EX-99.4 5 ampg_ex994.htm PRO FORMA FINANCIAL STATEMENTS ampg_ex994.htm

EXHIBIT 99.4

 

UNAUDITED PRO FORMA COMBINED FINACIAL INFORMATION

 

The following unaudited pro forma combined financial information of AmpliTech Group, Inc. (the “Company” or "AmpliTech") is presented to reflect the acquisition (“Acquisition”) by the Company of Spectrum Semiconductor Materials, Inc. (“SSM”). The Acquisition was consummated on December 15, 2021. The unaudited pro forma combined balance sheet is presented as if the Acquisition had occurred on September 30, 2021. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 are presented as if the Acquisition had occurred on January 1, 2020. The Acquisition has been accounted for using the acquisition method of accounting and, accordingly, the total estimated purchase consideration of the Acquisition was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets acquired and liabilities assumed was recorded as goodwill.

 

Determination of the allocations of the SSM purchase price used in the unaudited pro forma combined balance sheet and statements of operations is based upon preliminary estimates and assumptions. These preliminary estimates and assumptions could change significantly during the measurement period as AmpliTech finalizes the valuations of the net tangible and intangible assets acquired and liabilities assumed. Any change could result in material variances between AmpliTech's future financial results and the amounts presented in the unaudited pro forma combined financial information, including variances in fair values recorded, as well as expenses associated with these items. The unaudited pro forma combined balance sheet and statements of operations reflect adjustments that AmpliTech's management believes are factually supportable, directly attributable to the Acquisition, and with respect to the statements of operations, expected to have a recurring impact on the combined results. The unaudited pro forma combined balance sheet and statements of operations also do not include any restructuring or integration costs AmpliTech may incur or the effects of any cost savings from operating efficiencies and synergies that may result from the Acquisition.

 

The unaudited pro forma combined balance sheet and statements of operations are for information purposes only and do not purport to represent what AmpliTech's actual results would have been if the Acquisition had been completed as of the dates indicated above or that may be achieved in the future.

 

The unaudited pro forma combined balance sheet and statements of operations, including the notes thereto, should be read in conjunction with AmpliTech's historical financial statements set forth in its Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission ("SEC") on March 31, 2021, on Form 10-Q for three and nine-month periods ended September 30, 2021, filed with the SEC on November 15, 2021, as well as the historical financial statements of SSM included elsewhere in this Current Report on Form 8-K.

 

 
1

 

   

AMPLITECH GROUP, INC.

 

 

 

 

 

 

 

 

 

 

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEPTEMBER 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

Spectrum

 

 

 

 

 

 

 

 

 

AmpliTech

 

 

Semiconductors

 

 

Pro Forma

 

 

 

 

Pro Forma

 

 

 

Group

 

 

Materials

 

 

Adjustments

 

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 $ 22,947,873

 

 

 $ 427,592

 

 

 $ (9,973,463 )

 

(a)

 

 $ 13,402,002

 

Accounts receivable, net

 

 

 489,736

 

 

 

 1,198,743

 

 

 

 -

 

 

 

 

 

 1,688,479

 

Marketable securities, net

 

 

 4,152,589

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 4,152,589

 

Inventories, net

 

 

 948,512

 

 

 

 3,388,650

 

 

 

 -

 

 

 

 

 

 4,337,162

 

Prepaid expenses

 

 

 913,926

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 913,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

 

 29,452,636

 

 

 

 5,014,985

 

 

 

 (9,973,463 )

 

 

 

 

 24,494,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

 1,166,589

 

 

 

 105,718

 

 

 

 -

 

 

 

 

 

 1,272,307

 

Operating lease right-of-use assets

 

 

 278,878

 

 

 

 923,658

 

 

 

 -

 

 

 

 

 

 1,202,536

 

Intangible assets, net

 

 

 601,511

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 601,511

 

Goodwill

 

 

 120,136

 

 

 

 -

 

 

 

 8,574,459

 

 

(b)

 

 

 8,694,595

 

Cost-method-investment

 

 

 250,000

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 250,000

 

Security deposits

 

 

 26,707

 

 

 

 29,958

 

 

 

 -

 

 

 

 

 

 56,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

 31,896,457

 

 

$

 6,074,319

 

