• |
for Kubient, the unaudited condensed consolidated balance sheet as of September 30, 2021; and
|
• |
for MediaCrossing, the unaudited condensed balance sheet as of September 30, 2021.
|
• |
for Kubient, the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2021; and
|
• |
for MediaCrossing, the unaudited condensed statement
of operations for the nine months ended September 30, 2021.
|
• |
for Kubient, the audited consolidated statement
of operations for the year ended December 31, 2020; and
|
• |
for MediaCrossing, the audited statement of
operations for the year ended December 31, 2020.
|
• |
Pre-acquisition adjustments to the historical MediaCrossing unaudited condensed balance sheet as of September 30, 2021 to remove the effect of the assets and liabilities not
acquired by Kubient with respect to the Transaction;
|
• |
Reclassification adjustments to the historical MediaCrossing statements of operations for the nine months ended September 30, 2021 and for the year ended December 31, 2020 in order
to conform to the historical financial statement presentation of the Company; and
|
• |
Transaction accounting adjustments to reflect the application of required accounting principles for the Transaction.
|
Kubient
|
MediaCrossing
|
Pre-
Acquisition Adjustments
|
Net Assets
Acquired of MediaCrossing
|
Transaction
Accounting
Adjustments
|
Pro Forma
Combined
|
||||||||||||||||||||||
Note A
|
Note B
|
Note C
|
Note D
|
Note E
|
|||||||||||||||||||||||
Assets
|
|||||||||||||||||||||||||||
Current Assets:
|
|||||||||||||||||||||||||||
Cash
|
$
|
28,746,456
|
$
|
2,127,913
|
$
|
(1,606,438
|
)
|
(a)
|
$
|
521,475
|
(a)
|
$
|
(500,000
|
)
|
(a)
|
$
|
28,767,931
|
||||||||||
Accounts receivable, net
|
372,971
|
1,346,021
|
(1,346,021
|
)
|
(a)
|
-
|
-
|
372,971
|
|||||||||||||||||||
Media rebates receivable
|
-
|
147,935
|
(147,935
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Prepaid expenses and other current assets
|
625,643
|
727,456
|
(620,513
|
)
|
(a)
|
106,943
|
(a)
|
-
|
732,586
|
||||||||||||||||||
|
|||||||||||||||||||||||||||
Total Current Assets
|
29,745,070
|
4,349,325
|
(3,720,907
|
)
|
628,418
|
(500,000
|
)
|
29,873,488
|
|||||||||||||||||||
Property and equipment, net
|
34,035
|
34,691
|
(34,691
|
)
|
(a)
|
-
|
-
|
34,035
|
|||||||||||||||||||
Intangible assets, net
|
2,440,316
|
-
|
-
|
-
|
650,000
|
(a)
|
3,090,316
|
||||||||||||||||||||
Goodwill
|
-
|
-
|
-
|
-
|
463,000
|
(a)
|
463,000
|
||||||||||||||||||||
Operating lease right-of-use assets
|
-
|
1,183,815
|
(1,183,815
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Deferred offering costs
|
37,510
|
-
|
-
|
-
|
-
|
37,510
|
|||||||||||||||||||||
Deferred tax assets, net
|
-
|
800,022
|
(800,022
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Restricted cash
|
-
|
262,500
|
(262,500
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Security deposits
|
-
|
62,374
|
(62,374
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Other asset
|
-
|
4,955
|
(4,955
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Total Assets
|
$
|
32,256,931
|
$
|
6,697,682
|
$
|
(6,069,264
|
)
|
$
|
628,418
|
$
