EX-99 4 es99-2.htm Exhibit 99.2

 

 

 

EXHIBIT 99.2

 

On April 2, 2014, Plug Power Inc. (the “Company”) completed the acquisition of ReliOn, Inc. (“ReliOn”). The unaudited pro forma condensed combined financial data presented herein is derived from the historical consolidated financial statements of the Company and the historical financial statements of ReliOn. The unaudited pro forma condensed combined balance sheet information is presented on an as adjusted basis as if the ReliOn acquisition had occurred on March 31, 2014. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2014 and the year ended December 31, 2013 combine the Company’s historical consolidated statements of operations with ReliOn’s historical statements of operations for those periods, and give effect to the acquisition as if it had occurred on January 1, 2013. The Company believes this information is important in evaluating its future operations and the impact of the ReliOn acquisition.

 

The unaudited pro forma condensed combined financial statements contained in this report use the acquisition method of accounting, with the Company treated as the acquirer. The purchase price for the ReliOn acquisition was approximately $4.0 million, based on the issuance of 530,504 shares of Plug Power common stock at the closing price of the Company’s common stock on April 1, 2014 of $7.54. The pro forma adjustments are based on currently available information and upon assumptions that the Company believes are reasonable under the circumstances. A final determination of the allocation of the purchase price to the assets acquired and the liabilities assumed in the acquisition has not been made, and the allocation reflected in the unaudited pro forma condensed combined financial statements should be considered preliminary and is subject to the completion of a more comprehensive valuation of the assets acquired and liabilities assumed. The final allocation of purchase price could differ from the pro forma allocation included herein. Amounts preliminarily allocated to intangible assets and goodwill may change significantly, and amortization methods and useful lives may differ from the assumptions that have been used in this unaudited pro forma condensed combined financial information, any of which could result in a material change in depreciation and amortization expense.

 

You should read the following pro forma statements in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and related notes contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission for the yearended December 31, 2013.

 

The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only. They do not purport to represent what the results of operations and financial position of the Company would have been had the ReliOn acquisition actually occurred as of the dates indicated, and they do not purport to project or predict the future results of operations or financial position of the Company.

 


 

 

Unaudited Pro Forma Condensed Combined Balance sheet
March 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plug Power Inc.

 

 

ReliOn Inc.

 

 

Pro Forma
Adjustments

 

 

Pro Forma
Combined

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

63,231,651

$

544,081

$

(130,000)

(1)

$

63,645,732

Accounts receivable, net

 

6,342,316

 

 

294,701

 

 

-

 

 

6,637,017

Inventory

 

11,943,724

 

 

5,154,495

 

 

-

 

 

17,098,219

Prepaid expenses and other current assets

 

2,796,505

 

 

72,115

 

 

-

 

 

2,868,620

Total current assets

 

84,314,196

 

 

6,065,392

 

 

(130,000)

 

 

90,249,588

Restricted cash

 

500,000

 

 

-

 

 

-

 

 

500,000

Property, plant, and equipment, net

 

5,235,504

 

 

644,616

 

 

355,384

(2)

 

6,235,504

Leased property under capital lease, net

 

2,324,191

 

 

-

 

 

-

 

 

2,324,191

Note receivable

 

494,480

 

 

-

 

 

-

 

 

494,480

Intangible assets, net

 

2,335,651

 

 

1,803,881

 

 

(303,881)

(3)

 

3,835,651

Other assets

 

-

 

 

16,779

 

 

-

 

 

16,779

Total assets

$

95,204,022

 

$

8,530,668

 

$

(78,497)

 

$

103,656,193

Liabilities, Redeemable Preferred Stock, and Stockholders’ (Deficit) Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$

2,838,445

$

1,225,801

$

(130,000)

 (1)

$

3,934,246

Accrued expenses

 

2,249,776

 

 

310,692

 

 

-

 

 

2,560,468

Note payable

 

-

 

 

5,388,942

 

 

(5,388,942)

(4)

 

-

Product warranty reserve

 

1,478,171

 

 

-

 

 

