EX-99.1 18 ea127797ex99-1_tattooed.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF THE COMPANY FOR THE SIX MONTHS ENDED JUNE 30, 2020, UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2019, AND COMPARATIVE SHARE IN

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

The Company is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination.

 

The following unaudited pro forma condensed combined financial information is prepared in accordance with Article 11 of Regulation S-X and presents the pro forma effects of the following transactions (collectively the “Transactions”):

 

1.The restructuring described in the section of the Proxy Statement titled “Information About Ittella Parent — Corporate Information” prior to the consummation of the Business Combination.

 

2.Tax distribution of $512,000 to the stockholders of Ittella Parent prior to the consummation of the Business Combination.

 

3.The Business Combination.

 

The Unaudited Pro Forma Condensed Combined Financial Statements

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2020, assumes that the Transactions, as described above, occurred on June 30, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 and the six months ended June 30, 2020, present the pro forma effect of the Transactions as if they had been completed on January 1, 2019.

 

The following unaudited pro forma combined financial statements do not necessarily reflect what the Company’s financial condition or results of operations would have been had the Transactions occurred on the dates indicated. The pro forma combined financial information also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The historical financial information of Forum was derived from the audited financial statements of Forum as of and for the year ended December 31, 2019 and the unaudited condensed financial statements of Forum as of and for the six months ended June 30, 2020, included elsewhere in the Proxy Statement. The historical financial information of Ittella Parent was derived from Ittella Parent’s audited consolidated financial statements as of and for the year ended December 31, 2019 and its unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2020, included in the proxy statement.

 

The pro forma financial information is qualified in its entirety by reference to, and should be read together with Forum’s and Ittella Parent’s unaudited and audited consolidated financial statements and related notes and the sections titled “Summary Historical Financial Information of the Company”, “Summary Historical Financial Information of Ittella Parent”, “The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Ittella Parent Management Discussion and Analysis of Financial Condition and Results of Operations”, included in the Proxy Statement. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

Description of the Business Combination

 

Pursuant to the Merger Agreement, Merger Sub was merged with and into Ittella Parent, with Ittella Parent continuing as the surviving entity and a wholly-owned subsidiary of the Company. The aggregate consideration paid at the Closing to the Ittella Parent securityholders is the “Closing Merger Consideration.” The Closing occurred on October 15, 2020. The Closing Merger Consideration comprised $75,000,000 in cash, with the remainder of the Closing Merger Consideration comprising the Company’s common stock, valued at $10.00 per share. The Holdback Shares are payable after the Closing to the Ittella Parent stockholders upon satisfaction of certain conditions within the first three years after the Closing.

 

1

 

 

Accounting for the Business Combination

 

Business combinations in which the legal acquirer is not the accounting acquirer are commonly referred to as “reverse acquisitions” and can represent asset acquisitions, capital transactions and business combinations. A reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (the legal acquiree) is identified as the acquirer for accounting purposes. Reverse acquisitions are accounted for in accordance with Subtopic 805-40 of Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805-40”).

 

As described in the Proxy Statement, including under the section entitled “Proposal No. 1 — The Business Combination Proposal,” Ittella Parent was acquired by the Company and the owners of Ittella Parent obtained control of the Company following the Business Combination. In accordance with ACS 805-40, the Business Combination will be accounted for as a reverse acquisition in which the Company is considered the legal acquirer and Ittella Parent is considered the accounting acquirer. As such, the consolidated financial statements will reflect the accounting from the perspective of Ittella Parent as the accounting acquirer. This determination is based on the following factors:

 

i.Ittella Parent securityholders combined retained the largest voting interest in the Company.

 

ii.Ittella Parent’s former management represent the majority of the management of the Company.

 

iii.Ittella Parent is the entity with the ability to elect the largest number of members to the Company’s board of directors.

 

iv.Ittella Parent is larger than Forum based on assets, revenues, or earnings.

 

Other factors were evaluated but are not considered to have a material impact on the determination of Ittella Parent as the accounting acquirer.

