EX-99.2 4 d502327dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information presents the combination of the historical financial information of Ouster, Inc. (“Ouster”) and Velodyne Lidar, Inc. (“Velodyne”) adjusted to give effect to the transactions consummated on February 10, 2023 pursuant to the Agreement and Plan of Merger, dated as of November 4, 2022, by and among Ouster, Oban Merger Sub, Inc. (“Merger Sub I”), Oban Merger Sub II LLC (“Merger Sub II”) and Velodyne, referred to as the merger agreement. Under the merger agreement, Merger Sub I merged with and into Velodyne, with Velodyne as the surviving entity and continuing as a direct, wholly owned subsidiary of Ouster, in accordance with the applicable provisions of the Delaware General Corporate Law, as amended, referred to as the first merger, and, immediately after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne merged with and into Merger Sub II, with Merger Sub II as the surviving entity and continuing as a direct, wholly-owned subsidiary of Ouster, in accordance with the Delaware Limited Liability Company Act, as amended, referred to as the second merger. The first merger and the second merger, together, are referred to as the “mergers.” The mergers are accounted for as a business combination with Ouster identified as accounting acquirer.

The unaudited pro forma condensed combined balance sheet as of December 31, 2022 combines the historical audited consolidated balance sheet of Ouster and the historical audited consolidated balance sheet of Velodyne as of December 31, 2022 on a pro forma basis as if the mergers had been consummated on December 31, 2022.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 combines the historical audited consolidated statement of operations of Ouster for the year ended December 31, 2022 and the historical audited consolidated statement of operations of Velodyne for the year ended December 31, 2022, giving effect to the mergers as if they had been consummated on January 1, 2022.

On April 20, 2023, Ouster filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation to effect a one-for-10 reverse stock split of Ouster’s common stock (the “Reverse Stock Split”) and a corresponding reduction in Ouster’s authorized shares of common stock. The historical share and per share information included herein have been adjusted to reflect the Reverse Stock Split.

The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes:

 

   

the historical audited consolidated financial statements of Ouster as of and for the year ended December 31, 2022 included in Ouster’s Annual Report on Form 10-K filed on March 24, 2023, and

 

   

the historical audited consolidated financial statements of Velodyne as of and for the year ended December 31, 2022, included as Exhibit 99.1 to the Current Report on Form 8-K/A to which this Exhibit 99.2 is attached.

The pro forma financial information has been prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Release No. 33-10786, which is referred to herein as Article 11.

The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the mergers occurred on the dates indicated, and do not reflect adjustments for any anticipated synergies, adjustments related to restructuring or integration activities, operating efficiencies, tax savings or cost savings. Further, the unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of Ouster following the completion of the mergers. Ouster and Velodyne did not have material historical relationships reflected in the historical financial statements prior to the entry into the merger agreement. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.


Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2022

(in thousands)

 

     Ouster
(Historical)
    Velodyne
(Historical)
    Pro Forma
Adjustments
         Pro Forma
Combined
 

ASSETS

           

Current assets:

           

Cash and cash equivalents

   $ 122,932     $ 27,773       (7,902   A    $ 123,302  
         (8,121   B   
         (11,380   C   

Restricted cash, current

     257       —              257  

Short-term investments

     —         167,102            167,102  

Accounts receivable, current

     11,233       9,711       3,830     D      24,774  

Inventory

     19,533       9,975            29,508  

Prepaid expenses and other current assets

     8,543       8,804       (3,830   D      13,517  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current assets

     162,498       223,365       (27,403        358,460  

Property and equipment, net

     9,695       10,340            20,035  

Operating lease, right-of-use assets

     12,997       15,936       (4,690   D      24,243  

Goodwill

     51,152       4,289       102,445     D      157,886  

Intangible assets, net

     18,165       6,508       6,654     D      31,327  

Restricted cash, non-current

     1,089       —              1,089  

Contract assets

     —         12,013       (12,013   D      —    

Accounts receivable, non-current

     —         —         10,018     D      10,018  

Other non-current assets

     541       761            1,302  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 256,137     $ 273,212     $ 75,011        $ 604,360  
  

 

 

   

 

 

   

 

 

      

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

           

Current liabilities:

           

