ex99_7.htm

The following unaudited pro forma condensed combined balance sheet as of June 30, 2012 and the unaudited pro forma condensed combined statements of income for the year ended December 31, 2011 and the three months ended June 30, 2012 are based on the historical financial statements of Tegal Corporation and CollabRx after giving effect to Tegal Corporation’s acquisition of CollabRx using the acquisition method of accounting and applying the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined balance sheet combines Tegal Corporation’s historical condensed consolidated balance sheet as of June 30, 2012 and CollabRx’s historical condensed consolidated balance sheet as of June 30, 2012, giving effect to the acquisition as if it had occurred on June 30, 2012. The unaudited pro forma condensed combined statement of operations for the year ended March 31, 2012 combines Tegal Corporation’s historical consolidated statement of operations for the year then ended with CollabRx’s historical consolidated statement of operations for the year ended March 31, 2012. The unaudited pro forma condensed combined statement of operations for the three months ended June 30, 2012 combines Tegal Corporation’s historical condensed consolidated statement of operations for the three months ended June 30, 2012 with CollabRx’s historical condensed consolidated statement of operations for the six months ended June 30, 2012. The unaudited pro forma condensed combined statements of operations give effect to the merger as if it had occurred at the beginning of the fiscal year ending March 31, 2012.

The acquisition has been accounted for under the acquisition method of accounting in accordance with Financial Accounting Standard ASC 805, Business Combinations. Under the acquisition method of accounting, the total estimated purchase price is allocated to the net tangible and intangible assets of CollabRx acquired in connection with the acquisition, based on their estimated fair values. Management has made a preliminary allocation of the estimated acquisition price to the net tangible and intangible assets acquired and liabilities assumed based on various preliminary estimates. These preliminary estimates and assumptions are subject to change during the measurement period (up to the time it takes to gather the necessary information and no longer than one year from the acquisition date). The final determination of the values of assets and liabilities and the integration costs may result in actual values, assets, liabilities and expenses that are different from those set forth in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information has been prepared by management for illustrative purposes only and are not necessarily indicative of the condensed consolidated financial position or results of income in future periods or the results that actually would have been realized had Tegal Corporation and CollabRx been a combined company during the specified periods. The unaudited pro forma condensed combined financial information does not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies, or any liabilities that may result from integration activities. The pro forma adjustments are based on the information available at the time of the preparation of this document. The unaudited pro forma condensed combined financial information, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, Tegal Corporation’s historical consolidated financial statements included in its Annual Report on Form 10-K, for its year ended March 31, 2012 and in its Form 10-Q for its three month period ended June 30, 2012, and CollabRx’s historical consolidated financial statements for the year ended December 31, 2011, and three months ended June 30, 2012, which are included as Exhibits 99.6 to this Form 8-K.

	UNAUDITED
	Tegal			CollabRx
	June 30,			June 30,			Pro Forma
	2012			2012			Adjust			Combined
ASSETS
Current assets:
Cash and cash equivalents	$	7,191		$	476		$	-		$	7,667
Prepaid expenses and other current assets		19			11			--			30
Other assets of discontinued operations		11			--			--			11
Total current assets		7,221			487			-			7,708
Property and equipment, net		53			7			--			60
Goodwill/intangible assets		--			--			932			932
Other assets		--			793			--			793
Note receivable - CollabRx		300			--			(300	)		-
Investment in convertible promissory note		320			--			--			320
Total assets	$	7,894		$	1,287		$	632		$	9,813
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15		$	62		$	-		$	77
Common stock warrant liability		18			--			--			18
Accrued expenses and other current liabilities		200			322			--			522
Note payable - current		--			300			(300	)		-
Liabilities of discontinued operations		206			--			--			206
Total current liabilities		439			684			(300	)		823

Long term liabilities:
Convertible promissory note		--			500			--			500
Total liabilities		439			1,184			(300	)		1,323

Stockholders’ equity:
Series 1 Preferred Convertible stock, $0.001 par value; 14,634,147 shares authorized; 9,494,275 shares issued and outstanding (liquidation preference $2,432,908)	$	-		$	9		$	-		$	9
Common stock, $0.01 par value; 50,000,000 shares authorized; 1,688,807 and 1,688,807 shares issued and outstanding at June 30, 2012 and March 31, 2012, respectively		17			-			-			17
Common stock, $0.001 par value; 44,000,000 shares authorized; 8,694,088 shares issued and outstanding		-			9			-			9
Additional paid-in capital		129,106			9,906			932			139,944
Accumulated other comprehensive loss		(142	)		-			-			(142	)
Accumulated deficit		(121,526	)		(9,821	)		-			(131,347	)
Total stockholders’ equity		7,455			103			932			8,490
Total liabilities and stockholders’ equity	$	7,894		$	1,287		$	632		$	9,813

	UNAUDITED
	Three Months ended
	Tegal			CollabRx
	June 30,			June 30,			Pro Forma
	2012			2012			Adjust		Combined

