Exhibit 99.1
BLUM HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2024
(in thousands, except for shares)
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Transaction Accounting Adjustments |
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Blum Holdings, Inc. |
Less: Deconsolidated Entities (a) |
Note 2 |
Pro Forma Adjustments |
Pro Forma Consolidated |
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ASSETS |
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Current Assets: |
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Cash and Cash Equivalents |
$ | 1,025 | $ | (532 | ) | $ | — | $ | 493 | ||||||||
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Inventory |
1,345 | (225 | ) | — | 1,120 | ||||||||||||
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Prepaid Expenses & Other Assets |
1,166 | (440 | ) | — | 726 | ||||||||||||
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Assets Related to Discontinued Operations |
13 | — | — | 13 | |||||||||||||
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Total Current Assets |
3,549 | (1,197 | ) | — | 2,352 | ||||||||||||
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Property, Equipment and Leasehold Improvements, Net |
7,066 | (6,734 | ) | — | 332 | ||||||||||||
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Right-of-Use Assets - Operating Leases |
3,271 | (1,633 | ) | — | 1,638 | ||||||||||||
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Intangible Assets & Goodwill |
21,530 | (1,227 | ) | — | 20,303 | ||||||||||||
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Other Assets |
2,309 | (2,309 | ) | — | (0 | ) | |||||||||||
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Long-Term Assets Related to Discontinued Operations |
953 | — | — | 953 | |||||||||||||
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TOTAL ASSETS |
$ | 38,678 | $ | (13,100 | ) | $ | — | $ | 25,578 | ||||||||
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LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT |
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LIABILITIES: |
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Current Liabilities: |
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Accounts Payable & Accrued Liabilities |
$ | 25,675 | $ | (19,691 | ) |
(b) |
$ | 6,961 | $ | 12,945 | |||||||
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Current Portion of Notes Payable |
3,789 | (3,115 | ) | — | 674 | ||||||||||||
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Income Taxes Payable |
21,906 | (10,558 | ) | — | 11,348 | ||||||||||||
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Current Portion of Operating Lease Liabilities |
— | (620 | ) | — | (620 | ) | |||||||||||
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Liabilities Related to Discontinued Operations |
498 | (4 | ) | — | 494 | ||||||||||||
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Total Current Liabilities |
51,868 | (33,987 | ) | 6,961 | 24,842 | ||||||||||||
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Notes Payable, Net of Discounts |
5,396 | (3,596 | ) | — | 1,800 | ||||||||||||
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Deferred Tax Liabilities |
1,628 | — | — | 1,628 | |||||||||||||
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Operating Lease Liabilities |
3,104 | (1,241 | ) | — | 1,863 | ||||||||||||
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Derivative Liability |
4,160 | — | — | 4,160 | |||||||||||||
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TOTAL LIABILITIES |
66,156 | (38,825 | ) | 6,961 | 34,292 | ||||||||||||
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MEZZANINE EQUITY |
1,556 | — | — | 1,556 | |||||||||||||
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STOCKHOLDERS’ DEFICIT: |
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Preferred Stock, Convertible Series V, par value $0.001: 25,000,000 shares authorized and 14,071,431 shares outstanding as of September 30, 2024 |
1 | — | — | 1 | |||||||||||||
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Common Stock, par value $0.001: 990,000,000 shares authorized and 9,744,914 shares outstanding as of September 30, 2024 |
8 | — | — | 8 | |||||||||||||
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Additional Paid-In Capital |
408,854 | — | — | 408,854 | |||||||||||||
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Accumulated Deficit |
(437,023 | ) | — |
(c) |
25,724 | (411,299 | ) | ||||||||||
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Total Equity Attributable to Stockholders of Blum Holdings, Inc. |
(28,160 | ) | — | 25,724 | (2,436 | ) | |||||||||||
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Non-Controlling Interest |
(874 | ) | — | — | (874 | ) | |||||||||||
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TOTAL MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT |
(27,478 | ) | — | 25,724 | (1,754 | ) | |||||||||||
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TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT |
$ | 38,678 | $ | (38,825 | ) | $ | 32,685 | $ | 32,539 | ||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
BLUM HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
(in thousands, except for shares and per share data)
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Nine Months Ended September 30, 2024 |
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Transaction Accounting Adjustments |
