Exhibit 99.1
Image Sensing Systems, Inc.
Unaudited Pro Forma Consolidated Financial Information
The following unaudited consolidated pro forma financial information of Image Sensing Systems, Inc. and its consolidated subsidiaries (“ISS” or the “Company”) is based upon the historical statements of operations, as adjusted to reflect the disposition of its license plate recognition (“LPR”) business segment. The historical statements of operations presented in the pro forma financial information are for the three months ended March 31, 2015 as presented in the Company’s Quarterly Report on Form 10-Q filed on May 5, 2015, and for the year ended December 31, 2014 as presented in the Company’s Annual Report on Form 10-K filed on March 20, 2015. The historical balance sheet presented in the pro forma financial information is as of March 31, 2015 as was presented in the Company’s Quarterly Report on Form 10-Q filed on May 5, 2015.
The following unaudited consolidated pro forma financial information of ISS should be read in conjunction with the related notes and with the historical consolidated financial statements of ISS and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited pro forma consolidated balance sheet reflects the disposition of the LPR business segment as if it occurred on March 31, 2015, while the unaudited pro forma statements on consolidated income give effect to the disposition as if it occurred on January 1, 2014. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that ISS management believes are reasonable.
The unaudited consolidated pro forma financial information is presented for illustrative purposes only and does not purport to be indicative of the operating results or financial position that would have occurred if the transaction described above had occurred as presented in such statements. For example, this financial information does not reflect any potential earnings or other impacts form the use of the proceeds from the disposition or cost reductions previously allocated corporate costs and potential subsequent restructuring charges.
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Image Sensing Systems, Inc.
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015
(in thousands, except per share data)
| Image Sensing Systems Consolidated Historical | Pro Forma Adjustments LPR Disposition | Image Sensing Systems Pro Forma Consolidated | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 884 | $ | 4,200 | (a) | $ | 5,084 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $147 | 4,525 | (1,387 | )(b) | 3,138 | ||||||||
| Inventories | 1,980 | (1,104 | )(b) | 876 | ||||||||
| Prepaid expenses and other current assets | 641 | (160 | )(b) | 481 | ||||||||
| Total current assets | 8,030 | 1,549 | 9,579 | |||||||||
| Property and equipment: | ||||||||||||
| Furniture and fixtures | 619 | (167 | )(b) | 452 | ||||||||
| Leasehold improvements | 562 | (157 | )(b) | 405 | ||||||||
| Equipment | 3,886 | (499 | )(b) | 3,387 | ||||||||
| 5,067 | (823 | ) | 4,244 | |||||||||
| Accumulated depreciation | 4,282 | (661 | )(b) | 3,621 | ||||||||
| 785 | (162 | ) | 623 | |||||||||
| Intangible assets, net | 3,570 | (3,237 | )(b) | 333 | ||||||||
| Deferred income taxes | 59 | — | 59 | |||||||||
| TOTAL ASSETS | $ | 12,444 | $ | (1,851 | ) | $ | 10,593 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 2,707 | $ | (361 | )(b) | $ | 2,346 | |||||
| Warranty and other current liabilities | 1,789 | (648 | )(b) | 1,141 | ||||||||
| Accrued compensation | 604 | (64 | )(b) | 540 | ||||||||
| Accrued restructuring | 32 | — | 32 | |||||||||
| Total current liabilities | 5,132 | (1,073 | ) | 4,059 | ||||||||
| Deferred income taxes | 157 | — | 157 | |||||||||
| Other long-term liabilities | 104 | 357 | (b) | 461 | ||||||||
| — | ||||||||||||
| Shareholders’ equity | — | |||||||||||
| Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued or outstanding | — | — | — | |||||||||
| Common stock, $.01 par value; 20,000,000 shares authorized, 5,005,803 issued and outstanding | 49 | — | 49 | |||||||||
| Additional paid-in capital | 23,622 | — | 23,622 | |||||||||
| Accumulated other comprehensive loss | (335 | ) | — | (335 | ) | |||||||
| Accumulated deficit | (16,285 | ) | (1,135 | )(c) | (17,420 | ) | ||||||
| Total shareholders’ equity | 7,051 | (1,135 | ) | 5,916 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 12,444 | $ | (1,851 | ) | $ | 10,593 | |||||
See accompanying notes to the unaudited pro forma consolidated financial statements
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Image Sensing Systems, Inc.
