 1,471,885 | $ | 961,279 | $ | 2,487,102 | ||||||||
Notes
(1) Reflects the adjustment to increase the basis in the acquired equipment to the estimated fair value.
| Book Value of Equipment- Gross | $ | 587,502 | ||
| Accumulated Depreciation | 186,616 | |||
| Net Book Value | 400,886 | |||
| Fair Market Value of Equipment | 583,000 | |||
| Adjustment to Increase Equipment | 182,114 |
(2) Reflects adjustment to record goodwill associated with the acquisition of Range Environmental Resources, Inc., as shown below:
| Assets Acquired: | ||||
| Cash | $ | 87,058 | ||
| Accounts Receivable | 853,311 | |||
| Fair value of equipment | 583,000 | |||
| Goodwill | 779,165 | |||
| Total Assets Acquired | 2,302,534 | |||
| Liabilities Assumed | 802,534 | |||
| Net Assets Acquired | 1,500,000 | |||
(3) Represents the issuance of 5,000,000 shares of Malachite Innovations, Inc.’s common stock valued at $750,000 and the payment of $750,000 in cash for the acquisition of Range Environmental Resources, Inc.
(4) Elimination of common stock, additional paid-in capital, shareholder distributions and retained earnings of Range Environmental Resources, Inc. related to the acquisition of Range Environmental Resources, Inc. by Malachite Innovations, Inc.
Malachite Innovations, Inc.
Pro Forma Consolidated Statement of Operations
Three Months Ended March 31, 2022
(unaudited)
| Malachite Innovations, Inc. | Range Environmental Resources, Inc. | Pro Forma Adjustments | Pro Forma Total | |||||||||||||
| (unaudited) | ||||||||||||||||
| Revenues | $ | - | $ | 589,540 | $ | - | $ | 589,540 | ||||||||
| Cost of services | - | (478,786 | ) | - | (478,786 | ) | ||||||||||
| Gross profit | - | 110,755 | - | 110,755 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 317,941 | 290,561 | - | 608,502 | ||||||||||||
| Research and development | 125,730 | - | - | 125,730 | ||||||||||||
| Total operating expenses | 443,671 | 290,561 | - | 734,232 | ||||||||||||
| Loss from operations | (443,671 | ) | (179,809 | ) | - | (623,490 | ) | |||||||||
| Other expense | (4,303 | ) | (3,706 | ) | - | (8,009 | ) | |||||||||
| Net loss | $ | (447,974 | ) | $ | (183,515 | ) | $ | 55,028 | (2) | $ | (579,461 | ) | ||||
| Controlling interest | $ | (447,974 | ) | (165,164 | ) | - | (613,138 | ) | ||||||||
| Minority interest | - | (18,351 | ) | 55,028 | 36,677 | |||||||||||
| Net loss | $ | (447,974 | ) | (183,515 | ) | 55,028 | (579,461 | ) | ||||||||
| Net loss per share - | ||||||||||||||||
| Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||||||||||
| Weighted average common shares outstanding- | ||||||||||||||||
| Basic and diluted | 51,450,147 | 5,000,000 | (1) | 56,450,147 | ||||||||||||
(1) Represents the issuance of 5,000,000 shares of Malachite Innovations, Inc.’s common stock valued at $750,000 in connection with the acquisition of Range Environmental Resources, Inc.
(2) Adjustment for personal expenses paid through the Range Environmental Resources, Inc. accounts.
Malachite Innovations, Inc.
Pro Forma Consolidated Statement of Operations
Year ended December 31, 2021
| Malachite Innovations, Inc. | Range Environmental Resources, Inc. | Pro Forma Adjustments | Pro Forma Total | |||||||||||||
| (unaudited) | ||||||||||||||||
| Revenues | $ | - | $ | 2,484,207 | $ | - | $ | 2,484,207 | ||||||||
| Cost of services | - | (1,159,650 | ) | - | (1,159,650 | ) | ||||||||||
| Gross profit | - | 1,324,557 | - | 1,324,557 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 1,413,774 | 560,458 | - | 1,974,232 | ||||||||||||
| Research and development | 298,925 | - | - | 298,925 | ||||||||||||
| Total operating expenses | 1,712,699 | 560,458 | - | 2,273,157 | ||||||||||||
| Income (loss) from operations | (1,712,699 | ) | 764,099 | - | (948,600 | ) | ||||||||||
| Other income (expense) | (270 | ) | 30,866 | - | 30,596 | |||||||||||
| Net income (loss) | $ | (1,712,969 | ) | $ | 794,965 | $ | 129,887 | (2) | $ | (788,117 | ) | |||||
| Controlling interest | $ | (1,712,969 | ) | 715,469 | - | (997,500 | ) | |||||||||
| Minority interest | - | 79,496 | 129,887 | 209,383 | ||||||||||||
| Net income (loss) | $ | (1,712,969 | ) | 794,965 | 129,887 | (788,117 | ) | |||||||||
| Net loss per share - | ||||||||||||||||
| Basic and diluted | $ | (0.03 | ) | - | $ | (0.01 | ) | |||||||||
| Weighted average common shares outstanding- | ||||||||||||||||
| Basic and diluted | 50,968,292 | 5,000,000 | (1) | 55,968,292 | ||||||||||||
(1) Represents the issuance of 5,000,000 shares of Malachite Innovations, Inc.’s common stock valued at $750,000 in connection with the acquisition of Range Environmental Resources, Inc.
(2) Adjustment for personal expenses paid through the Range Environmental Resources, Inc. accounts.