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Blum Holdings, Inc. |
Less: Deconsolidated Entities (c) |
Note 2 |
Pro Forma Adjustments |
Pro Forma Consolidated |
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Revenue |
$ | 9,933 | $ | 4,736 | $ | — | $ | 14,669 | |||||||||
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Cost of Goods Sold |
5,095 | (2,427 | ) | — | 2,668 | ||||||||||||
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Gross Profit |
4,838 | 7,163 | — | 12,001 | |||||||||||||
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Operating Expenses: |
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Selling, General & Administrative |
14,839 | (9,495 | ) | — | 5,344 | ||||||||||||
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Impairment Expense |
1,709 | — | — | 1,709 | |||||||||||||
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Loss (Gain) on Disposal of Assets |
493 | (939 | ) |
(d) |
(15,166 | ) | (15,612 | ) | |||||||||
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Total Operating Expenses |
17,041 | (10,434 | ) | (15,166 | ) | (8,559 | ) | ||||||||||
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Income (Loss) from Operations |
(12,203 | ) | 17,596 | 15,166 | 20,560 | ||||||||||||
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Total Other Income (Expense) |
13,085 | (13,333 | ) | — | (248 | ) | |||||||||||
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Income (Loss) from Continuing Operations Before Provision for Income Taxes |
882 | 4,264 | 15,166 | 20,312 | |||||||||||||
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Provision for Income Tax Expense for Continuing Operations |
(745 | ) | 177 |
(d) |
10,558 | 9,990 | |||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS |
$ | 137 | $ | 4,440 | $ | 25,724 | $ | 30,302 | |||||||||
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Less: Net Loss from Continuing Operations Attributable to Non-Controlling Interest |
(874 | ) | — | — | (874 | ) | |||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO BLUM HOLDINGS, INC. |
$ | 17,448 | $ | 4,440 | $ | 25,724 | $ | 47,613 | |||||||||
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Net Income (Loss) from Continuing Operations per Common Share - Basic |
$ | (0.02 | ) | $ | 3.27 | ||||||||||||
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Net Income (Loss) from Continuing Operations per Common Share - Diluted |
$ | (0.02 | ) | $ | 2.79 | ||||||||||||
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Weighted-Average Shares Outstanding - Basic |
9,191,149 | 9,191,149 | |||||||||||||||
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Weighted-Average Shares Outstanding - Diluted |
9,191,149 | 10,766,572 | |||||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
BLUM HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2023
(in thousands, except for shares and per share data)
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Year Ended December 31, 2023 |
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Transaction Accounting Adjustments |
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Blum Holdings, Inc. |
Less: Deconsolidated Entities (c) |
Note 2 |
Pro Forma Adjustments |
Pro Forma Consolidated |
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Revenue |
$ | 33,229 | $ | (7,441 | ) | $ | — | $ | 25,788 | ||||||||
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Cost of Goods Sold |
15,565 | (3,804 | ) | — | 11,761 | ||||||||||||
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Gross Profit |
17,664 | (3,637 | ) | — | 14,027 | ||||||||||||
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Operating Expenses: |
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Selling, General & Administrative |
30,263 | (20,968 | ) | — | 9,295 | ||||||||||||
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Loss (Gain) on Disposal of Assets |
1,607 | (1,607 | ) |
(d) |
(22,407 | ) | (22,407 | ) | |||||||||
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Total Operating Expenses |
31,870 | (22,575 | ) | (22,407 | ) | (13,112 | ) | ||||||||||
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Income (Loss) from Operations |
(14,206 | ) | 18,938 | 22,407 | 27,139 | ||||||||||||
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Total Other Income (Expense) |
4,503 | (4,760 | ) | — | (257 | ) | |||||||||||
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Income (Loss) from Continuing Operations Before Provision for Income Taxes |
(9,703 | ) | 14,178 | 22,407 | 26,882 | ||||||||||||
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Provision for Income Tax Expense for Continuing Operations |
(4,116 | ) | 1,104 |
(d) |
5,273 | 2,261 | |||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS |
$ | (13,819 | ) | $ | 15,282 | $ | 27,680 | $ | 29,143 | ||||||||
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Net Income (Loss) from Continuing Operations per Common Share - Basic |
$ | (1.69 | ) | $ | 3.56 | ||||||||||||
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Net Income (Loss) from Continuing Operations per Common Share - Diluted |
$ | (1.69 | ) | $ | 3.43 | ||||||||||||
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Weighted-Average Shares Outstanding - Basic |
8,193,853 | 8,193,853 | |||||||||||||||
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Weighted-Average Shares Outstanding - Diluted |
8,193,853 | 8,497,521 | |||||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.
