v3.26.1
Trinity Acquisition
 6 Months Ended
Jun. 30, 2026
Trinity Acquisition [Abstract]  
TRINITY ACQUISITION

NOTE 2: TRINITY ACQUISITION

 

On November 7, 2025, the Company and Millard L. “Flip” Wallen, owner of 100% of the shares of TRINITY Group Construction, Inc., a Virginia S-corporation (the “Seller”) entered into a Letter of Intent for the acquisition of TRINITY by the Company, subject to definitive agreement (the “LOI”). Mr. Wallen is President of KiNRG and a related party. On March 31, 2026, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with TRINITY and the Seller, pursuant to which the Company agreed to acquire 100% of the issued and outstanding capital stock of TRINITY (the “Acquisition”). The Purchase Agreement was consummated on April 1, 2026.

 

The TRINITY Acquisition has been accounted for as a business combination under ASC 805, Business Combinations, using the acquisition method of accounting. Management evaluated the accounting treatment for this transaction under ASC 805 (Business Combinations) to determine whether it constituted a combination of entities under common control. Because the President does not hold a controlling financial interest (defined as a majority voting interest) in the purchasing Company, the pre-acquisition entities were not under the ultimate control of the same individual or corporate parent group. Accordingly, Management concluded that this transaction resulted in a substantive change in control of TRINITY. It has therefore been accounted for as a business combination utilizing the acquisition method under ASC 805-10, with the assets acquired and liabilities assumed recorded at their fair values as of the acquisition date rather than at historical cost carryover basis. TRINITY’s results of operations have been included in the Company’s condensed consolidated financial statements from April 1, 2026.

 

The purchase price consists of the following: (i) $1,000,000 cash; (ii) 4,200,000 shares of KiNRG common stock, par value $0.0001 per share, at a price of $2.00 per share, based on arm’s-length sales of the Company’s common stock in March 2026, which management believes is a reasonable indication of fair value; (iii) a note payable in the amount of $3,000,000 with an interest rate of 6% per annum due on the earlier of the closing of a public offering by the Company or September 30, 2026. On July 27, 2026, the due date of the note was extended from September 30, 2026 to December 31, 2026. See Note 22.

 

The Company evaluated its receivables-financing arrangements and “future receivables obligation” related to TRINITY’s projects and concluded that, as of the Acquisition Date, those arrangements represent financing obligations rather than additional purchase consideration. The activity under the future receivable obligation for the three months ended June 30, 2026 was as follows:

 

April 1, 2026   $ 16,113,228  
Payments made     (16,052,804 )
Interest amortized     3,590,302  
June 30, 2026   $ 3,650,726  

 

Preliminary Purchase Price

 

The purchase price consideration was measured at acquisition date fair value. The 4,200,000 shares of common stock were valued at $2.00 per share, based on sales of KiNRG stock at $2.00 per share on March 31, 2026, which management believes is a reasonable indication of fair value. The $3,000,000 face amount of the promissory note approximates its fair value due to the short-term duration of the note and that the contract rate of 6% sits above the risk-free threshold.

 

The purchase consideration is summarized below:

 

Cash   $ 1,000,000  
Note payable     3,000,000  
Common stock (4,200,000 shares x $2.00)     8,400,000  
Total estimated purchase price   $ 12,400,000  

 

Preliminary Purchase Price Allocation

 

The following table sets forth the preliminary allocation of the purchase price. Contract assets and contract liabilities have been recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers, consistent with ASU 2021-08, and other identifiable assets and liabilities have been measured at their estimated acquisition-date amounts. The allocation is preliminary and subject to change during the measurement period as the Company completes its valuations.

