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Holley (HLLY)

Filed: 21 Jul 21, 4:56pm

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Defined terms included below shall have the same meaning as terms defined and included elsewhere in this this Current Report on Form 8-K (the “Form 8-K”) and, if not defined in the Form 8-K, the Proxy Statement filed with the Securities and Exchange Commission (the “SEC”) on June 21, 2021.

The following unaudited pro forma condensed combined balance sheet as of March 31, 2021 and the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2021 and the year ended December 31, 2020 present the combination of the financial information of Empower and Holley after giving effect to the Business Combination, the PIPE Financing, the A&R FPA, and the partial repayment of Holley’s debt (“Debt Paydown”), and have been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”.

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 combines the unaudited historical condensed balance sheet of Empower as of March 31, 2021 with the unaudited historical condensed consolidated balance sheets of Holley as of March 28, 2021 giving effect to the Business Combination, the PIPE Financing, the A&R FPA, and the Debt Paydown described in the accompanying notes, on a pro forma basis as if each had been completed as of March 31, 2021.

The unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2021 and the year ended December 31, 2020 combines the unaudited historical condensed statement of operations of Empower for the three months ended March 31, 2021 and the period from August 19, 2020 (inception) through December 31, 2020 with the unaudited historical condensed consolidated statements of comprehensive income (loss) of Holley for the 13 weeks ended March 28, 2021 and the year ended December 31, 2020 on a pro forma basis giving effect to the Business Combination, the PIPE Financing, the A&R FPA, and the Debt Paydown described in the accompanying notes, on a pro forma basis as if each had been completed on January 1, 2020.

The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of any integration costs, tax deductibility of transaction costs, or anticipated synergies in the pre-acquisition period of entities acquired by Holley. These synergies are effective starting on the date of each acquisition and therefore, are not fully captured in the results for the three months ended March 31, 2021 and the year ended December 31, 2020.

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what the Company’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

The unaudited pro forma condensed combined financial information is based on and should be read in conjunction with the unaudited historical condensed financial statements of each of Empower and Holley and the notes thereto, as well as the disclosures contained in the sections titled “Empower’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Holley’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached.

On March 11, 2021, Empower entered into the Merger Agreement with Merger Sub I, Merger Sub II and Holley Intermediate, pursuant to which, among other things, following the Domestication, (i) Merger Sub I, a direct wholly owned subsidiary of Empower, merged with and into Holley Intermediate, with Holley Intermediate surviving such merger as a wholly owned subsidiary of Holley and (ii) Merger Sub II, a direct wholly owned subsidiary of Empower, merged with and into Holley Intermediate, with Merger Sub II surviving such merger as a wholly owned subsidiary of Holley.

The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Empower has been treated as the “acquired” company for financial reporting purposes. This determination was primarily based on current shareholders of Holley having a relative majority of the voting power of the Company, the operations of Holley prior to the acquisition comprising the only ongoing operations of the Company, and senior management of Holley comprising the majority of the senior management of the Company. Accordingly, for accounting purposes, the financial statements of the Company represent a continuation of the financial statements of Holley with the acquisition being treated as the equivalent of Holley issuing stock for the net assets of Empower, accompanied by a recapitalization. The net assets of Empower have been stated at historical cost, with no goodwill or other intangible assets recorded.

In connection with the execution of the Merger Agreement, Empower entered into the PIPE Subscription Agreements with the PIPE Investors to sell an additional 24,000,000 shares of Common Stock (at a price of $10.00 per share) at Closing, for a total aggregate purchase price of up to $240.0 million. Per the Merger Agreement, $100.0 million of the PIPE Financing proceeds were used for the Debt Paydown.

 


Pursuant to the A&R FPA, Empower entered into an agreement to issue 5,000,000 Empower Units to the A&R FPA Investor, which was subsequently assigned to the New FPA Purchasers, and consummated concurrently with the Closing, for total proceeds for $50.0 million.

