Carbon Energy Corp - FORM 8-K/A - EX-99.2

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8-K/A - 8-K/A - Carbon Energy Corp	a11-8971_18ka.htm
EX-99.1 - EX-99.1 - Carbon Energy Corp	a11-8971_1ex99d1.htm
EX-23.3 - EX-23.3 - Carbon Energy Corp	a11-8971_1ex23d3.htm
EX-99.3 - EX-99.3 - Carbon Energy Corp	a11-8971_1ex99d3.htm
EX-3.(I) - EX-3.(I) - Carbon Energy Corp	a11-8971_1ex3di.htm
EX-99.4 - EX-99.4 - Carbon Energy Corp	a11-8971_1ex99d4.htm
EX-23.2 - EX-23.2 - Carbon Energy Corp	a11-8971_1ex23d2.htm
EX-3.(II) - EX-3.(II) - Carbon Energy Corp	a11-8971_1ex3dii.htm
EX-10.2(B) - EX-10.2(B) - Carbon Energy Corp	a11-8971_1ex10d2b.htm
EX-10.2(A) - EX-10.2(A) - Carbon Energy Corp	a11-8971_1ex10d2a.htm
EX-23.1 - EX-23.1 - Carbon Energy Corp	a11-8971_1ex23d1.htm
EX-10.2 - EX-10.2 - Carbon Energy Corp	a11-8971_1ex10d2.htm

Exhibit 99.2

ST. LAWRENCE SEAWAY CORPORATION

Pro Forma Condensed Combined Financial Statements

(unaudited)

The following unaudited pro forma condensed consolidated financial statements reflect adjustments to the historical financial statements of St. Lawrence Seaway Corporation (“St. Lawrence Seaway” or the “Company”) to give effect to its merger with Nytis Exploration (USA) Inc. (“Nytis USA”).

Although the legal form of the transaction reflects the acquisition of Nytis USA by St. Lawrence Seaway, we have determined that the accounting form of the transaction is a “reverse merger”, in which Nytis USA is identified as the accounting acquirer and St. Lawrence Seaway is identified as the accounting acquiree. In this transaction, Nytis USA reports the acquisition of St. Lawrence as a recapitalization under which the outstanding shares of St. Lawrence Seaway are issued to acquire the net assets of St. Lawrence. Future financial statements will present the historical information of Nytis USA and the operations of St. Lawrence Seaway will be included from the date of the combination.

The following pro forma condensed combined financial statements present the combined financial position and results of operations of Nytis USA and St. Lawrence Seaway as they may have appeared had the combination described above occurred as of January 1, 2009 for purposes of the pro forma condensed statement of operations, and as of December 31, 2010 for purposes of the pro forma condensed combined balance sheet.

The accompanying pro forma information is presented for illustration purposes only and is not necessarily indicative of the financial position or results of operations that would have actually been reported had the acquisition been in effect during the periods presented, or which may be reported in the future.

The accompanying pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements and related notes of Nytis USA and St. Lawrence Seaway.

ST. LAWRENCE SEAWAY CORPORATION & NYTIS EXPLORATION (USA) INC.

Pro Forma Condensed Combined Balance Sheet

(unaudited)

	Historical
	December 31,			December 31,
	2010			2010
	St. Lawrence			Nytis
	Seaway			Exploration			Pro Forma
	Corporation			(USA) Inc.			Adjustments			Combined			Notes

ASSETS

Current assets:
Cash and cash equivalents	$	26,290		$	845,054		$	—		$	871,344
Accounts receivable	—			1,011,185			—			1,011,185
Prepaid expenses, deposits and other	—			84,941			—			84,941
Deferred offering costs	—			169,283			—			169,283
Derivative assets	—			170,840			—			170,840
Total current assets	26,290			2,281,303			—			2,307,593

Oil and gas properties, at cost, net	—			23,578,264			—			23,578,264
Other property and equipment, net	—			80,703			—			80,703
	—			23,658,967			—			23,658,967