 

$

 (1,399,004

 )

 

 

 

$

 36,571,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 $ 354,728

 

 

 $ 1,103,998

 

 

 $ 342,153

 

 

(e)

 

 $ 1,800,879

 

Customer deposits

 

 

 212,067

 

 

 

 15,037

 

 

 

 -

 

 

 

 

 

 227,104

 

Current portion of financing lease

 

 

 33,280

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 33,280

 

Current portion of operating lease liabilities

 

 

 88,986

 

 

 

 295,701

 

 

 

 -

 

 

 

 

 

 384,687

 

Current portion of loans payable

 

 

 137,394

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 137,394

 

Line of credit

 

 

 -

 

 

 

 105,800

 

 

 

 -

 

 

 

 

 

 105,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Current Liabilities

 

 

 826,455

 

 

 

 1,520,536

 

 

 

 342,153

 

 

 

 

 

 2,689,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent purchase price payable

 

 

 -

 

 

 

 -

 

 

 

 1,799,699

 

 

(d)

 

 

 1,799,699

 

Financing lease, net of current portion

 

 

 26,047

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 26,047

 

Operating lease liabilities, net of current portion

 

 

 199,302

 

 

 

 689,880

 

 

 

 -

 

 

 

 

 

 889,182

 

Notes payable, net of current portion

 

 

 234,341

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 234,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 1,286,145

 

 

 

 2,210,416

 

 

 

 2,141,852

 

 

 

 

 

 5,638,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A convertible preferred stock, par value $0.001, 1,000,000 shares authorized, 0 issued and outstanding

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 -

 

Common stock, par value $0.001, 500,000,000 shares authorized, 9,343,671 shares issued and outstanding

 

 

 9,344

 

 

 

 -

 

 

 

 188

 

 

(c)

 

 

 9,532

 

Common stock, no par value, 500,000 shares authorized, 80,250 shares issued and 77,000 shares outstanding

 

 

 -

 

 

 

 872,336

 

 

 

 (872,336 )

 

(g)

 

 

 -

 

Treasury stock, at cost

 

 

 

 

 

 

 (136,368 )

 

 

 136,368

 

 

(g)

 

 

 -

 

Additional paid-in capital

 

 

 34,414,811

 

 

 

 -

 

 

 

 665,012

 

 

(c)

 

 

 35,079,823

 

Accumulated deficit

 

 

 (3,813,843 )

 

 

 3,127,935

 

 

 

 (3,470,088 )

 

(f)

 

 

 (4,155,996 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity

 

 

 30,610,312

 

 

 

 3,863,903

 

 

 

 (3,540,856 )

 

 

 

 

 30,933,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

 $ 31,896,457

 

 

 $ 6,074,319

 

 

 $ (1,399,004 )

 

 

 

 $ 36,571,772

 

 

 
2

 

   

AMPLITECH GROUP, INC.

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

Spectrum

 

 

 

 

 

 

 

 

 

 

 

AmpliTech

 

 

Semiconductors

 

 

Pro Forma

 

 

 

 

Pro Forma

 

 

 

Group

 

 

Materials

 

 

Adjustments

 

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 $ 2,553,982

 

 

 $ 10,051,968

 

 

 $ -

 

 

 

 

 $ 12,605,950

 

Cost of goods sold

 

 

 1,840,764

 

 

 

 5,354,889

 

 

 

 -

 

 

 

 

 

 7,195,653

 

Gross profit

 

 

 713,218

 

 

 

 4,697,079

 

 

 

 -

 

 

 

 

 

 5,410,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

 2,802,434

 

 

 

 2,346,407

 

 

 

 (26,558 )

 

(h)

 

 

 5,122,284

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

 (2,089,216 )

 

 

 2,350,672

 

 

 

 26,558

 

 

 

 

 

 288,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

 

 

 232,200

 

 

 

 220,446

 

 

 

 -

 

 

 

 

 

 452,646

 

Other income

 

 

 11,520

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 11,520

 

Unrealized loss on investments

 

 

 (63,135 )

 

 

 -

 

 

 

 -

 

 

 

 

 

 (63,135 )

Interest expense, net

 

 

 (36,840 )

 

 

 (8,126 )

 

 

 -

 

 

 

 

 

