EX-99.2 4 tm2411365d1_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

On November 13, 2023, Phoenix Motor Inc. (“Phoenix Motor” or the “Company”) entered into two Asset Purchase Agreements (collectively, the “Asset Purchase Agreements”) with Proterra, Inc. and its subsidiary, Proterra Operating Company, Inc. (collectively, “Proterra”), pursuant to which Phoenix Motor agreed to purchase substantially all of the assets of the Proterra Transit business line.

 

Pursuant to the separate Asset Purchase Agreements, Phoenix Motor agreed to purchase:

 

(i) the Proterra Transit Business Unit, which is the business unit of Proterra that designs, develops and sells electric transit buses as an original equipment manufacturer for North American public transit agencies, airports, universities and other commercial transit fleets (“Proterra Transit Business Unit”), and

 

(ii) the Proterra Battery Lease Agreements, which are all of the battery lease transferred contracts to which Proterra is a party as the “lessor” thereunder, used in connection with deployed Proterra electric transit buses (“Proterra Battery Lease Agreements”).

 

On January 11, 2024, the Company completed the acquisition of the Proterra Transit Business for a purchase price of $3.5 million. The Company also assumed certain of Proterra’s obligations associated with the purchased Proterra Transit Business Unit, free and clear of liens, claims, encumbrances, other than certain specified cure payments and other liabilities of Proterra related to the Proterra Transit Business Unit.

 

On February 7, 2024, the Company completed purchase of the Proterra Battery Lease Agreements for a purchase price of $6.5 million. 

 

The following unaudited pro forma consolidated combined financial statements present the historical consolidated financial statements of Phoenix Motor Inc. and its subsidiaries (“the Group”) and the historical debtor-in-possession financial statements of Proterra Transit and battery lease business (“Proterra Transit”), adjusted as if the Company had acquired Proterra transit business.

 

The unaudited pro forma consolidated combined balance sheet combines the historical consolidated balance sheet of the Group and the historical debtor-in-possession balance sheet of Proterra Transit as of December 31, 2023, giving effect to the acquisition as if the acquisition had been consummated on December 31, 2023. The unaudited pro forma combined statement of operations and comprehensive loss for the years ended December 31, 2023 and 2022 combines the historical combined statement of operations and comprehensive loss of the Group and the historical debtor-in-possession statement of operations and comprehensive loss of Proterra Transit, giving effect to the acquisition as if the acquisition had been consummated on January 1, 2022, the beginning of the earliest period presented. The historical consolidated financial statements have been adjusted in the unaudited pro forma consolidated combined financial statements to give pro forma effect to events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) with respect to the statement of operations, expected to have a continuing impact on the Group’s results following the completion of the acquisition.

 

The unaudited pro forma consolidated combined financial statements have been developed from and should be read in conjunction with:

 

  ● The accompanying notes to the unaudited pro forma consolidated combined financial statements;
     
  ● The historical consolidated financial statements and related notes of Phoenix Motor Inc. as of December 31, 2022, for the year ended December 31, 2022, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Phoenix Motor Inc s Annual Report on Form 10-K for the year ended December 31, 2022, which were filed with the Securities and Exchange Commission; and
     
  ● The historical debtor-in-possession financial statements of Proterra Transit and battery lease business as of December 31, 2023 and 2022 and for the years ended December 31, 2023 and 2022, which are contained elsewhere in this statement.

 

 

 

PHOENIX MOTOR INC.

CONSOLIDATED BALANCE SHEETS

(In US$ thousands, except per share data)

 

    As of December 31, 2023  
    Historical     Pro Forma  
    Phoenix     Proterra     Pro Forma     Pro Foma  
    Motor     Transit     Adjustment     Consolidated  
ASSETS                        
Current assets:                                
Cash and cash equivalents     31       -       -       31  
Restricted cash, current     3,252       -       (3,000 )     252  
Accounts receivable, net     451       28,529       -       28,980  
Inventories     1,796       71,048       -       72,844  
Prepaid expenses and other current assets, net     356       6,864       -       7,220  
Amount due from related parties     130       -       -       130  
Total current assets     6,016       106,441       (3,000 )     109,457  
Property and equipment, net     1,119       4,497       -       5,616  
Operating lease right-of-use assets     -       2,840       -       2,840  
Net investment in leases     230       -       -       230  
Intangible assets                     26,178       26,178  
Goodwill     4,271       -       -       4,271  
Other assets     -       10,561       -       10,561  
Total assets     11,636       124,339       23,178       159,153  
LIABILITIES AND STOCKHOLDERS’ EQUITY                                
Current liabilities:                                
Accounts payable     3,529       26,515       -       30,044  
Accrued liabilities     926       3,751       -       4,677  
Advance from customers, current     167       -       -       167  
Deferred income     362       16,133       -       16,495  
Warranty reserve     289       4,303       -       4,592  
Lease liabilities - current portion     1,303       997       -       2,300  
Amounts due to related parties     863       -       -       863  
Short-term borrowing     961               -       961  
Derivative liability     1,156       -       -       1,156  
Convertible note – current portion     1,320       -       -       1,320  
Long-term borrowing, current portion     5       -       -       5  
Intercompany payable     -       166,178       (166,178 )     -  
Total current liabilities     10,881       217,877       (166,178 )     62,580  
Lease liabilities - non-current portion     2,696       1,798       -       4,494  
Advance from customers, noncurrent     2,214       -       -       2,214  
Convertible notes, noncurrent portion     540       -       -       540  
Warranty reserve, non-current     -       10,465       -       10,465  
Deferred revenue, non-current     -       24,199       -       24,199  
Long-term borrowings     144       -       -       144  
Total liabilities     16,475       252,936       (166,178 )     104,636  
Equity:                                
Common stock, par $0.0004, 450,000,000 shares authorized, 21,900,918 shares issued and outstanding as of December 31, 2023     9       -       4       13  
Additional paid-in capital     44,359       -       33,174       77,533  
Accumulated deficit     (49,207 )     (130,000 )     156,178       (23,029 )
Total stockholders’ (deficit) equity     (4,839 )     (130,000 )     189,356       54,517  
Total liabilities and stockholders’ (deficit) equity     11,636       124,339       23,178       159,153  

