Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The
following unaudited pro forma condensed combined financial information is based upon the historical financial statements of AgriFORCE
Growing Systems Ltd. (“AgriFORCE”) after giving effect to the January 17, 2025 acquisition of the Bitcoin mining operations
of Bald Eagle Mining, LLC (“Bald Eagle”). The Company paid total consideration of $4,765,000 for assets comprising a five
MW Bitcoin mining facility (on two sites) in Columbiana County Ohio (the “Facility”) from Bald Eagle
The unaudited pro forma condensed combined financial information also gives effect to the transactions undertaken to finance the acquisition of Bald Eagle.
The
unaudited pro forma condensed combined balance sheet as of December 31, 2024, combines
The
unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 gives effect to the acquisition of
Bald Eagle and the financing transactions as if they had each occurred on January 1, 2024, by combining
The
following unaudited pro forma condensed combined financial information and related notes present
The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the acquisitions had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The pro forma adjustments represent AgriFORCE’s management’s best estimate and are based upon currently available information and certain assumptions that AgriFORCE believes are reasonable under the circumstances. The final valuation may materially change the allocation of the purchase consideration, which could materially affect the fair values assigned to the assets and liabilities and could result in a material change to the unaudited pro forma condensed combined financial information. Refer to footnote 1 to the unaudited pro forma condensed combined financial information for more information on the basis of preparation.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2024
(In US dollars)
AgriFORCE Historical | Bald Eagle Historical | Pre-Acquisition Adjustments | Net Assets Acquired of Bald Eagle | Transaction Accounting Adjustments | Combined Pro Forma | |||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 489,868 | $ | 23,474 | $ | (23,474 | ) | 3(g) | $ | - | $ | 1,945,000 | 3(a) | $ | 2,434,868 | |||||||||||
Digital assets | 26,282 | 251,106 | (251,106 | ) | 3(g) | - | - | 26,282 | ||||||||||||||||||
Other receivable | 115,520 | 4,942 | (4,942 | ) | 3(g) | - | - | 115,520 | ||||||||||||||||||
Deposits receivable | 73,849 | - | - | - | - | 73,849 | ||||||||||||||||||||
Inventories | 42,443 | - | - | - | - | 42,443 | ||||||||||||||||||||
Prepaid expenses and other current assets | 559,271 | - | - | - | - | 559,271 | ||||||||||||||||||||
Total current assets | 1,307,233 | 279,522 | (279,522 | ) | - | 1,945,000 | 3,252,233 | |||||||||||||||||||
Non-Current | ||||||||||||||||||||||||||
Property, plant and equipment, net | 808,895 | 4,169,664 | - | 4,169,664 | (531,894 | ) | 3(h) | 4,446,665 | ||||||||||||||||||
Goodwill | 294,941 | - | - | - | 1,127,230 | 3(c) | 1,422,171 | |||||||||||||||||||
Intangible assets | 8,307,690 | - | - | - | - | 8,307,690 | ||||||||||||||||||||
Lease deposit | 45,224 | - | - | - | - | 45,224 | ||||||||||||||||||||
TOTAL ASSETS | $ | 10,763,983 | $ | 4,449,186 | $ | (279,522 | ) | $ | 4,169,664 | $ | 2,540,336 | $ | 17,473,983 | |||||||||||||
LIABILITIES | ||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 2,583,295 | $ | 70,742 | $ | (70,742 | ) | 3(g) | $ | - | $ | - | $ | 2,583,295 | ||||||||||||
Derivative liabilities | 293,761 | - | - | - | 293,761 | |||||||||||||||||||||
Debentures | 1,443,209 | - | - | - | 779,600 | 3(b) | 2,222,809 | |||||||||||||||||||
Total current liabilities | 4,320,265 | 70,742 | (70,742 | ) | - | 779,600 | 5,099,865 | |||||||||||||||||||
Non-Current | ||||||||||||||||||||||||||
Derivative liabilities | 191,902 | - | - | - | 5,930,400 | 3(b) | 6,122,302 | |||||||||||||||||||
Other liabilities | 98,864 | - | - | - | - | 98,864 | ||||||||||||||||||||
Long-term debt | 41,699 | - | - | - | - | 41,699 | ||||||||||||||||||||
Total liabilities | 4,652,730 | 70,742 | (70,742 | ) | - | 6,710,000 | 11,362,730 | |||||||||||||||||||
EQUITY | ||||||||||||||||||||||||||
Common shares, no par value per share - unlimited shares authorized; | 65,042,657 | - | - | - | - | 65,042,657 | ||||||||||||||||||||
Additional paid-in-capital | 2,964,795 | - | - | - | - | 2,964,795 | ||||||||||||||||||||
Accumulated deficit | (60,782,119 | ) | (60,782,119 | ) | ||||||||||||||||||||||
Total invested equity | - | 4,378,444 | (208,780 | ) | 3(g) | 4,169,664 | (4,169,664 | ) | 3(f) | - | ||||||||||||||||
Accumulated other comprehensive income | (1,158,294 | ) | - | - | - | (1,158,294 | ) | |||||||||||||||||||
Obligation to issue shares | 44,214 | - | - | - | 44,214 | |||||||||||||||||||||
TOTAL EQUITY | 6,111,253 | 4,378,444 | (208,780 | ) | 4,169,664 | (4,169,664 | ) | 6,111,253 | ||||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 10,763,983 | $ | 4,449,186 | $ | (279,522 | ) | $ | 4,169,664 | $ | 2,540,336 | $ | 17,473,983 |
See accompanying notes.