Unaudited Pro forma Condensed Combined Balance Sheet

As of March 31, 2021

(in USD thousands)

 

         Pro Forma  Financing  Pro Forma       
         Transaction  Transaction  Adjustments       
   Empower  Holley  Accounting  Accounting  for A&R FPA  Pro Forma  Note 
   (Historical)  (Historical)  Adjustments  Adjustments     Consolidated    

Assets

        

Cash and cash equivalents

  $1,027  $87,462  $(154,306 $133,012  $50,000  $117,195   a 

Accounts receivable, less allowance for credit losses

   –     55,285   –     –     –     55,285  

Inventory

   –     126,194   –     –     –     126,194  

Prepaids and other current assets

   320   6,891   –     –     –     7,211  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total current assets

   1,347   275,832   (154,306  133,012   50,000   305,885  

Property, plant and equipment, net

   –     44,581   –     –     –     44,581  

Goodwill

   –     359,099   –     –     –     359,099  

Cash and marketable securities held in Trust Account

   250,109   –     (250,109  –     –     –     a 

Other intangible assets, net

   –     401,186   –     –     –     401,186  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total assets

   251,456   1,080,698   (404,415  133,012   50,000   1,110,751  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Liabilities and stockholders’ equity

        

Accounts payable

   –     36,107   –     –     –     36,107  

Accrued interest

   –     6,164   –     –     –     6,164  

Accrued liabilities

   –     26,003   –     –     –     26,003  

Acquisition contingent consideration payable

   –     24,373   –     –     –     24,373  

Other Accrued expenses

   2,998   –     (2,998  –     –     –     a 

Current portion of long-term debt

   –     5,528    –     –     5,528  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total current liabilities

   2,998   98,175   (2,998  –     –     98,175  

Warrant liability

   15,527   –     –     –     1,967   17,494   a 

A&R FPA liability

   1,750   –     –     –     (1,750  –     a 

Earn-out liability

   –     –     19,009   –     –     19,009   b 

Deferred underwriting fee payable

   8,750   –     (8,750  –     –     –     a 

Long-term debt, net of current portion

   –     650,123   –     (100,000  –     550,123   c 

Long-term debt due to related party

   –     20,000   –     –     –     20,000  

Deferred taxes

   –     71,814   –     –     –     71,814  

Other noncurrent liabilities

   –     2,146   –     –     –     2,146  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total liabilities

   29,025   842,258   7,261   (100,000  217   778,761  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Ordinary shares subject to possible redemption

   217,431   –     (217,431  –     –     –     d 

Shareholders’ Equity

        

Class A ordinary shares

   –     –     82   22   5   109   d 

Class B ordinary shares

   1   –     (1  –     –     –     d 

Common stock

   –     –     –     –     –     –    

Additional paid-in capital

   12,460   239,021   (182,778  232,990   49,778   351,471   d 

Accumulated other comprehensive loss

   –     (690  –     –     –     (690 

Retained earnings (accumulated deficit)

   (7,461  109   (11,548  –      (18,900  d 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total stockholders’ equity

   5,000   238,440   (194,245  233,012   49,783   331,990  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total liabilities and stockholders’ equity

  $251,456  $1,080,698  $(404,415 $133,012  $50,000  $1,110,751  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

2


Unaudited Pro forma Condensed Combined Statement of Comprehensive Loss

For the three months ended March 31, 2021

(in USD thousands, except share and per share amounts)

 

   Empower
(Historical)
  Holley
(Historical)
  Pro Forma
Transaction
Accounting
Adjustments
  Financing
Transaction
Accounting
Adjustments
  Pro Forma
Adjustments
For A&R
FPA
  Pro Forma
Consolidated
  Note 

Revenue

   —     160,332   —     —     —     160,332  

Cost of goods sold

   —     94,653   —     —     —     94,653  

Operating Expenses

    —     —     —     —     —    

Selling, general and administrative

   —     24,012   —     —     —     24,012  

Research and development costs

   —     5,969   —     —     —     5,969  

Formation and operational costs

   2,937   —     —     —     —     2,937  

Amortization of intangibles

   —     3,336   —     —     —     3,336  

Acquisition, restructuring and management fee costs

   —     18,833   —     —     —     18,833  

Related party acquisition and management fee costs

   —     881   —     —     —     881  

Other income

   —     (133  —     —     —     (133 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total operating expenses