 (44,966 )
Total Other Income (Expense)

 

 

 143,745

 

 

 

 212,320

 

 

 

 -

 

 

 

 

 

 356,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 $ (1,945,471 )

 

 $ 2,562,992

 

 

 $ 26,558

 

 

 

 

 $ 644,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 (0.25 )

 

 

 

 

 

 

 

 

 

 

 

 

 0.08

 

Diluted

 

 

 (0.25 )

 

 

 

 

 

 

 

 

 

 

 

 

 0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 7,939,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 8,127,450

 

Diluted

 

 

 7,939,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 8,127,450

 

 

 
3

 

   

AMPLITECH GROUP, INC.

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE YEAR ENDED DECEMBER 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

Spectrum

 

 

 

 

 

 

 

 

 

 

 

AmpliTech

 

 

Semiconductors

 

 

Pro Forma

 

 

 

 

Pro Forma

 

 

 

Group

 

 

Materials

 

 

Adjustments

 

 

Notes

 

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 $ 3,458,081

 

 

 $ 7,662,572

 

 

 $ -

 

 

 

 

 $ 11,120,653

 

Cost of goods sold

 

 

 2,203,844

 

 

 

 4,145,569

 

 

 

 -

 

 

 

 

 

 6,349,413

 

Gross profit

 

 

 1,254,237

 

 

 

 3,517,003

 

 

 

 -

 

 

 

 

 

 4,771,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

 2,170,183

 

 

 

 2,505,836

 

 

 

 -

 

 

 

 

 

 4,676,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

 (915,946 )

 

 

 1,011,167

 

 

 

 -

 

 

 

 

 

 95,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

 (109,613 )

 

 

 (23,816 )

 

 

 -

 

 

 

 

 

 (133,429 )

Total Other Expenses

 

 

(109,613

)

 

 

(23,816

)

 

 

-

 

 

 

 

 

(133,429

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 $ (1,025,559 )

 

 $ 987,351

 

 

 $ -

 

 

 

 

 $ (38,208 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 (0.37 )

 

 

 

 

 

 

 

 

 

 

 

 

(0.01

 )

Diluted

 

 

 (0.37 )

 

 

 

 

 

 

 

 

 

 

 

 

(0.01

 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 2,782,303

 

 

 

 

 

 

 

 

 

 

 

 

 

2,970,745

 

Diluted

 

 

 2,782,303

 

 

 

 

 

 

 

 

 

 

 

 

 

2,970,745

 

 

 
4

 

 

1.  BASIS OF PRESENTATION. On November 19, 2021, AmpliTech entered into a Purchase Agreement (the “Purchase Agreement”) with SSM (the "Seller"), pursuant to which AmpliTech will acquire substantially all of the assets of the Company. The Acquisition was completed on December 15, 2021. The aggregate purchase price for the Company's assets is $10,250,000, subject to certain working capital and other adjustments.

 

The unaudited pro forma combined financial statements are based on the AmpliTech’s historical consolidated financial statements and SSM’s historical financial statements, as adjusted to give effect to the December 15, 2021 acquisition of SSM. The unaudited pro forma combined balance sheet as of September 30, 2021 gives effect to the acquisition of SSM as if it had occurred on September 30, 2021. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 give effect to the acquisition of SSM as if it had occurred on January 1, 2020.

 

The unaudited pro forma combined financial information has been prepared using the acquisition method of accounting, in accordance with ASC 805, Business Combinations, which requires, among other things, that the purchase price paid by the Company in connection with the acquisition be allocated to identifiable assets acquired based on the respective estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair values of the underlying identifiable assets acquired has been allocated to goodwill.

 

The process for estimating fair values in many cases requires the use of significant estimates, assumptions and judgments, including developing appropriate discount rates. The Company has engaged an independent third-party valuation firm to assist in determining the preliminary estimated fair values of identifiable intangible assets. Since these unaudited pro forma combined financial statements have been prepared based on preliminary estimates of fair values using currently available information and certain assumptions, the actual amounts recorded may differ materially if additional information becomes available. The Company will finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. Acquisition related transaction costs are not included as a component of the purchase price and are expensed as incurred.