|
613,000
|
$
|
33,498,349
|
||||||||||||||
Liabilities and Stockholders’ Equity
|
|||||||||||||||||||||||||||
Current Liabilities:
|
|||||||||||||||||||||||||||
Accounts payable - suppliers
|
$
|
451,709
|
$
|
-
|
$
|
-
|
(a)
|
$
|
-
|
$
|
-
|
$
|
451,709
|
||||||||||||||
Accounts payable - trade
|
817,389
|
-
|
-
|
-
|
185,000
|
(b)
|
1,002,389
|
||||||||||||||||||||
Accounts payable
|
-
|
1,201,044
|
(1,201,044
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Accrued expenses and other current liabilities
|
921,990
|
891,173
|
(891,173
|
)
|
(a)
|
-
|
-
|
921,990
|
|||||||||||||||||||
Notes payable
|
260,322
|
34,893
|
(34,893
|
)
|
(a)
|
-
|
-
|
260,322
|
|||||||||||||||||||
Advance billings
|
-
|
1,046,066
|
(417,648
|
)
|
(a)
|
628,418
|
(a)
|
-
|
628,418
|
||||||||||||||||||
Media rebate funding agreement liability
|
-
|
94,917
|
(94,917
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Current portion of operating lease liabilities
|
-
|
198,043
|
(198,043
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Total Current Liabilities
|
2,451,410
|
3,466,136
|
(2,837,718
|
)
|
628,418
|
185,000
|
3,264,828
|
||||||||||||||||||||
Contingent consideration
|
-
|
-
|
-
|
-
|
613,000
|
(a)
|
613,000
|
||||||||||||||||||||
Notes payable, non-current portion
|
77,422
|
438,902
|
(438,902
|
)
|
(a)
|
-
|
-
|
77,422
|
|||||||||||||||||||
Operating lease liabilities, non-current portion
|
-
|
1,111,199
|
(1,111,199
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Total Liabilities
|
2,528,832
|
5,016,237
|
(4,387,819
|
)
|
628,418
|
798,000
|
3,955,250
|
||||||||||||||||||||
Commitments and Contingencies
|
|||||||||||||||||||||||||||
Stockholders’ Equity:
|
|||||||||||||||||||||||||||
Preferred stock:
|
|||||||||||||||||||||||||||
Series A Convertible Preferred Stock
|
-
|
5
|
(5
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Series A-1 Convertible Preferred Stock
|
-
|
5
|
(5
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Series A-2 Convertible Preferred Stock
|
-
|
849
|
(849
|
)
|
(a)
|
-
|
-
|
-
|
|||||||||||||||||||
Common stock
|
143
|
9
|
(9
|
)
|
(a)
|
-
|
-
|
143
|
|||||||||||||||||||
Additional paid-in capital
|
51,827,263
|
10,260,570
|
(10,260,570
|
)
|
(a)
|
-
|
-
|
51,827,263
|
|||||||||||||||||||
Retained earnings/accumulated deficit
|
(22,099,307
|
)
|
(8,579,993
|
)
|
8,579,993
|
(a)
|
-
|
(185,000
|
)
|
(b)
|
(22,284,307
|
)
|
|||||||||||||||
Total Stockholders’ Equity
|
29,728,099
|
1,681,445
|
(1,681,445
|
)
|
-
|
(185,000
|
)
|
29,543,099
|
|||||||||||||||||||
|
|||||||||||||||||||||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
32,256,931
|
$
|
6,697,682
|
$
|
(6,069,264
|
)
|
$
|
628,418
|
$
|
613,000
|
$
|
33,498,349
|
Kubient
|
MediaCrossing
|
Reclassification Adjustments
|
MediaCrossing As Reclassified
|
Transaction
Accounting
Adjustments
|
Pro Forma
Combined
|
||||||||||||||||||||
Note A
|
Note B
|
Note C
|
Note D
|
||||||||||||||||||||||
Net Revenues
|
$
|
1,882,311
|
$
|
2,210,176
|
$
|
-
|
$
|
2,210,176
|
$
|
-
|
$
|
4,092,487
|
|||||||||||||
Operating Expenses:
|
|||||||||||||||||||||||||
Cost of services
|
-
|
903,026
