UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
As indicated in the Explanatory Note above, on September 8, 2021, iSun, iSun Residential, Merger Sub and SunCommon entered into the Merger Agreement. The Merger
Agreement contains the terms and conditions of the proposed Merger, whereby iSun Residential, a wholly-owned subsidiary of iSun acquired SunCommon in the Merger. Under the Merger Agreement, Merger Sub merged with and into SunCommon, with SunCommon
surviving the Merger and becoming a wholly-owned subsidiary of iSun Residential. The Merger became effective on October 1, 2021.
At the completion of the Merger (the “Effective Time”), the shareholders of SunCommon received cash considerations of $25,534,621 and 1,810,855 shares of iSun Common
Stock valued at $8.816 per share. The shares of iSun Common Stock issued in connection with the Merger listed on the NASDAQ Capital Market. Immediately following completion of the Merger, former holders of SunCommon Common Stock own approximately
16.62% of the outstanding Common Stock of iSun and pre-Merger holders of iSun Common Stock own approximately 83.38% of the outstanding Common Stock of iSun.
The following unaudited pro forma condensed combined financial information combines the historical consolidated financial position and results of operations of iSun
and SunCommon, as an acquisition by iSun of SunCommon using the acquisition method of accounting and giving effect to the related pro forma adjustments described in the accompanying notes. Under the acquisition method of accounting, the assets and
liabilities of SunCommon will be recorded by iSun at their respective fair values as of the date the Merger was completed. Certain reclassifications have been made to the historical financial statements of XxxXxxxxx to conform to the presentation
in iSun’s financial statements.
The unaudited pro forma condensed combined balance sheet gives effect to the Merger as if the transaction had occurred on June 30, 2021. The unaudited pro forma
condensed combined statement of operations for the six months ended June 30, 2021 and the year ended December 31, 2020 give effect to the Merger as if the transaction had occurred on January 1, 2020.
A final determination of the fair values of SunCommon’ assets and liabilities will be based on the actual net tangible and intangible assets of SunCommon that existed
as of the date of completion of the transaction. Consequently, fair value adjustments and amounts preliminarily allocated to goodwill (or to a bargain purchase gain) and identifiable intangibles could change significantly from those allocations
used in the unaudited pro forma condensed combined financial statements presented herein and could result in a material change in amortization of acquired intangible assets.
The unaudited pro forma condensed combined financial information included herein is presented for informational purposes only and does not necessarily reflect the
financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The adjustments included in this unaudited pro forma condensed combined financial information are preliminary and may be
revised and may not agree to actual amounts recorded by iSun upon consummation of the Merger. This information also does not reflect transaction costs, the benefits of the expected cost savings and expense efficiencies, opportunities to earn
additional revenue, potential impacts of current market conditions on revenues or asset dispositions, among other factors, and includes various preliminary estimates and may not necessarily be indicative of the financial position or results of
operations that would have occurred if the Merger had been consummated on the date or at the beginning of the period indicated or that may be attained in the future.
The unaudited pro forma condensed combined financial information should be read in conjunction with and is qualified in its entirety by reference to
the historical consolidated financial statements and related notes thereto of iSun and its subsidiaries, filed with the U.S. Securities and Exchange Commission and the historical consolidated financial statements and related notes thereto of
SunCommon and its subsidiaries, which are filed as Exhibit 99.1 to this Current Report on Form 8-K.