  

 

 

PHOENIX MOTOR INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In US$ thousands, except for per share data)

 

    For the Year ended December 31, 2023  
    Historical     Pro Forma  
          Proterra     Pro Forma     Pro Foma  
    Phoenix     Transit     Adjustment     Consolidated  
Net revenues     3,488       115,778       -       119,266  
Cost of revenues     3,398       115,324       -       118,722  
Gross profit     90       454       -       544  
Operating expenses:                                
Selling, general and administrative     14,902       56,130       -       71,032  
Provision for credit loss     1,062       -       -       1,062  
Operating loss     (15,874 )     (55,676 )     -       (71,550 )
                                 
Other income (expense):                                
Interest expense, net     (606 )     (437)       -       (1,043 )
Gain on sales-type leases     238       -       -       238  
Change in fair value of derivative liability     (319 )     -       -       (319 )
Tax refund     697       -       -       697  
Impairment of long-lived assets     (4,968 )     -       -       (4,968 )
Others     209       1,159       -       1,368  
Total other income (expense), net     (4,749 )     722       -       (4,027 )
Loss before income taxes     (20,623 )     (54,954 )             (75,557 )
Income tax provision     (22 )     -               (22 )
Net loss     (20,645 )     (54,954 )     -       (75,599 )
                                 
Net loss per share of common stock:                                
Basic and Diluted     (0.97 )     (0.24 )     -       (2.77 )
Weighted average common stocks outstanding     21,199       228,167       (222,080 )     27,286  

 

 

 

PHOENIX MOTOR INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In US$ thousands, except per share data)

 

    For the Year ended December 31, 2022  
    Historical     Pro Forma  
    Phoenix     Proterra     Pro Forma     Pro Foma  
    Motor     Transit     Adjustment     Combined  
Net revenues     4,330       191,087       -       195,417  
Cost of revenues     3,510       184,900       -       188,410  
Gross profit     820       6,187       -       7,007  
Operating expenses:                                
Selling, general and administrative     13,970       82,754       300       97,024  
Operating loss     (13,150 )     (76,567 )     (300 )     (90,017 )
                                 
Other income (expense):                                
Interest expense, net     (7 )     (265)       -       (272)  
Tax refund     196       -       -       196  
Others     265       1,786       26,178       28,229  
Total other income (expense), net     454       2,051       26,178       28,153  
Loss before income taxes     (12,696 )     (75,046 )     25,878       (61,864 )
Income tax provision     (9 )     -               (9 )
Net loss     (12,705 )     (74,046 )     25,878       (61,873 )
                                 
Net loss per share of common stock:                                
Basic and Diluted     (0.65 )     (0.33 )     -       (2.40 )
Weighted average common stocks outstanding     19,664       224,301       (218,214 )     25,751  

 

(1) Basis of Pro Forma Presentation

 

The unaudited pro forma consolidated combined financial statements have been prepared assuming the acquisition is accounted for as a business combination using the acquisition method of accounting under Financial Accounting Standards Board (“FASB”) ASC 805, Business Combinations (“ASC 805”). For business combinations under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred. Acquisition-related transaction costs include valuation, auditing, legal consulting fee and others.

 

The unaudited pro forma consolidated combined financial statements reflect adjustments, based on available information and certain assumptions that Phoenix Motor believes are reasonable, attributable to the following:

 

  ● The acquisition of Proterra Transit, which will be accounted for as a business combination, with the Company identified as the acquirer, and $10 million as acquisition consideration. The Company is considered the accounting acquirer since immediately following the closing: (i) the Company stockholders will own a majority of the voting rights of the combined company; (ii) the Company will designate a majority of the initial members of the board of directors of the combined company; (iii) the Company’s senior management will hold the majority of the key positions in senior management of the combined company; and (iv) the Company will continue to maintain its corporate headquarters in Anaheim, California , United States.
     