-

 

 

1,478,171

Deferred revenue

 

3,614,686

 

 

-

 

 

-

 

 

3,614,686

Obligations under capital lease

 

735,809

 

 

-

 

 

-

 

 

735,809

Other current liabilities

 

826,924

 

 

-

 

 

-

 

 

826,924

Total current liabilities

 

11,743,811

 

 

6,925,435

 

 

(5,518,942)

 

 

13,150,304

Note payable

 

-

 

 

426,044

 

 

-

 

 

426,044

Obligations under capital lease

 

396,061

 

 

-

 

 

-

 

 

396,061

Deferred revenue

 

5,759,654

 

 

53,517

 

 

-

 

 

5,813,171

Common stock warrant liability

 

25,742,408

 

 

-

 

 

-

 

 

25,742,408

Finance obligation

 

2,476,430

 

 

-

 

 

-

 

 

2,476,430

Other liabilities

 

740,075

 

 

-

 

 

-

 

 

740,075

Total liabilities

 

46,858,439

 

 

7,404,996

 

 

(5,518,942)

 

 

48,744,493

Redeemable Preferred Stock

 

2,371,080

 

 

111,002,028

 

 

(111,002,028)

(5)

 

2,371,080

Stockholders’ (deficit) equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

1,441,247

 

 

3,862

 

 

1,443

(5)

 

1,446,552

Additional paid-in capital

 

970,533,905

 

 

(85,090,265)

 

 

89,084,960

(5)

 

974,528,600

Accumulated other comprehensive income

 

897,807

 

 

-

 

 

-

 

 

897,807

Accumulated deficit

 

(925,346,074)

 

 

(24,789,953)

 

 

27,356,070

(5)

 

(922,779,957)

Less common stock in treasury

 

(1,552,382)

 

 

-

 

 

-

 

 

(1,552,382)

Total stockholders’ (deficit) equity

 

45,974,503

 

 

(109,876,356)

 

 

116,442,473

 

 

52,540,620

Total liabilities, redeemable preferred stock, and stockholders’ (deficit) equity

$

95,204,022

 

$

8,530,668

 

$

(78,497)

 

$

103,656,193

 


 

 

 

Unaudited Pro Forma Condensed Combined Statement of Operations
For the three months ended March 31, 2014

 

 

 

 

 

 

 

 

 

Pro Forma

 

Pro Forma

 

Plug Power Inc.

 

 

ReliOn Inc.

 

Adjustments

 

Combined

Product revenue

$

3,162,327

$

803,244

$

-

 

$

3,965,571

Service revenue

 

2,065,715

 

 

328,367

 

 

-

 

 

2,394,082

Research and development contract revenue

 

346,399

 

 

-

 

 

-

 

 

346,399

Total revenue

 

5,574,441

 

 

1,131,611

 

 

-

 

 

6,706,052

Cost of product revenue

 

3,444,964

 

 

653,470

 

 

-

 

 

4,098,434

Cost of service revenue

 

4,018,382

 

 

249,937

 

 

-

 

 

4,268,319

Cost of research and development contract revenue

 

417,917

 

 

-

 

 

-

 

 

417,917

Research and development expense

 

1,253,396

 

 

558,235

 

 

-

 

 

1,811,631

Selling, general and administrative expenses

 

3,252,009

 

 

1,090,364

 

 

38,333

(1)

 

4,380,706

Amortization of intangible assets

 

565,944

 

 

-

 

 

75,000

(2)

 

640,944

Operating loss

 

(7,378,171)

 

 

(1,420,395)

 

 

(113,333)

 

 

(8,911,899)

Interest and other income

 

45,009

 

 

740

 

 

 

 

 

45,749

Change in fair value of common stock warrant liability

 

(68,433,468)

 

 

-

 

 

 

 

 

(68,433,468)

Interest and other expense and foreign currency gain (loss)

 

(90,469)

 

 

(110,373)

 

 

73,973

(3)

 

(126,869)

Gain on sale of equity interest in joint venture

 

 

 

 

-

 

 

 

 