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
As of June 30, 2021
(In thousands, except share data)
|
|
Historical
|
||||||||||||||||||
|
|
June 30, 2021
|
June 30, 2021
|
|||||||||||||||||
|
|
iSun
|
SunCommon
|
Pro Forma
Adjustments
Note B
|
|
|
Pro Forma
Combined
|
|||||||||||||
|
ASSETS
|
|
|
|||||||||||||||||
|
Current assets:
|
|
|
|||||||||||||||||
|
Cash and cash equivalents
|
$
|
20,223
|
$
|
—
|
$
|
(16,085
|
)
|
|
(a)(c)(f)
|
|
$
|
4,138
|
|||||||
|
Accounts receivable, net of allowance
|
4,057
|
3,405
|
—
|
|
|
7,462
|
|||||||||||||
|
Costs and estimated earnings in excess of xxxxxxxx
|
2,612
|
1,154
|
—
|
|
|
3,766
|
|||||||||||||
|
Inventories
|
1,535
|
2,143
|
—
|
|
|
3,678
|
|||||||||||||
|
Prepaid expenses and other current assets
|
224
|
551
|
—
|
|
|
775
|
|||||||||||||
|
Total current assets
|
28,651
|
7,253
|
(16,085
|
)
|
|
|
19,819
|
||||||||||||
|
Property and equipment, net
|
6,145
|
3,822
|
—
|
|
|
9,967
|
|||||||||||||
|
Captive insurance investment
|
233
|
—
|
—
|
|
|
233
|
|||||||||||||
|
Intangibles
|
4,007
|
—
|
—
|
|
|
4,007
|
|||||||||||||
|
Investments
|
7,621
|
—
|
—
|
|
|
7,621
|
|||||||||||||
|
Goodwill
|
—
|
3,076
|
32,673
|
|
(b)
|
|
35,749
|
||||||||||||
|
Deferred tax asset
|
—
|
787
|
(787
|
)
|
|
(b) |
|
—
|
|||||||||||
|
|
18,006
|
7,685
|
31,886
|
|
|
57,577
|
|||||||||||||
|
TOTAL ASSETS
|
$
|
46,657
|
$
|
14,938
|
$
|
15,801
|
|
|
$
|
77,396
|
|||||||||
|
|
|
|
|||||||||||||||||
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|||||||||||||||||||
|
Accounts payable and accrued liabilities
|
$
|
2,444
|
$
|
4,210
|
$
|
—
|
|
|
$
|
6,654
|
|||||||||
|
Billings in excess of costs
|
574
|
1,065
|
—
|
|
|
1,639
|
|||||||||||||
|
Line of credit
|
3,518
|
2,066
|
(2,066
|
)
|
|
(f)
|
|
3,518
|
|||||||||||
|
Current portion of long-term debt
|
274
|
4,592
|
(3,592
|
)
|
|
(e)(f)
|
|
1,274
|
|||||||||||
|
Total current liabilities
|
6,810
|
11,933
|
(5,658
|
)
|
|
|
13,085
|
||||||||||||
|
Other liabilities
|
47
|
49
|
—
|
|
|
96
|
|||||||||||||
|
Deferred tax liability
|
372
|
—
|
—
|
|
|
372
|
|||||||||||||
|
Warrant liability
|
307
|
—
|
—
|
|
|
307
|
|||||||||||||
|
Long-term debt
|
1,520
|
831
|
8,169
|
|
(a)
|
|
10,520
|
||||||||||||
|
|
2,246
|
880
|
8,169
|
|
|
11,295
|
|||||||||||||
|
TOTAL LIABILITIES
|
9,056
|
12,813
|
2,511
|
|
|
24,380
|
|||||||||||||
|
Series A Preferred stock - $0.001 par value, 2,000,000 shares authorized; 825,000 issued and outstanding
|
—
|
802
|
(802
|
)
|
|
(b)
|
|
—
|
|||||||||||
|
Series B Preferred stock - $0.001 par value, 682,045 shares authorized; 660,900 issued and outstanding
|
—
|
1,457
|
(1,457
|
)
|
|
(b)
|
|
—
|
|||||||||||
|
Series C Preferred stock - $0.001 par value, 500,000 shares authorized; 250,678 issued and outstanding
|
—
|
1,015
|
(1,015
|
)
|
(b)
|
—
|
|||||||||||||
|
Common stock - $0.001 par value, 8,000,000 shares authorized; 5,295,297 issued and outstanding
|
—
|
5
|
(5
|
)
|
(b)
|
—
|
|||||||||||||
|
Common stock, $0.0001 par value; 49,000,000 authorized shares; 10,898,722 shares issued and outstanding at June 30, 2021
|
1
|
—
|
—
|
|
|
1
|
|||||||||||||
|
Additional paid-in capital
