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SUPPLEMENTAL PURCHASE AGREEMENT TRANSACTION INFORMATION

6 Months Ended

Jun. 30, 2023

SUPPLEMENTAL PURCHASE AGREEMENT TRANSACTION INFORMATION

SUPPLEMENTAL PURCHASE AGREEMENT TRANSACTION INFORMATION

10. SUPPLEMENTAL PURCHASE AGREEMENT TRANSACTION INFORMATION

Historical financial information for Breckenridge was derived from Breckenridge’s unaudited financial statements. In the opinion of the Company’s management, the financial information of Breckenridge reflects all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The non-cash items associated with the Purchase Agreement (unaudited and in thousands) shown on the Condensed Consolidated Statements of Cash Flows consist of “Deemed distribution (contribution)” and “Acquisition of Breckenridge net assets” and are derived as follows:


Deemed Distribution (Contribution)	Six Months Ended June 30,
	2023		2022
Deemed distribution (contribution) of short-term investments	$	1,000	$	—
Deemed distribution (contribution) of accounts receivable		1,015		(2,605)
Deemed distribution (contribution) of prepaids and other		1		(133)
Deemed distribution (contribution) of land and buildings		514		(4,726)
Deemed (distribution) contribution of accounts payable		(132)		196
Deemed (distribution) contribution of accrued liabilities		(69)		228
Deemed (distribution) contribution of deferred revenue		—		568
Deemed distribution of Breckenridge net assets not acquired	$	2,329
Deemed contribution of Breckenridge net assets			$	(6,472)


Historical Carrying Value of Assets Acquired	March 24, 2023
Accounts receivable, net	$	67
Prepaid expenses and other current assets		56
Property and equipment, net		1,322
Other accrued liabilities		(16)
Deferred revenue		(94)
Acquisition of Breckenridge net assets	$	1,335

Total consideration for the asset purchase (in thousands) is as follows:


Consideration Paid	March 24, 2023
Common stock issued	$	2,020
Note payable issued		9,880
Purchase price	$	11,900

Because the Transaction constitutes a transaction among entities under common control, the excess purchase price over the historical carrying value of the net assets acquired was recorded as a charge to additional paid in capital. The excess purchase price over the historical carrying value of the assets at the acquisition date (unaudited and in thousands) is as follows:


Excess Purchase Price	March 24, 2023
Purchase price	$	11,900
Historical carrying value of assets acquired		(1,335)
Excess purchase price	$	10,565

The following table reconciles the previously reported Balance Sheet at December 31, 2022 to the current Balance Sheet for the same period:


	December 31, 2022
	Dawson		Breckenridge		Dawson
	Previously Reported				As Adjusted
			(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	13,914	$	4,689	$	18,603
Restricted cash		5,000		—		5,000
Short-term investments		265		—		265
Accounts receivable, net		6,945		1,027		7,972
Employee retention credit receivable		3,035		—		3,035
Prepaid expenses and other current assets		8,876		75		8,951
Total current assets		38,035		5,791		43,826

Property and equipment, net		18,127		2,341		20,468
Right-of-use assets		4,010		—		4,010
Intangibles, net		369		—		369
Total assets	$	60,541	$	8,132	$	68,673

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,015	$	125	$	4,140
Accrued liabilities:
Payroll costs and other taxes		1,973		28		2,001
Other		1,178		102		1,280
Deferred revenue		7,199		181		7,380
Current maturities of notes payable and finance leases		275		—		275
Current maturities of operating lease liabilities		1,118		—		1,118
Total current liabilities		15,758		436		16,194

Long-term liabilities:
Notes payable and finance leases, net of current maturities		207		—		207
Operating lease liabilities, net of current maturities		3,331		—		3,331
Deferred tax liabilities, net		136		1		137
Total long-term liabilities		3,674		1		3,675

Stockholders' equity:
Common stock		238		—		238
Additional paid-in capital		155,413		—		155,413
Accumulated deficit		(112,469)		—		(112,469)
Equity of Breckenridge prior to acquisition		—		7,695		7,695
Accumulated other comprehensive loss, net		(2,073)		—		(2,073)
Total stockholders' equity		41,109		7,695		48,804

Total liabilities and stockholders' equity	$	60,541	$	8,132	$	68,673

The following tables reconcile the previously reported Statement of Operations for the three and six months ended June 30, 2022 to the current Statement of Operations for the same periods:


	Three Months Ended June 30, 2022
	Dawson		Breckenridge		Eliminations and		Dawson
	Previously Reported				Other Adjustments		As Adjusted

Operating revenues	$	921	$	4,050	$	(206)	$	4,765

Operating costs:
Operating expenses		4,013		2,978		(206)		6,785
General and administrative		2,415		413		—		2,828
Depreciation and amortization		2,451		559		—		3,010
		8,879		3,950		(206)		12,623

(Loss) income from operations		(7,958)		100		—		(7,858)

Other income (expense):
Interest income		29		1		—		30
Interest expense		(9)		—		—		(9)
Other income (expense), net		276		(3)		—		273
(Loss) income before income tax		(7,662)		98		—		(7,564)
Income tax (expense) benefit		(16)		1		—		(15)
Net (loss) income		(7,678)		99		—		(7,579)
Other comprehensive loss:
Net unrealized loss on foreign exchange rate translation		(439)		—		—		(439)