  ● The incurrence of acquisition-related expenses.

 

 

 

The pro forma adjustments represent management’s estimates based on information available as of the date of this filing and are subject to change as additional information becomes available and additional analyses are performed. The pro forma financial statements are provided for illustrative purposes only and are not intended to represent what the Company financial position or results of operations would have been had the acquisition actually been consummated on the assumed dates nor do they purport to project the future operating results or financial position of the Company following the acquisition. The pro forma financial statements do not reflect future events that may occur after the acquisition, including, but not limited to, the anticipated realization of ongoing savings from potential operating efficiencies, cost savings, or economies of scale that the Company may achieve with respect to the combined operations. Specifically, the pro forma statements of operations do not include the synergies expected to be achieved as a result of the acquisition and any associated costs that may be incurred to achieve the identified synergies. Additionally, the Company cannot assure that additional charges will not be incurred in excess of those included in the pro forma additional valuation, auditing, and legal consulting fees related to the acquisition, The Company’s efforts to achieve operational synergies, or that management will be successful in its efforts to integrate the operations. The pro forma statement of operations also excludes the effects of costs associated with any restructuring and integration activities that may result from the acquisition. Further, the pro forma financial statements do not reflect the effect of any regulatory actions that may impact the results of the Company following the acquisition.

 

Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated combined financial statements. In Phoenix Motor’s opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The historical financial statements have been adjusted in the unaudited pro forma consolidated combined financial statements to give effect to the acquisition. These adjustments are directly attributable to the acquisition, factually supportable and, with respect to the unaudited pro forma consolidated combined statements of operations, expected to have a continuing impact on Phoenix Motor following the acquisition.

 

(2)  Pro Forma Adjustments and Assumptions

 

Pro Forma Adjustments to the Consolidated Balance Sheet as of December 31, 2022:

 

  a. Reflects $10,000 cash consideration for acquisition of Proterra Transit and adjustments to state Proterra Transit’s assets acquired and liabilities assumed at preliminary fair value. A summary of the consideration paid, and the preliminary fair value of the assets acquired, and liabilities assumed is as follows:

 

Cash consideration for Proterra Transit Business Unit   $ 3,500  
Cash consideration for Proterra Battery Lease business     6,500  
Total consideration   $ 10,000  
         
Preliminary fair value of assets acquired:        
Current assets        
Accounts receivables, net   $ 28,529  
Inventories     71,048  
Prepaid expenses and other current assets, net     6,864  
Non-current assets        
Property and equipment, net     4,497  
Operating lease right-of-use assets     2,840  
Other assets     10,561  
Total preliminary fair value of assets acquired   $ 124,339  
         
Preliminary fair value of liabilities assumed:        
Current liabilities        
Accounts payable   $ 26,515  
Accrued liabilities     3,751  
Deferred income     16,133  
Warranty reserve     4,303  
Lease liabilities - current portion     997  
Non-current liabilities        
Lease liabilities - non-current portion     1,798  
Warranty reserve, non-current     10,465  
Deferred revenue, non-current     24,199  
Total preliminary fair value of liabilities assumed   $ 88,161  
Net Assets acquired and liabilities assumed   $ 36,178  
         
Bargain Purchase Gain   $ 26,178  

  

 

 

The acquisition consideration is allocated to the acquired assets and assumed liabilities based on their preliminary fair values, and any excess is initially allocated to the identifiable intangible asset, customer relationship. The purchase price exceeded the fair value of net assets acquired by $26,179. The Company allocated the $26,179 excess to intangible assets, which will be amortized over 5 years. The calculation of the bargain purchase gain entails the determination of the preliminary fair value of net assets and deducting the consideration paid by the Company. The initial allocation is subject to change upon the final valuation which is to be done after the date of closing. Such a change could have a material impact on the Company’s financial statements.

 

  b. Represents the elimination of Proterra Transit’s historical equity balances.
     
  c. Represents the accrual of $300 in estimated valuation, auditing, and legal consulting fees that are payable as a result of the acquisition of Proterra Transit, which were not reflected in either Phoenix Motor’s or Proterra Transit’s historical financial statements.
     
  d. Represents raising $7,000 from issuing 6,086,957 shares of the Phoenix Motor’s common stocks.

 

Pro Forma Adjustments to the Consolidated Statement of Operations and Comprehensive Loss for the Years Ended December 31, 2023 and 2022:

 

  a. Represents the bargain purchase gain incurred in the acquisition of Proterra Transit. The calculation of the bargain purchase gain entails the determination of the fair value of net assets, and deducting the consideration paid by the Company.
     
  b. Represents the accrual of $300 in estimated valuation, auditing, and legal consulting fees that are payable as a result of the acquisition of Proterra Transit, which were not either Phoenix Motor’s or Proterra Transit’s historical financial statements.
     
  c. The pro forma basic and diluted net loss per common share was computed by dividing pro forma net loss attributable to Phoenix Motor by the historical weighted average number of shares of common stock outstanding, as if the acquisition had been consummated on January 1, 2022.