8-K/A - NWPX - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 5, 2021

NORTHWEST PIPE COMPANY

(Exact name of registrant as specified in its charter)

Oregon	0-27140	93-0557988
(State or other jurisdiction<br><br> <br>of incorporation)	(Commission File Number)	(IRS Employer<br><br> <br>Identification No.)

201 NE Park Plaza Drive, Suite 100

Vancouver , WA 98684

(Address of principal executive offices and Zip Code)

Registrant’s telephone number, including area code: 360 -397-6250

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock , par value $0.01 per share	NWPX	Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Explanatory Note

In a Current Report on Form 8‑K (the “Original Report”) filed by Northwest Pipe Company (the “Company”) with the Securities and Exchange Commission on October 6, 2021 the Company reported the completion of the following acquisition:

On October 5, 2021, Northwest Pipe Company and EBSR, LLC, a Texas limited liability company (“Seller”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), by and among the Company, Seller, the equity holders of Seller, and Park Environmental Equipment, LLC, a Texas limited liability company (“ParkUSA”) pursuant to which the Company agreed to purchase from Seller all of the issued and outstanding membership interests of ParkUSA (the “Acquisition”). ParkUSA is a precast concrete and steel fabrication-based company that develops and manufactures water, wastewater, and environmental solutions. The Purchase Agreement includes customary representations, warranties, covenants, and agreements by the parties, including mutual indemnification obligations. The Acquisition was completed on October 5, 2021. The purchase price was approximately $87.4 million, net of cash acquired, and is subject to a post-closing adjustment based on changes in net working capital.

The Company hereby amends the Original Report to include in Item 9.01 thereof required financial statements and pro forma financial information.

Item 9.01.	FINANCIAL STATEMENTS AND EXHIBITS
(a)	Financial statements of business acquired
---	---

The audited financial statements of Park Environmental Equipment, Ltd as of and for the year ended December 31, 2020, and the independent auditor’s report thereon are filed as Exhibit 99.1 to this Form 8‑K/A and are incorporated herein by reference.

The unaudited financial statements of Park Environmental Equipment, LLC as of September 30, 2021 and December 31, 2020 and for the nine months ended September 30, 2021 and 2020, as well as the accompanying notes thereto, are filed as Exhibit 99.2 to this Form 8‑K/A and are incorporated herein by reference.

(b)	Pro forma financial information

The unaudited pro forma condensed combined financial information and explanatory notes of Northwest Pipe Company and Park Environmental Equipment, LLC as of September 30, 2021 and for the nine months ended September 30, 2021 and the year ended December 31, 2020 is filed as Exhibit 99.3 to this Form 8‑K/A and is incorporated herein by reference.

(d)	Exhibits
23.1	Consent of Armanino LLP, filed herewith
---	---
99.1	Audited financial statements of Park Environmental Equipment, Ltd as of and for the year ended December 31, 2020 and the independent auditor’s report thereon
99.2	Unaudited financial statements of Park Environmental Equipment, LLC as of September 30, 2021 and December 31, 2020 and for the nine months ended September 30, 2021 and 2020
99.3	Unaudited pro forma condensed combined financial information
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on December 22, 2021.

NORTHWEST PIPE COMPANY
(Registrant)
By	/s/ Aaron Wilkins
	Aaron Wilkins
	Senior Vice President, Chief Financial Officer, and<br><br> <br>Corporate Secretary

ex_314891.htm

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

Northwest Pipe Company

Vancouver, WA

We consent to the incorporation by reference in the Registration Statements on Form S‑3 (No. 333‑249637) and Form S‑8 (Nos. 333‑190854 and 333‑152573) of Northwest Pipe Company, of our report dated June 4, 2021, with respect to the financial statements of Park Environmental Equipment, Ltd. for the year ended December 31, 2020, included in this Current Report on Form 8‑K/A of Northwest Pipe Company.

/s/ Armanino LLP

Armanino LLP

Dallas, Texas

December 22, 2021

ex_316359.htm

Exhibit 99.1

Park Environmental Equipment, Ltd.

Financial Statements

December 31, 2020

TABLE OF CONTENTS

	Page No.
Independent Auditor's Report	1
Balance Sheet	2
Statement of Income	3
Statement of Changes in Partners' Capital	4
Statement of Cash Flows	5
Notes to Financial Statements	6-10

INDEPENDENT AUDITOR'S REPORT

To the Partners of

Park Environmental Equipment, Ltd.

Houston, TX

We have audited the accompanying financial statements of Park Environmental Equipment, Ltd. (a limited partnership) (the ''Company''), which comprise the balance sheet as of December 31, 2020, and the related statements of income, changes in partners' capital, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Park Environmental Equipment, Ltd. as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Armanino LLP

Armanino LLP

Dallas, Texas

June 4, 2021

Park Environmental Equipment, Ltd.

Balance Sheet

December 31, 2020

ASSETS
Current assets
Cash	$	19,247,223
Accounts receivable, net		8,630,389
Inventory		5,576,550
Prepaid expenses		67,977
Total current assets		33,522,139
Property and equipment, net		5,037,022
Total assets	$	38,559,161
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable	$	1,678,375
Paycheck protection program loan, current		1,412,037
Accrued employee benefits		409,736
Sales tax payable		700,493
Other		32,749
Total current liabilities		4,233,390
Paycheck protection program loan, net of current		562,963
Total liabilities		4,796,353
Commitment and contingencies (Note 7)
Partners' capital		33,762,808
Total liabilities and partners' capital	$	38,559,161

The accompanying notes are an integral part of these financial statements.