|
—
|
3,260
|
(3,260
|
)
|
(b)
|
—
|
|||||||||||||
|
Additional paid-in capital
|
36,803
|
—
|
15,965
|
|
(g)
|
|
52,768
|
||||||||||||
|
Retained earnings
|
797
|
—
|
(550
|
) |
|
(c)
|
|
247 |
|||||||||||
|
Accumulated deficit
|
—
|
(4,414
|
)
|
4,414
|
|
(b)
|
|
—
|
|||||||||||
|
Total stockholders’ equity
|
37,601
|
2,125
|
13,290
|
|
|
53,016
|
|||||||||||||
|
Total liabilities and stockholders’ equity
|
$
|
46,657
|
$
|
14,938
|
$
|
15,801
|
|
|
$
|
77,396
|
|||||||||
See notes to the unaudited pro forma condensed combined financial information.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Six Months Ended June 30, 2021
(In thousands, except share and per share data)
|
|
Historical
|
||||||||||||||||
|
|
6 months ended
|
||||||||||||||||
|
|
June 30,
2021
|
June 30,
2021
|
Pro Forma
Adjustments
Note B
|
Pro Forma
Combined
|
|||||||||||||
|
|
iSun
|
SunCommon
|
|||||||||||||||
|
Revenue, net
|
$
|
11,614
|
$
|
14,920
|
$
|
—
|
$
|
26,534
|
|||||||||
|
Cost of revenue earned
|
12,130
|
10,958
|
—
|
23,088
|
|||||||||||||
|
Gross profit
|
(516
|
)
|
3,962
|
—
|
3,446
|
||||||||||||
|
Warehouse and other operating expenses
|
432
|
—
|
—
|
432
|
|||||||||||||
|
Selling, general and administrative expenses
|
3,120
|
5,599
|
—
|
8,169
|
|||||||||||||
|
Stock based compensation – general & administrative
|
1,336
|
—
|
—
|
1,336
|
|||||||||||||
|
Total operating expenses
|
4,888
|
5,599
|
—
|
10,487
|
|||||||||||||
|
Loss from operations
|
(5,404
|
)
|
(1,637
|
)
|
—
|
(7,041
|
)
|
||||||||||
|
Interest expense
|
(87
|
)
|
(120
|
)
|
(300
|
)
|
(f) |
(507
|
)
|
||||||||
|
Change in warrant liability
|
817
|
—
|
—
|
817
|
|||||||||||||
|
Loss before income taxes
|
(4,674
|
)
|
(1,757
|
)
|
(300
|
)
|
(6,731
|
)
|
|||||||||
|
Benefit for income taxes
|
(237
|
)
|
—
|
—
|
(237
|
)
|
|||||||||||
|
Net income (loss)
|
(4,437
|
)
|
(1,757
|
)
|
(300
|
)
|
(6,494
|
)
|
|||||||||
|
Preferred stock dividend
|
(70
|
)
|
—
|
—
|
(70
|
)
|
|||||||||||
|
Net loss available to common stockholders
|
$
|
(4,507
|
)
|
$
|
(1,757
|
)
|
$
|
(300
|
)
|
$
|
(6,564
|
)
|
|||||
|
Net loss per share attributable to ordinary shareholders, basic and diluted
|
$
|
(0.53
|
)
|
$
|
(0.33
|
)
|
$
|
(0.64
|
)
|
||||||||
|
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted
|
8,382,930
|
5,295,297
|
(3,484,342
|
)
|
(d)
|
10,193,885
|
|||||||||||
See notes to the unaudited pro forma condensed combined financial information.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Year Ended December 31, 2020
(In thousands, except share and per share data)
|
|
Historical
|
||||||||||||||||
|
|
12 months ended
|
||||||||||||||||
|
|
December 31,
2020
|
December 31,
2020
|
Pro Forma
Adjustments
Note B
|
Pro Forma
Combined
|
|||||||||||||
|
|
iSun
|
SunCommon
|
|||||||||||||||
|
Revenue, net
|
$
|
21,052
|
$
|
32,101
|
$
|
—
|
$
|
53,153
|
|||||||||
|
Cost of revenue earned
|
18,709
|
22,395
|
|
|
|
41,104
|
|||||||||||
|
Gross profit
|
2,343
|
9,706
|
|
12,049
|
|||||||||||||
|
Warehouse and other operating expenses
|
684
|
—
|
—
|
684
|
|||||||||||||
|
Selling, general and administrative expenses
|
3,344
|
11,115
|
|