Accounts payable

   $ 8,798     $ 3,965          $ 12,763  

Accrued and other current liabilities

     17,473       32,987       (7,902   A      44,813  
         (4,201   B   
         (794   C   
         7,251     E   

Operating lease liability, current

     3,221       3,100            6,321  

Contract liabilities, current

     —         5,726            5,726  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current liabilities

     29,492       45,778       (5,646        69,624  

Operating lease liabilities, long-term portion

     13,400       13,895       (987   D      26,308  

Warrant liabilities

     180       —              180  

Debt

     39,574       —              39,574  

Contract liabilities, non-current

     —         9,179       (6,443   D      2,736  

Long-term tax liabilities

     —         1,765       (1,765   D      —    

Other non-current liabilities

     1,872       352            2,224  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities

     84,518       70,969       (14,841        140,646  
  

 

 

   

 

 

   

 

 

      

 

 

 

Redeemable convertible preferred stock

     —         —              —    

Stockholders’ equity:

           

Preferred stock

     —         —              —    

Common stock

     19       25       (6   D      38  

Additional paid-in capital

     613,665       892,357       (585,775   D      927,537  
         6,383     F   
         907     G   

Accumulated other comprehensive loss

     (441,916     (756     756     D      (441,916

Accumulated deficit

     (149     (689,383     (3,920   B      (21,945
         (10,586   C   
         696,634     D   
         (7,251   E   
         (6,383   F   
         (907   G   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders’ equity

     171,619       202,243       89,852          463,714  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities, reddemable comvertible preferred stock, and stockholders’ equity

   $ 256,137     $ 273,212     $ 75,011        $ 604,360  
  

 

 

   

 

 

   

 

 

      

 

 

 


Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2022

(in thousands, except share and per share data)

 

     Ouster
(Historical)
    Velodyne
(Historical)
    Transaction
Accounting
Adjustments
           Pro Forma
Combined
 

Revenue

           

Product

   $ 41,029     $ 33,868          $ 74,897  

License and services

     —         10,087            10,087  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total revenue

     41,029       43,955            84,984  

Cost of revenue

           

Product

     30,099       67,883       1,326       AA        100,348  
         1,040       CC     

License and services

     —         784            784  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total cost of revenue

     30,099       68,667       2,366          101,132  
  

 

 

   

 

 

   

 

 

      

 

 

 

Gross profit (loss)

     10,930       (24,712     (2,366        (16,148

Operating expenses

           

Research and development

     64,317       73,309       94       BB        142,810  
         5,090       CC     

Sales and marketing

     30,833       20,036       673       AA        53,383  
         180       BB     
         1,661       CC     

General and administrative

     61,203       47,434       3,920       DD        122,368  
         6,109       BB     
         2,795       CC     
         907       EE     
  

 

 

   

 

 

   

 

 

      

 

 

 

Total operating expenses

     156,353       140,779       21,429          318,561  
  

 

 

   

 

 

   

 

 

      

 

 

 

Loss from operations

     (145,423     (165,491     (23,795        (334,709
  

 

 

   

 

 

   

 

 

      

 

 

 

Other income (expense)

           

Interest income

     2,208       2,732            4,940  

Interest expense

     (2,694     (3          (2,697

Other income (expense), net

     7,654       238            7,892  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total other income (expense), net

     7,168       2,967            10,135  
  

 

 

   

 

 

   

 

 

      

 

 

 

Loss before income taxes

     (138,255     (162,524     (23,795        (324,574
  

 

 

   

 

 

   

 

 

      

 

 

 

Provision for (benefit from) income taxes

     305       526            831  
  

 

 

   

 

 

   

 

 

      

 

 

 

Net loss

   $ (138,560   $ (163,050   $ (23,795      $ (325,405
  

 

 

   

 

 

   

 

 

      

 

 

 

Net loss per share

           

Basic and diluted

   $ (7.79          $ (8.73

Weighted-average shares used in computing net loss per share

           