Park Environmental Equipment, Ltd.

Statement of Income

For the Year Ended December 31, 2020

Revenue, net of sales discounts	$	66,539,046
Cost of goods sold		38,525,166
Gross profit		28,013,880
Operating expenses
General and administrative		17,534,385
Depreciation and amortization		871,462
Total operating expenses		18,405,847
Income from operations		9,608,033
Other income (expense)
Interest expense		(28,800	)
Third party monthly lease		15,000
Interest income		94,407
Dividend income		9,564
Gain (loss) on sale of assets		19,045
Total other income (expense), net		109,216
Net income	$	9,717,249

The accompanying notes are an integral part of these financial statements.

Park Environmental Equipment, Ltd.

Statement of Changes in Partners' Capital

For the Year Ended December 31, 2020

	General Partner			Limited Partners			Total
Balance, January 1, 2020	$	293,854		$	29,091,507		$	29,385,361
Distributions		(53,398	)		(5,286,404	)		(5,339,802	)
Net income		97,172			9,620,077			9,717,249
Balance, December 31, 2020	$	337,628		$	33,425,180		$	33,762,808

The accompanying notes are an integral part of these financial statements.

Park Environmental Equipment, Ltd.

Statement of Cash Flows

For the Year Ended December 31, 2020

Cash flows from operating activities
Net income	$	9,717,249
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		871,462
Gain on sale of assets		(19,045	)
Changes in operating assets and liabilities
Accounts receivable, net		572,508
Inventory		(766,221	)
Prepaid expenses		(37,980	)
Accounts payable		108,857
Note receivable ‑ related party		3,330,015
Shareholder payable		(646,176	)
Accrued employee benefits		18,333
Accrued expenses and other payables		(20,619	)
Sales tax payable		(56,308	)
Net cash provided by operating activities		13,072,075
Cash flows from investing activities
Purchases of property and equipment		(477,317	)
Proceeds on disposal of property and equipment		58,528
Net cash used in investing activities		(418,789	)
Cash flows from financing activities
Proceeds from Paycheck Protection Program loan		1,975,000
Distributions made to partners		(5,339,802	)
Net cash used in financing activities		(3,364,802	)
Net increase in cash and cash equivalents		9,288,484
Cash and cash equivalents, beginning of year		9,958,739
Cash and cash equivalents, end of year	$	19,247,223

The accompanying notes are an integral part of these financial statements.

Park Environmental Equipment, Ltd.

Notes to Financial Statements

December 31, 2020

1.	NATURE OF OPERATIONS

Park Environmental Equipment, Ltd. (the "Company") was incorporated in the state of Texas and has been a technology leader in the Water industry for over 35 years. The Company operates five lines of products including Stormwater, Wastewater, Domestic & Fire protection, Pump Lift stations, and Chemical processing. The Company is a Partnership with 1% owned by a General Partner and 99% owned by various Limited Partners.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from these estimates.

Cash and cash equivalents

For purposes of the statement of cash flows and balance sheet presentation, cash equivalents include readily available marketable securities with an original maturity of 90 days or less. The Company had no cash equivalents as of December 31, 2020.

Accounts receivable

The Company has non‑interest bearing accounts receivable from its customers. Management evaluates its customers' credit risk prior to extending credit and will sometimes require a production charge of 50% due upon approval for new customers. Customers without established accounts must settle their account in full prior to delivery. Management considers trade receivables to be past due between 30 and 120 days after billing. The Company has the advantage of Mechanic Lien Laws, and has an immaterial amount of bad debt. Management reviews account receivables on a regular basis to determine if any receivable will be uncollectible. After all efforts to collect have failed, the receivable is written off. Bad debt expense totaled $102,073 for the year ended December 31, 2020. The Company did not record an allowance for doubtful accounts for the year ended December 31, 2020, as any amounts are considered immaterial to the financial statements.

Inventory

Inventory, consisting of raw materials, work in process and finished goods, is stated at the lower of cost, determined on a first‑in, first out basis, or net realizable value. Management provides an allowance for obsolete inventory based on the age and estimated marketability of its products relative to historical and anticipated future sales. Management has determined that no allowance was necessary at December 31, 2020.

Park Environmental Equipment, Ltd.

Notes to Financial Statements

December 31, 2020

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and equipment

Property and equipment is stated on the basis of cost less accumulated depreciation. Depreciation and amortization is calculated using an accelerated method over the estimated useful life of the respective asset ranging between 5 and 39 years, which reasonably approximates the straight‑line method under GAAP. Leasehold improvements are amortized over the lesser of the useful life of the asset or the term of the lease. The cost of normal repairs and maintenance that do not extend the useful life or increase the productive capacity of the assets are charged to expense as incurred. The costs and accumulated depreciation and amortization of assets retired or sold are removed from assets and related accumulated depreciation and amortization accounts, and gains or losses thereon are included in income.

Impairment of long‑lived assets

The Company reviews long‑lived assets, including property and equipment, for impairment indicators on an annual basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. There was no impairment to long‑lived assets for the year ended December 31, 2020.

