Note 2—Restatement of Unaudited Consolidated Financial Statements and Additional Disclosure

The unaudited consolidated statement of operations for the three months ended March 31, 2017 has been restated to properly reflect the Company’s revenues, cost of revenues, income from operations, net income and earnings per share for that three-month period. Certain amounts recorded in the second quarter of 2017 should properly have been recorded in the first quarter. The unaudited consolidated balance sheet at March 31, 2107, the unaudited consolidated statement of comprehensive income for the three months ended March 31, 2017, the unaudited consolidated statement of cash flows for the three months ended March 31, 2017, and the notes to consolidated financial statements, were restated to make the associated changes required by the adjustments to the unaudited consolidated statement of operations.

The error related to the estimation of weather impact on the Company’s estimated unbilled revenue. This estimation process is performed in an effort to allocate billings to a calendar period using historical consumption data of the customer base of the retail energy providers operated by the Company and applying a weather factor to estimated unbilled amounts. The weather adjustment was erroneous, causing understated amounts of estimated unbilled commodity consumption, resulting in under estimates of revenues and cost of revenues to be included in the three months ended March 31, 2017. The errors impacted revenue by $2.0 million, gross profit and income (loss) from operations by $1.2 million, and net income by $1.1 million. The nature of the estimation processes is reversing, as actual billings representing the unbilled estimates manifest in the following period, in this case, in April 2017. The reversal of this estimate resulted in commodity consumption and the associated revenues and cost of revenues to be overstated in the three months ended June 30, 2017. The cumulative operating results for the six months ended June 30, 2017 were unaffected. The Company’s GRE segment was the only segment affected by the misstatement.

The impact of the restatement on the Company’s consolidated financial statements was as follows:

	Three Months Ended March 31, 2017
	Previously Reported		Error Correction		Restated
	(in thousands, except per share data)

Consolidated Statement of Operations:

Electricity revenues	$	52,474	$	492	$	52,966
Natural gas revenues	$	16,467	$	1,473	$	17,940
Cost of revenues	$	45,819	$	737	$	46,556
Gross profit	$	23,621	$	1,228	$	24,849
Provision for income taxes	$	733	$	123	$	856
Net income	$	3,034	$	1,105	$	4,139
Net income attributable to Genie Energy, Ltd	$	3,477	$	1,105	$	4,582
Comprehensive income	$	3,476	$	1,105	$	4,581
Comprehensive income attributable to Genie Energy, Ltd	$	4,177	$	1,105	$	5,282
Earnings per share attributable to Genie Energy, Ltd. common stockholders:
Basic	$	0.13	$	0.05	$	0.18
Diluted	$	0.13	$	0.05	$	0.18

	March 31, 2017
	Previously Reported			Error Correction			Restated
	(in thousands)

Consolidated Balance Sheet:

Trade accounts receivable, net	$	33,385		$	1,817		$	35,202
Prepaid expenses	$	4,577		$	(589	)	$	3,988
Total assets	$	123,165		$	1,228		$	124,393
Income taxes payable	$	3,176		$	123		$	3,299
Total liabilities	$	41,523		$	123		$	41,646
Accumulated deficit	$	(50,310	)	$	1,105		$	(49,205	)
Total liabilities and equity	$	123,165		$	1,228		$	124,393

In addition, the Company is revising Note 11 to include additional disclosure about the pending class action lawsuits in Pennsylvania, New York and New Jersey.