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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINACIAL STATEMENTS


The following unaudited pro forma combined condensed balance sheet and statement of operations adjusts the balance sheet data and the statement of operations data for the Company as of September 30, 2016 and the statement of operations data for the Company for the year ended December 31, 2015, as if the Disposition had been completed on December 31, 2015. The pro forma financial information is based upon the historical consolidated financial statements of the Company and the assumptions, estimates, and adjustments described in the notes to the unaudited pro forma combined financial statements. The assumption, estimates, and adjustments are preliminary and have been made solely for purposes of developing such pro forma information. The unaudited pro forma combined financial statements include adjustments that have been made to reflect the preliminary purchase price allocations. The preliminary allocations represent estimates made for purpose of these pro forma financial statements and are subject to change upon a final determination of fair value.
 
The unaudited pro forma combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the consolidated financial position and consolidated results of operations of the Company that would have been reported had the Disposition occurred on the dates indicated, nor do they represent a forecast of the consolidated results of operations of the Company for any future period. The unaudited pro forma combined financial statements should be read in conjunction with the audited consolidated financial statements and related notes, together with management’s discussion and analysis of financial condition and results of operations, contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2015 and the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2016, which are on file with the SEC.








































Active Power, Inc.
Pro Forma Condensed Consolidated Balance Sheet
September 30, 2016 (unaudited)
(in thousands, except par value)

 
Active Power, Inc.
 
Pro Forma
 
Active Power, Inc.
 
Historical (a)
 
Adjustments (c)
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
8,629

 
$
(6,685
)
 
$
1,944

Restricted cash
37

 
(37
)
 
—

Accounts receivable
4,963

 
(4,963
)
 
—

Inventories, net
7,266

 
(7,266
)
 
—

Prepaid expenses and other
601

 
(404
)
 
197

Total current assets
21,496

 
(19,355
)
 
2,141

Property and equipment, net
1,301

 
(1,301
)
 
—

Deposits and other
267

 
(94
)
 
173

Total assets
$
23,064

 
$
(20,750
)
 
$
2,314

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 

 
 
 
 
 
 
 
 
Current liabilities:
 

 
 

 
 
Accounts payable
$
1,726

 
$
(1,726
)
 
$
—

Accrued expenses
3,753

 
(3,552
)
 
201

Deferred revenue
4,580

 
(4,580
)
 
—

Revolving line of credit
5,535

 
(5,535
)
 
—

Total current liabilities
15,594

 
(15,393
)
 
201

Long-term liabilities
357

 
(357
)
 
—

Commitments and contingencies
 
 
 
 
 
Stockholders’ equity:
 

 
 

 
 
Preferred stock - $0.001 par value; 2,000 shares authorized
—

 
—

 
—

Common stock
23

 
—

 
23

Treasury stock
(241
)
 
—

 
(241
)
Additional paid-in capital
305,045

 
—

 
305,045

Accumulated deficit
(297,678
)
 
5,000

(d) 
(302,678
)
Other accumulated comprehensive income
(36
)
 
—

 
(36
)
Total stockholders’ equity
7,113

 
5,000

 
2,113

Total liabilities and stockholders’ equity
$
23,064

 
$
(20,750
)
 
$
2,314

















Active Power, Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2016 (unaudited)
(in thousands, except per share amounts)

 
Active Power, Inc.
 
Pro Forma
 
Active Power, Inc.
 
Historical (a)
 
Adjustments (b)
 
Pro Forma
Revenues:
 
 
 
 
 
Product revenue
$
17,690

 
$
(17,690
)
 
$
—

Service and other revenue
8,895

 
(8,895
)
 
—

Total revenue
26,585

 
(26,585
)
 
—

 
 
 
 
 
 
Cost of goods sold:
 

 
 

 
 

Cost of product revenue
14,626

 
(14,626
)
 
—

Cost of service and other revenue
5,289

 
(5,289
)
 
—

Total cost of goods sold
19,915

 
(19,915
)
 
—

Gross profit
6,670

 
(66,780
)
 
—

 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

Research and development
3,405

 
(3,405
)
 
—

Selling and marketing
5,996

 
(5,996
)
 
—

General and administrative
4,214

 
(4,214
)
 
—

Total operating expenses
13,615

 
(13,615
)
 
—

Loss from operations
(6,945
)
 
6,945

 
—

 
 
 
 
 
 
Interest expense
(255
)
 
255

 
—

Other income (expense), net
(24
)
 
24

 
—

Net loss
$
(7,224
)
 
$
7,224

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Net loss per share, basic and diluted
$
(0.31
)
 
$
0.31

 
$
—

 
 
 
 
 
 
Shares used in computing net loss per share, basic and diluted
23,141

 
23,141

 
23,141
























Active Power, Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2015 (unaudited)
(in thousands, except per share amounts)

 
Active Power, Inc.
 
Pro Forma
 
Active Power, Inc.
 
Historical (a)
 
Adjustments (b)
 
Pro Forma
Revenues:
 
 
 
 
 
Product revenue
$
43,247

 
$
(43,247
)
 
$
—

Service and other revenue
14,174

 
(14,174
)
 
—

Total revenue
57,421

 
(57,421
)
 
—

 
 
 
 
 
 
Cost of goods sold:
 

 
 

 
 

Cost of product revenue
32,017

 
(32,017
)
 
—

Cost of service and other revenue
8,587

 
(8,587
)
 
—

Total cost of goods sold
40,604

 
(40,640
)
 
—

Gross profit
16,817

 
(16,817
)
 
—

 
 
 
 
 
 
Operating expenses:
 

 
 

 
 

Research and development
5,723

 
(5,723
)
 
—

Selling and marketing
10,589

 
(10,589
)
 
—

General and administrative
6,565

 
(6,565
)
 
—

Total operating expenses
22,877

 
(22,877
)
 
—

Loss from operations
(6,060
)
 
606

 
—

 
 
 
 
 
 
Interest expense
(375
)
 
375

 
—

Other income (expense), net
(24
)
 
24

 
—

Net loss
$
(6,459
)
 
$
6,459

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Net loss per share, basic and diluted
$
(0.28
)
 
$
0.28

 
$
—

 
 
 
 
 
 
Shares used in computing net loss per share, basic and diluted

23,134

 
23,134

 
23,134
























NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Basis of Presentation

The unaudited pro forma condensed consolidated financial statements are based on Active Power's historical consolidated financial statements adjusted to give effect to the sale of the assets and liabilities to Piller. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2015 give effect to the sale as if it had occurred on December 31, 2015. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 gives effect to the sale as if it occurred on September 30, 2016.


Note 2 - Pro Forma Adjustments

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the pro forma condensed consolidated financial information.
 
 
 
 
 
 
 
(a)
Reflects the historical operating results.
 
 
 
 
 
 
 
(b)
Reflects the elimination of revenues, cost of goods sold and expenses associated with the sale of our assets and liabilities to Piller.
 
 
 
 
 
 
 
(c)
Reflects the assets and liabilities being sold to Piller, which excludes director and officer prepaid insurance, the deposit on the leased manufacturing building, and the deferred rent and accrued state franchise taxes.
 
 
 
 
 
 
 
(d)
Reflects the loss of approximately $5.0 million arising from the transaction, which is reflected in the balance sheet.