Unaudited Pro Forma Consolidated Statement of Operations for the three months Ending March 31, 2015
(in thousands, except per share data)
| Image Sensing Systems Consolidated Historical | Pro Forma Adjustments LPR Disposition | Image Sensing Systems Pro Forma Consolidated | ||||||||||
| Consolidated Statement of Operations Data: | ||||||||||||
| Revenue: | ||||||||||||
| Product sales | $ | 2,328 | $ | 1,112 | (d) | $ | 1,216 | |||||
| Royalties | 2,011 | — | 2,011 | |||||||||
| 4,339 | 1,112 | 3,227 | ||||||||||
| Cost of revenue: | ||||||||||||
| Product sales | 1,019 | 432 | (d) | 587 | ||||||||
| 1,019 | 432 | 587 | ||||||||||
| Gross profit | 3,320 | 680 | 2,640 | |||||||||
| Operating expenses: | ||||||||||||
| Selling, marketing and product support | 1,415 | 543 | (e) | 872 | ||||||||
| General and administrative | 1,478 | 606 | (e) | 872 | ||||||||
| Research and development | 1,077 | 171 | (e) | 906 | ||||||||
| Amortization of intangible assets | 381 | 259 | (e) | 122 | ||||||||
| Restructuring | 119 | — | 119 | |||||||||
| 4,470 | 1,579 | 2,891 | ||||||||||
| Loss from operations | (1,150 | ) | (899 | ) | (251 | ) | ||||||
| Other expense, net | (1 | ) | — | (1 | ) | |||||||
| Loss before income taxes | (1,151 | ) | (899 | ) | (252 | ) | ||||||
| Income tax expense | 16 | — | 16 | |||||||||
| Net Loss | $ | (1,167 | ) | $ | (899 | ) | $ | (268 | ) | |||
| Net loss per share: | ||||||||||||
| Basic | $ | (0.23 | ) | $ | (0.18 | ) | $ | (0.05 | ) | |||
| Diluted | $ | (0.23 | ) | $ | (0.18 | ) | $ | (0.05 | ) | |||
| Weighted average number of common shares outstanding: | ||||||||||||
| Basic | 4,999 | 4,999 | 4,999 | |||||||||
| Diluted | 4,999 | 4,999 | 4,999 | |||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements
| 3 |
Image Sensing Systems, Inc.
Unaudited Pro Forma Consolidated Statement of Operations for the twelve months Ending December 31, 2014
(in thousands, except per share data)
| Image Sensing Systems Consolidated Historical | Pro Forma Adjustments LPR Disposition | Image Sensing Systems Pro Forma Consolidated | ||||||||||
| Consolidated Statement of Operations Data: | ||||||||||||
| Revenue: | ||||||||||||
| Product sales | $ | 12,806 | $ | 4,903 | (d) | $ | 7,903 | |||||
| Royalties | 10,247 | — | 10,247 | |||||||||
| 23,053 | 4,903 | 18,150 | ||||||||||
| Cost of revenue: | ||||||||||||
| Product sales | 8,041 | 3,458 | (d) | 4,583 | ||||||||
| 8,041 | 3,458 | 4,583 | ||||||||||
| Gross profit | 15,012 | 1,445 | 13,567 | |||||||||
| Operating expenses: | ||||||||||||
| Selling, marketing and product support | 9,543 | 3,691 | (e) | 5,852 | ||||||||
| General and administrative | 6,185 | 2,241 | (e) | 3,944 | ||||||||
| Research and development | 5,734 | 843 | (e) | 4,891 | ||||||||
| Amortization of intangible assets | 1,558 | 1,070 | (e) | 488 | ||||||||
| Impairment | 1,017 | 1,017 | (e) | — | ||||||||
| Restructuring | 770 | — | 770 | |||||||||
| Investigation matter | 152 | — | 152 | |||||||||
| 24,959 | 8,862 | 16,097 | ||||||||||
| Loss from operations | (9,947 | ) | (7,417 | ) | (2,530 | ) | ||||||
| Other income, net | 70 | — | 70 | |||||||||
| Loss before income taxes | (9,877 | ) | (7,417 | ) | (2,460 | ) | ||||||
| Income tax expense (benefit) | (174 | ) | 59 | (f) | (115 | ) | ||||||
| Net loss | $ | (9,703 | ) | $ | (7,476 | ) | $ | (2,345 | ) | |||
| Net loss per share: | ||||||||||||
| Basic | $ | (1.95 | ) | $ | (1.50 | ) | $ | (0.47 | ) | |||
| Diluted | $ | (1.95 | ) | $ | (1.50 | ) | $ | (0.47 | ) | |||
| Weighted average number of common shares outstanding: | ||||||||||||
| Basic | 4,983 | 4,983 | 4,983 | |||||||||
| Diluted | 4,983 | 4,983 | 4,983 | |||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements
| 4 |
Image Sensing Systems, Inc.
Unaudited Pro Forma Consolidated Financial Information
| (a) | To reflect the cash proceeds received for the sale of the LPR business segment. |
| (b) | To reflect the removal or adjustment of LPR balance sheet accounts as set in the SAPA. |
| (c) | To reflect the estimated loss related to the sale of LPR assets |
| (d) | Represents the decrease of LPR revenue and cost of sales as if the divestiture occurred on January 1, 2014 and 2015 |
| (e) | Represents the pro forma decrease of operating costs as if the LPR divestiture occurred on January 1, 2014 and 2015 |
| (f) | Represents the pro forma decrease in income tax benefit as if the transaction occurred on January 1, 2014 |
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