Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

AIRGAIN, INC.

Unaudited Pro Forma Financial Statements

December 31, 2016 and 2015

 

 

 

 

Airgain, Inc.

Index to Financial Statements

 

 

  

Page

Unaudited Pro Forma Financial Statements

  

2

Unaudited Pro Forma Balance Sheet

  

3

Unaudited Pro Forma Statement of Operations

  

4

Notes to Unaudited Pro Forma Financial Statements

  

5

 

 

 

 

 

 

1

 

 

Airgain, Inc.

Unaudited Pro Forma Financial Statements

 

On April 27, 2017, Airgain, Inc. (the “Company”) acquired substantially all the assets of Antenna Plus, LLC (“Antenna Plus”).  

The following unaudited pro forma balance sheet and unaudited pro forma statement of operations of the Company are based on the historical financial statements of the Company and the historical financial statements of Antenna Plus after giving effect to the acquisition and after applying the assumptions and adjustments described in the accompanying notes to these unaudited pro forma financial statements.  The unaudited pro forma balance sheet gives effect to the acquisition as if it had occurred on December 31, 2016.  The unaudited pro forma statement of operations gives effect to the acquisition as if it had occurred on January 1, 2016.  

The unaudited pro forma financial statements, including the notes thereto, should be read in conjunction with the historical financial statement of the Company, and the notes thereto, included in the Company’s annual report on Form 10-K for the year ended December 31, 2016 filed with the U.S. Securities and Exchange Commission, and the historical financial statements of Antenna Plus and the notes thereto, for the year ended December 31, 2016, filed herewith and included as Exhibit 99.1 to this current report Form 8-K/A.

The unaudited pro forma financial statements are provided for informational purposes only and are not necessarily indicative of the results that actually would have been realized had the transaction occurred on January 1, 2016, nor do they purport to project the Company’s results of operations for any future period.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

Airgain, Inc.

Unaudited Pro Forma Balance Sheet

As of December 31, 2016

 

 

 

 

 

 

Airgain, Inc.

 

 

Antenna Plus, LLC Historical

 

 

Pro Forma Adjustments

 

 

Notes

 

Antenna Plus, Inc. Pro Forma

 

 

Airgain, Inc. Pro Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,161,403

 

 

$

1,534,044

 

 

$

(7,917,544

)

 

(c)

 

$

(6,383,500

)

 

$

38,777,903

 

Trade accounts receivable, net

 

 

5,154,996

 

 

 

416,460

 

 

 

167,930

 

 

(d)

 

 

584,390

 

 

 

5,739,386

 

Inventory

 

 

146,815

 

 

 

514,509

 

 

 

(81,739

)

 

(d)

 

 

432,770

 

 

 

579,585

 

Prepaid expenses and other current assets

 

 

349,550

 

 

 

7,640

 

 

 

(7,640

)

 

(f)

 

 

—

 

 

 

349,550

 

Total current assets

 

 

50,812,764

 

 

 

2,472,653

 

 

 

(7,838,993

)

 

 

 

 

(5,366,340

)

 

 

45,446,424

 

Property and equipment, net

 

 

807,086

 

 

 

282,510

 

 

 

120,448

 

 

(a)

 

 

402,958

 

 

 

1,210,044

 

Goodwill

 

 

1,249,956

 

 

 

—

 

 

 

1,385,261

 

 

(e)

 

 

1,385,261

 

 

 

2,635,217

 

Customer relationships, net

 

 

2,822,918

 

 

 

—

 

 

 

1,440,000

 

 

(b)

 

 

1,440,000

 

 

 

4,262,918

 

Assembled workforce, net

 

 

—

 

 

 

—

 

 

 

1,340,000

 

 

(b)

 

 

1,340,000

 

 

 

1,340,000

 

Intangible assets, net

 

 

286,719

 

 

 

—

 

 

 

920,000

 

 

(b)

 

 

920,000

 

 

 

1,206,719

 

Other assets

 

 

84,060

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

84,060

 

Total assets

 

$

56,063,503

 

 

$

2,755,163

 

 

$

(2,633,284

)

 

 

 

$

121,879

 

 

$

56,185,382

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,949,005

 

 

$

181,328

 

 

$

(59,449

)

 

(d)

 

$

121,879

 

 

$

4,070,884

 

Accrued bonus

 

 

1,748,551

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

1,748,551

 

Accrued liabilities

 

 

1,072,242

 

 

 

123,341

 

 

 

(123,341

)

 

(f)

 

 

—

 

 

 

1,072,242

 

Deferred purchase price

 

 

1,000,000

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

1,000,000

 

Current portion of long-term notes payable

 