Equity method investment	—			582,745			—			582,745
Other long-term assets	—			463,110			—			463,110

Total assets	$	26,290		$	26,986,125		$	—		$	27,012,415

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$	8,500		$	1,632,193		$	—		$	1,640,693

Non-current liabilities:
Due to related parties	—			3,073,036			—			3,073,036
Asset retirement obligation	—			351,954			—			351,954
Notes payable	—			3,116,383			—			3,116,383
Total non-current liabilities	—			6,541,373			—			6,541,373

Commitments and contingencies

Stockholders’ equity:
Preferred stock	—			—			—			—
Common stock	5,188			282			469,717			475,187			a
Additional paid-in capital	1,390,492			28,179,398			(2,541,427		)	27,028,463			a
Non-controlling interests	—			637,612			—			637,612
Treasury stock, at cost	—			(693,820		)	693,820			—			a
Accumulated deficit	(1,377,890		)	(9,310,913		)	1,377,890			(9,310,913		)	a
Total stockholders’ equity	17,790			18,812,559			—			18,830,349

Total liabilities and stockholders’ equity	$	26,290		$	26,986,125		$	—		$	27,012,415

See accompanying notes to pro forma condensed combined financial statements.

ST. LAWRENCE SEAWAY CORPORATION & NYTIS EXPLORATION (USA) INC.

Pro Forma Condensed Combined Statement of Operations

(unaudited)

	Historical
	Three Months			Nine Months			Twelve Months
	Ended			Ended			Ended
	March 31,			December 31,			December 31,
	2010			2010			2010
	St. Lawrence						Nytis
	Seaway						Exploration			Pro Forma
	Corporation						(USA) Inc.			Adjustments		Combined			Notes

Revenue:
Oil and gas	$	—		$	—		$	4,879,718		$	—	$	4,879,718
Commodity derivative gain	—			—			691,660			—		691,660
Other income	—			—			360,236			—		360,236
Total revenue	—			—			5,931,614			—		5,931,614

Expenses:
Lease operating expenses	—			—			1,053,387			—		1,053,387
Transportation costs	—			—			444,033			—		444,033
Production and property taxes	—			—			430,433			—		430,433
General and administrative	12,236			28,644			3,094,410			—		3,135,290
Depreciation, depletion and amortization	—			—			1,540,175			—		1,540,175
Accretion of asset retirement obligations	—			—			17,367			—		17,367
Other	—			—			—			—		—
Total expenses	12,236			28,644			6,579,805			—		6,620,685

Operating income (loss)	(12,236		)	(28,644		)	(648,191		)	—		(689,071		)

Other income and (expense):
Interest income	144			314			38,710			—		39,168
Interest expense	—			—			(352,138		)	—		(352,138		)
Equity investment income	—			—			22,745			—		22,745
Sale of medical investment	100,000			—			—			—		100,000
Gain on sale of oil and gas properties	—			—			10,103,932			—		10,103,932
Total other income and (expense)	100,144			314			9,813,249			—		9,913,707

Income (loss) before income taxes	87,908			(28,330		)	9,165,058			—		9,224,636

Provision for income taxes	—			250			5,404,000			—		5,404,250

Net income (loss)	87,908			(28,580		)	3,761,058			—		3,820,386

Net income attributable to non-controlling interests	—			—			(941,093		)	—		(941,093		)

Net income (loss) attributable to controlling interest	$	87,908		$	(28,580	)	$	2,819,965		$	—	$	2,879,293

Per share data:
Weighted average number of common shares outstanding:
Basic	518,736			518,736						47,000,003		47,518,739			b

Net income (loss) per common share
Basic	$	.17		$	(.06	)						$	.06

See accompany notes to pro forma condensed combined financial statements.

ST. LAWRENCE SEAWAY CORPORATION & NYTIS EXPLORATION (USA) INC.