Basic and diluted

     17,792,316              37,279,987  


Notes to the Unaudited Pro Forma Condensed Combined Financial Information

1. Description of the Transaction

Pursuant to the merger agreement, Merger Sub I merged with and into Velodyne, with Velodyne as the surviving entity and continuing as a direct, wholly owned subsidiary of Ouster, in accordance with the applicable provisions of the Delaware General Corporate Law, as amended, referred to as the first merger, and, immediately after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne merged with and into Merger Sub II, with Merger Sub II as the surviving entity and continuing as a direct, wholly-owned subsidiary of Ouster, in accordance with the Delaware Limited Liability Company Act, as amended, referred to as the second merger. The first merger and second merger are referred to collectively herein as the “mergers.” The mergers are accounted for as a business combination in accordance with accounting standards codification 805 (“ASC 805”) with Ouster being identified as the accounting acquirer. Upon the consummation of the first merger, Velodyne’s equity holders received or have the right to receive shares of Ouster common stock at a deemed value of $1.26 per share based on the closing price of Ouster common stock shares on February 10, 2023 of $1.53, and after giving effect to the exchange ratio of 0.8204 based on the terms of the merger agreement. Accordingly, 19.5 million shares of Ouster common stock were immediately issued and outstanding, based on Velodyne’s outstanding common stock balance as of February 10, 2023 and accelerated vesting of certain restricted stock units (“RSUs”), performance stock awards (“PSAs”) and restricted stock awards (“RSAs”) upon closing of the first merger as discussed below:

 

   

the cancellation of each issued and outstanding share of Velodyne common stock and the conversion of each such issued and outstanding share of Velodyne common stock into the right to receive 0.8204 shares of Ouster common stock, referred to the exchange ratio;

 

   

the automatic vesting upon change of control of Ouster RSUs;

 

   

the automatic vesting due to change of control and expected termination of Velodyne RSAs and PSAs;

 

   

the automatic vesting upon change of control of a portion of a Velodyne warrant granted to a customer and exercisable into Velodyne common stock shares;

 

   

the automatic vesting upon change of control of Velodyne RSUs;

 

   

the conversion of each Velodyne warrant into the right to acquire a number of shares of Ouster common stock equal to the number of shares of Velodyne common stock subject to such Velodyne warrant and the exchange ratio with the corresponding adjustment to the exercise price of the warrants;

 

   

the conversion of outstanding unvested restricted shares of Velodyne common stock into shares of Ouster common stock at the exchange ratio, which shares will continue to be governed by the same terms and conditions (including vesting and repurchase terms) effective immediately prior to the effective time of the first merger.


Ouster determined the preliminary acquisition consideration based on the fair value of Ouster’s common stock of $1.53 as of February 10, 2023, as follows:

 

     Number of
Ouster’s

common stock
(in millions)
     Preliminary
Acquisition

consideration
(in thousands)
 

Fair value of shares of Ouster common stock issued to Velodyne equity holders

     19.3      $ 296,648  

Fair value of Velodyne Restricted Stock units that were accelerated by a change of control trigger

     0.1        776  

Fair value of Velodyne vested warrants

     2.1        9,177  
  

 

 

    

 

 

 

Total consideration

     21.5      $ 306,601  
  

 

 

    

 

 

 

For purposes of this pro forma analysis, the acquisition consideration of $306.6 million has been allocated based on the estimated fair values of identifiable assets and liabilities acquired as of February 10, 2023 (in thousands) as follows:

 

  

 

 

 

Fair value of total preliminary consideration transferred

   $ 306,601  
  

 

 

 

Preliminary amounts of identifiable assets and liabilities assumed

  

Cash and cash equivalents

     27,773  

Short-term investments

     167,102  

Accounts receivable, current

     13,541  

Inventories

     9,975  

Prepaid and other current assets

     4,974  

Intangible assets

  

Customer relationships

     5,562  

Developed technology – hardware

     2,500  

Developed technology – software

     5,100  

Property and equipment, net

     10,340  

Right-of-use assets under operating leases

     11,246  

Noncurrent accounts receivable

     10,018  

Other noncurrent assets

     761  

Accounts payable, accrued and other current liabilities

     (44,203

Operating lease liability, current

     (3,100

Contract liabilities, current

     (5,726

Noncurrent operating lease liabilities

     (12,908

Noncurrent contract liabilities

     (2,736

Other noncurrent liabilities

     (352
  

 

 

 

Total identifiable net assets

     199,867  

Goodwill

     106,734  
  

 

 

 
   $ 306,601  
  

 

 

 


2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The adjustments included in the unaudited pro forma condensed combined balance sheets as of December 31, 2022, are as follows:

 

(A)

Represents payment of costs incurred by Velodyne in connection with the mergers, which is reflected as decrease in cash and cash equivalents and accrued and other current liabilities.

