-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VLjufinMhbWJfYVsgIA9c3Xe3JE1W5aeyafzIHmxo6vCsxOau/++C/Bxtu/na+BH vA8kUkhGyEu8VKx/Es7P4w== 0000891618-97-002524.txt : 19970610 0000891618-97-002524.hdr.sgml : 19970610 ACCESSION NUMBER: 0000891618-97-002524 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970326 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970606 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERSANT OBJECT TECHNOLOGY CORP CENTRAL INDEX KEY: 0000865917 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943079392 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-04910-LA FILM NUMBER: 97619864 BUSINESS ADDRESS: STREET 1: 41380 WILLOW ROAD CITY: MENLO PK STATE: CA ZIP: 94025 BUSINESS PHONE: 4153297500 8-K/A 1 AMENDMENT TO FORM 8-K FOR PERIOD MARCH 26, 1997 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AMENDING REPORT FILED APRIL 9, 1997 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 26, 1997 ------------------------ VERSANT OBJECT TECHNOLOGY CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 0-28540 94-3079392 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION OR IDENTIFICATION NO.) ORGANIZATION)
1380 WILLOW ROAD MENLO PARK, CA 94025 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE) (415) 329-7500 (REGISTRANT'S TELEPHONE NUMBER) ================================================================================ 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS Versant Object Technology Corporation ("Company") initially reported on Form 8-K dated April 9, 1997 (filed April 10, 1997) that the Company and Versant Object Technology GmbH ("Versant Europe") had entered into an agreement whereby Versant Europe was to become a wholly-owned subsidiary of the Company (the "Acquisition"). The Acquisition was completed on March 26, 1997. The purpose of this amendment is to amend Items 7(a) and 7(b) in order to provide the required financial statements and pro forma financial information for the Acquistion. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements as of December 31, 1996 and 1995 together with Auditors' Report. 2 3 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Versant Object Technology GmbH: We have audited the accompanying consolidated balance sheets of Versant Object Technology GmbH, Grasbrunn/Germany (hereafter also referred to as the "Company") and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, stockholder's equity (deficit) and cash flows for the six month period from inception (July 1995) to December 31, 1995 and the year ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Versant Object Technology GmbH and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for the six month period from inception (July 1995) to December 31, 1995 and the year ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN Wirtschaftsprufungsgesellschaft Steuerberatungsgesellschaft mbH Munich, Germany March 26, 1997 3 4 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996 AND 1995 ASSETS
DEC. 31, 1996 DEC. 31, 1995 US US DOLLARS DOLLARS ------------- ------------- CURRENT ASSETS Cash............................................................. $ 24,782 $ 92,446 Accounts Receivable -- Trade..................................... 288,908 154,815 Other Current Assets............................................. 15,802 587 Deferred cost.................................................... 1,400,000 -- Prepaid Expenses................................................. 30,918 6,054 ----------- --------- 1,760,410 253,902 ----------- --------- FIXED ASSETS Fixed Assets..................................................... 108,802 49,643 Less Accumulated Depreciation.................................... (6,604) (3,833) ----------- --------- 102,199 45,810 ----------- --------- TOTAL ASSETS....................................................... $ 1,862,609 $ 299,712 =========== ========= LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) CURRENT LIABILITIES Accounts Payable................................................. $ 637,691 $ 187,184 Accrued Liabilities.............................................. 308,050 22,373 Deferred Revenue................................................. 60,297 -- Short Term Bank Borrowings....................................... 690,488 -- ----------- --------- 1,696,526 209,557 ----------- --------- LONG TERM LIABILITIES Shareholder Loan................................................. 1,819,411 -- ----------- --------- TOTAL LIABILITIES.................................................. 3,515,937 209,557 ----------- --------- STOCKHOLDER'S EQUITY (DEFICIT) Capital.......................................................... 195,326 195,326 Translation adjustment........................................... 95,105 21 Accumulated Deficit.............................................. (1,943,759) (105,192) ----------- --------- (1,653,328) 90,155 ----------- --------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)............... $ 1,862,609 $ 299,712 =========== =========
The accompanying notes are an integral part of these financial statements. 4 5 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTH PERIOD YEAR ENDED FROM INCEPTION TO DECEMBER 31, 1996 DECEMBER 31, 1995 US DOLLARS US DOLLARS ----------------- ----------------- REVENUE Licenses................................................. $ 1,046,493 $ 513,366 Services................................................. 288,012 53,701 Other.................................................... 81,394 8,429 ----------- --------- 1,415,899 575,496 ----------- --------- COST OF REVENUE Licenses................................................. 425,139 358,258 Services................................................. 33,215 29,838 Other.................................................... 47,613 461 ----------- --------- 505,967 388,557 ----------- --------- GROSS PROFIT............................................... 909,932 186,939 ----------- --------- OPERATING EXPENSES General, Selling & Administrative........................ 2,729,287 292,223 ----------- --------- LOSS FROM OPERATIONS....................................... (1,819,355) (105,284) Interest income and other................................ 19,212 93 ----------- --------- NET LOSS................................................... $(1,838,567) $(105,192) =========== =========