Pro Forma Condensed Combined Statement of Operations

(unaudited)

	Historical
	Three Months			Nine Months			Twelve Months
	Ended			Ended			Ended
	March 31,			December 31,			December 31,
	2009			2009			2009
	St. Lawrence						Nytis
	Seaway						Exploration			Pro Forma
	Corporation						(USA) Inc.			Adjustments		Combined			Notes

Revenue:
Oil and gas	$	—		$	—		$	5,676,271		$	—	$	5,676,271
Commodity derivative gain	—			—			226,476			—		226,476
Other income	—			—			334,878			—		334,878
Total revenue	—			—			6,237,625			—		6,237,625

Expenses:
Lease operating expenses	—			—			1,134,936			—		1,134,936
Transportation costs	—			—			393,409			—		393,409
Production and property taxes	—			—			563,502			—		563,502
General and administrative	10,135			24,886			2,672,215			—		2,707,236
Depreciation, depletion and amortization	—			—			2,625,086			—		2,625,086
Accretion of asset retirement obligations	—			—			43,315			—		43,315
Impairment of oil and gas properties	—			—			16,076,515			—		16,076,515
Total expenses	10,135			24,886			23,508,978			—		23,543,999

Operating income (loss)	(10,135		)	(24,886		)	(17,271,353		)	—		(17,306,374		)

Other income and (expense):
Interest income	452			742			37,959			—		39,153
Interest expense	—			—			(1,167,247		)	—		(1,167,247		)
Other	—			—			—			—		—
Total other income and (expense)	452			742			(1,129,288		)	—		(1,128,094		)

Income (loss) before income taxes	(9,683		)	(24,144		)	(18,400,641		)	—		(18,434,468		)

Provision for income taxes (benefit)	—			—			(4,784,000		)	—		(4,784,000		)

Net income (loss)	(9,683		)	(24,144		)	(13,616,641		)	—		(13,650,468		)

Net income attributable to non-controlling interests	—			—			—			—		—

Net income (loss) attributable to controlling interest	$	(9,683	)	$	(24,144	)	$	(13,616,641	)	$	—	$	(13,650,468	)

Per share data:
Weighted average number of common shares outstanding:
Basic	518,736			518,736						47,000,003		47,518,739			b

Net income (loss) per common share
Basic	$	(.02	)	$	(.05	)						$	(.29	)

See accompany notes to pro forma condensed combined financial statements.

ST. LAWRENCE SEAWAY CORPORATION & NYTIS EXPLORATION (USA) INC.

Notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements

Note 1- Basis of Pro Forma Presentation

On February 14, 2011, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among St. Lawrence Seaway (“the Company”), St. Lawrence Merger Sub, Inc. (“Merger Co.”) and Nytis USA, Merger Co. merged with and into Nytis USA with Nytis USA remaining as the surviving subsidiary of the Company. Per the terms of the Merger Agreement, in exchange for all the outstanding common shares of Nytis USA, the Company issued 47,000,003 shares of currently authorized but unissued common stock of the Company which represented approximately 99% of the aggregate voting power of the Company, prior to the exercise of 250,000 currently outstanding warrants of the Company.

For accounting purposes, the business combination is considered a “reverse merger”, in which Nytis USA will be considered the accounting acquirer. The combination will be recorded as a recapitalization under which St. Lawrence Seaway issues shares in exchange for the net assets of Nytis USA. The assets of Nytis USA will be recorded at their respective book values and will not be adjusted to their estimated fair values. No goodwill or other intangible assets will be recorded in the transaction.

Note 2- Pro Forma Adjustments

The pro forma condensed combined financial statements have been prepared to reflect the reverse merger between St. Lawrence Seaway and Nytis USA. Pro forma adjustments included in the pro forma condensed combined financial statements are as follows:

a. To record the exchange of St. Lawrence Seaway shares with a par value of $.01 per share for Nytis USA shares and give effect to reverse recapitalization.

b. To adjust the calculation of weighted average shares outstanding as if all the shares issued in connection with the merger by St. Lawrence Seaway had been issued as of January 1, 2009.

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