true
Update Pro Forma Information
0001795851
0001795851
2026-09-21
2026-09-21
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K/A
Amendment
No.1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): September
21, 2026
Stewards, Inc.
(Exact name of registrant as specified in its charter)
| Nevada |
001-43473 |
88-0436017 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
4300 N. University Drive Suite D-105
Lauderhill, Florida |
33351 |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: 1.516.419-5300
|
Not
Applicable
(Former name or former address, if changed since last
report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] |
Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425) |
| |
|
| [ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| [ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| [ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title
of each class |
Trading
Symbol(s) |
Name
of each exchange on which registered |
| Common
Stock, par value $0.0001 per share |
SWRD |
The
Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. [ ]
EXPLANATORY NOTE
On September 29, 2026, Stewards, Inc. (the "Company")
filed a Current Report on Form 8-K (the "Original Report") reporting the completion of the acquisition of Envy Pompano Beach
on September 23, 2026. This Amendment No. 1 on Form 8-K/A (this "Amendment") amends Item 1.01 and Item 9.01(b) of the Original
Report and replaces Exhibit 99.3 with updated unaudited pro forma condensed combined financial information.
The restated escrow paragraph below supersedes
the corresponding paragraph in Item 1.01 of the Original Report. Item 2.01 incorporates that disclosure by reference. No other disclosure
in the Original Report is amended.
Following further analysis of the mandatory
redemption provisions applicable to the 7,000,000 shares placed in escrow at closing, the Company revised its preliminary accounting presentation.
The updated pro forma information treats those shares as mandatorily redeemable financial instruments under ASC 480. The shares were legally
issued at closing and remain issued and outstanding until cancelled. They are not classified in stockholders’ equity and are excluded
from weighted-average shares outstanding. The required-redemption obligation is presented as a current liability under ASC 480 at a preliminary
estimated acquisition-date fair value of $20.043 million. That estimate represents the present value of the seven contractual $3.0 million
payments, totaling $21.0 million, discounted at a preliminary 18.0% annual effective rate. That rate and the resulting measurement remain
subject to completion of the valuation specialist’s analysis and auditor review. The remaining 7,263,025 rollover shares delivered
directly to the sellers are recognized in equity at the $2.42 acquisition-date closing price, or approximately $17.577 million. The resulting
preliminary accounting consideration remains approximately $84.830 million. The preliminary recorded real estate and intangible basis
is approximately $86.682 million, including approximately $0.374 million of capitalized direct acquisition costs, approximately $1.471
million of existing-lender charges borne by the Purchaser and approximately $0.007 million of net working-capital re-cut. Because the
pro forma statements of operations give effect to the acquisition as if it occurred on January 1, 2025, the full $0.957 million discount
accretion is included in FY2025 interest expense. Under the actual closing schedule, accretion is expected from October 5, 2026 through
April 5, 2027. This accounting revision does not change the $90.0 million contractual purchase price, the legal issuance of 14,263,025
shares or the Company’s cash obligations under the transaction agreements. The updated Exhibit 99.3 also reflects the removal of
duplicate H1 2026 in-place lease amortization, re-footed operating subtotals, revised working-capital liabilities and the resulting balance-sheet
changes. The updated pro forma presents preliminary net loss of approximately $29.429 million, or $0.21 per share, for FY2025 and approximately
$14.933 million, or $0.08 per share, for the six months ended June 30, 2026. The updated balance sheet presents a cash adjustment of approximately
$(0.923) million, fixed assets of approximately $85.235 million, intangible assets of approximately $1.447 million, a total-liability
adjustment of approximately $70.429 million and combined total liabilities of approximately $206.479 million.
Except as specifically amended by this Amendment,
the Original Report remains unchanged. This Amendment should be read together with the Original Report. Capitalized terms used but not
defined in this Amendment have the meanings assigned to them in the Original Report.