   2,937   52,898   —     —     —     55,835  

Income (loss) before interest expense and income taxes

   (2,937  12,781   —     —     —     9,844  

Interest expense

   —     10,071   —     (2,101  —     7,970   AA 

Interest income

   52   —     (52  —     —     —     AB 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Income (loss) before income taxes

   (2,885  2,710   (52  2,101   —     1,874  

Unrealized gain (loss) on other marketable securities

   4   —     —     —     —     4  

Change in fair value of warrant liability

   (437  —     —     —     —     (437 

Change in fair value of forward purchase agreement liability

   300   —     —     —     (300  —     AC 

Transaction costs

   —     —     —     —     —     —    

Income tax expense (benefit)

   —     4,766   —     530   —     5,296   AD 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Net loss

   (3,018  (2,056  (52  1,571   (300  (3,855 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Comprehensive loss:

   —     —        —    

Foreign currency translation adjustment

   —     (16  —     —     —     (16 

Pension liability loss

   —     —     —     —     —     —    
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Total comprehensive loss

   (3,018  (2,072  (52  1,571   (300  (3,871 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Weighted average shares outstanding, basic and diluted

   9,209,782       115,805,639  

Basic and diluted net income per share

   (0.33      (0.03 


Unaudited Pro forma Condensed Combined Statement of Comprehensive Income (Loss)

For the year ended December 31, 2020

(in USD thousands, except share and per share amounts)

 

   Empower
(Historical)
  Holley
(Historical)
  Pro Forma
Transaction
Accounting
Adjustments
  Financing
Transaction
Accounting
Adjustments
  Pro Forma
Adjustments
for A&R
FPA
   Pro Forma
Consolidated
  Note 

Revenue

   —     504,179   —     —     —      504,179  

Cost of goods sold

   —     295,935   —     —     —      295,935  

Operating Expenses

    —     —     —     —      —    

Selling, general and administrative

   —     70,875   —     —     —      70,875  

Research and development costs

   —     23,483   —     —     —      23,483  

Formation and operational costs

   274   —     —     —     —      274  

Amortization of intangibles

   —     11,082   —     —     —      11,082  

Acquisition, restructuring and management fee costs

   —     9,743   —     —     —      9,743  

Related party acquisition and management fee costs

   —     6,089   —     —     —      6,089  

Other income

   —     1,517   —     —     —      1,517  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

Total operating expenses

   274   122,789   —     —     —      123,063  

Income (loss) before interest expense and income taxes

   (274  85,455   —     —     —      85,181  

Interest expense

   —     43,772   —     (9,513  —      34,259   AA 

Interest income

   49   —     (49  —     —      —     AB 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

Income (loss) before income taxes

   (225  41,683   (49  9,513   —      50,922  

Unrealized gain (loss) on other marketable securities

   4   —     —     —     —      4  

Change in fair value of warrant liability

   (1,690  —     —     —     —      (1,690 

Change in fair value of purchase agreement liability

   (2,050  —     —     —     2,050    —     AC 

Transaction costs

   (483  —     —     —     —      (483 

Income tax expense (benefit)

   —     8,826   —     2,399   —      11,225   AD 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

Net income (loss)

   (4,444  32,857   (49  7,114   2,050    37,528  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

Comprehensive income (loss):

   —     —         —    

translation adjustment

   —     16   —     —     —      16  

Pension liability loss

   —     (293  —     —     —      (293 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

Total comprehensive income (loss)

   (4,444  32,580   (49  7,114   2,050    37,251  
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

   

 

 

  

Weighted average shares outstanding, basic and diluted

   7,850,413        115,805,639  

Basic and diluted net income per share

   (0.58       0.32  


NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1 — Basis of Presentation

The pro forma adjustments have been prepared as if the Business Combination had been consummated on March 31, 2021 in the case of the unaudited pro forma condensed combined balance sheet and on January 1, 2020, the beginning of the earliest period presented in the unaudited pro forma condensed combined statement of operations.

The unaudited pro forma condensed combined financial information has been prepared assuming the following methods of accounting in accordance with GAAP.