Revenue recognition

Management and the Company has analyzed the provisions of the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, and has concluded that no changes are necessary to conform with the new standard. The Company's sales contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Delivery is considered to have occurred when the title and risk of loss passes to the customer, which occurs at the time of shipment. Revenue is recorded net of estimated returns and discounts.

Advertising costs

Advertising costs are expensed as incurred and are included in general and administrative expenses in the accompanying statement of income. Advertising costs totaled $133,908 for the year ended December 31, 2020.

Income taxes

The Partnership is not liable for the payment of federal income taxes. All items of income and loss are reported to the partners who are responsible for the payment of any applicable taxes. Therefore, no provision or liability for federal income taxes has been recorded in the accompanying financial statements.

Park Environmental Equipment, Ltd.

Notes to Financial Statements

December 31, 2020

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes (continued)

As of December 31, 2020, no significant uncertain tax positions have been identified. If applicable, interest and penalties related to uncertain tax positions are recognized in income tax expense as incurred. No such amounts were recognized during the year ended December 31, 2020.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable.

The Company has one vendor who accounted for 12% of total revenues for the year ended December 31, 2020. The Company has no customers representing greater than 10% of the Company's accounts receivable for the year ended December 31, 2020.

The Company maintains its cash in bank deposit accounts which, at times, exceeds federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Subsequent events

Management of the Company has evaluated subsequent events through June 4, 2021, the date the financial statements were available to be issued, and summarized in Note 9, of these financial statements.

3.	INVENTORY

Inventory consisted of the following:

Work in process	$	4,203,109
Finished goods		1,373,441
	$	5,576,550

Park Environmental Equipment, Ltd.

Notes to Financial Statements

December 31, 2020

4.	PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Equipment	$	2,968,062
Furniture		347,557
Leasehold improvements		3,589,453
Vehicles		4,298,226
		11,203,298
Accumulated depreciation		(6,166,276	)
	$	5,037,022

The Company incurred $871,462 in depreciation and amortization expense for the year ended December 31, 2020.

5.	RELATED PARTY TRANSACTIONS

Related party leases

The Company entered into certain leasing arrangements with an entity affiliated with the Company through common ownership and has guaranteed certain financing arrangements associated with the leased property. See Note 7 for further discussion.

6.	PAYCHECK PROTECTION PROGRAM LOAN

The Company received a loan from a lending institution in the amount of $1,975,000 under the Paycheck Protection Program (“PPP”) established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The loan is subject to a note dated May 7, 2020 and may be forgiven to the extent proceeds of the loan are used for eligible expenditures such as payroll and other expenses described in the CARES Act. The Company believes they have complied with the provisions of the program and expects that the loans will be forgiven.

7.	COMMITMENTS AND CONTINGENCIES

The Company leases office equipment under multiple operating leases which expire in various years through 2025.

Park Environmental Equipment, Ltd.

Notes to Financial Statements

December 31, 2020

7.	COMMITMENTS AND CONTINGENCIES (continued)

The scheduled minimum lease payments under the lease terms are as follows:

Year ending December 31,
2021	$	43,460
2022		43,460
2023		27,671
2024		5,567
2025		2,784
	$	122,942

Rent and lease expense for the year ended December 31, 2020 totaled approximately $3,589,000, of which $3,561,000, respectively, was related to leasing arrangements with an affiliated company. Rental agreements with the affiliated company are on a month to month basis and future minimum payments relating to these agreement are not required.

The Company is subject to legal proceedings and claims, which arise in the ordinary course of business. It is management's opinion that the outcome of these actions will not have a material effect on the financial statements of the Company.

8.	PROFIT SHARING PLAN

The Company has a profit sharing plan with a 401(k) feature covering all qualified employees. The plan provides for contributions by employees and discretionary contributions by the Company, determined by the Company's Board of Directors. The Company contributed $732,434 to the plan for the year ended December 31, 2020.

9.	SUBSEQUENT EVENTS

Management has evaluated subsequent events for recognition or disclosure in the financial statements through June 4, 2021, the date the financial statements were available to be issued, and has determined that there are no subsequent events that require adjustment to, or disclosure in, the financial statements, other than those disclosed below.

On March 30, 2021, the Company received legal forgiveness of the Paycheck Protection Program loan from its financial institution and the SBA.

ex_314892.htm

Exhibit 99.2

PARK ENVIRONMENTAL EQUIPMENT, LLC

Interim Financial Statements

(Unaudited)

As of September 30, 2021 and December 31, 2020

and for the Nine Months Ended September 30, 2021 and 2020

PARK ENVIRONMENTAL EQUIPMENT, LLC

INTERIM FINANCIAL STATEMENTS

TABLE OF CONTENTS

(Unaudited)

	Page
Statements of Operations for the nine months ended September 30, 2021 and 2020	1
Balance Sheets as of September 30, 2021 and December 31, 2020	2
Statements of Changes in Equity for the nine months ended September 30, 2021 and 2020	3
Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	4
Notes to Interim Financial Statements	5

PARK ENVIRONMENTAL EQUIPMENT, LLC

STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2021		2020
Net sales	$	52,238	$	49,888
Cost of sales		27,376		29,705
Gross profit		24,862		20,183
Selling, general, and administrative expense		21,855		12,744
Depreciation and amortization expense		607		622
Operating income		2,400		6,817
Gain on forgiveness of paycheck protection program loan		1,975		-
Gain on sale of assets		210		27
Other income, net		9		13
Interest income		2		84
Interest expense		-		(22	)
Net income	$	4,596	$	6,919

The accompanying notes are an integral part of these interim financial statements.

