Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - Breitling Energy Corp | d675902d8ka.htm |
| EX-99.4 - EX-99.4 - Breitling Energy Corp | d675902dex994.htm |
| EX-99.2 - EX-99.2 - Breitling Energy Corp | d675902dex992.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements of Bering are based on the historical financial statements of Bering which were derived from its Quarterly and Annual Report on Form 10-Q and Form 10-K, for the nine months ended September 30, 2013 and for the year ended March 31, 2012, respectively. Breitling historical financial information was derived from its unaudited financial statements as of and for the nine months ended September 30, 2013 and/or from its audited financial statements for the year ended December 31, 2012, included elsewhere in this Form 8-K.
The unaudited pro forma condensed consolidated financial statements give pro forma effect to the following transactions: The unaudited pro forma condensed consolidated financial statements give pro forma effect to the following transactions:
| • | Breitling (accounting acquirer) acquisition of Bering (through Bering’s sale of 461,863,084 shares of Common Stock in exchange for the assets of Breitling (the “Acquisition”)); and |
| • | The following transactions effected by Bering in connection with the closing of the Acquisition whereby Bering: |
| • | cancelled 10,016,200 shares of Common Stock previously issued to J. Leonard Ivins; |
| • | cancelled 5,500,000 shares of Common Stock previously issued to Steven M. Plumb; |
| • | cancelled 100,000 shares of Common Stock previously issued to William Park Grant; |
| • | converted the August 16, 2012 convertible promissory note of the Company issued to Jinsun, LLC in the original principal amount of $247,500 into 3,535,714 shares of Common Stock; |
| • | converted the December 31, 2012 convertible promissory note of the Company issued to Jinsun, LLC in the original principal amount of $20,000 into 285,714 shares of Common Stock; |
| • | converted the January 24, 2013 convertible promissory note of the Company issued to Jinsun, LLC in the original principal amount of $2,000 into 28,571 shares of Common Stock; |
| • | converted the April 8, 2013 convertible promissory note of the Company issued to Pass the Biscuits, LLC in the original principal amount of $75,000 into 1,604,148 shares of Common Stock; |
| • | converted the September 30, 2013 convertible promissory note of the Company issued to Cinco NRG, LLC in the original principal amount of $25,000 into 357,142 shares of Common Stock and issued those shares to TPH Holdings, LLC, Cinco NRG, LLC’s assignee; |
| • | converted the June 6, 2013 convertible promissory note of the Company issued to Jinsun, LLC in the original principal amount of $18,000 into 257,142 shares of Common Stock; and |
| • | issued to Vertical Holdings, LLC on December 9, 2013, 8,096,144 shares of Common Stock in exchange for the assumption by that entity of (a) between $75,000 and $150,000 of accounts payable of Bering Operations, Inc., a wholly owned subsidiary of the Company, and (b) all plugging and abandonment obligations for any and all wells for which Bering Operations was acting as operator as of such date. |
| • | The transfer of from Breitling to Crude Energy, LLC of certain assets of Breitling that were not acquired by Bering. |
The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2012 gives effect to all transactions as if they had occurred on January 1, 2012. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2013 gives effect to all transactions as if they had occurred on January 1, 2013. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2012 gives effect to the transactions referred to above as if they had occurred on that date.
The following pro forma information has been prepared in accordance with the rules and regulations of the SEC and, accordingly, includes the effects of purchase accounting resulting from the proposed business combination. The accounting policies of Breitling, as accounting acquirer, are utilized in preparing these pro forma financial statements. This includes the use of the full cost method of accounting for oil and gas exploration and development costs and recognizing oil and gas revenues under the sales method of accounting. Otherwise, the pro forma information does not give effect to cost savings, synergies, or other adjustments that may result from the transactions referred to above.
A preliminary allocation of the purchase prices have been made to major categories of assets and liabilities in the accompanying unaudited pro forma condensed consolidated financial statements based on currently available information. The actual final purchase price allocation and the resulting effect on income from operations may differ from the pro forma amounts included herein. These pro forma adjustments represent Breitling’s preliminary determination of purchase accounting adjustments and are based on available information and certain assumptions that Breitling believes to be reasonable. More information about the assets, liabilities and oil and gas reserves, as of the closing date, will become available following the closing. The final determination of the values to be assigned to these assets and any related liabilities will be finalized when Breitling has additional market information about these assets. In addition, the properties of Bering need to be further evaluated with respect to their existing reserves to determine their fair values. Breitling also has not made a final determination of all the liabilities that may be attributable to the proposed transaction, such as office closure, deferred tax liabilities and transaction costs, as well as the fair values of all existing liabilities, including any contingent liabilities, or those that may arise due to the transaction. As additional information becomes available, Breitling’s purchase price allocation will be adjusted and may result in us recording goodwill for the excess of cost over the fair value of the acquired assets. Consequently, the amounts reflected in the pro forma financial information are subject to change.