 

1,388,563

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

1,388,563

 

Current portion of deferred rent obligation under operating lease

 

 

81,332

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

81,332

 

Total current liabilities

 

 

9,239,693

 

 

 

304,669

 

 

 

(182,790

)

 

 

 

 

121,879

 

 

 

9,361,572

 

Long-term notes payable

 

 

1,333,333

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

1,333,333

 

Deferred tax liability

 

 

6,166

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

6,166

 

Deferred rent obligation under operating lease

 

 

451,909

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

451,909

 

Total liabilities

 

 

11,031,101

 

 

 

304,669

 

 

 

(182,790

)

 

 

 

 

121,879

 

 

 

11,152,980

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

 

928

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

928

 

Additional paid in capital

 

 

88,582,470

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

88,582,470

 

Accumulated deficit

 

 

(43,550,996

)

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

(43,550,996

)

Members’ equity

 

 

—

 

 

 

2,450,494

 

 

 

(2,450,494

)

 

(f)

 

 

—

 

 

 

—

 

Total stockholders' equity

 

 

45,032,402

 

 

 

2,450,494

 

 

 

(2,450,494

)

 

 

 

 

—

 

 

 

45,032,402

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

56,063,503

 

 

$

2,755,163

 

 

$

(2,633,284

)

 

 

 

$

121,879

 

 

$

56,185,382

 

See accompanying notes to unaudited pro forma financial statements

3

 

 

Airgain, Inc.

Unaudited Pro Forma Statement of Operations

For the Year Ended December 31, 2016

 

 

 

 

 

 

 

Airgain, Inc.

 

 

Antenna Plus, LLC Historical

 

 

Pro Forma Adjustments

 

 

Notes

 

Antenna Plus, Inc. Pro Forma

 

 

Airgain, Inc. Pro Forma

 

Sales

 

$

43,433,867

 

 

$

7,506,906

 

 

$

—

 

 

 

 

$

7,506,906

 

 

$

50,940,773

 

Cost of goods sold

 

 

24,156,792

 

 

 

3,392,527

 

 

 

78,000

 

 

(a)(b)

 

 

3,470,527

 

 

 

27,627,319

 

Gross profit

 

 

19,277,075

 

 

 

4,114,379

 

 

 

(78,000

)

 

 

 

 

4,036,379

 

 

 

23,313,454

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,622,132

 

 

 

300,225

 

 

 

—

 

 

 

 

 

300,225

 

 

 

5,922,357

 

Sales and marketing

 

 

5,670,625

 

 

 

775,180

 

 

 

—

 

 

 

 

 

775,180

 

 

 

6,445,805

 

General and administrative

 

 

4,532,151

 

 

 

1,690,584

 

 

 

589,200

 

 

(a)(b)

 

 

2,279,784

 

 

 

6,811,935

 

Total operating expenses

 

 

15,824,908

 

 

 

2,765,989

 

 

 

589,200

 

 

 

 

 

3,355,189

 

 

 

19,180,097

 

Income (loss) from operations

 

 

3,452,167

 

 

 

1,348,390

 

 

 

(667,200

)

 

 

 

 

681,190

 

 

 

4,133,357

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(7,803

)

 

 

(51

)

 

 

—

 

 

 

 

 

(51

)

 

 

(7,854

)

Interest expense

 

 

178,371

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

178,371

 

Fair market value adjustment - warrants

 

 

(460,289

)

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

(460,289

)

Total other income

 

 

(289,721

)

 

 

(51

)

 

 

—

 

 

 

 

 

(51

)

 

 

(289,772

)

Income (loss) before income taxes

 

 

3,741,888

 

 

 

1,348,441

 

 

 

(667,200

)

 

 

 

 

681,241

 

 

 

4,423,129

 

Provision for income taxes

 

 

8,181

 

 

 

—

 

 

 

1,458

 

 

(g)

 

 

1,458

 

 

 

9,639

 

Net (loss) income

 

 

3,733,707

 

 

 

1,348,441

 

 

 

(668,658

)

 

 

 

 

679,783

 

 

 

4,413,490

 

Accretion of dividends on preferred convertible stock

 

 

(1,537,021

)

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

(1,537,021

)

Net income (loss) attributable to common stockholders

 

$

2,196,686

 

 

$

1,348,441

 

 

$

(668,658

)

 

 

 

$

679,783

 

 

$

2,876,469

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.85

 

Diluted

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.53

 

Weighted average shares used in calculating income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

3,373,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,373,316

 

Diluted

 

 

4,667,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,616,936

 

See accompanying notes to unaudited pro forma financial statements

 

4

 

 

Airgain, Inc.