PARK ENVIRONMENTAL EQUIPMENT, LLC

BALANCE SHEETS

(Unaudited)

(In thousands)

	September 30, 2021		December 31, 2020
Assets	****	****	****	****
Current assets:
Cash	$	2,545	$	19,247
Accounts receivable, net		11,552		8,630
Inventories		7,403		5,577
Prepaid expenses and other		265		68
Total current assets		21,765		33,522
Property and equipment, net		5,261		5,037
Intangible assets, net		1,400		-
Total assets	$	28,426	$	38,559
Liabilities and Equity	****	****	****	****
Current liabilities:
Accounts payable	$	2,318	$	1,678
Paycheck protection program loan, current		-		1,412
Sales tax payable		862		700
Accrued bonus		839		-
Accrued employee benefits		846		410
Other accrued liabilities		-		33
Total current liabilities		4,865		4,233
Paycheck protection program loan, net of current		-		563
Total liabilities		4,865		4,796
Commitments and contingencies (Note 8)
Members’ equity at September 30, 2021 and Partners’ capital at December 31, 2020		23,561		33,763
Total liabilities and equity	$	28,426	$	38,559

The accompanying notes are an integral part of these interim financial statements.

PARK ENVIRONMENTAL EQUIPMENT, LLC

STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands)

	General Partner			Limited Partner			Members’ Equity		Total
Balances, January 1, 2021	$	338		$	33,425		$	-	$	33,763
Net income		46			4,550			-		4,596
Distributions		(148	)		(14,650	)		-		(14,798	)
Reorganization from limited partnership to limited liability company		(236	)		(23,325	)		23,561		-
Balances, September 30, 2021	$	-		$	-		$	23,561	$	23,561
	General Partner			Limited Partner			Members’ Equity		Total
---	---	---	---	---	---	---	---	---	---	---	---
Balances, January 1, 2020	$	294		$	29,091		$	-	$	29,385
Net income		69			6,850			-		6,919
Distributions		(19	)		(1,860	)		-		(1,879	)
Balances, September 30, 2020	$	344		$	34,081		$	-	$	34,425

The accompanying notes are an integral part of these interim financial statements.

PARK ENVIRONMENTAL EQUIPMENT, LLC

STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net income	$	4,596		$	6,919
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		607			622
Gain on sale of assets		(210	)		(27	)
Gain on forgiveness of paycheck protection program loan		(1,975	)		-
Changes in operating assets and liabilities:
Accounts receivable, net		(2,922	)		(625	)
Inventories		(1,826	)		(341	)
Prepaid expenses and other assets		(197	)		(108	)
Related party notes receivable		-			(40	)
Accounts payable		640			682
Sales tax payable		162			459
Accrued bonus		839			-
Accrued employee benefits		436			892
Shareholder payable		-			(280	)
Other accrued liabilities		(33	)		42
Net cash provided by operating activities		117			8,195
Cash flows from investing activities:
Purchases of property and equipment		(959	)		(408	)
Purchases of intangible assets		(1,400	)		-
Proceeds from sale of property and equipment		338			27
Net cash used in investing activities		(2,021	)		(381	)
Cash flows from financing activities:
Proceeds from paycheck protection program loan		-			1,975
Distributions made to members		(14,798	)		(1,879	)
Net cash provided by (used in) financing activities		(14,798	)		96
Change in cash		(16,702	)		7,910
Cash, beginning of period		19,247			9,959
Cash, end of period	$	2,545		$	17,869
Noncash investing and financing activities:
Forgiveness of paycheck protection program loan	$	1,975		$	-

The accompanying notes are an integral part of these interim financial statements.

PARK ENVIRONMENTAL EQUIPMENT, LLC

NOTES TO INTERIM FINANCIAL STATEMENTS

(Unaudited)

1.	Organization

Park Environmental Equipment, LLC (fka Park Environmental Equipment, Ltd.) (the “Company”) has been a technology leader in the Water industry for over 35 years. The Company has three manufacturing facilities in Texas and operates five lines of products including Stormwater, Wastewater, Domestic & Fire protection, Pump Lift stations, and Chemical processing.

Park Environmental Equipment, Ltd., the Company’s predecessor, was a limited partnership until it undertook a series of reorganization transactions that resulted in its conversion from a limited partnership into a limited liability company effective September 30, 2021. This reorganization had no material impact on the interim financial statements.

2.	Summary of Significant Accounting Policies

Basis of Presentation

The interim financial statements are expressed in United States Dollars and include the accounts of the Company as of the financial statement dates.

Use of Estimates

The interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from these estimates.

Cash and Cash Equivalents

Accounts Receivable

The Company has non-interest bearing accounts receivable from its customers. Management evaluates its customers’ credit risk prior to extending credit and will sometimes require a production charge of 50% due upon approval for new customers. Customers without established accounts must settle their account in full prior to delivery. Management considers trade receivables to be past due between 30 and 120 days after billing. The Company has the advantage of Mechanic Lien Laws, and has an immaterial amount of bad debt. Management reviews account receivables on a regular basis to determine if any receivable will be uncollectible. After all efforts to collect have failed, the receivable is written off. Bad debt expense totaled $41 thousand and $3 thousand for the nine months ended September 30, 2021 and 2020, respectively. The Company did not record an allowance for doubtful accounts as of September 30, 2021 or 2020, as any amounts are considered immaterial to the interim financial statements.