The pro forma adjustments reflecting the consummation of the Business Combination, the PIPE Financing, and the transactions contemplated by the A&R FPA are based on currently available information and assumptions and methodologies that management believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. The assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and related transactions based on information available to management at the current time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

Notwithstanding the legal form of the Business Combination pursuant to the Merger Agreement, the Business Combination will be accounted for as a reverse capitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Empower is treated as the “acquired” company for financial reporting purposes. The net assets of Empower are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of Holley.

The Business Combination will be accounted for as a reverse recapitalization because Holley has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). The determination is primarily based on the evaluation of the following facts and circumstances taking into consideration both the no redemption and maximum redemption scenario:

 

  

The pre-merger equity holders of Holley hold the majority of voting rights in the Company;

 

  

The pre-merger equity holders of Holley have the right to appoint the majority of members of the Company’s board of directors;

 

  

Senior management of Holley comprise the senior management of the Company; and

 

  

Operations of Holley comprise the ongoing operations of the Company.

Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Holley issuing stock for the net assets of Empower, accompanied by a recapitalization.

Following the Closing, holders of Empower Class A Shares that exercised their redemption rights received their per share redemption price out of the funds in the trust account. Each holder of Empower Class A Shares was able to elect to redeem all or a portion of its Empower Class A Shares at a per-share price, payable in cash, equal to a pro rata share of the aggregate amount on deposit in the trust account (including any interest earned on the funds held in the trust account).

The 2,187,500 Earn-Out Shares issued to Sponsor at Closing are carried as a liability on the pro forma balance sheet. The Earn-Out shares do not have an income statement impact as the fair value of the Earn-Out liability has not materially changed. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Other Agreements — Sponsor Agreement” for additional information on vesting and forfeiture of the Earn-Out Shares.

Note 2 — Description of the Business Combination

On March 11, 2021, Empower entered into the Merger Agreement with Merger Sub I, Merger Sub II and Holley, pursuant to which, among other things, following the Domestication, (i) Merger Sub I merged with and into Holley Intermediate, the separate corporate existence of Merger Sub I ceased and Holley Intermediate became the surviving corporation and a wholly owned subsidiary of Empower, and (ii) Holley Intermediate merged with and into Merger Sub II, the separate corporate existence of Holley Intermediate ceased and Merger Sub II became the surviving limited liability company and a wholly owned subsidiary of Empower.

At the Closing, Empower ceased to exist, and the Company will operate under the name “Holley Inc.”.

As a result of and upon the Closing, among other things, all outstanding shares of Holley common stock as of immediately prior to the effective time of Merger I were cancelled in exchange for the right to receive an aggregate of $264.7 million in cash (subject to adjustment) and 67,673,884 shares (subject to adjustment) of Common Stock (at a deemed value of $10.00 per share). Cash Merger Consideration was reduced by COVID-19 related deferral taxes and accrued and unpaid income tax liabilities for any tax period prior to the Closing (but giving effect to certain transaction tax deductions and prepayments not less than zero). Because redemptions of Empower Class A Shares resulted in the trust account having an amount less than $540 million at the Closing (after giving effect to proceeds received from the PIPE Financing and A&R FPA, but before payment of the unpaid transaction expenses of the parties), (i) Cash Merger Consideration was proportionally reduced by the shortfall of $99.4 million and (ii) Securities Merger Consideration was proportionally increased at a price of $10.00 per share of Common Stock.

An additional 24,000,000 shares of Common Stock were purchased (at a price of $10.00 per share) at the Closing by the PIPE Investors, for a total aggregate purchase price of $240.0 million. Per the Merger Agreement, $100.0 million of the PIPE Financing proceeds were used to partially pay off Holley’s debt.

 

5


Pursuant to the A&R FPA, Empower issued 5,000,000 Empower Units to the New FPA Purchasers concurrently with the Closing, for total proceeds for $50.0 million.

Pursuant to the Cayman Constitutional Documents, holders of Empower Class A Shares were offered the opportunity to redeem, upon the Closing, all or a portion of such holder’s Empower Class A Shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit in the trust account (as of two business days prior to the Closing).