 

Assets acquired:      
Cash and cash equivalents   $ 13,439,400  
Contract receivables     101,954,686  
Retention receivables     34,503,368  
Contract assets (costs and estimated earnings in excess of billings on uncompleted contracts)     3,528,138  
Due from affiliate     35,328,981  
Reserve for amounts due from affiliate     (29,917,458 )
Due from affiliate, net     5,411,523  
Prepaid expenses and other current assets     195,287  
Property and equipment, net     354,813  
Operating lease right-of-use assets     851,701  
Deferred tax asset     75,845  
Deposit     10,000  
Customer-related and contract-based intangible assets     -  
Total identifiable assets acquired   $ 160,324,761  
         
Liabilities assumed:        
Accounts payable   $ 103,896,473  
Retention payable     33,806,194  
Accrued salaries and other current liabilities     726,681  
Accrued liabilities – related parties     6,314,423  
Contract liabilities     17,203,905  
Obligation under future receivables financing, net     16,113,228  
Current portion of operating lease liabilities     267,691  
Current portion of long-term debt     28,169  
Operating lease liabilities, net of current portion     584,010  
Long-term debt, net of current portion     98,180  
Total liabilities assumed   $ 179,038,954  
         
Net identifiable liabilities assumed   $ 18,714,193  
Total purchase price     12,400,000  
Goodwill   $ 31,114,193  

 

The goodwill recognized in connection with the TRINITY Acquisition represents the expected future economic benefits from TRINITY’s assembled workforce, customer relationships, project backlog and anticipated synergies from combining TRINITY’s construction expertise with KiNRG’s HydroThermal Reactor technology. The goodwill is not expected to be deductible for income tax purposes.

 

The Company intends to combine TRINITY’s expertise in constructing data centers with KiNRG’s HydroThermal Reactor power generation technology to market a data center solution.

 

Measurement Period

 

The purchase price allocation is preliminary. The Company is continuing to evaluate the fair values of certain assets and liabilities, including customer-related and contract-based intangible assets, working capital accounts, contract positions and income tax-related items. In accordance with ASC 805, the Company may record adjustments to the provisional amounts during the measurement period (which will not exceed one year from April 1, 2026), with a corresponding adjustment to goodwill.

 

Pro forma Information

 

For the three and six months ended June 30, 2026, TRINITY contributed revenue and net income from continuing operations of approximately $369,170,248 and $14,391,831, respectively, to the Company’s consolidated results.

 

The following unaudited pro forma information presents the Company’s consolidated results of operations as if the TRINITY Acquisition had occurred on January 1, 2025. The pro forma amounts are presented for informational purposes only and are not necessarily indicative of what the Company’s results of operations would have been had the Acquisition been completed on that date, nor are they indicative of future results.

 

  – For the six months ended June 30, 2026, pro forma revenue would have been approximately $589,185,442 and pro forma net income from continuing operations would have been approximately $21,044,680.

 

  – For the six months ended June 30, 2025, pro forma revenue would have been approximately $82,846,589 and pro forma net income from continuing operations would have been approximately $436,051.

 

The pro forma results reflect the following material, non-recurring adjustments directly attributable to the TRINITY Acquisition:

 

  – Elimination of acquisition-related costs in the amount of $68,130, included in Selling, general and administrative expenses on the Company’s Statement of Operations, incurred during the six months ended June 30, 2026.

 

  – Amortization of acquired intangible assets of $0 due to no identifiable intangibles having been recorded, pending valuation.

 

– The income tax effects of the pro forma adjustments based on applicable statutory tax rates.

 

Pro forma Summary Tables

 

    FOR THE SIX MONTHS ENDED JUNE 30, 2026  
    KiNRG     TRINITY     Adjustments     Notes     Combined  
Revenues   $ -     $ 589,185,442                     $ 589,185,442  
                                         
Net income (loss) from continuing operations   $ 1,544,537     $ 26,479,722       (6,979,579 )     (1)   $ 21,044,680  

 

    FOR THE SIX MONTHS ENDED JUNE 30, 2025  
    KiNRG     TRINITY     Adjustments     Notes     Combined  
Revenues   $ -     $ 82,846,589                     $ 82,846,589  
                                         
Net income (loss) from continuing operations   $ (472,473 )   $ 1,110,901       (202,377 )     (2)   $ 436,051  

 

(1) Remove acquisition-related costs of $68,130 and interest income of $7,047,709 related to amounts due from affiliate fully reserved in consolidation.
(2) Remove interest income of $202,377 related to amounts due from affiliate fully reserved in consolidation.