1 |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2024
(In US dollars)
AgriFORCE Historical | Bald Eagle Historical | Pro Forma Adjustments | Combined Pro Forma | |||||||||||||
Revenue | ||||||||||||||||
Revenue | $ | 67,887 | $ | 1,742,218 | $ | - | $ | 1,810,105 | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Cost of revenue, excluding deprecation | 89,115 | 1,005,187 | - | 1,094,302 | ||||||||||||
Selling, general and administrative expense | - | 54,518 | - | 54,518 | ||||||||||||
Wages and salaries | 2,300,904 | - | - | 2,300,904 | ||||||||||||
Consulting | 423,500 | - | - | 423,500 | ||||||||||||
Professional fees | 655,031 | - | - | 655,031 | ||||||||||||
Office and administrative | 669,310 | - | - | 669,310 | ||||||||||||
Investor and public relations | 273,492 | - | - | 273,492 | ||||||||||||
Research and development | 211,354 | - | - | 211,354 | ||||||||||||
Share based compensation | 387,090 | - | - | 387,090 | ||||||||||||
Lease expense | 60,224 | - | - | 60,224 | ||||||||||||
Travel and entertainment | 67,867 | - | - | 67,867 | ||||||||||||
Shareholder and regulatory | 165,779 | - | - | 165,779 | ||||||||||||
Sales and marketing | 141,638 | - | - | 141,638 | ||||||||||||
Depreciation | 667,061 | 1,242,861 | (856,364 | ) | 3(i) | 1,053,558 | ||||||||||
Repairs and maintenance | 20,610 | - | - | 20,610 | ||||||||||||
Write-off of inventory | 38,470 | - | - | 38,470 | ||||||||||||
Write-off of deposit | 50,000 | - | - | 50,000 | ||||||||||||
Legal settlement | 111,196 | - | - | 111,196 | ||||||||||||
Intangible asset impairment | 4,137,271 | - | - | 4,137,271 | ||||||||||||
Realized (gain) loss on digital assets | - | (500,889 | ) | - | (500,889 | ) | ||||||||||
Unrealized (gain) loss on digital assets | - | (12,405 | ) | - | (12,405 | ) | ||||||||||
TOTAL OPERATING EXPENSES | 10,469,912 | 1,789,272 | (856,364 | ) | 11,402,820 | |||||||||||
INCOME (LOSS) FROM OPERATIONS | (10,402,025 | ) | (47,054 | ) | 856,364 | (9,592,715 | ) | |||||||||
OTHER | ||||||||||||||||
Other income, net | (29,319 | ) | - | - | (29,319 | ) | ||||||||||
Foreign exchange gain | (204,218 | ) | - | - | (204,218 | ) | ||||||||||
Loss (gain) on sale of fixed assets | - | (49,980 | ) | - | (49,980 | ) | ||||||||||
Accretion of interest on debentures | 2,978,722 | - | 3,818,598 | 3(d) | 6,797,320 | |||||||||||
Change in fair value of derivative liabilities | (1,392,530 | ) | - | (4,257,310 | ) | 3(e) | (5,649,840 | ) | ||||||||
Loss on debt extinguishment | 2,805,306 | - | - | 2,805,306 | ||||||||||||
Loss (gain) on extinguishment of warrant liability | (14,769 | ) | - | - | (14,769 | ) | ||||||||||
Change in fair value of long-term investment | 97,488 | - | - | 97,488 | ||||||||||||
Loss (gain) on conversion of convertible debt | 1,627,858 | - | - | 1,627,858 | ||||||||||||
Other loss | 4,252 | - | - | 4,252 | ||||||||||||
NET (LOSS) INCOME | (16,274,815 | ) | 2,926 | 1,295,076 | (14,976,813 | ) | ||||||||||
Other comprehensive income (loss) | ||||||||||||||||
Foreign currency translation | (831,698 | ) | - | - | (831,698 | ) | ||||||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTED TO COMMON SHAREHOLDERS | $ | (17,106,513 | ) | $ | 2,926 | $ | 1,295,076 | $ | (15,808,511 | ) | ||||||
Earnings per share: | ||||||||||||||||
Basic | $ | $ | (20.99 | ) | ||||||||||||
Diluted | $ | (28.84 | ) | $ | (25.65 | ) | ||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||
Basic | 713,627 | 713,627 | ||||||||||||||
Diluted | 407,311 | 407,311 |
2 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. | Basis of Presentation |
The
unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with
Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, with AgriFORCE
being the accounting acquirer, and uses the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and was based on
Under ASC Topic 805, all the assets acquired and liabilities assumed in a business combination are recognized at their assumed acquisition-date fair value, while acquisition-related costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.