Inventories

Inventories, consisting of raw materials, work in process and finished goods, is stated at the lower of cost, determined on a first-in, first out basis, or net realizable value. Management provides an allowance for obsolete inventory based on the age and estimated marketability of its products relative to historical and anticipated future sales. Management has determined that no allowance was necessary as of September 30, 2021 or December 31, 2020.

Property and Equipment

Property and equipment is stated on the basis of cost less accumulated depreciation. Depreciation and amortization is calculated using an accelerated method over the estimated useful life of the respective asset ranging between 5 and 39 years, which reasonably approximates the straight-line method under U.S. GAAP. Leasehold improvements are amortized over the lesser of the useful life of the asset or the term of the lease. The cost of normal repairs and maintenance that do not extend the useful life or increase the productive capacity of the assets are charged to expense as incurred. The costs and accumulated depreciation and amortization of assets retired or sold are removed from assets and related accumulated depreciation and amortization accounts, and gains or losses thereon are included in income.

Intangible Assets

Intangible assets consist of patents. Intangible assets are amortized using the straight-line method over estimated useful lives ranging from 3 to 4 years.

Impairment of Long-lived Assets

The Company reviews long-lived assets, including property and equipment, for impairment indicators on an annual basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. There was no impairment to long-lived assets for the nine months ended September 30, 2021 or 2020.

Revenue Recognition

The Company’s sales contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Delivery is considered to have occurred when the title and risk of loss passes to the customer, which occurs at the time of shipment. Revenue is recorded net of estimated returns and discounts.

Advertising Costs

Advertising costs are expensed as incurred and are included in general and administrative expenses in the accompanying statement of income. Advertising costs totaled $67 thousand and $111 thousand for the nine months ended September 30, 2021 and 2020, respectively.

Income Taxes

The Company is not liable for the payment of federal income taxes. All items of income and loss are reported to the members (after the conversion to a limited liability company) or partners (prior to the conversion to a limited liability company) who are responsible for the payment of any applicable taxes. Therefore, no provision or liability for federal income taxes has been recorded in the accompanying interim financial statements.

As of September 30, 2021 and December 31, 2020, no significant uncertain tax positions have been identified. If applicable, interest and penalties related to uncertain tax positions are recognized in income tax expense as incurred. No such amounts were recognized during the nine months ended September 30, 2021 and 2020.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable.

The Company has one customer who accounted for 12% of total revenues for the nine months ended September 30, 2021 and 2020. The Company has no customers representing greater than 10% of the Company’s accounts receivable as of September 30, 2021 or December 31, 2020.

3.	Inventories

Inventories consist of the following (in thousands):

	September 30, 2021		December 31, 2020
Raw materials and work-in-process	$	5,354	$	4,203
Finished goods		2,049		1,374
Total inventories	$	7,403	$	5,577
4.	Property and Equipment
---	---

Property and equipment, net consists of the following (in thousands):

	September 30, 2021			December 31, 2020
Equipment	$	3,130		$	2,968
Furniture		348			348
Leasehold improvements		3,942			3,589
Vehicles		3,787			4,298
		11,207			11,203
Less accumulated depreciation		(5,946	)		(6,166	)
Property and equipment, net	$	5,261		$	5,037
5.	Intangible Assets
---	---

Intangible assets consist of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net
As of September 30, 2021	****	****	****	****	****	****
Patents	$	1,400	$	-	$	1,400

During the nine months ended September 30, 2021, the Company acquired two patents with a weighted-average estimated useful life of 3.6 years.

The estimated amortization expense for each of the next five years and thereafter is as follows (in thousands):

Year ending December 31,	****	****
Remainder of 2021	$	97
2022		391
2023		391
2024		374
2025		147
Total amortization expense	$	1,400
6.	Paycheck Protection Program Loan
---	---

The Company received a loan from a lending institution in the amount of $1,975,000 under the Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Security Act. The loan was subject to a note dated May 7, 2020. On March 30, 2021, the Company received legal forgiveness of this loan from its financial institution and the U.S. Small Business Administration.

7.	Related Party Transactions

8.	Commitments and Contingencies

The Company leases office equipment under multiple operating leases which expire in various years through 2025.

The scheduled minimum lease payments under the lease terms as of September 30, 2021 are as follows (in thousands):

Year ending December 31,	****	****
Remainder of 2021	$	11
2022		43
2023		28
2024		6
2025		3
Total amortization expense	$	91

Rent and lease expense totaled $2.6 million and $2.8 million for the nine months ended September 30, 2021 and 2020, respectively, of which $2.5 million and $2.7 million, respectively, is related to leasing arrangements with an affiliated company. Rental agreements with the affiliated company are on a month to month basis and future minimum payments relating to these agreement are not required.

All Sites

The Company operates its facilities under numerous governmental permits and licenses relating to air emissions, stormwater runoff, and other environmental matters. The Company’s operations are also governed by many other laws and regulations, including those relating to workplace safety and worker health, principally the Occupational Safety and Health Act and regulations there under which, among other requirements, establish noise and dust standards. The Company believes it is in material compliance with its permits and licenses and these laws and regulations, and the Company does not believe that future compliance with such laws and regulations will have a material adverse effect on its financial position, results of operations, or cash flows.