|
|
14,459
|
|||||||||||
|
Stock based compensation – general & administrative
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Total operating expenses
|
4,028
|
11,115
|
|
|
|
||||||||||||
|
(Loss) income from operations
|
(1,685
|
)
|
(1,409
|
)
|
|
(3,094
|
)
|
||||||||||
|
Interest expense
|
(303
|
)
|
(160
|
)
|
(600
|
)
|
(f) |
(1,063
|
)
|
||||||||
|
Gain on forgiveness of PPP loan
|
1,497
|
—
|
—
|
1,497
|
|||||||||||||
|
Other, net
|
—
|
363
|
—
|
363
|
|||||||||||||
|
Change in warrant liability
|
(976
|
)
|
—
|
—
|
(976
|
)
|
|||||||||||
|
(Loss) income before income taxes
|
(1,467
|
)
|
(1,206
|
)
|
(600 |
) |
(3,273
|
)
|
|||||||||
|
Benefit for income taxes
|
(487
|
)
|
(80
|
)
|
—
|
(567
|
)
|
||||||||||
|
Net (loss) income
|
(980
|
)
|
(1,126
|
)
|
(600 |
) |
(2,706
|
)
|
|||||||||
|
Preferred stock dividend
|
(276
|
)
|
—
|
—
|
(276
|
)
|
|||||||||||
|
Net (loss) income available to common stockholders
|
$
|
(1,256
|
)
|
$
|
(1,126
|
)
|
$
|
(600 |
) |
$
|
(2,982
|
)
|
|||||
|
Net loss per share attributable to ordinary shareholders, basic and diluted
|
$
|
(0.24
|
)
|
$
|
(0.21
|
)
|
$
|
(0.38
|
)
|
||||||||
|
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted
|
5,301,471
|
5,295,297
|
(3,484,342
|
)
|
(d)
|
7,112,426
|
|||||||||||
See notes to the unaudited pro forma condensed combined financial information.
NOTE A – BASIS OF PRESENTATION
On September 8, 2021, iSun, Inc., a Delaware corporation ( “iSun”), entered into an Agreement and Plan of Merger dated September 8, 2021, by among
the iSun, Solar Communities, Inc., a Vermont corporation ( “SunCommon”), iSun Residential, Inc., a Delaware corporation and wholly-owned subsidiary of iSun (“iSun Residential”) and iSun Residential Merger Sub, Inc., a Vermont corporation and
wholly-owned subsidiary of iSun Residential t (“Merger Sub”) (the “Merger Agreement”). .
The Merger Agreement provides that upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into SunCommon (the “Merger”), with
SunCommon as the surviving corporation in the Merger and becoming a wholly-owned subsidiary of iSun Residential (the “Surviving Corporation”). At the effective time of the Merger (the “Effective Time”), the shareholders of SunCommon will receive
cash consideration of $25,534,621 and 1,810,855 shares of iSun Common Stock valued at $8.816 per share. The shares of iSun Common Stock to be issued in connection with the Merger will be listed on the NASDAQ Capital Market.
The unaudited pro forma condensed combined financial information of iSun’s financial condition and results of operations, including per share data, are presented
after giving effect to the Merger. The pro forma financial information assumes that the Merger with SunCommon was consummated on January 1, 2021 and January 1, 2020, for purposes of unaudited pro forma condensed combined statements of operations
and on June 30, 2021, for purposes of the unaudited pro forma condensed combined balance sheet and gives effect to the Merger, for purposes of the unaudited pro forma condensed combined statement of operations, as if it had been effective during
the entire period presented.