Item 1.01 Entry into a Material Definitive
Agreement
The paragraph under “Purchase Consideration
and Escrowed Shares” in Item 1.01 of the Original Report describing the escrow and required redemption is amended and restated in
full as follows:
In connection with the closing, the Company,
Envy Development PB, LLC, The Myelin Group, LLC and ClearTrust, LLC entered into an Escrow Agreement effective as of September 23, 2026.
Under the Escrow Agreement, 7,000,000 of the issued shares, having an agreed contractual value of $21.0 million, were deposited with ClearTrust,
LLC as escrow agent. Those shares were legally issued at closing and remain issued and outstanding until cancelled. Beginning October
5, 2026, and generally on the fifth day of each month thereafter through April 5, 2027, the Company is required to pay the sellers $3.0
million in cash and, concurrently with each payment, cancel 1,000,000 escrowed shares. Shares cancelled under that provision are retired
and do not remain outstanding. A sale of escrowed shares, or a borrowing against those shares, may be used to fund a required redemption
only by mutual agreement. It is not the default. The parties are to pursue registered sales, privately negotiated sales and borrowings
as potential sources of liquidity, but neither party can impose a liquidity measure on the other. Shares actually sold under an agreed
liquidity measure remain outstanding and are not cancelled, and the Company’s obligation for that redemption is then limited to
any shortfall below $3.0 million. If no liquidity measure is agreed, the Company remains obligated to pay the full $3.0 million and to
cancel the related 1,000,000 shares. The escrowed shares are subject to a stop-transfer and may be transferred or released only on joint
instructions. The Company is obligated to pay daily liquidated damages for late redemption payments, initially at $1,000 per day for each
outstanding redemption and increasing to $2,000 per day after the first calendar month.
Except for the paragraph restated above, Item 1.01 of the Original
Report is unchanged and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(b) Pro Forma Financial Information
The updated unaudited pro forma condensed combined
financial information giving effect to the Envy acquisition is filed as Exhibit 99.3 to this Amendment and incorporated herein by reference.
Exhibit 99.3 filed with this Amendment replaces Exhibit 99.3 filed with the Original Report. Exhibits 99.1 and 99.2 to the Original Report
are unchanged.
(d) Exhibits
| Exhibit
No. |
Description |
| 99.3 |
Updated unaudited pro forma condensed combined financial information of Stewards, Inc. giving effect to the Envy acquisition. |
| 104 |
Cover
Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Stewards, Inc.
/s/ Katuischia Murless
Katuischia Murless
Chief Financial Officer
Date October 7, 2026
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
Stewards, Inc. (the "Company")
is providing this unaudited pro forma condensed combined financial information to illustrate the effects of the acquisition by SRC Envy
Holdco LLC, a wholly owned subsidiary of the Company, of all membership interests in Envy Development DE, LLC and Envy Recreational,
LLC (the "Envy Acquisition"). The acquired real estate consists of a 214-unit apartment community, a 26-slip marina and a three-story
commercial community center in Pompano Beach, Florida. Envy Recreational, LLC was formed in connection with the acquisition, and the
marina and commercial community center did not generate revenue before closing. The Envy Acquisition closed on September 23, 2026 and
is accounted for as an asset acquisition under ASC 805-50.
The unaudited pro forma condensed
combined financial information has been prepared in accordance with Article 11 of SEC Regulation S-X. The pro forma adjustments are Transaction
Accounting Adjustments reflecting the application of required accounting to the Envy Acquisition. No Management’s Adjustments are
presented. The acquired real estate operations are presented under Rule 3-14, which reflects revenues and certain operating expenses
and excludes mortgage interest, depreciation and amortization, management fees and income taxes that are not comparable to the future
operations of the property.
A pro forma condensed combined balance
sheet as of June 30, 2026 is presented as if the Envy Acquisition had occurred on that date. The pro forma condensed combined statements
of operations for the year ended December 31, 2025 and the six months ended June 30, 2026 give effect to the Envy Acquisition as if it
had occurred on January 1, 2025, in accordance with 17 CFR 210.11-02(a)(6)(i).