Comprehensive (loss) income	$	(8,117)	$	99	$	—	$	(8,018)
Basic loss per share of common stock	$	(0.32)	$	—	$	0.02	$	(0.30)
Diluted loss per share of common stock	$	(0.32)	$	—	$	0.02	$	(0.30)
Weighted average equivalent common shares outstanding		23,812,329		—		1,188,235		25,000,564
Weighted average equivalent common shares outstanding
- assuming dilution		23,812,329		—		1,188,235		25,000,564


	Six Months Ended June 30, 2022
	Dawson		Breckenridge		Eliminations and		Dawson
	Previously Reported				Other Adjustments		As Adjusted

Operating revenues	$	19,280	$	8,951	$	(1,532)	$	26,699

Operating costs:
Operating expenses		16,651		6,069		(1,532)		21,188
General and administrative		7,946		750		—		8,696
Depreciation and amortization		5,085		1,026		—		6,111
		29,682		7,845		(1,532)		35,995

(Loss) income from operations		(10,402)		1,106		—		(9,296)

Other income (expense):
Interest income		54		2		—		56
Interest expense		(20)		—		—		(20)
Other income (expense), net		315		(3)		—		312
(Loss) income before income tax		(10,053)		1,105		—		(8,948)
Income tax expense		(16)		—		—		(16)
Net (loss) income		(10,069)		1,105		—		(8,964)
Other comprehensive loss:
Net unrealized loss on foreign exchange rate translation		(672)		—		—		(672)

Comprehensive (loss) income	$	(10,741)	$	1,105	$	—	$	(9,636)
Basic loss per share of common stock	$	(0.42)	$	—	$	0.06	$	(0.36)
Diluted loss per share of common stock	$	(0.42)	$	—	$	0.06	$	(0.36)
Weighted average equivalent common shares outstanding		23,752,775		—		1,102,892		24,855,667
Weighted average equivalent common shares outstanding
- assuming dilution		23,752,775		—		1,102,892		24,855,667

The following table reconciles the previously reported Statement of Cash Flows for the six months ended June 30, 2022 to the current Statement of Cash Flows for the same period:


	Six Months Ended June 30, 2022
	Dawson		Breckenridge		Dawson
	Previously Reported				As Adjusted

Cash flows from operating activities:
Net (loss) income	$	(10,069)	$	1,105	$	(8,964)

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		5,085		1,026		6,111
Operating lease cost		499		—		499
Non-cash compensation		368		—		368
Gain on disposal of assets		(142)		785		643
Remeasurement and other		(18)		(2)		(20)
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable		6,696		(1,770)		4,926
Decrease in prepaid expenses and other assets		68		20		88
(Decrease) increase in accounts payable		(1,508)		750		(758)
(Decrease) increase in accrued liabilities		(491)		268		(223)
Decrease in operating lease liabilities		(496)		—		(496)
Increase (decrease) in deferred revenue		128		(568)		(440)
Net cash provided by operating activities		120		1,614		1,734

Cash flows from investing activities:
Capital expenditures		(95)		(47)		(142)
Proceeds from disposal of assets		142		100		242
Net cash provided by investing activities		47		53		100

Cash flows from financing activities:
Principal payments on notes payable		(713)		—		(713)
Principal payments on finance leases		(18)		—		(18)
Tax withholdings related to stock-based compensation awards		(79)		—		(79)
Sale of treasury stock		113		—		113
Breckenridge cash contributions prior to acquisition		—		3,871		3,871
Net cash (used in) provided by financing activities		(697)		3,871		3,174

Effect of exchange rate changes on cash and cash equivalents and restricted cash		(192)		—		(192)

Net (decrease) increase in cash and cash equivalents and restricted cash		(722)		5,538		4,816

Cash and cash equivalents and restricted cash at beginning of period		30,376		—		30,376

Cash and cash equivalents and restricted cash at end of period	$	29,654	$	5,538	$	35,192

Supplemental cash flow information:
Cash paid for interest	$	20	$	—	$	20
Cash received for income taxes	$	7	$	—	$	7

Non-cash operating, investing and financing activities:
Increase in right-of-use assets and operating lease liabilities	$	527	$	—	$	527
Financed insurance premiums	$	944	$	—	$	944
Deemed contribution of Breckenridge net assets	$	—	$	(6,472)	$	(6,472)

The following table details the standalone Breckenridge Statement of Operations for the three and six months ended June 30, 2023:


	Three Months Ended		Six Months Ended
	June 30, 2023		June 30, 2023

Operating revenues	$	—	$	782

Operating costs:
Operating expenses		—		806
General and administrative		—		438
Depreciation and amortization		—		505
		—		1,749

Loss from operations		—		(967)

Other income (expense):
Interest income		—		2
Interest expense		—		—
Other (expense) income, net		—		(11)
Loss before income tax		—		(976)
Income tax benefit		—		—
Net loss		—	$	(976)