 

The Business Combination will be accounted for as a reverse acquisition in accordance with U.S. GAAP. Under this method of accounting, Forum will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Ittella Parent issuing stock for the net assets of Forum, accompanied by a recapitalization. The net assets of Forum will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the reverse acquisition will be those of Ittella Parent. The reverse acquisition of Ittella Parent is determined to result in a transfer of an entire business operation and therefore represents a business combination through which the pre-transaction securityholders of Ittella Parent will retain a controlling interest in the Company.

 

Basis of Unaudited Pro Forma Presentation

 

The unaudited pro forma condensed combined financial statements for the year ended December 31, 2019 have been prepared using and should be read in conjunction with the following:

 

Forum’s audited financial statements, consisting of the balance sheet as of December 31, 2019 and statement of operations and comprehensive income for the year ended December 31, 2019, and the related notes, included in the Proxy Statement.

 

Ittella Parent’s audited consolidated financial statements, consisting of the consolidated balance sheet as of December 31, 2019 and consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2019, and the related notes, included in the Proxy Statement.

 

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The unaudited pro forma condensed combined financial statements as of and for the six months ended June 30, 2020 have been prepared using and should be read in conjunction with the following:

 

Forum’s unaudited financial statements, consisting of the balance sheet as of June 30, 2020 and statement of operations and comprehensive income for the six months ended June 30, 2020, and the related notes, included in the Proxy Statement.

 

Ittella Parent’s unaudited consolidated financial statements, consisting of the consolidated balance sheet as of June 30, 2020 and consolidated statement of operations and comprehensive income (loss) for the six months ended June 30, 2020, and the related notes, included in the Proxy Statement.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination.

 

The unaudited condensed pro forma adjustments reflecting the completion of the Business Combination are based on certain currently available information and certain assumptions and methodologies that the Company believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the unaudited pro forma condensed adjustments and it is possible the difference may be material. The Company believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at this time and that the unaudited pro forma condensed adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the business combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of the Company and Ittella Parent.

 

The unaudited pro forma condensed combined financial information has been prepared on the basis of total redemptions of 1,827 shares of Class A common stock of the Company valued at $18,952.

 

Accounting Policies and Reclassifications

 

Based on management’s initial analysis of the accounting policies of Forum and Ittella Parent, there were no differences identified that would have an impact on the unaudited pro forma condensed combined financial information or that would require adjustments to the unaudited pro forma condensed combined financial statements. Management will perform a comprehensive review of the accounting policies of Forum and Ittella Parent. As a result of the comprehensive review, management may identify differences between the accounting policies of these entities which, when conformed, could have a material impact on the financial statements of the Company.

 

Unaudited Pro Forma Financial Information

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2020 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 and six months ended June 30, 2020 are based on the historical financial statements of Forum and Ittella Parent. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

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ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2020

 

(in thousands)  Ittella
Parent
Consolidated
   Forum
Consolidated
   Ittella
Parent
Pro Forma
Consolidated
   Pro Forma
Adjustments
      Ittella
Parent
As adjusted
 
CURRENT ASSETS                            
Cash and cash equivalents  $5,202   $86   $5,288   $104,400  

PF: 1

PF: 2
PF: 3
PF: 6

  $109,688 
Cash held in Trust       207,402    207,402    (207,402)  PF: 1    
Accounts receivable   15,707        15,707            15,707 
Inventory   27,100        27,100           27,100 
Prepaid expenses and other current assets   3,780    426    4,206           4,206 
    51,789    207,914    259,703    (103,002)      156,701 
                             