This information was derived from
and should be read in conjunction with the Company’s historical financial statements and the historical statement of revenues and
certain operating expenses of the acquired property. The pro forma information is for illustrative purposes only and does not purport
to represent what the results of operations or financial position would actually have been.
Revised preliminary acquisition accounting. The 7,000,000 shares placed
in escrow are not recognized in stockholders’ equity. For this unaudited pro forma information, the associated required-redemption
obligation is presented at its preliminary estimated acquisition-date fair value of $20.043 million, calculated as the present value at
September 23, 2026 of seven monthly $3.0 million payments due from October 5, 2026 through April 5, 2027, discounted using a preliminary
18.0% annual effective rate, subject to completion of the valuation specialist’s analysis and auditor review. Because the pro forma
statements of operations give effect to the acquisition as if it occurred on January 1, 2025, the full $0.957 million discount accretion
is included as a non-recurring component of FY2025 interest expense, and the seven required-redemption payments and related accretion
are treated as completed within 2025 under that assumption. No accretion is included in the six months ended June 30, 2026. Under the
actual closing schedule, accretion is expected to occur from September 23, 2026 through April 5, 2027. The 7,000,000 escrowed shares were
legally issued and remain outstanding until cancelled, but they are not classified in stockholders’ equity. The acquisition accounting
remains preliminary and subject to auditor review. Changes in the final measurement could affect the liability, acquired-asset basis,
depreciation, amortization and interest expense. The Company expects to finalize this accounting in its next periodic report. Until then,
the principal remaining uncertainty is the final fair-value measurement, including the discount rate and other valuation assumptions.
Unaudited Pro Forma Condensed Combined Statement
of Operations
For the Year Ended December 31, 2025
(in thousands, except per share data)
| | |
Stewards, Inc. | |
Envy (Rule 3-14) | |
Envy Transaction Adjustments | |
Notes | |
Pro Forma Combined |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income, financing and brokerage | |
$ | 11,660 | | |
| — | | |
| — | | |
| | | |
$ | 11,660 | |
| Income from rental property | |
| 4,617 | | |
| 4,905 | | |
| — | | |
| | | |
| 9,522 | |
| Total revenues | |
| 16,277 | | |
| 4,905 | | |
| — | | |
| | | |
| 21,182 | |
| Cost of revenue | |
| | | |
| | | |
| | | |
| | | |
| | |
| Financing and brokerage | |
| 2,518 | | |
| — | | |
| — | | |
| | | |
| 2,518 | |
| Rental property | |
| 2,100 | | |
| 4,007 | | |
| — | | |
| F | | |
| 6,107 | |
| Total cost of revenue | |
| 4,618 | | |
| 4,007 | | |
| — | | |
| | | |
| 8,625 | |
| Gross profit | |
| 11,659 | | |
| 898 | | |
| — | | |
| | | |
| 12,557 | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | |
| General and administrative expenses | |
| 12,142 | | |
| 497 | | |
| — | | |
| F | | |
| 12,639 | |
| Provision for credit losses | |
| 1,774 | | |
| — | | |
| — | | |
| | | |
| 1,774 | |
| Depreciation and amortization | |
| 6,090 | | |
| — | | |
| 3,525 | | |
| A | | |
| 9,615 | |
| Professional fees | |
| 3,061 | | |
| — | | |
| — | | |
| | | |
| 3,061 | |
| Total operating expenses | |
| 23,067 | | |
| 497 | | |
| 3,525 | | |
| | | |
| 27,089 | |
| Loss from operations | |
| (11,408 | ) | |
| 401 | | |
| (3,525 | ) | |
| | | |
| (14,532 | ) |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| (8,452 | ) | |
| — | | |
| (4,976 | ) | |
| E | | |