Subject to the terms and conditions set forth in the Merger Agreement, the Holley Stockholder received aggregate consideration with a value equal to $1,155,000,000, which consists of (a) $264,717,627 of Cash Merger Consideration and (b) $676,738,839 in shares of Common Stock based on an assumed price of $10.00 per share. This consideration was determined given (i) the trust account value at redemption of $250,113,825, (ii) the per share redemption amount is equal to approximately $10.005, (iii) that 9,930,745 Empower Class A Shares were redeemed for an aggregate payment of approximately $99.4 million from the trust account, and (iv) there is an upward adjustment to the Securities Merger Consideration issued to the Holley Stockholder pursuant to the Merger Agreement.

The following table summarizes the pro forma Common Stock issued and outstanding immediately after the Closing, excluding the potential dilutive effect of the exercise of the Warrants and Earn-Out Shares.

 

   Shares   % 

Empower public shareholders

   15,069,255    13.01

Holley Stockholder

   67,673,884    58.44

Sponsor and related parties

   9,062,500    7.83

PIPE Investors

   24,000,000    20.72

Closing Shares

   115,805,639    100.00

Note 3 — Pro Forma Adjustments

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheets

The adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2021 are as follows:

a. Cash. Represents the impact of the Business Combination on the cash balance of New Holley. The table below represents the sources and uses of funds related to the Business Combination:

 

   Note     

Cash balance of Empower prior to the Business Combination

    $1,027 

Cash balance of Holley prior to the Business Combination

     87,462 

Total Pre-adjustment cash balance

     88,489 

Proceeds from cash held in Trust Account

   1    250,114 

PIPE proceeds

   2    240,000 

A&R FPA proceeds

   3    50,000 

Payment to redeeming Empower public shareholders

   4    (99,353

Payment to the Sellers

   5    (264,718

Payment of accrued expenses

   6    (2,998

Payment of deferred offering costs

   7    (8,750

Payment of transaction costs

   7    (35,589

Debt paydown from PIPE proceeds

   8    (100,000
    

 

 

 

Adjustment to cash in connection with the Business Combination

     28,706 

Ending cash and restricted cash balance

   9    117,195 

 

 (1)

Represents the amount of the restricted investments and cash held in the trust account upon consummation of the Business Combination.

 

 (2)

Represents the issuance, pursuant to the PIPE Financing consummated concurrently with the Closing, to the PIPE Investors of 24.0 million shares of Common Stock at a price of $10 per share.

 

 (3)

Represents the issuance of 5,000,000 Empower Units under the A&R FPA to the New FPA Purchasers, consummated concurrently with the Closing.

 

 (4)

Represents the amount paid to and the Class A Shares redeemed by Empower public shareholders who exercised their redemption rights.

 

 (5)

Represents the amount of cash paid to the existing equity holders of the Holley Stockholder upon the consummation of the Business Combination.

 

 (6)

Represents payment of Empower’s accrued expenses.


 (7)

Reflects the settlement of $35.6 million of transaction costs and $8.8 million of Empower’s deferred underwriting fees at close in connection with the Business Combination. The $35.6 million of transaction fees relates to advisory, legal, accounting, printing and other fees to be incurred, including $7.0 million of PIPE Financing expenses.

 

 (8)

Reflects Debt Repayment of Holley’s debt with net cash proceeds from the PIPE Financing in an aggregate principal amount of $100.0 million. See Note 3(b) below.

 

 (9)

Amount excludes the impact of Holley’s second quarter acquisition of AEM Performance Inc., which occurred on April 14, 2021. The purchase price was approximately $52 million and was funded by Holley using cash on hand. See “Note 14 (Subsequent Events)” to Holley’s unaudited condensed consolidated financial statements, which are incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached.

b. Earn-Out Liability. Represents recognition of earn-out related to 2,187,500 shares of Common Stock as required under terms of the Merger Agreement. The earn-out is classified as a liability in the unaudited pro forma condensed combined balance sheet and becomes issuable upon achieving certain market share price milestones as outlined in the Merger Agreement during the earn-out period. The earn-out liability was recognized at its estimated fair value of $19,009,375 as of March 31, 2021. This liability will be remeasured to its fair value at the end of each reporting period, and subsequent changes in the fair value post-Business Combination will be recognized in the Company’s statement of operations within other income/expense.