BLUM HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – INTRODUCTION
On November 6, 2024 (the “Petition Date”), wholly owned subsidiaries of Blum Holdings, Inc. (the "Company"), Unrivaled Brands, Inc. ("Unrivaled") and Halladay Holding, LLC ("Halladay Holding") (each a “Debtor” and collectively, the “Debtors”) voluntarily filed for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division (“Bankruptcy Court”), bearing case numbers 2:24-bk-19127-BB and 2:24-bk-19128-BB (“Bankruptcy Cases”). The Debtors voluntarily filed for relief under Chapter 11 of the Bankruptcy Code following insolvency and litigation by People’s California, LLC (“People's”). The Chapter 11 filing is limited to Unrivaled and Halladay Holding, meaning only their assets and liabilities are included in the Debtors-in-Possession estates. Blum Holdings, Inc., along with all other operations of the Company are not included in the bankruptcy proceeding and continue operating in the ordinary course of business.
As a result of the Chapter 11 filing, the Debtors are now subject to review and oversight by the Bankruptcy Court. As a result, the Company no longer has exclusive control over the Debtors’ activities during the Chapter 11 proceedings. Therefore, all assets and liabilities related to the Debtors were deconsolidated as of the Petition Date.
The Debtors have jointly filed a liquidating plan on February 4, 2025, and a disclosure statement describing the plan. While the plan and related documents are available on the public docket, the Bankruptcy Court has not approved the disclosure statement as containing adequate information about the plan, nor has the Bankruptcy Court confirmed the plan.
The Bankruptcy Cases filed on November 6, 2024 and the transactions completed on November 5, 2024, described below, are collectively referred to herein as the "Dispositions".
Basis of Presentation
The unaudited pro forma condensed consolidated financial statements were prepared in accordance with Article 11 of Regulation S‑X and have been derived from the historical financial statements of Blum Holdings, Inc. prepared in accordance with accounting principles generally accepted in the United States of America. The unaudited pro forma consolidated financial statements have been compiled using the significant accounting policies, as set out in the audited consolidated financial statements of the Company as of and for the periods ended September 30, 2024 and December 31, 2023.
On November 5, 2024, Unrivaled executed stock purchase agreements with VLPS, LLC ("VLPS") pursuant to which Unrivaled sold all of the issued and outstanding shares of common stock of Black Oak Gallery, a California corporation (“Blüm Oakland”), and Blüm San Leandro, a California corporation (“Blüm San Leandro”), for a purchase price of $2,055,420 and $1,124,305, respectively. The purchase price shall be paid by VLPS by the assumption of liabilities of Blüm Oakland and Blüm San Leandro. Pursuant to the respective Stock Purchase Agreements, the closing of the dispositions of Blüm Oakland and Blüm San Leandro occurred on November 5, 2024. The transactions completed on November 5, 2024 were previously reported in the Current Report on Form 8-K filed on November 7, 2024. As the transactions completed on November 5, 2024 occurred immediately prior to the Bankruptcy Cases, the dispositions of Blüm Oakland and Blüm San Leandro are reflected in the unaudited pro forma condensed consolidated financial statements presented herein.
The unaudited pro forma condensed consolidated balance sheet is presented as if the Dispositions had occurred on September 30, 2024. The unaudited pro forma condensed consolidated statements of operations are presented as if the Dispositions had occurred as of January 1, 2023. The unaudited pro forma condensed consolidated financial information has been prepared to illustrate the estimated effects of the Dispositions.
The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of what the Company’s financial condition or results of operations would have been for the periods presented. The unaudited pro forma condensed consolidated financial statements are intended to provide information about the continuing impact of the Dispositions as if it had been consummated earlier. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed consolidated financial statements have been made.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 and in the Quarterly Report on Form 10-Q for the nine months ended September 30, 2024.