| (13,428 | ) |
| Financing charges | |
| (648 | ) | |
| — | | |
| (572 | ) | |
| C | | |
| (1,220 | ) |
| Other losses | |
| (208 | ) | |
| — | | |
| — | | |
| | | |
| (208 | ) |
| Total other income (expense) | |
| (9,308 | ) | |
| — | | |
| (5,548 | ) | |
| | | |
| (14,856 | ) |
| Net loss before income taxes | |
| (20,716 | ) | |
| 401 | | |
| (9,073 | ) | |
| | | |
| (29,388 | ) |
| Income tax provision | |
| (41 | ) | |
| — | | |
| — | | |
| D | | |
| (41 | ) |
| Net loss | |
| (20,757 | ) | |
| 401 | | |
| (9,073 | ) | |
| | | |
| (29,429 | ) |
| Deemed dividend from conversion of preferred stock | |
| (700 | ) | |
| — | | |
| — | | |
| | | |
| (700 | ) |
| Dividend on preferred stock | |
| (1,651 | ) | |
| — | | |
| — | | |
| | | |
| (1,651 | ) |
| Net loss applicable to common stockholders | |
$ | (23,108 | ) | |
$ | 401 | | |
| (9,073 | ) | |
| | | |
| (31,780 | ) |
| Net Loss Per Common Share - basic and diluted | |
$ | (0.16 | ) | |
| | | |
| | | |
| | | |
$ | (0.21 | ) |
| Weighted-Average Common Shares Outstanding - basic and diluted | |
| 145,573 | | |
| | | |
| 7,263 | | |
| B | | |
| 152,836 | |
| Comprehensive Loss | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| (20,757 | ) | |
| 401 | | |
| (9,073 | ) | |
| | | |
| (29,429 | ) |
| Unrealized gain (loss) on foreign currency translation | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total comprehensive loss | |
$ | (20,757 | ) | |
$ | 401 | | |
| (9,073 | ) | |
| | | |
| (29,429 | ) |
For the Six Months Ended June 30, 2026
(in thousands, except per share data)
| | |
Stewards, Inc. | |
Envy (Rule 3-14) | |
Envy Transaction Adjustments | |
Notes | |
Pro Forma Combined |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income, financing and brokerage | |
$ | 2,539 | | |
| — | | |
| — | | |
| | | |
$ | 2,539 | |
| Income from rental property | |
| 4,783 | | |
| 2,861 | | |
| — | | |
| | | |
| 7,644 | |
| Total revenues | |
| 7,322 | | |
| 2,861 | | |
| — | | |
| | | |
| 10,183 | |
| Cost of revenue | |
| | | |
| | | |
| | | |
| | | |
| | |
| Financing and brokerage | |
| 471 | | |
| — | | |
| — | | |
| | | |
| 471 | |
| Rental property | |
| 2,782 | | |
| 1,357 | | |
| — | | |
| F | | |
| 4,139 | |
| Total cost of revenue | |
| 3,253 | | |
| 1,357 | | |
| — | | |
| | | |
| 4,610 | |
| Gross profit | |
| 4,069 | | |
| 1,504 | | |
| — | | |
| | | |
| 5,573 | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | |
| General and administrative expenses | |
| 5,742 | | |
| 187 | | |
| — | | |
| F | | |
| 5,929 | |
| Provision for credit losses | |
| 251 | | |
| — | | |
| — | | |
| | | |
| 251 | |
| Depreciation and amortization | |
| 4,320 | | |
| — | | |
| 1,030 | | |
| A | | |
| 5,350 | |
| Professional fees | |
| 1,924 | | |
| — | | |
| — | | |
| | | |
| 1,924 | |
| Total operating expenses | |
| 12,237 | | |
| 187 | | |
| 1,030 | | |
| | | |
| 13,454 | |
| Loss from operations | |
| (8,168 | ) | |
| 1,317 | | |
| (1,030 | ) | |
| | | |
| (7,881 | ) |
| Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest expense | |
| (6,078 | ) | |
| — | | |
| (1,993 | ) | |
| E | | |
| (8,071 | ) |
| Financing charges | |
| (34 | ) | |
| — | | |
| (284 | ) | |
| C | | |
| (318 | ) |
| Change in fair value of the warrant instrument | |
| 1,364 | | |
| — | | |
| — | | |
| | | |
| 1,364 | |
| Other loss | |
| (27 | ) | |
| — | | |
| — | | |
| | | |
| (27 | ) |
| Total other income (expense) | |
| (4,775 | ) | |
| — | | |
| (2,277 | ) | |
| | | |
| (7,052 | ) |
| Net loss before income taxes | |
| (12,943 | ) | |
| 1,317 | | |
| (3,307 | ) | |
| | | |
| (14,933 | ) |
| Income tax provision | |
| — | | |
| — | | |
| — | | |
| D | | |
| — | |
| Net loss | |
| (12,943 | ) | |
| 1,317 | | |
| (3,307 | ) | |
| | | |
| (14,933 | ) |