Other Contingencies and Legal Proceedings

From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of its business. The Company maintains insurance coverage against potential claims in amounts that are believed to be adequate. To the extent that insurance does not cover legal, defense, and indemnification costs associated with a loss contingency, the Company records accruals when such losses are considered probable and reasonably estimable. The Company believes that it is not presently a party to litigation, the outcome of which would have a material adverse effect on its business, financial condition, results of operations, or cash flows.

9.	Profit Sharing Plan

The Company has a profit sharing plan with a 401(k) feature covering all qualified employees. The plan provides for contributions by employees and discretionary contributions by the Company, determined by the Company’s Board of Directors. The Company contributed $317 thousand and $247 thousand to the plan for the nine months ended September 30, 2021 and 2020, respectively.

10.	Subsequent Event

Management of the Company has evaluated subsequent events through December 22, 2021, the date the interim financial statements were available to be issued, and summarized below.

On October 5, 2021, Northwest Pipe Company (“NWP”) purchased all of the issued and outstanding membership interests of the Company for approximately $87.4 million, net of cash acquired, and subject to a post-closing adjustment based on changes in net working capital. The Membership Interest Purchase Agreement, dated October 5, 2021, by and among NWP, the Company, the Company’s parent entity EBSR, LLC, and the equity holders of EBSR, LLC, includes customary representations, warranties, covenants, and agreements by the parties, including mutual indemnification obligations.

ex_314893.htm

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Northwest Pipe Company (the “Company”) acquired Park Environmental Equipment, LLC (“ParkUSA”) on October 5, 2021 for total consideration of approximately $87.5 million, subject to a post-closing adjustment based on changes in net working capital. The Company financed the acquisition primarily by borrowings on the Company’s line of credit.

The accompanying unaudited pro forma combined financial information was prepared in accordance with Article 11 of Regulation S‑X, as amended by the SEC Final Rule Release No. 33‑10786, “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The unaudited pro forma condensed combined financial statements are based on the Company’s historical consolidated financial statements and ParkUSA’s historical consolidated financial statements as adjusted to give effect to the Company’s acquisition of ParkUSA. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 give effect to the transaction as if it had occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet as of September 30, 2021 gives effect to the transaction as if it had occurred on September 30, 2021. The pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial information.

Release No. 33-10786 (effective January 1, 2021) replaced the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the Transactions (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and is only presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits that may result from synergies that may be derived from any integration activities. Therefore, the unaudited pro forma condensed combined financial information should not be considered indicative of actual results that would have been achieved had the acquisition occurred on the dates indicated and does not purport to indicate results of operations for any future period.

The assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined financial statements are described in the accompanying notes, which should be read together with the pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements should be read together with the Company’s historical financial statements, which are included in the Company’s latest annual report on Form 10‑K and quarterly report on Form 10‑Q, and ParkUSA’s historical information included herein.

NORTHWEST PIPE COMPANY
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
September 30, 2021
(In thousands)
	Northwest Pipe<br><br> <br>Company<br><br> <br>Historical		Park<br><br> <br>Environmental<br><br> <br>Equipment, LLC Historical		Reclassification<br><br> <br>Adjustments<br><br> <br>(Note 3)		Transaction<br><br> <br>Accounting<br><br> <br>Adjustments<br><br> <br>(Note 4)				Pro Forma<br><br> <br>Combined
---	---	---	---	---	---	---	---	---	---	---	---	---
Assets	****	****	****	****	****	****	****	****	****		****	****
Current assets:
Cash and cash equivalents	$	3,188	$	2,545	$	-	$	(87,493	)	(a)	$	4,512
								86,272		(b)
Trade and other receivables, net		38,885		11,552		-		-				50,437
Contract assets		111,239		-		-		-				111,239
Inventories		43,042		7,403		-		2,544		(c)		52,989
Prepaid expenses and other		1,915		265		-		-				2,180
Total current assets		198,269		21,765		-		1,323				221,357
Property and equipment, net		111,157		5,261		-		2,761		(d)		119,179
Operating lease right-of-use assets		32,769		-		-		58,301		(e)		91,070
Goodwill		22,985		-		-		28,527		(f)		51,512
Intangible assets, net		9,571		1,400		-		30,100		(g)		41,071
Other assets		6,216		-		-		-				6,216
Total assets	$	380,967	$	28,426	$	-	$	121,012			$	530,405
Liabilities and Stockholders’ Equity	****	****	****	****	****	****	****	****	****		****	****
Current liabilities:
Accounts payable	$	20,148	$	2,318	$	-	$	-			$	22,466
Accrued liabilities		17,406		2,547		-		2,516		(h)		22,469
Contract liabilities		5,388		-		-		-				5,388
Current portion of operating lease liabilities		2,401		-		-		1,897		(e)		4,298
Total current liabilities		45,343		4,865		-		4,413				54,621
Borrowings on line of credit		2,153		-		-		86,272		(b)		88,425
Operating lease liabilities		30,004		-		-		56,404		(e)		86,408
Deferred income taxes		12,391		-		-		-				12,391
Other long-term liabilities		10,767		-		-		-				10,767
Total liabilities		100,658		4,865		-		147,089				252,612
Total stockholders’ equity		280,309		23,561		-		(2,516	)	(h)		277,793
								(23,561	)	(i)
Total liabilities and stockholders’ equity	$	380,967	$	28,426	$	-	$	121,012			$	530,405

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.

