GigPeak (GIG.U) 8-K/A Financial Statements and Exhibits

 

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined financial information combines the historical consolidated financial statements of GigOptix and Terasquare as if the merger had occurred on January 1, 2014.

Pro Forma Combined Information

The following unaudited pro forma condensed combined balance sheet as of June 28, 2015 is based on (i) the historical consolidated balance sheet of GigOptix as of June 28, 2015 and (ii) the historical balance sheet of Terasquare as of June 30, 2015. The following unaudited pro forma condensed combined statements of operations for the year ended December 31, 2014 and the six months ended June 28, 2015 are based on (i) the historical consolidated statements of operations of GigOptix for the year ended December 31, 2014 and the six months ended June 28, 2015 and (ii) the historical statements of operations of Terasquare for the year ended December 31, 2014 and the six months ended June 30, 2015.

Pro forma combined adjustments and the assumptions related to the Terasquare acquisition were prepared using the purchase method of accounting and are based on the assumption that the acquisition of Terasquare took place as of June 28, 2015 for purposes of the pro forma condensed combined balance sheet and January 1, 2014 for purposes of the pro forma condensed combined statements of operations. The preliminary purchase price allocation used in the accompanying unaudited pro forma financial statements is based on estimates as of the date of this report and may differ from the final purchase price allocation.

In accordance with the purchase method of accounting, the actual consolidated financial statements of GigOptix will reflect the Terasquare acquisition only from and after the date of acquisition.

The unaudited pro forma condensed combined financial information included herein does not give effect to any potential cost reductions or other operating efficiencies that could result from the Terasquare acquisition, including but not limited to those associated with potential (i) reductions of corporate overhead, (ii) eliminations of duplicate functions and (iii) increased operational efficiencies through the adoption of best practices and capabilities from each company.

The pro forma condensed combined financial information has been prepared in accordance with the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted pursuant to these rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading. The pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the combined operating results or financial position that would have occurred if such transactions had been consummated on the dates and in accordance with the assumptions described herein, nor is it necessarily indicative of future operating results or financial position.

The pro forma condensed combined financial information below should be read together with GigOptix’s and Terasquare’s historical consolidated financial statements and accompanying notes which have been previously filed with the SEC.

GIGOPTIX, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of June 28, 2015

(In thousands)

	GigOptix			Terasquare						Pro FormaCombinedAdjustments				Pro Forma Combined
ASSETS	(in USD)			(in KRW)			(in USD)			(in USD)				(in USD)
Current assets:
Cash and cash equivalents	$	18,382		KRW	393,113		$	351		$	(4,447	)	A	$	14,286
Short-term investments		-			54,600			49							49
Accounts receivable, net		7,843			-			-							7,843
Restricted cash		-			265,979			238							238
Inventories		6,824			-			-							6,824
Prepaid and other current assets		789			20,125			18							807
Total current assets		33,838			733,817			656			(4,447	)			30,047
Property and equipment, net		2,309			33,421			30							2,339
Goodwill and intangible assets, net		12,342			4,654			4			4,792		B		17,138
Restricted cash		56			-			-							56
Other assets		133			174,879			156							289
Total assets	$	48,678		KRW	946,771		$	846		$	345			$	49,869
LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIT)
Current liabilities:
Accounts payable	$	2,702		KRW	182,400		$	163						$	2,865
Accrued and other current liabilities		3,858			297,080			266							4,124
Convertible bonds		-			500,000			447			(447	)	D		-
Long-term debt, current portion		-			194,000			173							173
Total current liabilities		6,560			1,173,480			1,049			(447	)			7,162
Pension liabilities		346													346
Redeemable convertible preferred stock		-			5,483,662			4,898			(4,898	)	D		-
Other long term liabilities		658			50,000			45							703
Total liabilities		7,564			6,707,142			5,992			(5,345	)			8,211
Stockholders’ Equity / (Deficit)
Common stock		33			-			-							33
Additional paid-in capital		145,380			399,998			378			(378	)	C		145,380
Treasury stock		(2,209	)		-			-							(2,209	)
Accumulated deficit		(102,378	)		(6,160,369	)		(5,712	)		6,256		C		(101,834	)
Accumulated other comprehensive income		288			-			188			(188	)	C		288
Total stockholders’ equity / (deficit)		41,114			(5,760,371	)		(5,146	)		5,690				41,658
Total liabilities and stockholders’ equity / (deficit)	$	48,678		KRW	946,771		$	846		$	345			$	49,869

See accompanying notes to unaudited pro forma condensed combined financial information.