|
-
|
903,026
|
-
|
903,026
|
|||||||||||||||||||
Sales and marketing
|
1,977,150
|
-
|
1,355,325
|
1,355,325
|
87,000
|
(a)
|
3,419,475
|
||||||||||||||||||
Technology
|
1,916,020
|
-
|
-
|
-
|
-
|
1,916,020
|
|||||||||||||||||||
General and administrative
|
3,878,765
|
639,313
|
953,394
|
1,592,707
|
17,500
|
(a)
|
5,488,972
|
||||||||||||||||||
Employee compensation and benefits
|
-
|
1,809,360
|
(1,809,360
|
)
|
-
|
-
|
-
|
||||||||||||||||||
Business development and marketing
|
-
|
499,359
|
(499,359
|
)
|
-
|
-
|
-
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Total Operating Expenses
|
7,771,935
|
3,851,058
|
-
|
3,851,058
|
104,500
|
11,727,493
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
Loss From Operations
|
(5,889,624
|
)
|
(1,640,882
|
)
|
-
|
(1,640,882
|
)
|
(104,500
|
)
|
(7,635,006
|
)
|
||||||||||||||
Other Income (Expense):
|
|||||||||||||||||||||||||
Interest income
|
84,469
|
247
|
-
|
247
|
-
|
84,716
|
|||||||||||||||||||
Interest expense
|
(5,308
|
)
|
-
|
-
|
-
|
-
|
(5,308
|
)
|
|||||||||||||||||
Other income
|
233
|
-
|
-
|
-
|
-
|
233
|
|||||||||||||||||||
Gain on extinguishment of PPP loan
|
-
|
481,325
|
-
|
481,325
|
-
|
481,325
|
|||||||||||||||||||
Total Other Income (Expense)
|
79,394
|
481,572
|
-
|
481,572
|
-
|
560,966
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
Loss Before Income Taxes
|
(5,810,230
|
)
|
(1,159,310
|
)
|
-
|
(1,159,310
|
)
|
(104,500
|
)
|
(7,074,040
|
)
|
||||||||||||||
Income tax provision
|
-
|
(859,021
|
)
|
-
|
(859,021
|
)
|
-
|
(859,021
|
)
|
||||||||||||||||
|
|||||||||||||||||||||||||
Net Loss
|
$
|
(5,810,230
|
)
|
$
|
(2,018,331
|
)
|
$
|
-
|
$
|
(2,018,331
|
)
|
$
|
(104,500
|
)
|
$
|
(7,933,061
|
)
|
||||||||
|
|||||||||||||||||||||||||
Net Loss Per Share - Basic and Diluted
|
$
|
(0.43
|
)
|
$
|
(0.58
|
)
|
|||||||||||||||||||
|
|||||||||||||||||||||||||
Weighted Average Common Shares Outstanding - Basic and Diluted
|
13,624,435
|
13,624,435
|
Kubient
|
MediaCrossing
|
Reclassification Adjustments
|
MediaCrossing As Reclassified
|
Transaction Accounting Adjustments
|
Pro Forma Combined
|
|||||||||||||||||||
Note A
|
Note B
|
Note C
|
Note D
|
|||||||||||||||||||||
Net Revenues
|
$
|
2,900,029
|
$
|
4,627,622
|
$
|
-
|
$
|
4,627,622
|
$
|
-
|
$
|
7,527,651
|
||||||||||||
Operating Expenses:
|
||||||||||||||||||||||||
Cost of services
|
-
|
1,380,458
|
-
|
1,380,458
|
-
|
1,380,458
|
||||||||||||||||||
Sales and marketing
|
503,721
|
-
|
1,951,981
|
1,951,981
|
116,000(
|
a)
|
2,571,702
|
|||||||||||||||||
Technology
|
2,088,538
|
-
|
-
|
-
|
-
|
2,088,538
|
||||||||||||||||||
General and administrative
|
4,774,508
|
1,107,877
|
1,297,401
|
2,405,278
|
208,333(
|
a)(b)
|
7,388,119
|
|||||||||||||||||
Employee compensation and benefits
|
-
|
2,332,304
|
(2,332,304
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Business development and marketing
|
-
|
917,078
|
(917,078
|
)
|
-
|
-
|
-
|
|||||||||||||||||
Total Operating Expenses
|
7,366,767
|
5,737,717
|
-
|
5,737,717
|
324,333
|
13,428,817
|
||||||||||||||||||
Loss From Operations
|
(4,466,738
|
)
|
(1,110,095
|
)
|
-
|
(1,110,095