NORTHWEST PIPE COMPANY
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
For the Nine Months Ended September 30, 2021
(In thousands, except per share amounts)
	Northwest Pipe<br><br> <br>Company<br><br> <br>Historical			Park<br><br> <br>Environmental<br><br> <br>Equipment, LLC Historical		Reclassification<br><br> <br>Adjustments<br><br> <br>(Note 3)				Transaction<br><br> <br>Accounting<br><br> <br>Adjustments<br><br> <br>(Note 4)				Pro Forma<br><br> <br>Combined
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Net sales	$	230,766		$	52,238	$	-			$	-			$	283,004
Cost of sales		200,090			27,376		13,735		(1)		341		(d)		241,628
							-				86		(e)
Gross profit		30,676			24,862		(13,735	)			(427	)			41,376
Selling, general and administrative expense		17,729			21,855		(13,128	)	(1)		2,251		(g)		28,707
Depreciation and amortization expense		-			607		(607	)	(1)		-				-
Operating income		12,947			2,400		-				(2,678	)			12,669
Gain on forgiveness of paycheck protection program loan		-			1,975		-				-				1,975
Other income, net		260			219		-				-				479
Interest income		-			2		-				-				2
Interest expense		(687	)		-		-				(563	)	(b)		(1,250	)
Income before income taxes		12,520			4,596		-				(3,241	)			13,875
Income tax expense		3,268					-				345		(j)		3,613
Net income	$	9,252		$	4,596	$	-			$	(3,586	)		$	10,262
Net income per share:
Basic	$	0.94												$	1.04
Diluted	$	0.93												$	1.03
Shares used in per share calculations:
Basic		9,849													9,849
Diluted		9,918													9,918

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.

NORTHWEST PIPE COMPANY
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
For the Year Ended December 31, 2020
(In thousands, except per share amounts)
	Northwest Pipe<br><br> <br>Company<br><br> <br>Historical			Park<br><br> <br>Environmental<br><br> <br>Equipment, LLC Historical			Reclassification<br><br> <br>Adjustments<br><br> <br>(Note 3)				Transaction<br><br> <br>Accounting<br><br> <br>Adjustments<br><br> <br>(Note 4)				Pro Forma<br><br> <br>Combined
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Net sales	$	285,907		$	66,539		$	-			$	-			$	352,446
Cost of sales		235,388			38,525			11,846		(1)		2,544		(c)		289,814
								-				747		(d)
								-				(36	)	(e)
								-				800		(g)
Gross profit		50,519			28,014			(11,846	)			(4,055	)			62,632
Selling, general and administrative expense		24,954			17,535			(10,975	)	(1)		3,002		(g)		37,032
								-				2,516		(h)
Depreciation and amortization expense		-			871			(871	)	(1)		-				-
Operating income		25,565			9,608			-				(9,573	)			25,600
Other income		953			34			-				-				987
Interest income		49			104			-				-				153
Interest expense		(933	)		(29	)		-				(1,833	)	(b)		(2,795	)
Income before income taxes		25,634			9,717			-				(11,406	)			23,945
Income tax expense (benefit)		6,584			-			-				(422	)	(j)		6,162
Net income	$	19,050		$	9,717		$	-			$	(10,984	)		$	17,783
Net income per share:
Basic	$	1.95													$	1.82
Diluted	$	1.93													$	1.80
Shares used in per share calculations:
Basic		9,788														9,788
Diluted		9,873														9,873

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1.	Basis of Presentation

Northwest Pipe Company (the “Company”) acquired Park Environmental Equipment, LLC (“ParkUSA”) on October 5, 2021.

The historical consolidated financial statements have been adjusted in the pro forma condensed combined financial statements to give effect to pro forma events that are based upon available information and certain assumptions (1) directly attributable to the acquisition, (2) factually supportable and reasonable under the circumstances and (3) with respect to the pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results following the acquisition. The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed.

The acquisition will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations.” As the acquirer for accounting purposes, the Company has estimated the fair value of ParkUSA’s assets acquired and liabilities assumed and conformed the accounting policies of ParkUSA to its own accounting policies.

The pro forma condensed combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined 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.

2.	Preliminary Purchase Price Allocation

The Company has performed a preliminary valuation analysis of the fair value of ParkUSA’s assets and liabilities. The following table summarizes the allocation of the preliminary purchase price as if the acquisition had closed on September 30, 2021 (in thousands):

Cash and cash equivalents	$	2,545
Trade and other receivables		11,552
Inventories		9,947
Prepaid expenses and other		265
Property and equipment		8,022
Operating lease right-of-use assets		58,301
Intangible assets		31,500
Accounts payable		(2,318	)
Accrued liabilities		(2,547	)
Operating lease liabilities		(58,301	)
Goodwill		28,527
Total estimated consideration	$	87,493

This preliminary purchase price allocation has been used to prepare pro forma adjustments in the pro forma balance sheet and statement of operations. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include (1) changes in fair values of property and equipment, (2) changes in allocations to intangible assets, (3) changes in operating lease right-of-use assets and liabilities, (4) changes in income taxes, and (5) other changes to assets and liabilities, including working capital adjustments.