 

-

Loss before income taxes

$

(75,857,099)

$

(1,530,028)

$

(39,360)

 

$

(77,426,487)

Income tax benefit

 

-

 

 

21

 

 

-

 

 

21

Net loss attributable to the Company

$

(75,857,099)

$

(1,530,007)

$

(39,360)

 

$

(77,426,466)

Preferred stock dividends declared

 

(51,909)

 

 

-

 

 

-

 

 

(51,909)

Accretion of redeemable preferred stock

 

-

 

 

(19,046,527)

 

 

19,046,527

(4)

 

-

Net loss attributable to common shareholders

$

(75,909,008)

 

$

(20,576,534)

 

$

19,007,167

 

$

(77,478,375)

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.57)

 

 

 

 

 

 

 

$

(0.58)

Weighted average number of common shares outstanding

 

133,750,522

 

 

-

 

 

530,504

(5)

 

134,281,026

 


 

 

 

Unaudited Pro Forma Condensed Combined Statement of Operations

For the year ended December 31, 2013

 

 

 

 

 

 

 

 

Pro Forma

 

Pro Forma

 

Plug Power Inc.

 

 

ReliOn Inc.

 

Adjustments

 

Combined

Product revenue

$

18,446,082

 

$

4,030,523

 

$

-

 

$

22,476,605

Service revenue

 

6,658,816

 

 

558,897

 

 

-

 

 

7,217,713

Research and development contract revenue

 

1,496,530

 

 

-

 

 

-

 

 

1,496,530

Total revenue

 

26,601,428

 

 

4,589,420

 

 

-

 

 

31,190,848

Cost of product revenue

 

20,414,084

 

 

3,876,677

 

 

-

 

 

24,290,761

Cost of service revenue

 

14,928,595

 

 

364,347

 

 

-

 

 

15,292,942

Cost of research and development contract revenue

 

2,505,989

 

 

-

 

 

-

 

 

2,505,989

Research and development expense

 

3,121,007

 

 

3,387,374

 

 

-

 

 

6,508,381

Selling, general and administrative expenses

 

12,325,466

 

 

4,262,973

 

 

115,000

(1)

 

16,703,439

Amortization of intangible assets

 

2,270,858

 

 

-

 

 

300,000

(2)

 

2,570,858

Operating loss

 

(28,964,571)

 

 

(7,301,951)

 

 

(415,000)

 

 

(36,681,522)

Interest and other income

 

150,006

 

 

-

 

 

-

 

 

150,006

Change in fair value of common stock warrant liability

 

(37,101,818)

 

 

-

 

 

-

 

 

(37,101,818)

Interest and other expense and foreign currency gain (loss)

 

(398,275)

 

 

(447,975)

 

 

292,602

(3)

 

(553,648)

Gain on sale of equity interest in joint venture

 

3,234,717

 

 

-

 

 

-

 

 

3,234,717

Loss before income taxes

$

(63,079,941)

 

$

(7,749,926)

 

$

(122,398)

 

$

(70,952,265)

Income tax benefit

 

410,259

 

 

21

 

 

-

 

 

410,280

Net loss attributable to the Company

$

(62,669,682)

 

$

(7,749,905)

 

$

(122,398)

 

$

(70,541,985)

Preferred stock dividends declared

 

(121,118)

 

 

-

 

 

 

 

 

(121,118)

Accretion of redeemable preferred stock

 

-

 

 

(48,160,306)

 

 

48,160,306

(4)

 

-

Net loss attributable to common shareholders

$

(62,790,800)

 

$

(55,910,211)

 

$

48,037,908

 

$

(70,663,103)

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

$

(0.82)

 

 

 

 

 

 

 

$

(0.92)

Weighted average number of common shares outstanding

 

76,436,408

 

 

-

 

 

530,504

(5)

 

76,966,912

 


 

 

 

 

 

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

1. Basis of Presentation

 

On April 2, 2014, the Company completed the acquisition of ReliOn Inc. (ReliOn), in a transaction accounted for using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations.

