Unaudited Pro Forma Combined Balance Sheet as of December 31, 2021
Troika Media Group
Converge Direct & Affiliates
Transaction Adjustment (See Notes)
Total
Current Assets
Cash and cash equivalents
5,982,245
22,285,380
9,536,386
(1)
37,804,011
Marketable securities
-
1,180,371
-
1,180,371
Accounts receivable, net
989,187
12,335,251
-
13,324,438
Prepaid expenses
232,351
1,756,039
-
1,988,390
Accrued revenue
252,102
2,595,783
-
2,847,885
Other assets - short term portion
64,660
-
-
64,660
7,520,545
40,152,824
9,536,386
57,209,755
Long-Term Assets
Other Deposits
481,373
520,402
-
1,001,775
Other Assets
147,904
92,228
-
240,132
Operating lease right-of-use assets
6,356,418
5,674,394
-
12,030,812
Due from related parties
-
554,296
-
554,296
Property and equipment, net
374,310
251,047
-
625,357
Intangible assets, net
2,259,061
-
71,000,000
(2)
73,259,061
Goodwill
19,367,834
-
41,528,496
(3)
60,896,330
28,986,900
7,092,367
112,528,496
148,607,763
TOTAL ASSETS
$
36,507,445
$
47,245,191
$
122,064,882
$
205,817,518
Current Liabilities
Accounts payable and accrued expenses
5,683,217
27,147,050
-
32,830,267
Due to related parties
6,821
-
-
6,821
Billings in excess of cost
5,825,989
1,811,716
-
7,637,705
Note payable -related party (ST)
150,000
-
-
150,000
Operating lease liabilities - short-term portion
3,108,771
610,447
-
3,719,218
Bank loan net of discount (ST)
-
-
1,460,862
(4)
1,460,862
Convertible Notes Payable
50,000
-
-
50,000
Derivative liabilities
779
-
-
779
Taxes Payable
58,242
77,066
-
135,308
Stimulus loan program - short term portion
19,332
-
-
19,332
Other short-term liabilities
796,957
-
-
796,957
15,700,108
29,646,279
1,460,862
46,807,249
Other Liabilities
Stimulus loan program - long term portion
417,850
-
-
417,850
Rental deposits - long term portion
119,158
-
-
119,158
Preferred Stock Liability
-
-
15,997,537
(5)
15,997,537
Warrant liability
-
-
30,840,050
(6)
30,840,050
Bank loan net of discount (LT)
-
-
65,823,518
(4)
65,823,518
Acquisition liability
-
-
5,000,000
(7)
5,000,000
Corporate Tax - Liability/(Asset)
53,191
-
-
53,191
Operating lease liabilities - long-term portion
5,341,104
5,666,827
-
11,007,931
Liabilities of discontinued operations - long term portion
106,515
-
-
106,515
Other long-term liabilities
156,662
-
-
156,662
6,194,480
5,666,827
117,661,105
129,522,412
TOTAL LIABILITIES
$
21,894,588
$
35,313,106
$
119,121,967
$
176,329,661
Stockholder's Equity
Preferred Stock
7,200
-
5,000
(8)
12,200
Common Stock
43,660
-
12,500
(9)
56,160
Additional Paid-in-Capital
208,087,892
-
14,857,500
(10)
222,945,392
Other Comprehensive Loss
(385,679
)
-
-
(385,679
)
Members Interest
-
11,932,085
(11,932,085)
(11)
-
Retained Earnings
(193,140,216
)
-
-
(193,140,216
)
TOTAL EQUITY
14,612,857
11,932,085
2,942,915
29,487,857
TOTAL LIABILITIES & EQUITY
$
36,507,445
$
47,245,191
$
122,064,882
$
205,817,518
F-1
Adjustments to the Unaudited Pro Forma Combined Balance Sheet as of December 31, 2021
1.
Reflects the estimated net cash received from the proceeds from the Company’s March 21, 2022 private placement with institutional investors (the “PIPE”) and $75,000,000 debt financing with Blue Torch Capital (the “Debt Offering”).
2.
Reflects the estimated fair value of the identifiable intangible assets acquired as assessed by a third party valuation. This represents the preliminary purchase price allocation, is not final, and subject to change.
3.
Reflects the preliminary purchase price allocation of the acquisition less the assessed intangibles. This is preliminary, not final, and subject to change.
4.
Represents the short-term and long-term balance of the Debt Offering relating to the acquisition net of Debt Offering costs.
5.
Represents the net proceeds from the PIPE less the fair market value of the associated warrants issued on the date of the acquisition.
6.
Represents the fair market value of the warrants associated with the PIPE on March 31, 2022.
7.
Reflects the balance due to the owners of Converge due 12 months after the date of the acquisition contingent on the Company satisfying its loan covenants.
8.
Reflects the par value of the 500,000 Series E Preferred Stock at $0.01 par value issued relating to the PIPE.
9.
Reflects the par value of the 12,500,000 shares of common stock at $0.001 par value issued to the owners of Converge relating to the acquisition.
10.
Reflects the impact of the issuance of 12,500,000 shares of common stock to Additional Paid-in-Capital relating to the acquisition of Converge.
11.
Reflects the elimination of Converge’s Members’ Interests during consolidation.