PROPERTY AND EQUIPMENT, NET   11,915        11,915           11,915 
                             
INTANGIBLE ASSETS INCLUDING GOODWILL                       
                             
DEFERRED TAXES   189        189           189 
                             
OTHER ASSETS   256        256           256 
                             
TOTAL ASSETS  $64,149   $207,914   $272,063   $(103,002)     $169,061 
                             
LIABILITIES AND STOCKHOLDERS’ EQUITY                            
                             
CURRENT LIABILITIES                            
Accounts payable  $26,163   $1,245   $27,408   $      $27,408 
Accrued expenses   1,456        1,456    8,250   PF: 3   9,706 
Dividends payable   1,923        1,923           1,923 
Line of credit   14,532        14,532           14,532 
Notes payable to related parties, current portion   189        189    (189)       
Notes payable, current portion   540        540    (404)      136 
Other current liabilities   895        895           895 
    45,698    1,245    46,943    7,657   PF: 6   54,600 

 

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ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2020 (Continued)

 

(in thousands)  Ittella
Parent
Consolidated
   Forum
Consolidated
   Ittella
Parent
Pro Forma
Consolidated
   Pro Forma
Adjustments
      Ittella
Parent
As adjusted
 
NONCURRENT LIABILITIES   2,433    8,800    11,233    (9,332) 

PF: 2;

PF: 6

   1,901 
                             
CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION       192,868    192,868    (192,868)  PF: 6    
                             
REDEEMABLE NONCONTROLLING INTEREST   43,900        43,900    (43,900)  PF: 4    
                             
STOCKHOLDERS’ EQUITY (DEFICIT)                            
Common stock   1    1    2    (1)  PF: 7   1 
Additional paid-in capital       2,127    2,127    165,581   PF: 4;
PF: 8
   167,708 
Accumulated other comprehensive income   (343)       (343)          (343)
Retained earnings (deficit)   (28,498)   2,873    (25,625)   (29,181)  PF: 1;
PF: 2;
PF: 3;
PF: 4;
PF: 7
   (54,806)
Total equity attributable to common stockholders   (28,840)   5,001    (23,839)   136,399       112,560 
Noncontrolling interests   958        958    (958)  PF: 5    
    (27,882)   5,001    (22,881)   135,441       112,560 
                             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $64,149   $207,914   $272,063   $(103,002)     $169,061 

 

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ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2019

 

(in thousands except per share information)  Ittella
Parent
Consolidated
   Forum
Consolidated
Forum
   Ittella
Parent
Pro Forma
Consolidated
   Pro Forma
Adjustments
      Ittella
Parent
As adjusted
 
REVENUE  $84,919   $   $84,919   $      $84,919 
                             
COST OF GOODS SOLD   71,209        71,209           71,209 
                             
GROSS PROFIT   13,710        13,710           13,710 
                             
OPERATING EXPENSES   7,454    1,105    8,559    934   PF: 8   

9,493

 
                             
INCOME FROM OPERATIONS   6,256    (1,105)   5,151    (934)      4,217 
                             
OTHER INCOME AND EXPENSES                            
Interest income       4,289    4,289    (2,326)  PF: 1   1,963 
Interest expense (income)   (494)       (494)      PF: 1   (494)
Unrealized gain on marketable securities held in Trust Account       18    18    (18)       
    (494)   4,307    3,813    (2,344)      1,469 
                             
INCOME BEFORE PROVISION FOR INCOME TAXES   5,762    3,202    8,964    (3,278)      5,686 
                             
PROVISION FOR INCOME TAXES   154    852    1,006    (973)  PF: 9   33 
                             
NET INCOME (LOSS)   5,608    2,350    7,958    (2,305)      5,653 
                             
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   1,082        1,082    (1,082)  PF: 4    
                             
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS  $4,526   $2,350   $6,876   $(1,223)     $5,653 
                             
SHARES OUTSTANDING, BASIC AND DILUTED   8    6,688                 57,619(1)
                             
NET INCOME PER SHARE  $549.93   $(0.11)               $0.10 

 

 

(1)Pro forma shares outstanding does not include 2,500 Sponsor Earnout Shares and 5,000 Holdback Shares that are held in escrow subject to the achievement of certain conditions.