3.	Reclassification Adjustments

The reclassification adjustments are based on our preliminary estimates and assumptions that are subject to change. The following reclassification adjustments have been reflected in the unaudited pro forma condensed combined financial information:

(1)	The Company recognizes certain expenses in Cost of sales, while ParkUSA recognizes these expenses in Selling, general, and administrative expense and Depreciation and amortization expense. Therefore, this reclassification adjustment conforms the presentation of these expenses to the Company’s presentation.
4.	Transaction Accounting Adjustments
---	---

The transaction accounting adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

(a)	Reflects consideration of $87.5 million of cash paid at closing of acquisition.
(b)	Reflects the increase in borrowings on line of credit of $86.3 million incurred to fund the acquisition.
---	---
The following table summarizes the change in interest expense resulting from interest on the borrowings on the line of credit and the amortization of related debt issuance costs (in thousands):
---
	Nine Months Ended<br><br> <br>September 30, 2021			Year Ended<br><br> <br>December 31, 2020
---	---	---	---	---	---	---
Estimated interest expense	$	1,054		$	2,152
Estimated debt issuance costs		196			614
Historical interest expense		(300	)		(656	)
Historical debt issuance costs		(387	)		(277	)
Pro forma adjustments to interest expense	$	563		$	1,833
(c)	Reflects the adjustment of $2.5 million to step up the estimated fair value of the work-in-process and finished goods inventories. The calculation of fair value is preliminary and subject to change. The fair value was determined based on the estimated selling price of the inventories, less the remaining manufacturing and selling costs and a normal profit margin on those manufacturing and selling efforts. The pro forma statement of operations for the year ended December 31, 2020 is also adjusted to increase cost of sales by the same amount as the step up in the inventory that is expected to be sold within one year of the acquisition date.
---	---
(d)	Reflects the adjustment of $2.8 million to increase the basis in the acquired property and equipment to the estimated fair value of $8.0 million. The estimated useful lives range from 1 to 20 years. The fair value and useful life calculations are preliminary and subject to change after the Company finalizes its review of the specific types, nature, age, condition, and location of ParkUSA’s property and equipment.
---	---
	The following table summarizes the change in the estimated depreciation expense (in thousands):
	Nine Months Ended<br><br> <br>September 30, 2021			Year Ended<br><br> <br>December 31, 2020
---	---	---	---	---	---	---
Estimated depreciation expense	$	948		$	1,618
Historical depreciation expense		(607	)		(871	)
Pro forma adjustments to depreciation expense	$	341		$	747

(e)	Reflects the establishment of $58.3 million of operating lease right-of-use assets, $1.9 million of current operating lease liabilities, and $56.4 million of long-term operating lease liabilities for operating leases entered into by the Company at the time of the acquisition.
The following table summarizes the change in the estimated rent and lease expense (in thousands):
---
	Nine Months Ended<br><br> <br>September 30, 2021			Year Ended<br><br> <br>December 31, 2020
---	---	---	---	---	---	---
Estimated rent and lease expense	$	2,714		$	3,553
Historical rent and lease expense		(2,628	)		(3,589	)
Pro forma adjustments to rent and lease expense	$	86		$	(36	)
(f)	Reflects the preliminary goodwill of $28.5 million, calculated as if the net assets were acquired on September 30, 2021. The actual goodwill to be recorded in our December 31, 2021 financial statements is expected to be materially different, due to the changes in ParkUSA’s working capital balances between September 30, 2021 and the acquisition date of October 5, 2021, as well as possible changes as the purchase price allocation is completed. See the preliminary purchase price allocation in Note 2.
---	---
(g)	Reflects the adjustment of $30.1 million to increase the historical intangible assets acquired by the Company to their estimated fair values. As part of the preliminary valuation analysis, the Company identified intangible assets for customer relationships, trade names, backlog, and patents. The fair value of identifiable intangible assets is determined primarily using the income approach, which requires a forecast of all of the expected future cash flows.
---	---
	The following table summarizes the estimated fair values of ParkUSA’s identifiable intangible assets and their estimated useful lives (dollars in thousands):
	****	****		Amortization Expense
---	---	---	---	---	---	---	---
	Estimated Fair Value		Estimated Useful Life<br><br> <br>(in years)	Nine Months Ended<br><br> <br>September 30, 2021		Year Ended<br><br> <br>December 31, 2020
Customer relationships	$	19,800	10.0	$	1,485	$	1,980
Trade names		9,600	10.0		720		960
Patents		1,300	21.0		46		62
Backlog		800	0.6		-		800
	$	31,500			2,251		3,802
Historical amortization expense					-		-
Pro forma adjustments to amortization expense				$	2,251	$	3,802
This preliminary estimate of fair value and estimated useful life will likely differ from final amounts the Company will calculate after completing a detailed valuation analysis, and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.
---
(h)	Reflects the accrual of $2.5 million of additional non-recurring transaction costs incurred subsequent to September 30, 2021, including advisory, legal, accounting, and other expenses. There were $2.8 million and $0.3 million of transaction costs and $6.0 million and $0 of transaction bonuses included in the historical statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020, respectively. These transaction costs and transaction bonuses are not expected to affect the results of operations beyond twelve months after the acquisition date.
---	---

(i)	Reflects the elimination of the historical equity of ParkUSA.
(j)	Reflects the income tax effect of pro forma adjustments based on the estimated blended federal and state statutory income tax rate of 24.7% for the nine months ended September 30, 2021 and the year ended December 31, 2020, adjusted for the impact of combined non-deductible permanent differences.
---	---