F-2
Unaudited Pro Forma Consolidated Statements of Operations for the fiscal year ended June 30, 2021
Troika Media Group
Converge Direct & Affiliates
Transaction Adjustment
(See Notes)
Total
Revenues
$
16,192,297
$
254,365,501
$
-
$
270,557,798
Cost of revenues
(7,504,072
)
(224,527,173
)
-
(232,031,245
)
Gross profit
8,688,225
29,838,328
-
38,526,553
Operating expenses:
Selling, general and administrative expenses
(24,040,195
)
(14,128,598
)
-
(38,168,793
)
Professional fees
(1,332,188
)
(3,294,901
)
-
(4,627,089
)
Depreciation expense
(130,721
)
(122,208
)
-
(252,929
)
Amortization expense of intangibles
(2,168,333
)
-
(8,150,000
)(1)
(10,318,333
)
Total operating expenses
(27,671,437
)
(17,545,707
)
(8,150,000
)
(53,367,144
)
Income from operations
(18,983,212
)
12,292,621
(8,150,000
)
(14,840,591
)
Other income (expense):
Income from government grants
3,139,538
-
-
3,139,538
Amortization expense of note payable discount
(410,019
)
-
-
(410,019
)
Interest expense
(7,104
)
-
(7,214,556
)(2)
(7,221,660
)
Foreign exchange gain/loss
(47,825
)
-
-
(47,825
)
Profit/Loss on early termination of lease
1,829
-
-
1,829
Gain/loss on derivative liabilities
71,693
-
-
71,693
Other income
451,961
154
-
452,115
Dividend income
-
82,498
-
82,498
Interest income
-
67,892
-
67,892
Realized gain (loss) from investments
-
1,398,110
-
1,398,110
Total other income (expense)
3,200,073
1,548,654
(7,214,556
)
(2,465,829
)
Net Income before income tax
(15,783,139
)
13,841,275
(15,364,556
)
(17,306,420
)
Provision for income tax
(216,210
)
(181
)
-
(216,391
)
Net Income
$
(15,999,349
)
$
13,841,094
$
(15,364,556
)
$
(17,522,811
)
Earnings Per Share
Weighted Average Basic
15,544,032
12,500,000
(3)
28,044,032
Earnings (loss) per share
$
(1.03
)
$
(0.62
)
Adjustments to the Unaudited Pro Forma Consolidated Statements of Operations for the fiscal year ended June 30, 2021
1.
Reflects the anticipated amortization expense of the estimated fair value of the identifiable intangible assets acquired in the Converge acquisition. This is based on the preliminary purchase price allocation, is not final, and subject to change.
2.
Represents the anticipated interest expense of the Blue Torch Debt Offering and amortization of such Debt Offering costs.
3.
Represents the common stock issued to the owners of Converge relating to the acquisition.
F-3
Unaudited Pro Forma Consolidated Statements of Operations for the six-month period ended December 31, 2021
Troika Media Group
Converge Direct & Affiliates
Transaction Adjustment
(See Notes)
Total
Revenues
$
15,342,672
$
129,971,193
$
-
$
145,313,865
Cost of revenues
(8,420,151
)
(115,479,999
)
-
(123,900,150
)
Gross profit
6,922,521
14,491,194
-
21,413,715
Operating expenses:
Selling, general and administrative expenses
(13,228,983
)
(7,587,248
)
(20,816,231
)
Professional fees
(867,693
)
(2,153,132
)
-
(3,020,825
)
Depreciation expense
(58,458
)
(61,104
)
-
(119,562
)
Amortization expense of intangibles
(343,500
)
-
(4,075,000
)(1)
(4,418,500
)
Total operating expenses
(14,498,634
)
(9,801,484
)
(4,075,000
)
(28,375,118
)
Income from operations
$
(7,576,113
)
$
4,689,710
(4,075,000
)
$
(6,961,403
)
Other income (expense):
Income from government grants
262,458
-
-
262,458
Interest expense
(47,371
)
-
(3,653,230
)(2)
(3,700,601
)
Foreign exchange gain/loss
(25,971
)
-
-
(25,971
)
Profit/Loss on early termination of lease
(2,100
)
-
-
(2,100
)
Gain/loss on derivative liabilities
12,477
-
-
12,477
Other income
147,490
-
-
147,490
Dividend income
-
33,101
-
33,101
Interest income
-
34,019
-
34,019
Income from legal settlement
1,037,853
-
-
1,037,853
Realized gain (loss) from investments
-
598,427
-
598,427
Total other income (expense)
1,384,836
665,547
(3,653,230
)
(1,602,847
)
Net Income before income tax
(6,191,277
)
5,355,257
(7,728,230
)
(8,564,250
)
Provision for income tax
(57,179
)
(107
)
-
(57,286
)
Net Income
$
(6,248,456
)
$
5,355,150
(7,728,230
)
$
(8,621,536
)
Earnings Per Share
Weighted Average Basic
42,517,201
12,500,000
(3)
55,017,201
Earnings (loss) per share
$
(0.15
)
$
(0.16
)
Adjustments to the Unaudited Pro Forma Consolidated Statements of Operations for the six-month period ended December 31, 2021
1.
Reflects the anticipated amortization expense of the estimated fair value of the identifiable intangible assets acquired in the Converge acquisition. This is based on the preliminary purchase price allocation, is not final, and subject to change.
2.
Represents the anticipated interest expense of the Blue Torch Debt Offering and amortization of such Debt Offering costs.
3.
Represents the common stock issued to the owners of Converge relating to the acquisition.
F-4
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