|
)
|
(324,333
|
)
|
(5,901,166
|
)
|
|||||||||||||
Other (Expense) Income:
|
||||||||||||||||||||||||
Interest expense
|
(1,123,086
|
)
|
-
|
-
|
-
|
-
|
(1,123,086
|
)
|
||||||||||||||||
Interest expense - related parties
|
(403,372
|
)
|
-
|
-
|
-
|
-
|
(403,372
|
)
|
||||||||||||||||
Interest income
|
12,589
|
10,864
|
-
|
10,864
|
-
|
23,453
|
||||||||||||||||||
Amortization of beneficial conversion feature
|
(1,984,322
|
)
|
-
|
-
|
-
|
-
|
(1,984,322
|
)
|
||||||||||||||||
Gain on settlement of notes and other payables
|
148,600
|
-
|
-
|
-
|
-
|
148,600
|
||||||||||||||||||
Loss on settlement of other payables
|
(23,601
|
)
|
-
|
-
|
-
|
-
|
(23,601
|
)
|
||||||||||||||||
Gain on forgiveness of accounts payable - supplier
|
236,248
|
-
|
-
|
-
|
-
|
236,248
|
||||||||||||||||||
Loss on extinguishment of convertible note payable
|
(297,272
|
)
|
-
|
-
|
-
|
-
|
(297,272
|
)
|
||||||||||||||||
Other income
|
15,294
|
-
|
-
|
-
|
-
|
15,294
|
||||||||||||||||||
Total Other (Expense) Income
|
(3,418,922
|
)
|
10,864
|
-
|
10,864
|
-
|
(3,408,058
|
)
|
||||||||||||||||
Loss Before Income Taxes
|
(7,885,660
|
)
|
(1,099,231
|
)
|
-
|
(1,099,231
|
)
|
(324,333
|
)
|
(9,309,224
|
)
|
|||||||||||||
Income tax benefit
|
-
|
276,285
|
-
|
276,285
|
-
|
276,285
|
||||||||||||||||||
Net Loss
|
(7,885,660
|
)
|
(822,946
|
)
|
-
|
(822,946
|
)
|
(324,333
|
)
|
(9,032,939
|
)
|
|||||||||||||
Deemed dividend related to warrant down round adjustment
|
(1,682,000
|
)
|
-
|
-
|
-
|
-
|
(1,682,000
|
)
|
||||||||||||||||
Net Loss Attributable to Common Shareholders
|
$
|
(9,567,660
|
)
|
$
|
(822,946
|
)
|
$
|
-
|
$
|
(822,946
|
)
|
$
|
(324,333
|
)
|
$
|
(10,714,939
|
)
|
|||||||
Net Loss Per Share - Basic and Diluted
|
$
|
(1.85
|
)
|
$
|
(2.07
|
)
|
||||||||||||||||||
Weighted Average Common Shares Outstanding - Basic and Diluted
|
5,185,204
|
5,185,204
|
Note A |
Derived from the unaudited condensed consolidated balance sheet of Kubient as of September 30, 2021.
|
Note B |
Derived from the unaudited condensed balance sheet of MediaCrossing as of September 30, 2021 included elsewhere in this Current Report.
|
Purchase Consideration:
|
||||
Cash
|
$
|
500,000
|
||
Contingent consideration
|
613,000
|
|||
Total Purchase Consideration
|
1,113,000
|
|||
Less:
|
||||
Customer contracts and related customer relationships (1)
|
580,000
|
|||
Restrictive covenant agreements (1)
|
70,000
|
|||
Cash
|
521,475
|
|||
Prepaid expenses and other current assets
|
106,943
|
|||
Deferred revenue
|
(628,418
|
)
|
||
|
||||
Fair Value of Identified Net Assets
|
650,000
|
|||
Remaining Unidentified Goodwill Value
|
$
|
463,000
|
(1) |
As part of the preliminary valuation analysis, the Company identified (i) customer contracts and related customer relationships and (ii) restrictive covenant agreements as
intangible assets. The fair value of the identifiable intangible assets is determined using the “income approach”. The customer contracts and related customer relationships have an estimated useful life of five (5) years and the restrictive
covenant agreements have an estimated useful life of three (3) years.