Revenue	$	25		$	13		$	--	$	38
Costs and expenses:
Research and development expenses		--			285			--		285
Sales and marketing expenses		--			77			--		77
General and administrative expenses		712			219			--		931
Total costs and expenses		712			581			--		1,293
Loss from operations		(687	)		(568	)		--		(1,255	)
Other income (expense), net		9			0			--		9
Loss before income tax benefit		(678	)		(568	)		0		(1,246	)
Loss from continuing operations		(678	)		(568	)		-		(1,246	)
Loss from discontinued operations, net of taxes		(1	)		-			-		(1	)
Net loss	$	(679	)	$	(568	)	$	-	$	(1,247	)

	UNAUDITED
	Twelve Months ended
	Tegal			CollabRx
	March 31,			March 31,			Pro Forma
	2012			2012			Adjust		Combined

Revenue	$	100		$	130		$	--	$	230
Operating expenses:
Research and development expenses		--			1,025			--		1,025
Sales and marketing expenses		--			275			--		275
General and administrative expenses		2,615			465			--		3,080
Total operating expenses		2,615			1,765			--		4,380
Operating loss		(2,515	)		(1,635	)		--		(4,150	)
Equity in (loss) of unconsolidated affiliate		(2,046	)		--			0		(2,046	)
Other income (expense), net		18			1			--		19
Loss before income tax benefit		(4,543	)		(1,634	)		0		(6,177	)
Loss from continuing operations		(4,543	)		(1,634	)		-		(6,177	)
Gain on sale of discontinued operations, net of taxes		2,930			--			--		2,930
Income from discontinued operations, net of taxes		184			-			-		184
Income from discontinued operations, net of taxes		3,114			-			-		3,114

Net loss		(1,429	)		(1,634	)		-		(3,063	)

Other comprehensive income (loss)		25			--			--		25
Net loss and comprehensive loss	$	(1,404	)	$	(1,634	)	$	-	$	(3,038	)

The unaudited pro forma combined financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Accordingly, these pro forma forma financial statements should be read in connection with Tegal Corporation and CollabRx historical audited and unaudited financial statements referred to above.

The acquisition method of accounting under GAAP requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values at the acquisition date. Fair value is defined under GAAP as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Market participants are assumed to be buyers and sellers in the principal (or most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. Fair value measurements can be highly subjective and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values and added to those of Tegal Corporation.

On July 12, 2012, Tegal completed the acquisition of CollabRx, pursuant to the previously announced Agreement and Plan of Merger, dated as of June 29, 2012. As a result of the Merger, CollabRx became a wholly-owned subsidiary of the Company. In consideration for 100% of the capital stock of CollabRx, Tegal will issue an aggregate of 236,433 shares of common stock, representing 14% of Tegal’s total shares outstanding prior to the closing, to former CollabRx stockholders. Tegal did not include any cash for the acquisition. Tegal also assumed $500 of existing CollabRx indebtedness through the issuance of 5-year promissory notes in substitution for outstanding notes previously issued by CollabRx.

The closing of our acquisition of CollabRx occurred on July 12, 2012. In connection with that transaction, we will issue an aggregate of 236,433 shares of common stock, representing 14% of Tegal’s total shares outstanding prior to the closing, to former CollabRx stockholders in exchange for 100% of the capital stock of CollabRx, Inc. Tegal did not include any cash for the acquisition. Tegal and certain former CollabRx stockholders entered into a Stockholders Agreement providing for, among other things, registration rights, transfer restrictions and voting and standstill agreements. Tegal also assumed $500,000 of existing CollabRx indebtedness through the issuance of 5-year promissory notes in substitution for outstanding notes previously issued by CollabRx. Additional information is set forth in the Company’s 8-K report filed on July 18, 2012, and is incorporated herein in its entirety by reference.

The accompanying unaudited pro forma combined financial statements present the pro forma consolidated financial position and results of operations of the combined company based upon the historical financial statements of Tegal and CollabRx, after giving effect to the CollabRx acquisition and adjustments described in the following footnotes, and are intended to reflect the impact of this acquisition on Tegal on a pro forma basis.

The unaudited pro forma combined statements of operations for the three months ended June 30, 2012 and for the year ended March 31, 2012 combine Tegal’s historical results for the twelve months ended March 31, 2012 with CollabRxs historical results for the same periods. The unaudited pro forma statements of operations give effect to the acquisition as if it had taken place at the beginning of the fiscal year ending March 31, 2012.

The unaudited pro forma combined financial statements do not include any adjustments for liabilities that may result from integration activities related to the CollabRx acquisition. Additional assets or liabilities may be recorded that could affect amounts in the unaudited pro forma combined financial statements. During the measurement period, any such adjustments to provisional amounts would increase or decrease goodwill. Adjustments that occur after the end of the measurement period will be recognized in the post-combination current period operations.