| Dividend on preferred stock | |
| (1,342 | ) | |
| — | | |
| — | | |
| | | |
| (1,342 | ) |
| Net loss applicable to common stockholders | |
$ | (14,285 | ) | |
$ | 1,317 | | |
| (3,307 | ) | |
| | | |
| (16,275 | ) |
| Net Loss Per Common Share - basic and diluted | |
$ | (0.07 | ) | |
| | | |
| | | |
| | | |
$ | (0.08 | ) |
| Weighted-Average Common Shares Outstanding - basic and diluted | |
| 208,881 | | |
| | | |
| 7,263 | | |
| B | | |
| 216,144 | |
| Comprehensive Loss | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| (12,943 | ) | |
| 1,317 | | |
| (3,307 | ) | |
| | | |
| (14,933 | ) |
| Unrealized gain (loss) on foreign currency translation | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total comprehensive loss | |
$ | (12,943 | ) | |
$ | 1,317 | | |
| (3,307 | ) | |
| | | |
| (14,933 | ) |
Notes to the Unaudited Pro Forma Condensed
Combined Statements of Operations
A - Reflects depreciation and amortization of the acquired asset
basis allocated to depreciable real estate, furniture, fixtures and equipment, and the in-place lease intangible. Land is not depreciated.
The adjustment uses a 44-year life for building and improvements, a 17-year life for site improvements, a 4-year life for furniture, fixtures
and equipment, and a 12-month life for the in-place lease intangible, which is fully amortized during 2025 under the January 1, 2025 pro
forma assumption. The resulting adjustment is approximately $3.525 million for the year ended December 31, 2025 and $1.030 million for
the six months ended June 30, 2026.
B - Reflects 7,263,025 rollover shares delivered directly to
the sellers as outstanding from the beginning of each period presented. The 7,000,000 escrowed shares are mandatorily redeemable financial
instruments, are classified as a liability and are excluded from weighted-average shares outstanding. Because the Company reports a net
loss, diluted earnings per share equals basic earnings per share. Legal issuance is unchanged. The exclusion is a classification and earnings-per-share
presentation under ASC 480, not a reduction of shares issued at closing.
C - Reflects the recurring guaranty fee on the new $47.70m loan
at 1.20% per year, or $0.57m, being the 1.50% contractual fee net of the 0.30% payable to Stewards that eliminates on consolidation, presented
in financing charges.
D - Reflects the income tax effect of the pro forma adjustments.
No pro forma income tax benefit has been recognized on the pro forma adjustments because the Company is in a net operating loss position
with an accumulated deficit and does not recognize a tax benefit on additional losses.
E - Reflects interest expense on the new $47.70 million LoanCore Capital
Credit REIT LLC loan based on one-month Term SOFR of 3.9375% plus 3.60%, or 7.5375% in total (actual/360), together with amortization
of the $0.75 million of debt issuance costs over the 24-month loan term under ASC 835-30. Loan interest and debt issuance cost amortization
produce an adjustment of approximately $4.019 million for the year ended December 31, 2025 and $1.993 million for the six months ended
June 30, 2026. FY2025 also includes a non-recurring $0.957 million of accretion on the required-redemption liability because the pro forma
statements give effect to the acquisition as if it occurred on January 1, 2025. Under that assumption, the seven required-redemption payments
and related accretion are treated as completed within 2025. No accretion is included in the six months ended June 30, 2026. Under the
actual closing schedule, accretion is expected from September 23, 2026 through April 5, 2027. The 18.0% rate used to measure the liability
is preliminary and remains subject to valuation specialist and auditor review.