The Merger will be accounted for using the acquisition method of accounting; accordingly, the difference between the purchase price over the estimated fair value of
the assets acquired (including identifiable intangible assets) and liabilities assumed will be recorded as goodwill. Alternatively, if the estimated fair value of the assets acquired (including identifiable intangible assets) and liabilities
assumed exceeds the purchase price, the difference will be recorded as a bargain purchase gain.
The pro forma financial information includes estimated adjustments to record the assets and liabilities of SunCommon at their respective fair values and represents
management’s estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analysis is performed. The final allocation of the purchase price will be
determined after the Merger is completed and after completion of a final analysis to determine the fair values of SunCommon’s tangible, and identifiable intangible, assets and liabilities as of the effective date of the Merger.
NOTE B – PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are
based on current valuations, estimates, and assumptions. Subsequent to the completion of the Merger, iSun will engage an independent third party valuation firm to determine the fair value of the assets acquired and liabilities assumed which could
significantly change the amount of the estimated fair values used in pro forma financial information presented.
| (a) |
Estimated cash paid at close, approx. $25.5 million
|
| (b) |
Elimination of SunCommon’s stockholders’ equity representing conversion of all of SunCommon’s common stock into the merger consideration, see ‘Note C’ for estimated goodwill
calculation. Includes elimination of SunCommon’s existing goodwill of $3.1 million and deferred tax assets of $0.8 million.
|
| (c) |
Accrued legal fees related to the transaction estimated to be $200,000 for iSun and $200,000 for SunCommon. Additional accounting and advisory services related to the due
diligence process estimated at $150,000. All costs are non-recurring and assume expenses paid at June 30, 2021.
|
| (d) |
Weighted average basic and diluted shares outstanding were adjusted to effect the merger of Merger Sub into SunCommon, elimination of SunCommon’s outstanding shares of 5,295,297
and additional of issuance of iSun’s shares of Common Stock of 1,810,955.
|
| (e) |
Escrow of SunCommon’s PPP loan, not being assumed as part of the Merger.
|
| (f) |
Prior to the close of the transaction, the Company secured a line of credit of $10 million at 8% annual interest rate due on October 15, 2022, $1
million is considered to be short term with $9 million considered to be long term. The line of credit is not assumed by the Company and paid down to $0 at close. Interest expense of $0.6 million and $0.3 million, net adjustments, have
been included in the statement of operations for the year ended December 31, 2020 and for the six months ended June 30, 2021, respectively.
|
| (g) |
Issuance of 1,810,955 shares of iSun Common Stock at $8,816 per share resulting in Additional Paid-In Capital of $15,965 million.
|
NOTE C – PRO FORMA ALLOCATION OF PURCHASE PRICE
The following table shows the pro forma allocation of the consideration paid for SunCommon’s common equity to the acquired identifiable assets and
liabilities assumed and the pro forma goodwill generated from the transaction (unaudited, dollars in thousands):
|
Purchase price:
|
||||||||
|
Fair value of iSun’s shares of Common Stock issued (1,810,955 shares), at $8.816 per share
|
$
|
15,965
|
||||||
|
Cash paid
|
25,535
|
|||||||
|
Total consideration transferred
|
$
|
41,500
|
||||||
|
Fair value of identifiable assets acquired:
|
||||||||
|
Cash and cash equivalents
|
$
|
-
|
||||||
|
Accounts receivable
|
3,405
|
|||||||
|
Inventory
|
2,143
|
|||||||
|
Contract assets
|
1,154
|
|||||||
|
Premises and equipment
|
3,823
|
|||||||
|
|
||||||||
|
Other current assets
|
551
|
|||||||
|
Total identifiable assets
|
$
|
11,075
|
||||||
|
Fair value of identifiable liabilities assumed:
|
||||||||
|
Accounts payable and accrued liabilities
|
$
|
4,210
|
||||||
|
Contract liabilities
|
1,066
|
|||||||
|
Line of credit
|
|
|||||||
|
Loans payable
|
|
|||||||
|
Other liabilities
|
49
|
|||||||
|
Total identifiable liabilities
|
$
|
5,324
|
||||||
|
Net assets acquired including identifiable intangible assets
|
5,751
|
|||||||
|
Preliminary pro forma goodwill
|
$
|
35,749
|
||||||