GIGOPTIX, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2014

(In thousands, except per shares amounts)

	GigOptix			Terasquare						Pro FormaCombinedAdjustments				Pro Forma Combined
	(in USD)			(in KRW)			(in USD)			(in USD)				(in USD)
Revenue	$	32,947		KRW	135,288		$	128		$	-			$	33,075
Cost of revenue		13,711			-			-			324		E		14,035
Gross profit		19,236			135,288			128			(324	)			19,040
Operating expenses:
Research and development expense		13,732			678,357			642			-				14,374
Selling, general and administrative expense		10,503			1,269,800			1,203			141		E		11,847
Restructuring expense		343			-			-			-				343
Total operating expenses		24,578			1,948,157			1,845			141				26,564
Loss from operations		(5,342	)		(1,812,869	)		(1,717	)		(466	)			(7,525	)
Interest and other expense, net		(39	)		-			-			-				(39	)
Other income, net		70			12,667			12							82
Net loss before income taxes		(5,311	)		(1,800,202	)		(1,705	)		(466	)			(7,482	)
Provision for income taxes		54									-				54
Loss from consolidated companies		(5,365	)		(1,800,202	)		(1,705	)		(466	)			(7,536	)
Loss on equity investment		456			-			-							456
Net loss	$	(5,821	)	KRW	(1,800,202)		$	(1,705	)	$	(466	)		$	(7,992	)
Net loss per share - basic and diluted	$	(0.18	)											$	(0.25	)
Shares used in computing basic and diluted net loss per shares		31,851													31,851

See accompanying notes to unaudited pro forma condensed combined financial information.

GIGOPTIX, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Six Months Ended June 28, 2015

(In thousands, except per shares amounts)

	GigOptix			Terasquare						Pro FormaCombinedAdjustments				Pro Forma Combined
	(in USD)			(in KRW)			(in USD)			(in USD)				(in USD)
Revenue	$	18,900		KRW	310,228		$	282		$	-			$	19,182
Cost of revenue		7,278			-			-			162		E		7,440
Gross profit		11,622			310,228			282			(162	)			11,742
Operating expenses:
Research and development expense		6,472			329,190			299			-				6,771
Selling, general and administrative expense		5,212			480,818			437			71		E		5,720
Total operating expenses		11,684			810,008			736			71				12,491
Loss from operations		(62	)		(499,780	)		(454	)		(233	)			(749	)
Interest and other expense, net		(6	)		(5,918	)		(5	)		-				(11	)
Other income, net		(18	)												(18	)
Net loss before income taxes		(86	)		(505,698	)		(459	)		(233	)			(778	)
Provision for income taxes		25			-			-			-				25
Loss from consolidated companies		(111	)		(505,698	)		(459	)		(233	)			(803	)
Loss on equity investment		3			-			-							3
Net loss	$	(114	)	KRW	(505,698)		$	(459	)	$	(233	)		$	(806	)
Net loss per share - basic and diluted	$	(0.00	)											$	(0.02	)
Shares used in computing basic and diluted net loss per shares		32,705													32,705

See accompanying notes to unaudited pro forma condensed combined financial information.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

(1) Basis of Purchase Price Allocation

The purchase consideration for the merger of approximately $4.4 million consisted of $4.0 million cash paid for the purchase of all of the shares of stock of Terasquare and approximately $0.4 million for the assumption of liabilities and debt of Terasquare, subject to certain adjustments

The total purchase price of $4.4 million was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition as follows (in thousands):

Tangible assets acquired:
Cash and cash equivalents	$	22
Other current assets		17
Property, plant and equipment		22
Other assets		121
Liabilities assumed:
Accounts payable		(501	)
Accrued compensation		(28	)
Other current liabilities		(2	)
Identifiable intangible assets acquired:
Trade name		990
Developed technology		2,270
IPR&D		380
Goodwill		1,156
Total purchase price		4,447

(2) Pro Forma Combined Adjustments

The following pro forma combined adjustments have been reflected in the unaudited pro forma condensed combined financial information. These adjustments give effect to pro forma events that are (i) directly attributable to the Terasquare merger, (ii) factually supportable and (iii) with respect to the statement of operations, expected to have continuing impact on the combined company.

Balance Sheet Adjustments

A) To reflect the cost paid for the purchase of all of the shares of stake of Terasquare and the payment of the convertible bonds.

B) To reflect the establishment of identifiable intangible assets of $3.6 million and goodwill of $1.2 million. For purposes of the pro forma condensed combined statement of operations, it was assumed that the $3.6 million is related to the following intangible assets: trade name, developed technology and IPR&D with assumed lives of 7 years.

(C) To reflect the elimination of Terasquare’s stockholders’ equity/(deficit) balances.

(D) To reflect the elimination of Terasquare’s convertible bonds and redeemable convertible preferred stock.

Income Statement Adjustments

(E) To reflect the expense associated with the amortization of intangibles.

For purposes of preparing these pro forma condensed combined financial statements, the fair value of Terasquare’s inventory, accounts receivable and property, plant and equipment were estimated to approximate their carrying value on the date of acquisition.