The allocation of the purchase consideration depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the purchase consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. Fair value of Bald Eagle’s identifiable intangible assets and the estimated amortization periods are based primarily on preliminary information and assumptions likely will change, as AgriFORCE completes a valuation of Bald Eagle’s identifiable assets.
A final determination of fair values of assets acquired and liabilities assumed could differ materially from the preliminary allocation of purchase consideration. This final valuation will be based on the actual net tangible and intangible assets of the business acquired existing as of the closing date. The final valuation may materially change the allocation of purchase consideration, which could materially affect the fair values assigned to the assets and liabilities and could result in a material change to the unaudited pro forma condensed combined financial information.
The pro forma adjustments represent AgriFORCE management’s best estimate and are based upon currently available information and certain assumptions that AgriFORCE believes are reasonable under the circumstances. AgriFORCE is not aware of any material transactions between AgriFORCE and Bald Eagle during the periods presented; hence adjustments have not been reflected in the unaudited pro forma condensed combined financial information for any such transaction.
After consummation of the combination with Bald Eagle, AgriFORCE is performing a comprehensive review of Bald Eagle’s accounting policies. As a result of the review, AgriFORCE may identify differences between the accounting policies of the two companies which, when conformed, could have a material impact on the combined financial statements. Based on its initial analysis, AgriFORCE is not aware of any differences that would have a material impact on the combined financial statements.
2. | Financing Transactions |
On
January
On
December 31, 2024, the Company executed the definitive agreement (the “Agreement”) with accredited institutional investors
(the “Investors”) for convertible debentures.
3 |
3. | Pro Forma Adjustments Related to the Acquisition |
The total estimated consideration as shown in the table below is allocated to Bald Eagle tangible and intangible assets and liabilities based on their preliminary estimated fair values as of the pro forma acquisition date:
Consideration: | ||||
Cash paid to Bald Eagle | $ | 3,550,000 | ||
Cash paid for asset purchase option | 1,215,000 | |||
Total purchase consideration | $ | 4,765,000 |
Preliminary allocation of consideration: | ||||
Fair value of Bald Eagle net assets as of the pro forma acquisition date | $ | 3,637,770 | (h) | |
Goodwill | $ | 1,127,230 | (c) |
This preliminary purchase price allocation has been used to prepare the transaction accounting adjustments in the pro forma balance sheet and income statement. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations as described in more detail in the explanatory notes below. The final allocation is expected to be completed when the Company files its report on Form 10-Q for the quarter ended March 31, 2025, and could differ materially from the preliminary allocation used in the transaction accounting adjustments. The final allocation may include (1) changes in fair values of property, plant and equipment; (2) changes in allocations to intangible assets and goodwill; and (3) other changes to assets
(a) | Represents additional net cash received from financing for the Bald Eagle acquisition minus the total consideration of $4,765,000 paid for the acquisition of the Bald Eagle assets. |
(b) | Represents debt financing (Note 2) obtained to complete Bald Eagle transaction. |
(c) | Represents
the |
(d) | Represents the accretion interest of the convertible debentures issued to finance the Bald Eagle acquisition (Note 2). |
(e) | Represents the change in fair value of the conversion feature derivative liabilities and warrant derivative liabilities issued to finance the Bald Eagle acquisition (Note 2). |
(f) | Amount represents the elimination of the historical equity of Bald Eagle. |
(g) | Amount
represents assets and liabilities not acquired |
(h) | Represents
|
(i) | To adjust depreciation of assets acquired from the Bald Eagle Acquisition based on the fair values as at the acquisition date |
4. | Reclassification Adjustments |
Certain reclassifications have been made to the historical presentation of Bald Eagle’s financial information to conform to the financial statement presentation of AgriFORCE for purposes of the unaudited pro forma condensed combined financial information.
The adjustments represent the reclassification of cost of revenue, excluding deprecation and depreciation from operating expenses to cost of revenue within revenue.
4 |