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.