|
Intangible Asset
|
Estimated
Fair Value
|
Estimated
Useful Life
in Years
|
For The
Nine Months Ended
September 30, 2021
|
For The
Year Ended
December 31, 2020
|
||||||||||||
Customer Contracts and Related Customer Relationships
|
$
|
580,000
|
5
|
$
|
87,000
|
$
|
116,000
|
|||||||||
Restrictive Covenant Agreements
|
70,000
|
3
|
17,500
|
23,333
|
||||||||||||
Total
|
$
|
650,000
|
$
|
104,500
|
$
|
139,333
|
(b) |
To recognize additional transaction costs of approximately $185,000 incurred subsequent to September 30, 2021. The transaction costs consisted primarily of legal, accounting and
other professional fees directly related to the Transaction.
|
Note A
|
Derived from the unaudited condensed consolidated statement of operations of Kubient for the nine months ended September 30, 2021.
|
|
Note B
|
Derived from the unaudited condensed statement of operations of MediaCrossing for the nine months ended September 30, 2021 included elsewhere in this Current
Report.
|
Note C
|
Certain reclassifications have been made to the historical presentation of MediaCrossing to
conform to the financial statement presentation of the Company, as follows:
|
For the Nine Months Ended September 30, 2021
|
||||||||||||
MediaCrossing
Historical
|
Reclassification
Adjustments
|
MediaCrossing
As Reclassified
|
||||||||||
Operating Expenses:
|
||||||||||||
Cost of services
|
$
|
903,026
|
$
|
-
|
$
|
903,026
|
||||||
Sales and marketing
|
-
|
1,355,325
|
1,355,325
|
|||||||||
General and administrative
|
639,313
|
953,394
|
1,592,707
|
|||||||||
Employee compensation and benefits
|
1,809,360
|
(1,809,360
|
)
|
-
|
||||||||
Business development and marketing
|
499,359
|
(499,359
|
)
|
-
|
||||||||
Total Operating Expenses
|
$
|
3,851,058
|
$
|
-
|
$
|
3,851,058
|
Note D
|
(a) To record the amortization of fair value of the acquired intangible assets of MediaCrossing.
|
Note A
|
Derived from the audited statement of operations of Kubient for the year ended December 31, 2020.
|
|
Note B
|
Derived from the audited statement of operations of MediaCrossing for the year ended December 31, 2020 included elsewhere in this current report.
|
Note C
|
Certain reclassifications have been made to the historical presentation of MediaCrossing to
conform to the financial statement presentation of the Company, as follows:
|
For the Year Ended December 31, 2020
|
||||||||||||
MediaCrossing Historical
|
Reclassification Adjustments
|
MediaCrossing As Reclassified
|
||||||||||
Operating Expenses:
|
||||||||||||
Cost of services
|
$
|
1,380,458
|
$
|
-
|
$
|
1,380,458
|
||||||
Sales and marketing
|
-
|
1,951,981
|
1,951,981
|
|||||||||
General and administrative
|
1,107,877
|
1,297,401
|
2,405,278
|
|||||||||
Employee compensation and benefits
|
2,332,304
|
(2,332,304
|
)
|
-
|
||||||||
Business development and marketing
|
917,078
|
(917,078
|
)
|
-
|
||||||||
Total Operating Expenses
|
$
|
5,737,717
|
$
|
-
|
$
|
5,737,717
|
Note D
|
(a) To record the amortization of fair value of the acquired intangible assets of MediaCrossing.
(b) To recognize additional transaction costs of approximately $185,000 incurred subsequent to September 30, 2021. The transaction costs consisted primarily of
legal, accounting and other professional fees directly related to the Transaction.
|