 

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ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2020

 

(in thousands except per share information)  Ittella
Parent
Consolidated
   Forum
Consolidated
   Ittella
Parent
Pro Forma
Consolidated
   Pro Forma
Adjustments
      Ittella
Parent
As adjusted
 
REVENUE  $67,934   $   $67,934   $      $67,934 
                             
COST OF GOODS SOLD   54,946        54,946           54,946 
                             
GROSS PROFIT   12,988        12,988           12,988 
                             
OPERATING EXPENSES   4,458    1,273    5,731    467   PF: 8   6,198 
                             
INCOME FROM OPERATIONS   8,530    (1,273)   7,257    (467)      6,790 
                             
OTHER INCOME AND EXPENSES                            
Interest income       751    751    (363)  PF: 1   388 
Interest expense   (381)       (381)          (381)
Other income (expense)   288        288           288 
    (93)   751    658    (363)      295 
                             
INCOME BEFORE PROVISION FOR INCOME TAXES   8,437    (522)   7,915    (830)  PF: 1   7,085 
                             
PROVISION (BENEFIT) FOR INCOME TAXES   1,283    32    1,315    (248)  PF: 9   1,067 
                             
NET INCOME (LOSS)   7,154    (554)   6,600    (582)      6,018 
                             
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   1,361        1,361    (1,361)  PF: 4    
                             
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS  $5,793   $(554)  $5,239   $778      $6,018 
                             
SHARES OUTSTANDING, BASIC AND DILUTED   8    6,835                 57,619(1)
                             
NET INCOME (LOSS) PER SHARE  $703.55   $(0.17)               $0.10 

 

 

(1)Pro forma shares outstanding does not include 2,500 Sponsor Earnout Shares and 5,000 Holdback Shares that are held in escrow subject to the achievement of certain conditions.

 

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Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Business Combination, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the Company.

 

There were no intercompany balances or transactions between Forum and Ittella Parent as of the dates and for the periods of these unaudited pro forma condensed combined financial statements.

 

The unaudited pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had Forum and Ittella Parent filed consolidated income tax returns during the periods presented.

 

The unaudited pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined consolidated statements of operations are based upon the number of shares outstanding, assuming the Business Combination occurred on January 1, 2019.

 

The unaudited pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2020, and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and the six months ended June 30, 2020, are as follows:

 

Pro Forma Adjustments (PF)

 

1Reflects the reclassification of cash held in Forum’s trust account amounting to $207,402,252 as of June 30, 2020. This cash is used for transaction considerations (i.e., settlement of debts and defined obligations of Ittella Parent), transaction expenses, the redemption of 1,827 shares of Class A common stock of Forum valued at $18,952 and general corporate purposes following the Closing. This also reflects the adjustment of trust income related to the transaction cash consideration and other expenses related thereto and the resulting tax impact of the trust income using a US federal tax rate of 21% and a California state tax rate of 8.84%.

 

2.Reflects the settlement of $7,000,000 of deferred underwriters’ fees.

 

3.Represents transaction costs in connection with the Business Combination totaling $35,105,092 of which $26,855,092 was paid in cash at Closing, consisting of the deferred underwriters’ fees referenced in PF 2, legal and financial advisors’ fees, and other professional fees. This amount includes the accrued compensatory shares payable to Harrison Co. in the second quarter of 2021.

 

4.Represents recapitalization of Ittella Parent equity through the issuance of 9,406 shares of common stock, one share of Class A special stock, one share of Class B special stock and the exchange of certain securityholders’ shares of Ittella Parent’s common stock for 34,470,329 shares of the Company’s common stock as consideration in the Business Combination.

 

a.Exchange of 12.5% noncontrolling ownership interest held by a financial institution in Ittella LLC
to Ittella Parent for 1,176 shares of common stock of Ittella Parent.

 

b.Exchange of Pizzo’s 30% ownership interest in Ittella Italy to Ittella Parent in exchange for one share of Class B special stock of Ittella Parent, which entitled Pizzo to receive 1,500,000 shares of common stock of the Company and $2,000,000 in cash at the Closing.

