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Supplemental Purchase Agreement Transaction Information

12 Months Ended

Dec. 31, 2023

Supplemental Purchase Agreement Transaction Information

Supplemental Purchase Agreement Transaction Information

12. Supplemental Purchase Agreement Transaction Information

Historical financial information for Breckenridge was derived from Breckenridge’s 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 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 (in thousands):


Deemed Distribution (Contribution)	Year Ended December 31,
	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 is as follows (in thousands):


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 is as follows (unaudited and in thousands):


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 (in thousands):


	December 31, 2022
	Dawson		Breckenridge		Dawson
	Previously Reported				As Adjusted

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 earnings (deficit)		(112,469)		—		(112,469)
Equity of Breckenridge prior to acquisition		—		7,695		7,695
Accumulated other comprehensive income (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 year ended December 31, 2022 to the current Statement of Operations for the same periods (in thousands):


	Year Ended December 31, 2022
	Dawson		Breckenridge		Eliminations and		Dawson
	Previously Reported				Other Adjustments		As Adjusted
Operating revenues
Fee revenue	$	31,921	$	16,351	$	(2,201)	$	46,071
Reimbursable revenue		5,559		—		—		5,559
		37,480		16,351		(2,201)		51,630
Operating costs:
Operating expenses
Fee operating expenses		32,351		10,837		(2,201)		40,987
Reimbursable operating expenses		5,559		—		—		5,559
		37,910		10,837		(2,201)		46,546
General and administrative		13,785		1,670		—		15,455
Depreciation and amortization		9,795		2,035		—		11,830
		61,490		14,542		(2,201)		73,831

Income (loss) from operations		(24,010)		1,809		—		(22,201)

Other income (expense):
Interest income		316		1		—		317
Interest expense		(31)		—		—		(31)
Other income (expense), net		415		(4)		—		411
Gain from employee retention credit		2,966		—		—		2,966
Income (loss) before income tax		(20,344)		1,806		—		(18,538)
Income tax benefit (expense)		(107)		—		—		(107)
Net income (loss)		(20,451)		1,806		—		(18,645)
Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation		(1,063)		—		—		(1,063)

Comprehensive (loss) income	$	(21,514)	$	1,806	$	—	$	(19,708)
Basic income (loss) per share of common stock	$	(0.86)	$	—	$	0.11	$	(0.75)
Diluted income (loss) per share of common stock	$	(0.86)	$	—	$	0.11	$	(0.75)
Weighted average equivalent common shares outstanding		23,782,796		—		1,188,235		24,971,031
Weighted average equivalent common shares outstanding
- assuming dilution		23,782,796		—		1,188,235		24,971,031

The following table reconciles the previously reported Statement of Cash Flows for the year ended December 31, 2022 to the current Statement of Cash Flows for the same period (in thousands):


	Year ended December 31, 2022
	Dawson		Breckenridge		Dawson
	Previously Reported				As Adjusted

Cash flows from operating activities:
Net (loss) income	$	(20,451)	$	1,806	$	(18,645)

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		9,795		2,035		11,830
Operating lease cost		998		—		998
Non-cash compensation		413		—		413
Deferred income tax expense		116		—		116
Gain on disposal of assets		(219)		770		551
Remeasurement and other		(18)		—		(18)
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable		1,311		1,579		2,890
Increase in employee retention credit receivable		(3,035)		—		(3,035)
(Increase) decrease in prepaid expenses and other assets		(4,382)		58		(4,324)
Increase (decrease) in accounts payable		873		(71)		802
Increase (decrease) in accrued liabilities		802		(97)		705
Increase (decrease) in operating lease liabilities		(1,026)		—		(1,026)
Increase (decrease) in deferred revenue		5,862		(388)		5,474
Net cash (used in) provided by operating activities		(8,961)		5,692		(3,269)

Cash flows from investing activities:
Capital expenditures		(894)		(535)		(1,429)
Proceeds from disposal of assets		225		115		340
Net cash used in investing activities		(669)		(420)		(1,089)

Cash flows from financing activities:
Principal payments on notes payable		(1,253)		—		(1,253)
Principal payments on finance leases		(47)		—		(47)
Tax withholdings related to stock-based compensation awards		(79)		—		(79)
Cash settlement of RSUs		(301)		—		(301)
Sale of treasury stock		113		—		113
Breckenridge cash contributions prior to acquisition		—		(583)		(583)
Net cash used in financing activities		(1,567)		(583)		(2,150)

Effect of exchange rate changes on cash and cash equivalents and restricted cash		(265)		—		(265)

Net (decrease) increase in cash and cash equivalents and restricted cash		(11,462)		4,689		(6,773)

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	$	18,914	$	4,689	$	23,603

Supplemental cash flow information:
Cash paid for interest	$	31	$	—	$	31
Cash received for income taxes	$	7	$	—	$	7

Non-cash operating, investing and financing activities:
Increase in accrued purchases of property and equipment	$	605	$	—	$	605
Financed leases incurred	$	279	$	—	$	279
Increase in right-of-use assets and operating lease liabilities	$	598	$	—	$	598
Financed insurance premiums	$	1,193	$	—	$	1,193
Deemed contribution of Breckenridge net assets	$	—	$	(6,472)	$	(6,472)

The following table details the standalone Breckenridge Statement of Operations for the period from January 1, 2023 through March 24, 2023 (in thousands):


	Year Ended
	December 31, 2023

Operating revenues	$	782

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

Income (loss) from operations		(967)

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