NOTE 2 – PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated balance sheet as of September 30, 2024 reflects the following transaction accounting adjustments related to the Dispositions:
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(a) |
The removal of assets and liabilities disposed of in connection with the Dispositions from the historical information presented. |
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| (b) | Prior to the Chapter 11 filing, the Company issued a guarantee on behalf of Unrivaled and Halladay Holding for accounts payable totaling $6,961,167, which was recorded at fair value. |
The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2024 and the fiscal year ended December 31, 2023 reflect the following transaction accounting adjustments related to the Dispositions:
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(c) |
The removal of revenues and expenses from the assets in connection with the Dispositions from the historical information presented. |
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(d) |
The pro forma net gain on disposal of assets is based on the Company's historical balance sheet information as of September 30, 2024 and December 31, 2023 and is subject to change based upon, among other things, the actual balance sheet on the closing date of the Dispositions and the finalization of the Company's financial closing procedures and may differ significantly from the actual net gain on disposal of assets that the Company will recognize. The pro forma net gain on disposal of assets presented below is reflected in the unaudited pro forma condensed consolidated balance sheet as if the Dispositions were consummated as of September 30, 2024, and in the unaudited pro forma condensed statements of operation as if the Dispositions were consummated on January 1, 2023. |
| Nine Months Ended |
Year Ended |
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| September 30, 2024 | December 31, 2023 | |||||||
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Assumption of Liabilities |
$ | 28,267 | $ | 59,270 | ||||
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Total Consideration |
28,267 | 59,270 | ||||||
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Total Assets Disposed Of |
13,100 | 36,863 | ||||||
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Pro Forma Gain on Disposal of Assets |
$ | 15,166 | $ | 22,407 | ||||
NOTE 3 – PRO FORMA EARNINGS PER SHARE
The pro forma earnings per share (“EPS”) has been adjusted to reflect the pro forma consolidated net income from continuing operations for the nine months ended September 30, 2024 and the year ended December 31, 2023. The number of shares used in calculating the pro forma consolidated basic and diluted earnings per share is outlined below.
| Nine Months Ended |
Year Ended |
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| September 30, 2024 | December 31, 2023 | |||||||
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Net Income from Continuing Operations |
$ | 30,302 | $ | 29,143 | ||||
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Less: Accretion of Mezzanine Equity |
(292 | ) | — | |||||
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Adjusted Net Income from Continuing Operations Attributable to Common Shareholders, Basic |
30,010 | 29,143 | ||||||
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Net Income from Continuing Operations |
$ | 30,302 | $ | 29,143 | ||||
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Less: Accretion of Mezzanine Equity |
(292 | ) | — | |||||
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Add: Interest from Convertible Debt |
38 | — | ||||||
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Adjusted Net Income from Continuing Operations Attributable to Common Shareholders, Diluted |
30,048 | 29,143 | ||||||
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Weighted-Average Shares Outstanding - Basic |
9,191,149 | 8,193,853 | ||||||
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Effects of Dilutive Securities: |
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Common Stock Options |
- | 83,325 | ||||||
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Common Stock Warrants |
- | 220,342 | ||||||
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Convertible Promissory Notes |
168,280 | - | ||||||
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Convertible Series V Preferred Stock |
1,407,143 | - | ||||||
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Weighted-Average Shares Outstanding - Diluted |
10,766,572 | 8,497,521 | ||||||
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Net Income from Continuing Operations per Common Share - Basic |
$ | 3.27 | $ | 3.56 | ||||
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Net Income from Continuing Operations per Common Share - Diluted |
$ | 2.79 | $ | 3.43 | ||||
Dilutive securities that are not included in the calculation of diluted earnings per share because their effect is anti-dilutive are as follows (in common equivalent shares):
| Nine Months Ended |
Year Ended |
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| September 30, 2024 | December 31, 2023 | |||||||
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Common Stock Warrants |
1,460,199 | 1,242,969 | ||||||
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Common Stock Options |
285,928 | 285,976 | ||||||
| 1,746,127 | 1,528,945 | |||||||