 

2.  PURCHASE PRICE ALLOCATION.  The acquisition of SSM was accounted for under the acquisition method of accounting and the purchase price allocation was provisionally prepared during the first quarter of 2022. Amplitech has recorded provisional amounts for all of the assets acquired, based upon their estimated fair values at the date of the acquisition. These provisional amounts may be adjusted as necessary during the measurement period (up to one year from the acquisition date) while the accounting is finalized.

 

The total purchase price was preliminarily allocated as follows:

   

 

 

December 15,

2021

 

Purchase Consideration

 

 

 

Cash considerations

 

 

 9,500,000

 

Common stock

 

 

 665,200

 

Working capital adjustment

 

 

 708,076

 

Contingent payment

 

 

 1,799,699

 

Total consideration

 

 $ 12,672,975

 

 

 

 

 

 

Assets Acquired

 

 

 

 

Cash

 

 

 260,748

 

Accounts receivable

 

 

 1,242,278

 

Inventory

 

 

 4,176,189

 

Property and equipment

 

 

 99,188

 

Right-of-use operating lease asset

 

 

 858,508

 

Other assets

 

 

 29,958

 

Total assets acquired

 

 

 6,666,869

 

 

 

 

 

 

Liabilities Assumed

 

 

 

 

Accounts payable

 

 

 1,295,285

 

Accrued expenses

 

 

 304,400

 

Customer deposits

 

 

 48,830

 

Right-of-use operating lease liability

 

 

 919,838

 

Total liabilities assumed

 

 

 2,568,353

 

 

 

 

 

 

Net tangible assets acquired

 

 

 4,098,516

 

 

 

 

 

 

Preliminary Goodwill

 

 

 8,574,459

 

 

 

 

 

 

Net Assets Acquired

 

 $ 12,672,975

 

 

 
5

 

 

3. PRO FORMA ADJUSTMENTS. The following is a summary of pro forma adjustments reflected in the unaudited pro forma combined financial information based on preliminary estimates, which may change as additional information is obtained:

 

PRO FORMA ADJUSTMENTS 

 

The following is a summary of pro forma adjustments reflected in the unaudited pro forma combined financial information based on preliminary estimates, which may change as additional information is obtained: 

 

(a)

Cash impact upon paying the Closing Amount to the Sellers:

 

 

1)

 Payment of cash purchase consideration

 

 $ 9,500,000

 

 

2)

 Payment for working capital per closing statement

 

 

 708,076

 

 

 

 Working capital adjusted for 9/30

 

 

 (473,463 )

Add back working capital not paid per closing to adjust for 9/30

 

 234,613

 

 

 

 

 

 

 

 

Net impact on cash

 $

 9,973,463

 

(b)

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets.

 

 

(c)

Reflects the issuance of 188,442 shares of common stock as consideration in the purchase price. Shares were valued at $3.53 per share or $665,200.  

 

 

(d)

Represents the estimated fair value of the future potential contingent earn-out the Sellers may earn based upon SSM achieving certain revenue targets.

 

 

(e)

Records AmpliTech's estimated transaction related expenses that have not been paid. These costs are not included in the unaudited pro forma combined statements of operation because they are non-recurring. The adjustment does not include severance, restructuring or other costs that may result from the acquisition.

 

 

1)

 Total estimated acquisition related costs

 

 $ 368,710

 

 

2)

 Costs reflected in AmpliTech's historical financial statements as of September 30, 2021

 

 

 (26,558 )

Pro Forma acquisition costs reflected through the recordation of accounts payable at September 30, 2021

$

342,153

 

 

(f)

Impact on accumulated deficit

 

 

1)

 Total estimated acquisition related costs

 

 $ 368,710

 

 

2)

 Costs reflected in AmpliTech's historical financial statements as of September 30, 2021

 

 

 (26,558 )

 

3)

 Total acquisition costs not recorded in historical financial statements as of September 30, 2021

 

 

 342,153

 

 

4)

 Reflects removal of SSM equity in the acquisition

 

 

 3,127,935

 

Pro Forma reduction to accumulated deficit as of September 30, 2021

 $

(3,470,088

)

 

(g)

Eliminates the remaining historical equity accounts of SSM.

(h)

Pro Forma add back of one-time transaction cost expensed in the historical period ended September 30, 2021 of $26,558

 

 
6