c. Debt. Represents the impact of the Business Combination on the debt balance, specifically in respect of the net cash proceeds from the PIPE Financing in an aggregate principal amount of $100.0 million (as also indicated above per pro forma adjustment (a)(8)). The following table represents the impact of the Debt Paydown by Empower shareholders:

 

Debt paydown from PIPE proceeds

  $100,000 

Allocated to:

  

Long-term debt, net of current portion and deferred loan costs

  $100,000 

d. Equity

The following table represents the impact of the Business Combination on total equity section:

 

     Common Stock          
     Number of Shares  Par Value             
                    Additional     Retained
Earnings
 
     Class A  Class B  Class A  Class B  Common  Paid in  Accumulated
Other
  Accumulated 
  Note  Stock  Stock  Stock  Stock  Stock  Capital  Comprehensive
Loss
  Deficit 

Pre Business Combination—Empower

   3,266,381   6,250,000   –     1   –     12,460   –     (7,461

Pre Business Combination—Holley

   –     –     –     –     –     239,021   (690  109 

Founder Shares

  1   4,062,500   (6,250,000  –     (1  –     –     –     –   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances after share transaction of the Company

   7,328,881   –     –     –     –     251,481   (690  (7,352
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Reclassification of redeemable shares to Class A shares

  2   21,733,619   –     22   –     –     226,130   –     –   

Less: Redemption of redeemable stock

  10   (9,930,745  –     (10  –     –     (99,307  –     –   

Cash to the Holley Stockholder at Business Combination

  3   –     –     –     –     –     (264,718  –     –   

Shares issued to the Holley Stockholder as consideration

  4   67,673,884   –     68   –     –     (68  –     –   

PIPE Financing Proceeds

  5   24,000,000   –     24   –     –     232,987   –     –   

Forward purchase agreement proceeds

  6   5,000,000   –     5   –     –     49,778   –     –   

Earn-out liability

  7   –     –     –     –     –     –     –     (19,009

Holley transaction costs

  8   –     –     –     –     –     (27,965  –     –   

Empower transaction costs

  8   –     –     –     –     –     (9,386  –     –   

Elimination of historical accumulated deficit of Empower

  9   –     –     –     –     –     (7,461  –     7,461 

Elimination of historical common stock of Holley

   –     –     –     –��    –     –      –   
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Post-Business Combination

   115,805,639   –     109   –     –     351,471   (690  (18,900
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

(1) Represents the automatic conversion of Empower Class B ordinary shares, par value $0.0001, into Common Stock at Closing; 2,187,500 shares of Common Stock classified as Earn-Out Shares will be restricted from transfer at Closing subject to vesting and forfeiture.

(2) Represents redeemable shares of Empower prior to the Closing, which became permanent equity of the Company at Closing.


(3) Represents Cash Merger Consideration received by the Holley Stockholder at Closing subject to the terms and conditions set forth in the Merger Agreement.

(4) Represents shares of Common Stock that were issued to the the Holley Stockholder at Closing subject to the terms and conditions set forth in the Merger Agreement; 67,673,884 shares of Common Stock were issued to the Holley Stockholder.

(5) Represents the issuance, in the PIPE Financing consummated concurrently with the Closing, to the PIPE Investors of 24,000,000 shares of Common Stock at a price of $10 per share.

(6) Represents the issuance of 5,000,000 Empower Units under the A&R FPA to the New FPA Purchasers, consummated concurrently with the Closing.

(7) Represents recognition of the earn-out liability under the terms of the Merger Agreement.

(8) Represents capitalized expenses related to the Business Combination as a reduction to equity proceeds.

(9) Represents the equity reclassification of the historical accumulated deficit of Empower to the combined additional paid-in capital of the Company.

(10) Represents the amount paid to and the Empower Class A Shares redeemed by Empower public shareholders who exercised their redemption rights.

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 three months ended March 31, 2021 and twelve months ended December 31, 2020 are as follows:

(AA) Represents the estimated changes in historical interest expense following the partial repayment of the existing debt in the amount of $100.0 million in connection with the Business Combination. The impact of the partial repayment was calculated as follows for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively.