 

The total purchase price of $4,000,000 is based on the issuance of 530,504 shares of Plug Power common stock at the closing price of the Company’s stock on April 1, 2014 of $7.54. Under the acquisition method of accounting, the total purchase price is allocated to ReliOn’s tangible and intangible assets based on their fair values as of the acquisition date. For the purposes of these pro forma financial statements, the acquisition consideration has been preliminarily allocated based on an estimate of the fair value of assets and liabilities acquired as of the acquisition date. The allocation of the acquisition consideration for ReliOn is based on estimates, assumptions, valuations and other studies which have not yet been finalized in order to make a definitive allocation. The final amounts allocated to assets acquired and liabilities assumed could differ materially from the amounts presented in the pro forma financial statements.

 

The preliminary allocation of the purchase price is as follows (in thousands)

 

Cash and cash equivalents

$

414,081

 

Accounts receivable

 

294,701

 

Inventory

 

5,154,495

 

Prepaid expenses and other assets

 

88,894

 

Property and equipment

 

1,000,000

 

Identifiable intangibles

 

1,500,000

 

Goodwill

 

(2,566,117) *

Accounts payable and accrued expenses

 

(1,406,493)

 

Note payable

 

(479,561)

 

Preliminary estimated acquisition consideration

$

4,000,000

 

 

* Includes the excess of the estimated fair value of assets and liabilities acquired over the purchase price. Preliminary allocations result in negative goodwill, and under ASC 805, the Company will need to perform a required reassessment before recognizing a gain on a bargain purchase.

 

 

2. Pro Forma Adjustments

 

Pro forma adjustments are necessary to reflect the purchase price and to reflect amounts related to ReliOn’s net tangible and intangible assets at an amount equal to the preliminary estimate of their fair values.

 

There were no intercompany balances or transactions between the Company and ReliOn as of the dates or for the periods of these pro forma condensed combined financial statements.

 

The Company has not identified any pre-acquisition contingencies where the related asset, liability or impairment is probable and the amount of the asset, liability or impairment can be reasonably estimated. Prior to the end of the purchase price allocation period, if information becomes available which would indicate it is probable that such events have occurred and the amounts can be reasonably estimated, such items will be included in the purchase price allocation.

 

Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments as of March 31, 2014

 

The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet are as follows:

 


 

 

(1)

To eliminate cash and accounts payable not included in the acquired assets and assumed liabilities

 

 

(2)

To increase property plant and equipment to estimated fair value at the acquisition date

 

 

(3)

To eliminate the historical intangible assets of Relion of $1,803,881 and to record the estimated fair value of identifiable intangible assets at acquisition date of $1,500,000

 

 

(4)

To eliminate the note payable that was not assumed by the Company

 

 

(5)

To eliminate the redeemable preferred stock and stockholders’ equity accounts of ReliOn, to record the issuance of 530,504 shares of Plug Power common stock valued at $7.54 per share ($5,305 common stock and $3,994,695 additional paid-in-capital) for the acquisition of ReliOn and the assets and liabilities assumed, and to record additional retained earnings of $2,566,117 on the gain on bargain purchase.

 

Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments for the Three Months Ended March 31, 2014

 

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations are as follows:

 

(1)

To add the estimated depreciation expense on the fair value of assets acquired

 

 

(2)

To add the estimated amortization expense on the fair value of assets acquired

 

 

(3)

To eliminate interest expense associated with the note payable not assumed by the Company

 

 

(4)

To eliminate the accretion to earnings of the redeemable preferred stock

 

 

(5)

To adjust for the shares issued upon acquisition

 

 

 

Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments for the Twelve Months Ended December 31, 2013

 

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations are as follows:

 

(1)

To add the estimated depreciation expense on the fair value of assets acquired

 

 

(2) 

To add the estimated amortization on the fair value of assets acquired

 

 

(3)

To eliminate interest expense associated with the note payable not assumed by the Company

 

 

(4)

To eliminate the accretion to earnings of the redeemable preferred stock

 

 

(5)

To adjust for the shares issued upon acquisition