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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				Terasquare								Pro Forma Combined Adjustments						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

 

		GigOptix				Terasquare								Pro Forma Combined Adjustments						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

Notes to Unaudited Pro Forma Condensed Combined Financial Information

 

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.

 

 

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