 

Period  Amount   Rate  Interest 

1/1/2021 to 2/26/2021

  $100,000    8.73 $1,383 

2/27/2021 to 3/28/2021

   100,000    8.61  718 
  

 

 

   

 

 

  

 

 

 

Total

     $2,101 

 

Period  Amount   Rate  Interest 

1/1/2020 to 2/28/2020

  $100,000    10.41 $1,706 

3/1/2020 to 5/29/2020

   100,000    10.11  2,528 

5/30/2020 to 8/28/2020

   100,000    8.86  2,240 

8/28/2020 to 11/30/2020

   100,000    8.76  2,287 

12/1/2020 to 12/31/2020

   100,000    8.73  752 
     

 

 

 

Total

     $9,513 

(AB) Represents elimination of investment income and unrealized loss on marketable securities related to the investment held in the trust account.

(AC) Represents the elimination of the loss on Empower’s A&R FPA liability whereby New FPA Purchasers purchased, on a private placement basis, an aggregate of 5,000,000 Empower Units, consisting of one share of Common Stock and one-third of one Public Warrant at the Closing.

(AD) Represents the income tax expense resulting from the pro forma adjustment on interest expense. The impact on the income tax expense due to the partial debt repayment was calculated as follows for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively:

 

Adjustment  Amount   Tax Rate  Tax Benefit 

Partial debt paydown

  $2,101    25.22 $530 
Adjustment  Amount   Tax Rate  Tax Benefit 

Partial debt paydown

  $9,513    25.22 $2,399 

The estimated tax impacts of the pro forma adjustments have been reflected in Income tax expense (benefit) in the unaudited pro forma condensed combined statement of comprehensive income (loss) for the year ended December 31, 2020 and for the three months ended March 31, 2021, by using a tax rate which was determined using the weighted average statutory tax rate of the jurisdictions expected to be impacted. The total effective tax rate of the Company could be significantly different depending on the post-acquisition geographical mix of income and other factors. Because the tax rate used for these pro forma condensed combined financial statements is an estimate, it will likely vary from the actual rate in periods subsequent to the consummation of the Business Combination and those differences may be material.


4. Net Income (Loss) per Share

Represents the net income (loss) per share calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination and other related events, assuming such additional shares were outstanding since January 1, 2020. As the Business Combination is being reflected as if it had occurred as of January 1, 2020, the calculation of weighted average shares outstanding for basic and diluted net income (loss) per share assumes the shares issued in connection with the Business Combination have been outstanding for the entire periods presented.

 

   Three months ended 
   March 31, 2021 

Numerator

  

Pro forma total comprehensive loss

  $(3,871

Denominator

  

Empower public shareholders

   15,069,255 

Sellers

   67,673,884 

Sponsor and related parties

   9,062,500 

PIPE Investors

   24,000,000 

Basic and diluted weighted average shares outstanding

   115,805,639 

Loss per share—basic and diluted

  $(0.03
   Year ended
December 31, 2020
 

Numerator

  

Pro forma total comprehensive income

  $37,251 

Denominator

  

Empower public shareholders

   15,069,255 

Sellers

   67,673,884 

Sponsor and related parties

   9,062,500 

PIPE Investors

   24,000,000 

Basic and diluted weighted average shares outstanding

   115,805,639 

Earnings per share—basic and diluted

  $0.32 

Pursuant to the Sponsor Agreement, 2,187,500 Earn-Out Shares vest in two equal tranches; 1,093,750 of the Earn-Out Shares will vest the earlier of the date (x) the closing price of the Common Stock equals or exceeds $13.00 per share for any twenty (20) trading days within any thirty-trading day period or (y) Holley completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of Holley’s stockholders having the right to exchange their Common Stock at a price per share equal to or exceeding $13.00 per share. The other 1,093,750 of Earn-Out Shares will be subject to the same conditions but will vest at a target price that equals or exceeds $15.00 per share.

The additional 2,187,500 Earn-Out Shares are not included in the computation of diluted earnings per share as the share price as of the Closing is less than $13.00 per share.