F - Certain operating-expense captions in the Envy Rule 3-14
historical statements have been reclassified within the Envy column to conform to the Company’s presentation. These reclassifications
do not change total revenues, total certain operating expenses or revenues in excess of certain operating expenses.
Unaudited Pro Forma Condensed Combined Balance
Sheet
As of June 30, 2026 (in thousands)
| | |
Stewards, Inc. | |
Transaction Adjustments | |
Notes | |
Pro Forma Combined |
| ASSETS | |
| | | |
| | | |
| | | |
| | |
| Cash, cash equivalents | |
$ | 1,096 | | |
$ | (923 | ) | |
| b | | |
$ | 173 | |
| Advance receivables, net | |
| 4,948 | | |
| | | |
| | | |
| 4,948 | |
| Prepaid expense | |
| 728 | | |
| 287 | | |
| g | | |
| 1,015 | |
| Loan commitment asset | |
| 3,719 | | |
| | | |
| | | |
| 3,719 | |
| Due from related parties | |
| 64 | | |
| | | |
| | | |
| 64 | |
| Restricted cash | |
| 3,715 | | |
| 2,906 | | |
| c | | |
| 6,621 | |
| Note receivable | |
| 1,706 | | |
| (1,500 | ) | |
| e | | |
| 206 | |
| Other current assets | |
| 549 | | |
| 34 | | |
| d | | |
| 583 | |
| Total current assets | |
| 16,525 | | |
| 804 | | |
| | | |
| 17,329 | |
| Fixed assets, net | |
| 154,067 | | |
| 85,235 | | |
| a | | |
| 239,302 | |
| Operating lease right-of-use asset | |
| 18 | | |
| | | |
| | | |
| 18 | |
| Intangible assets, net | |
| 985 | | |
| 1,447 | | |
| a | | |
| 2,432 | |
| Goodwill | |
| 1,219 | | |
| | | |
| | | |
| 1,219 | |
| Other assets | |
| 1,162 | | |
| 520 | | |
| f | | |
| 1,682 | |
| TOTAL ASSETS | |
$ | 173,976 | | |
$ | 88,006 | | |
| | | |
$ | 261,982 | |
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
$ | 7,302 | | |
| 1,178 | | |
| d | | |
| 8,480 | |
| Syndicate payable | |
| 3,231 | | |
| | | |
| | | |
| 3,231 | |
| Due to related parties - current | |
| 1,883 | | |
| | | |
| | | |
| 1,883 | |
| Deferred consideration - current | |
| 270 | | |
| | | |
| | | |
| 270 | |
| Required redemption liability - current | |
| — | | |
| 20,043 | | |
| b | | |
| 20,043 | |
| Operating lease liabilities - current | |
| 15 | | |
| | | |
| | | |
| 15 | |
| Notes payable, net - current | |
| 2,622 | | |
| 2,000 | | |
| h | | |
| 4,622 | |
| Warrant liability | |
| 3,719 | | |
| | | |
| | | |
| 3,719 | |
| Mortgage loan - current | |
| — | | |
| | | |
| | | |
| — | |
| Other current liabilities | |
| 329 | | |
| 255 | | |
| d | | |
| 584 | |
| Total current liabilities | |
| 19,371 | | |
| 23,476 | | |
| | | |
| 42,847 | |
| Deferred consideration | |
| 39 | | |
| | | |
| | | |
| 39 | |
| Notes payable, net | |
| 38,761 | | |
| | | |
| | | |
| 38,761 | |
| Mortgage loan | |
| 77,588 | | |
| 46,953 | | |
| b | | |
| 124,541 | |
| Other non-current liabilities | |
| 291 | | |
| | | |
| | | |
| 291 | |
| Total liabilities | |
| 136,050 | | |
| 70,429 | | |
| | | |
| 206,479 | |
| Redeemable nonparticipating noncontrolling interest | |
| 8,462 | | |
| | | |
| | | |
| 8,462 | |
| STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| | |
| Series A preferred stock | |
| 7 | | |
| | | |
| | | |
| 7 | |
| Series B preferred stock | |
| 1 | | |
| | | |
| | | |
| 1 | |
| Common stock | |
| 21 | | |
| 1 | | |
| b | | |
| 22 | |
| Paid-in capital | |
| 73,619 | | |
| 17,576 | | |
| b | | |
| 91,195 | |
| Accumulated deficit | |
| (71,639 | ) | |
| | | |
| | | |
| (71,639 | ) |
| Accumulated other comprehensive income | |
| 3 | | |
| | | |
| | | |
| 3 | |
| Nonparticipating noncontrolling interest | |
| 27,452 | | |
| | | |
| | | |
| 27,452 | |
| Total stockholders’ equity | |
| 29,464 | | |
| 17,577 | | |
| | | |
| 47,041 | |