Notes to Unaudited Pro Forma Financial Statements

For the Year Ended December 31, 2016

 

(1)

Basis of presentation

The unaudited pro forma financial statements are based on the Company’s and Antenna Plus’s historical financial statements as adjusted to give effect to the acquisition of Antenna Plus. The unaudited pro forma statement of operations for the year ended December 31, 2016 gives effect to the Antenna Plus acquisition as if it had occurred on January 1, 2016.  The unaudited pro forma balance sheet as of December 31, 2016 gives effect to the Antenna Plus acquisition as if it had occurred on December 31, 2016.

(2)

Preliminary purchase price allocation

On April 27, 2017, the Company acquired Antenna Plus for total consideration of approximately $6.4 million in cash.  The unaudited pro forma financial statements includes various assumptions including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed of Antenna Plus based on management’s best estimates of fair value.  The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities.  Accordingly, the pro forma adjustments are preliminary and have been made solely for illustrative purposes.

 

The following table shows the preliminary allocation of the purchase price for Antenna Plus to the acquired identifiable assets, liabilities assumed and pro forma goodwill:

 

Accounts receivable, net

 

$

584,390

 

Inventory

 

 

432,770

 

Property and equipment, net

 

 

402,958

 

Intangible assets

 

 

3,700,000

 

Goodwill

 

 

1,385,261

 

Total assets

 

 

6,505,379

 

Accounts payable

 

 

121,879

 

Total purchase price

 

$

6,383,500

 

5

 

 

(3)

Pro forma adjustments

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change.  The following adjustments have been reflected in the unaudited pro forma financial statements:

 

 

(a)

Reflects the preliminary fair value adjustment of $0.1 million to increase the basis in the acquired property, plant and equipment to an estimated fair value of $0.4 million. The fixed assets acquired include furniture and fixtures, machinery and equipment, office equipment and computers with estimated useful lives ranging from three to five years.  The fair value and useful life calculations are preliminary and subject to change after the Company finalizes its review of the specific types, nature, age, condition and location of Antenna Plus’s property, plant and equipment.  The following table summarizes the changes in the estimated depreciation expense:

 

 

 

For the Year Ended

 

 

 

December 31, 2016

 

Estimated depreciation expense

 

$

84,146

 

Historical depreciation expense

 

 

179,613

 

Pro forma adjustments to depreciation expense

 

$

(95,467

)

 

(b)

Reflects the fair value adjustment of $3.7 million for intangible assets acquired with the acquisition.  The intangible assets acquired include developed technology, customer relationships, assembled workforce and trade name.  The estimated useful lives of the intangible assets range from three to ten years.  The fair value of identifiable intangible assets is determined primarily using the “income approach”, which requires a forecast of all the expected future cash flows.  

 

The following table summarizes the estimated fair values of Antenna Plus’s identifiable intangible assets and their estimated useful lives:

 

 

 

 

 

 

 

 

 

Estimated Fair Value

 

 

Estimated Useful Life in Years

 

 

For the Year ended December 31, 2016 Amortization Expense

 

 

Customer relationships

 

$

1,440,000

 

 

 

10

 

 

$

144,000

 

 

Developed technology

 

 

800,000

 

 

 

5

 

 

 

160,000

 

 

Trade name

 

 

120,000

 

 

 

10

 

 

 

12,000

 

 

Assembled workforce

 

 

1,340,000

 

 

 

3

 

 

 

446,667

 

 

 

 

$

3,700,000

 

 

 

 

 

 

$

762,667

 

 

These preliminary estimates of fair value and estimated useful lives will likely differ from final amounts the Company will calculate after completing a detailed valuation analysis, and the difference could have a material impact on the accompanying unaudited pro forma financial statements.

 

 

(c)

Reflects the cash used to purchase the acquisition offset by working capital adjustments

 

 

(d)

Reflects adjustments to assets and liabilities assumed with the acquisition as shown in Note 2

 

 

(e)

Reflects the preliminary estimate of goodwill in the amount of $1.4 million, which represents the excess of the purchase price over the fair value of Antenna Plus’s identifiable assets acquired and liabilities assumed as shown in Note 2

 

6

 

 

 

(f)

Reflects the elimination of historical assets, liabilities and members’ equity that were not included in the acquisition

 

 

(g)

Reflects an adjustment to the provision for income taxes due to the acquisition

(4)

Receivership expenses

Fees paid to MCA Financial Group in the amount of $0.2 million for services as receiver over the Company, due to a dispute between the two members, that were included in the historical general and administrative expense of Antenna Plus have not been adjusted in the pro forma financial statements.

 

7