(B)

Represents payment of transaction costs incurred by Ouster in connection with the mergers, which is reflected as decrease in cash and cash equivalents, decrease in accrued and other current liabilities and increase in accumulated deficit.

(C)

Represents cash severance payment to Velodyne employees terminated as direct result of the mergers, which is reflected as decrease in cash and cash equivalents, decrease in accrued and other current liabilities and increase in accumulated deficit.

(D)

Represents application of acquisition accounting for the mergers, including elimination of Velodyne historical equity balances, issuance of 19.3 million shares of Ouster common stock in exchange for Velodyne’s common stock and RSAs and PSAs vested on the date of the first merger for which compensation cost had been already recognized prior to the date of the first merger, vesting of 50% of Velodyne common stock warrant issued to a customer as a result of the pre-existing change of control provision and replacement of such warrant by a warrant to purchase common stock of Ouster based on the exchange ratio, automatic vesting of Velodyne RSUs, replacement of Velodyne public warrants with Ouster warrants based on the exchange ratio and recognition of Velodyne identifiable assets at fair values.

(E)

Represents accrual of costs incurred by Velodyne subsequent to December 31, 2022 in connection with the mergers.

(F)

Represents stock-based compensation expense related to accelerated vesting of Ouster’s equity awards triggered by a change of control.

(G)

Represents stock-based compensation expense related to acceleration of Velodyne RSAs and PSUs vested on February 10, 2023 for which no compensation cost had been recognized prior to the first merger.

There are no reclassification adjustments reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2022.

Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

The adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended as of December 31, 2022, are as follows:

 

(AA)

Represents amortization expense related to the fair value of acquired Velodyne identifiable intangible assets, net of the amortization expense of $0.5 million already reflected in actual historical results. The $0.7 million of amortization expense related to the acquired customer relationship is recognized as Sales and marketing expense based on an estimated weighted average useful life of eight years, the $0.8 million amortization expense related to the acquired developed technology hardware intangible asset is recognized as Cost of product revenue expense based on an estimated useful life of three years and the $1.0 million amortization expense related to the acquired developed technology software intangible asset is recognized as Cost of product revenue expense based on an estimated useful life of five years. The amortization of the intangible assets is based on a straight-line amortization method as this represents management’s best estimate of the pattern of utilization for the intangible assets.


(BB)

Represents stock-based compensation expense related to accelerated vesting of Ouster’s equity awards triggered by a change of control.

(CC)

Represents accrual for cash severance payment to Velodyne employees terminated as direct result of the mergers.

(DD)

Represents transaction costs incurred by Ouster in connection with the mergers.

(EE)

Represents stock-based compensation expense related to acceleration of Velodyne RSAs and PSUs vested on February 10, 2023 for which no compensation cost had been recognized prior to the first merger.

There are no reclassification adjustments reflected in the Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended December 31, 2022.

3. Net Loss per Share

Represents the net loss per share calculated using the historical weighted average shares outstanding. As the first merger is being reflected as if it had occurred as of January 1, 2022, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes the shares issued in connection with the first merger have been outstanding for the entire periods presented.

 

(in thousands, except share and per share data)    Year Ended
December 31, 2022
 

Pro forma net loss

   $ (325,405

Basic and diluted weighted average shares outstanding

     37,279,987  

Pro forma net loss per share - Basic and Diluted (1)

   $ (8.73

Weighted average shares outstanding- basic and diluted

  

Former Ouster shareholders (2)

     17,792,316  

Former Velodyne shareholders (2)

     19,487,671  
  

 

 

 
     37,279,987  
  

 

 

 

 

(1)

Outstanding options, restricted stock awards, unvested restricted stock units and warrants are anti-dilutive and are not included in the calculation of diluted net loss per share.

(2)

Includes impact of acceleration of vesting of equity awards upon change of control or change of control and employment termination.