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | |
$ | 173,976 | | |
$ | 88,006 | | |
| | | |
$ | 261,982 | |
Notes to the Unaudited Pro Forma Condensed
Combined Balance Sheet
Preliminary Consideration and Cost
Allocation (in thousands)
| Component | |
Measurement | |
Amount |
| Direct
rollover shares delivered directly to sellers | |
7,263,025 shares at $2.42 | |
$ | 17,576.5 | |
| Required
redemption liability | |
Present value of seven monthly
$3.0 million payments at a preliminary 18.0% | |
$ | 20,042.7 | |
| Non-share
consideration | |
Deposit, existing mortgage principal
and purchase-price adjustments | |
$ | 47,210.9 | |
| Total accounting
consideration | |
Direct equity, liability and
non-share consideration | |
$ | 84,830.2 | |
| Capitalized
acquisition costs and lender charges | |
Direct acquisition costs plus
$1.471 million of existing-lender charges borne by Purchaser | |
$ | 1,843.1 | |
| Recorded
real estate and intangible basis | |
Accounting
consideration plus capitalized costs, lender charges and approximately $0.007 million of net working-capital re-cut | |
$ | 86,681.9 | |
| Property-tax
escrow | |
Included in restricted cash | |
$ | 835.0 | |
| Net cash
used to fund the acquisition, subject to final settlement | |
Closing-statement
cash, subject to auditor confirmation of the June 30 reconciliation | |
$ | 923.0 | |
| Note receivable
transaction adjustment | |
Deposit applied at closing | |
$ | (1,500.0 | ) |
| Legal shares issued | |
7,263,025
direct and 7,000,000 escrowed | |
| 14,263,025 | |
The $90.0 million contractual price and $3.00 per-share reference
were used to determine the share count. For preliminary GAAP accounting, the 7,263,025 shares delivered directly to the sellers were measured
at the $2.42 acquisition-date closing price. The 7,000,000 escrowed shares are not recognized in equity. They were legally issued and
remain outstanding until cancelled. The related required-redemption obligation is presented at a preliminary estimated acquisition-date
fair value of $20.043 million, calculated as the present value of the $21.0 million of gross contractual payments discounted at a preliminary
18.0% annual effective rate. The $0.957 million discount is expected to accrete through interest expense over the redemption period. Under
the January 1, 2025 pro forma assumption, the accretion is non-recurring and is included in FY2025 interest expense, and the seven payments
and related accretion are treated as completed within 2025, subject to final valuation specialist and auditor review.
a - Reflects the acquired Envy assets under ASC 805-50. The acquisition
is accounted for as an asset acquisition because substantially all of the fair value of the gross assets acquired is concentrated in the
property. Preliminary fair-value consideration of approximately $84.83 million, together with approximately $0.37 million of capitalized
direct acquisition costs, approximately $1.47 million of existing-lender charges borne by the Purchaser and approximately $0.007 million
of net working-capital re-cut, produces approximately $86.68 million of recorded real estate and intangible basis. That basis is allocated
on a relative fair value basis to approximately $85.23 million of land, buildings, site improvements and furniture, fixtures and equipment
and approximately $1.45 million of in-place lease intangibles. Acquired working-capital assets, restricted cash and other closing assets
are presented separately in the balance sheet. The acquisition accounting remains preliminary because the final purchase-price adjustment
and other closing information remain subject to review.