 

c.Issuance of one share of Class A special stock of Ittella Parent to a key employee, which entitled her to receive 500,000 shares of common stock of the Company and $1,000,000 in cash at the Closing.

 

d.Conversion of all issued and outstanding capital stock of Ittella Parent immediately prior to the Business Combination into the right to receive common stock of the Company.

 

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e.Conversion of shares of the Company’s Class B common stock into shares of the Company’s common stock in connection with the Business Combination.

 

f.The Sponsor will subject 2,500,000 founder shares to potential forfeiture if certain conditions are not achieved by the post-combination company following the Closing. These shares are not included for purposes of the calculations of net income (loss) per share. In addition, 5,000,000 Holdback Shares subject to the achievement of the same conditions are also not included for purposes of the calculations of net income (loss) per share.

 

g.Reversal of non-controlling interests on Ittella Parent’s shares that were subsequently converted/exchanged with the Company’s shares.

 

5.Reflects elimination of non-controlling interests attributable to a financial institution and Pizzo.

 

6.Reflects settlement of Class A common stock subject to possible redemption held by Forum prior to the Business Combination, and certain of Forum’s debt obligations outstanding at Closing.

 

7.Reflects elimination of Forum’s stockholders’ equity.

 

8.Reflects the incremental expense to be incurred by Ittella Parent as a result of agreements for (i) a new hire to the executive management team, and (ii) compensation adjustments to the existing executive management team’s compensation based on the employment agreements to be effective upon the Closing. Compensation expense includes salary, bonus and burden.

 

9.Reflects adjustments to income tax expense as a result of the tax impact on the pro forma adjustments at the estimated US federal statutory tax rate of 21.0% and the California state tax rate of 8.84%.

 

Net income (loss) per Share

 

Represents the net income (loss) per share calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2019. As the Business Combination is being reflected as if it had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented.

 

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COMPARATIVE SHARE INFORMATION

 

The following table sets forth the per share data of Forum on a stand-alone basis and the unaudited pro forma condensed combined per share data for the year ended December 31, 2019 and the six months ended June 30, 2020 after giving effect to the Business Combination.

 

You should read the information in the following table in conjunction with the selected historical financial information summary included in the Proxy Statement, and the historical financial statements of Forum and Ittella Parent and related notes that are included in the Proxy Statement. The unaudited Forum and Ittella Parent pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this Form 8-K.

 

The unaudited pro forma combined net income per share information below does not purport to represent the net income per share which would have occurred had the companies been combined during the periods presented, nor net income per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Forum and Ittella Parent would have been had the companies been combined during the periods presented.

 

   Ittella
Parent
   Forum   Pro Forma
Combined
 
   (in thousands, except share and per share amounts) 
Six Months Ended June 30, 2020               
Net income (loss) attributable to common stockholders  $5,793   $(554)  $6,018 
Stockholders’ equity (deficit) attributable to common stockholders  $(28,840)  $5,001   $112,560 
Weighted average shares outstanding – basic and diluted   8,230    6,834,958   57,618,913(2) 
Basic and diluted net income (loss) per share  $703.55(1)  $(0.17)  $0.10 
Stockholders’ equity per share  $(3,504.25)  $0.73   $1.95 
                
Year Ended December 31, 2019               
Net income attributable to common stockholders  $4,526   $2,350   $

5,653

 
Stockholders’ equity attributable to common stockholders  $2,890   $5,000   $        
Weighted average shares outstanding – basic and diluted   8,230    6,687,798    57,618,913(2)
Basic and diluted net income per share  $549.93(1)  $(0.11)  $0.10 
Stockholders’ equity per share  $351.15   $0.75   $        

 

 

(1)Per share information for Ittella Parent is derived from the net income (loss) per share attributable to Ittella Parent from the historical consolidated financial statements of Ittella Parent.
(2)Pro forma shares outstanding does not include 2,500,000 Sponsor Earnout Shares and 5,000,000 Holdback Shares that are held in escrow subject to the achievement of certain conditions.

 

 

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