BREITLING ENERGY COMPANIES AND BERING EXPLORATION, INC.
PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 2012
| PRO FORMA | PRO FORMA | |||||||||||||||
| BREITLING | BERING (1) | ADJUSTMENT | TOTAL | |||||||||||||
| ASSETS |
||||||||||||||||
| Current assets |
||||||||||||||||
| Cash |
$ | 4,668,839 | $ | 1,113 | $ | $ | 4,669,952 | |||||||||
| Trade receivables, net |
16,416 | 16,416 | ||||||||||||||
| Related party receivable |
1,850 | 1,850 | ||||||||||||||
| Other current assets |
28,850 | 28,850 | ||||||||||||||
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| Total current assets |
4,670,689 | 46,379 | — | 4,717,068 | ||||||||||||
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| Long-term assets |
||||||||||||||||
| Equity investment |
12,205 | 12,205 | ||||||||||||||
| Oil and natural gas properties, net |
749,257 | 749,257 | ||||||||||||||
| Other property and equipment, net of depreciation |
128,258 | 128,258 | ||||||||||||||
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| Total other assets |
140,463 | 749,257 | — | 889,720 | ||||||||||||
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| Total assets |
$ | 4,811,152 | $ | 795,636 | $ | — | $ | 5,606,788 | ||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities |
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| Accounts payable and accrued liabilities |
$ | 2,617,761 | $ | 474,236 | $ | (1,451,760 | ){b} | $ | 1,640,237 | |||||||
| Accounts payable, related parties |
52,808 | (52,808 | ){b} | — | ||||||||||||
| Joint interest revenues payable |
51,559 | 51,559 | ||||||||||||||
| Deferred revenue from turnkey contracts |
6,592,676 | 6,592,676 | ||||||||||||||
| Derivative liability |
1,017,865 | (1,017,865 | ){a} | 0 | ||||||||||||
| Current notes and convertible notes payable |
126,950 | (126,950 | ){a} | — | ||||||||||||
| Current asset retirement obligations |
22,905 | 22,905 | ||||||||||||||
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| Total current liabilities |
9,284,901 | 1,671,859 | (2,649,383 | ) | 8,307,377 | |||||||||||
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| Long-term liabilities |
||||||||||||||||
| Asset retirement obligations |
20,842 | 8,507 | 29,349 | |||||||||||||
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| Commitments and contingencies |
166,000 | 166,000 | ||||||||||||||
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| Stockholders’ equity |
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| Common stock |
1,800 | 19,455 | 21,255 | |||||||||||||
| Additional paid-in capital |
11,859,619 | 2,649,383 | 14,509,002 | |||||||||||||
| Net deficit |
(4,662,391 | ) | (12,763,804 | ) | (17,426,195 | ) | ||||||||||
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| Total stockholders’ equity |
(4,660,591 | ) | (884,730 | ) | 2,649,383 | (2,895,938 | ) | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 4,811,152 | $ | 795,636 | $ | — | $ | 5,606,788 | ||||||||
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| (1) | Balance as of March 31, 2013, Bering Exploration, Inc.’s fiscal year-end. |
| {a} | Certain convertible notes of Bering were converted into common stock in connection with the transactions. |
| {b} | Certain liabilities of Breitling were not assumed by Bering pursuant to the terms of the purchase and sale agreement. |
See accompanying notes to consolidated financial statements.