b - Reflects the financing and consideration. The Company placed a
new $47.70 million loan from LoanCore Capital Credit REIT LLC that amended and refinanced the existing $44.56 million mortgage, shown
net of $0.75 million of debt issuance costs at $46.95 million. The 7,263,025 rollover shares delivered directly to the sellers are recorded
in equity at the acquisition-date market price of $2.42, comprising approximately $726 of common stock at $0.0001 par value and $17.58
million of additional paid-in capital. The 7,000,000 escrowed shares are mandatorily redeemable through seven monthly cash payments of
$3.0 million and are not recognized in equity. They were legally issued and remain outstanding until cancelled. The required-redemption
liability is presented at a preliminary estimated acquisition-date fair value of $20.043 million, calculated as the present value of the
$21.0 million gross contractual payments using a preliminary 18.0% annual effective discount rate. The $0.957 million discount is expected
to accrete through interest expense over the redemption period. Under the January 1, 2025 pro forma assumption, the accretion is non-recurring
and is included in FY2025 interest expense, and the seven payments and related accretion are treated as completed within 2025, subject
to final valuation specialist and auditor review. A $2.00 million short-term promissory note issued to Envy Development PB, LLC funds
a portion of the closing cash requirement (note h). The cash adjustment reflects estimated net cash used to fund the acquisition after
applying the deposit, financing proceeds, reserves, closing costs and other transaction flows. The June 30 pro forma cash reconciliation
remains subject to auditor confirmation.
c - Reflects lender-required reserves of $2.75 million for property
taxes, insurance, interest, leasing, capital expenditures, security upgrades, repairs and the DACA minimum balance. The reserves are recorded
as restricted cash together with $0.15 million of transferred tenant security-deposit cash.
d - Reflects the Envy working-capital assets and liabilities recognized
in the preliminary acquisition accounting. Acquired assets include approximately $0.15 million of tenant security-deposit cash, $0.03
million of accounts receivable and $0.01 million of prepaid operating expenses. Assumed liabilities include approximately $0.90 million
of accrued property taxes, $0.10 million of prepaid rent, $0.13 million of accounts payable, $0.15 million of other accrued liabilities
and $0.15 million of tenant security deposits. Based on the closing-date amounts, accounts payable and accrued liabilities are presented
at approximately $1.178 million and other current liabilities at approximately $0.255 million. These are the Envy balances assumed at
closing and included in the cost of the acquisition, with closing prorations reflected through these assumed liabilities.
e - Reflects the $1.50m acquisition deposit, consisting of three
$500,000 promissory notes funded before June 30, 2026 and recorded in note receivable in the historical balance sheet. The deposit is
applied against the purchase price at closing, reducing the note receivable and the cash required to fund the acquisition; it is not a
June 30, 2026 cash movement.
f - Reflects the interest rate cap purchased at closing to hedge
the floating-rate LoanCore loan, recorded as a derivative asset at its $0.52m premium under ASC 815; it is not expensed and not netted
against the loan.
g - Reflects the property insurance premium of $0.29m paid at
closing for the go-forward policy, recorded as prepaid insurance and amortised over the policy term.
h - Reflects a $2.00m short-term promissory note issued to Envy
Development PB, LLC in connection with the closing and recorded in current notes payable. The note is effective September 17, 2026, bears
interest at $1,333.33 per day and matures on October 5, 2026. Interest through maturity is not more than approximately $25,000 and is
not separately reflected in the pro forma statements of operations because it is not material.
The Rule 3-14 historical statement and its notes remain Exhibit 99.2 to
the Original Report and are omitted from this replacement Exhibit 99.3.
