Exhibit 99.2
Prairie Operating Co., LLC
Financial Statements
as of and for the three months ended March 31, 2023
F-1 |
Prairie Operating Co., LLC
Balance Sheet
March 31, 2023
(unaudited)
ASSETS | ||||
Current Assets | ||||
Cash | $ | |||
Total Current Assets | ||||
Other Assets | ||||
Deferred transaction costs | ||||
Total Assets | $ | |||
LIABILITIES AND MEMBERS’ DEFICIT | ||||
Current Liabilities | ||||
Accrued expenses | $ | |||
Accrued expenses – related party | ||||
Total Current Liabilities | ||||
Total Long-Term Liabilities | ||||
Total Liabilities | ||||
Commitments and contingencies (Note 3) | ||||
Members’ Deficit | ( | ) | ||
Total Members’ Deficit | ( | ) | ||
Total Liabilities and Members’ Deficit | $ |
The accompanying notes are an integral part of these financial statements.
F-2 |
Prairie Operating Co., LLC
Statement of Operations
for the three months ended March 31, 2023
(unaudited)
Revenues | $ | |||
Expenses | ||||
Operating expenses | ||||
General and administrative expenses | ||||
Total Expenses | ||||
Net Loss | $ | ( | ) |
The accompanying notes are an integral part of these financial statements.
F-3 |
Prairie Operating Co., LLC
Statement
of Members’ Deficit
for the three months ended March 31, 2023
(unaudited)
Members’ Deficit | ||||
Balance - December 31, 2022 | $ | ( | ) | |
Capital contributions | ||||
Net loss | ( | ) | ||
Balance - March 31, 2023 | $ | ( | ) |
The accompanying notes are an integral part of these financial statements.
F-4 |
Prairie Operating Co., LLC
Statement of Cash Flows
for the three months ended March 31, 2023
(unaudited)
Cash Flows from Operating Activities | ||||
Net loss | $ | ( | ) | |
Changes in operating assets and liabilities: | ||||
Increase in accounts payable and accrued expenses | ||||
Cash used in operating activities | ( | ) | ||
Net decrease in cash | $ | ( | ) | |
Cash - beginning of period | ||||
Cash - end of period | $ | |||
Supplemental disclosure of cash flow information: | ||||
Cash paid for interest | $ | |||
Cash paid for income taxes | $ | |||
Supplemental disclosure of non-cash activity: | ||||
Accrued deferred transaction costs associated with the Merger and Exok Transaction | ||||
Accrued deferred transaction costs associated with the PIPE Transaction |
The accompanying notes are an integral part of these financial statements.
F-5 |
Prairie Operating Co., LLC
Notes to Financial Statements
Note 1 – Organization and Nature of Business
Organization and General
Prairie Operating Co., LLC (the “Company”) is a limited liability company formed under the laws of the State of Delaware on June 7, 2022. The Company was formed for the purpose of acquiring and operating oil and gas properties in the United States.
As of March 31, 2023, the Company had not commenced any operations. All activity for the period from June 7, 2022 (inception) to March 31, 2023, relates to the Company’s formation, the Merger (as defined below) and the Exok Acquisition (see Notes 1 and 5). As of March 31, 2023, the Company did not generate any operating revenues.
Merger Agreement
On October 24, 2022, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Prairie Operating Co., a Delaware corporation (“PrairieCo”), and Creek Road Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), pursuant to which Merger Sub merged with and into the Company (the “Merger”), with the Company surviving and continuing to exist as a Delaware limited liability company and a wholly-owned subsidiary of PrairieCo. The Merger closed on May 3, 2023 (the “Closing Date”). See Note 5 for further discussion.
Acquisition of Oil and Gas Properties
Concurrently
with entering into the Merger Agreement, the Company entered into a purchase and sale agreement (the “PSA”) with Exok, Inc.
(“Exok”) to acquire certain oil and gas leasehold interests (the “Exok Assets”) covering
Note 2 – Going Concern
Since
its inception, the Company has incurred significant losses. The Company had a net loss of $
The assessment of the liquidity and going concern requires the Company to make estimates of future activity and judgments about whether the Company can meet its obligations and has adequate liquidity to operate. Significant assumptions used in Company’s forecasted model of liquidity in the next 12 months include PrairieCo’s current cash position, inclusive of the impacts from the Merger and related transactions discussed above, its ability to obtain funding from PrairieCo, and its ability to manage spending. Based on an assessment of these factors, management believes that the Company will have adequate liquidity for its operations for at least the next 12 months.
The financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the matters discussed herein.
F-6 |
Note 3 – Commitments and Contingencies
The
Company reimbursed members and others for reasonable, documented and customary out-of-pocket expenses incurred in connection with services
provided related to the Company’s formation, the Merger and the Exok Acquisition (see Notes 1 and 5) upon closing. As of March
31, 2023, such expenses were approximately $
Note 4 – Sale of Options
On
August 31, 2022, the Company entered into agreements with its members whereby each member was provided non-compensatory options to purchase
a
Note 5 – Subsequent Events
Non-Compensatory Options
On
May 3, 2023, prior to the closing of the Merger, the Company entered into a non-compensatory option purchase agreement with its members,
Bristol Capital LLC (“Bristol”) and a third party investor pursuant to which Bristol and such third party investor purchased
non-compensatory options for $
Amended and Restated Merger Agreement
On May 3, 2023, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “AR Merger Agreement”) with PrairieCo and Merger Sub to, among other things:
(i)
remove the reverse stock split of the shares of Common Stock, at a
(ii) amend the date by which the AR Merger Agreement may be terminated by either PrairieCo or the Company if the Merger has not been consummated to on or before September 30, 2023;
(iii) reflect the terms of the AR PSA (as defined below) and the PIPE Transaction; and
(iv) provide for the assumption of the Company’s long-term incentive plan by PrairieCo prior to the effective time of the Merger.
Amended Purchase and Sale Agreement
On May 3, 2023, the Company entered into an Amended and Restated Purchase and Sale Agreement (the “AR PSA”) with PrairieCo and Exok to, among other things:
(i)
reflect that the Exok Assets to be purchased by the Company for a total amount of $
(ii) amend the effective date of the conveyance of the Exok Assets to be the Closing Date;
(iii)
remove the issuance of $
(iv)
include an option of PrairieCo to purchase, from the Closing Date until the later of (x) the date that is ninety (90) days following
the Closing Date and (y) August 15, 2023, approximately
The Merger and Exok Acquisition both closed on May 3, 2023. At the effective time of the Merger, membership interests in the Company were converted into the right to receive each member’s pro rate share of shares of Common Stock and PrairieCo assumed and converted non-compensatory options to purchase membership interests of the Company into non-compensatory options to acquire shares of Common Stock for $ per share, which are only exercisable if specific production hurdles are achieved.
F-7 |