2
BREITLING ENERGY COMPANIES AND BERING EXPLORATION, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 2012
| PRO FORMA | PRO FORMA | |||||||||||||||
| BREITLING | BERING (1) | ADJUSTMENT | TOTAL | |||||||||||||
| Revenues |
||||||||||||||||
| Turnkey drilling |
$ | 13,085,714 | $ | $ | $ | 13,085,714 | ||||||||||
| Gain on sale of oil & natural gas royalties |
192,093 | 192,093 | ||||||||||||||
| Oil, natural gas, and related product sales |
130,314 | 88,842 | 219,156 | |||||||||||||
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| Total revenues |
13,408,121 | 88,842 | — | 13,496,963 | ||||||||||||
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| Expenses |
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| Turnkey drilling and completion |
6,009,535 | 6,009,535 | ||||||||||||||
| General and administrative |
5,559,976 | 3,624,138 | (3,624,138 | ){b} | 5,559,976 | |||||||||||
| Marketing |
5,135,122 | (1,165,220 | ){c} | 3,969,902 | ||||||||||||
| Professional fees |
2,083,811 | 298,018 | 2,381,829 | |||||||||||||
| Lease operating |
117,459 | 226,242 | 343,701 | |||||||||||||
| Asset impairment |
384,418 | 384,418 | ||||||||||||||
| Depreciation, depletion, and amortization |
14,817 | 62,858 | (14,817 | ){a} | 62,858 | |||||||||||
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| Total expenses |
18,920,720 | 4,595,674 | (4,804,175 | ) | 18,712,219 | |||||||||||
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| Operating loss |
(5,512,599 | ) | (4,506,832 | ) | 4,804,175 | (5,215,256 | ) | |||||||||
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| Other expense |
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| Loss on derivative |
309,866 | (309,866 | ){e} | — | ||||||||||||
| Interest expense |
70,460 | 1,082,760 | (1,082,760 | ){d} | 70,460 | |||||||||||
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| Loss before income taxes |
(5,583,059 | ) | (5,899,458 | ) | 6,196,801 | (5,285,716 | ) | |||||||||
| Income tax expense |
||||||||||||||||
| Current taxes |
101,838 | 101,838 | ||||||||||||||
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| Net loss |
$ | (5,684,897 | ) | $ | (5,899,458 | ) | $ | 6,196,801 | $ | (5,387,554 | ) | |||||
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| (1) | Balances for the year-ended March 31, 2013, Bering Exploration, Inc.’s fiscal year-end. |
| {a} | Pursuant to the purchase and sale agreement, all tangible assets of Breitling giving rise to depreciation, depletion and amortization, were not acquired by Bering in the transaction. |
| {b} | All of Bering’s officers, directors and employees have been replaced and this G&A expense is duplicative of that provided by personnel of Breitling. |
| {c} | Represents expenses related to turnkey contracts that are applicable to the part of Breitling’s business that was not acquired by Bering. |
| {d} | Certain convertible notes of Bering were converted into common stock in connection with the transactions. |
| {e} | Derivative is related to convertible debt, which was converted to equity. |
See accompanying notes to consolidated financial statements.
3
BREITLING ENERGY COMPANIES AND BERING EXPLORATION, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013
| PRO FORMA | PRO FORMA | |||||||||||||||
| BREITLING | BERING (1) | ADJUSTMENT | TOTAL | |||||||||||||
| Revenues |
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| Turnkey drilling |
$ | 9,645,784 | $ | $ | $ | 9,645,784 | ||||||||||
| Gain on sale of oil & natural gas royalties |
14,041,732 | 14,041,732 | ||||||||||||||
| Oil, natural gas, and related product sales |
432,820 | 88,842 | (88,842 | ){a} | 432,820 | |||||||||||
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| Total revenues |
24,120,336 | 88,842 | (88,842 | ) | 24,120,336 | |||||||||||
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| Expenses |
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| Turnkey drilling and completion |
3,839,465 | {a} | 3,839,465 | |||||||||||||
| General and administrative |
12,510,468 | 3,853,327 | (3,853,327 | ){b} | 12,510,468 | |||||||||||
| Marketing |
2,114,700 | {c} | 2,114,700 | |||||||||||||
| Professional fees |
4,225,928 | 204,127 | (204,127 | ){b} | 4,225,928 | |||||||||||
| Lease operating |
456,084 | 226,242 | (226,242 | ){a} | 456,084 | |||||||||||
| Asset impairment |
384,418 | (384,418 | ){b} | — | ||||||||||||
| Depreciation, depletion, and amortization |
11,113 | 62,858 | (62,858 | ){b} | 11,113 | |||||||||||
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| Total expenses |
23,157,758 | 4,730,972 | (4,730,972 | ) | 23,157,758 | |||||||||||
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| Operating loss |
962,578 | (4,642,130 | ) | 4,642,130 | 962,578 | |||||||||||
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| Other expense |
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| Loss on derivative |
309,866 | (309,866 | ){c} | — | ||||||||||||
| Loss on extinguishment of debt |
— | |||||||||||||||
| Interest expense |
2,294 | 1,082,760 | (1,082,760 | ){c} | 2,294 | |||||||||||
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| Loss before income taxes |
960,284 | (6,034,756 | ) | 6,034,756 | 960,284 | |||||||||||
| Income tax expense |
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| Current taxes |
17,493 | 17,493 | ||||||||||||||
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| Net loss |
$ | 942,791 | $ | (6,034,756 | ) | $ | 6,034,756 | $ | 942,791 | |||||||
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| (1) | Balances for the year-ended March 31, 2013, Bering Exploration, Inc.’s fiscal year-end. |
| {a} | Certain assets were transferred out of Bering immediately prior to the consummation of the transactions. |
| {b} | All of Bering’s officers, directors and employees have been replaced and this G&A expense is duplicative of that provided by personnel of Breitling. |
| {c} | Certain convertible notes of Bering were converted into common stock in connection with the transactions. |
4