The accompanying notes are an integral part of these financial statements. 5 6 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT) FOR PERIOD FROM INCEPTION TO DECEMBER 31, 1996
TRANSLATION ACCUMULATED TOTAL CAPITAL ADJUSTMENT DEFICIT STOCKHOLDER'S EQUITY US DOLLARS US DOLLARS US DOLLARS US DOLLARS ---------- ---------- ----------- -------------------- Balance, July 19, 1995 (Date of Inception)................. $ -- $ -- $ 34,880 $ -- Net Loss.............................. -- -- (105,192) (105,192) Sale of Capital Stock................. 195,326 -- -- 195,326 Foreign currency translation.......... -- 21 -- 21 -------- ------- ----------- ----------- Balance, December 31, 1995............ 195,326 21 (105,192) 90,155 Net Loss.............................. -- -- (1,838,567) (1,838,567) Foreign currency translation.......... -- 95,087 -- 95,087 -------- ------- ----------- ----------- Balance, December 31, 1996............ $195,326 $ 95,105 $(1,943,759) $ (1,653,328) ======== ======= =========== ===========
The accompanying notes are an integral part of these financial statements. 6 7 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH PERIOD YEAR ENDED FROM INCEPTION TO DECEMBER 31, 1996 DECEMBER 31, 1995 US DOLLARS US DOLLARS ----------------- ----------------- Cash Flow From Operating Activities Net Loss................................................. $(1,838,567) $(105,192) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and Amortization......................... 2,771 3,833 Changes in current assets and liabilities Accounts receivable................................. (134,093) (154,815) Deferred cost....................................... (1,400,000) -- Other assets and prepaid expenses................... (40,064) (6,656) Accounts Payable.................................... 450,507 187,184 Accrued liabilities................................. 285,677 22,373 Deferred revenue.................................... 60,297 -- ----------- --------- Net cash used in operations........................... (2,613,472) (53,273) ----------- --------- Cash flows from investing activities Purchases of property and equipment...................... (59,159) (49,643) ----------- --------- Net cash used in investing activities................. (59,159) (49,643) ----------- --------- Cash flows from financing activities Net proceeds from issuance of capital stock.............. -- 195,326 Borrowings on line of credit............................. 690,488 -- Borrowings from stockholder.............................. 1,819,411 -- ----------- --------- Net cash provided by financing activities............. 2,509,899 195,326 ----------- --------- Effect of exchange rate changes............................ 95,068 36 ----------- --------- Net increase (decrease) in cash and cash equivalent........ (67,664) 92,446 Cash and cash equivalents, beginning of year............... 92,446 -- ----------- --------- Cash and cash equivalents, end of year..................... $ 24,782 $ 92,446 =========== =========
The accompanying notes are an integral part of these financial statements. 7 8 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 1. ORGANIZATION AND OPERATIONS Versant Object Technology GmbH (the "Company") was incorporated in Germany in July 1995 by Isar-Vermogensverwaltung GbR mit beschrankter Haftung, Munich/Germany, a private German partnership. The Company operates in a single industry segment and is involved in marketing and support of high performance object database management software systems. To date, the Company's revenues have been derived entirely from the sublicensing of software products owned by Versant Object Technology Corporation ("Versant USA"), an independent company located in the United States, and services associated with such products. The Company is subject to the risks associated with other companies in a comparable stage of development. These risks include, but are not limited to, fluctuations in operating results, seasonality, a lengthy sales cycle, dependance on the acceptance of object database technology, competition, product concentration and other factors. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Principles of Consolidation The consolidated financial statements include the accounts of Versant Object Technology GmbH, Munich/Germany, Versant Object Technology LTD, London/United Kingdom, and Versant Object Technology SARL, Sevres Cedex/France. The companies are affiliated with one another by common ownership. All significant intercompany balances and transactions have been eliminated. b. Translation of Foreign Currency The financial statements of the companies are translated into US Dollars as follows: assets and liabilities at the prevailing year-end exchange rates; and income and expenses at the average exchange rate during the year. Adjustments from translation gains and losses are not included in determining net loss but are accumulated and reported as a separate component of stockholder's equity (translation adjustment). Actual gains and losses from transactions denominated in foreign currencies are included in net loss. c. Revenue Recognition Revenue is recognized in accordance with Statement of Position 91-1, Software Revenue Recognition. Revenue from perpetual software license agreements is recognized as revenue upon shipment of the software if no significant vendor obligations remain, payments are due within the Company's normal payment terms and collection of the resulting receivable is probable. In instances where a significant vendor obligation exists, revenue recognition is delayed until such obligation is satisfied. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period. Maintenance revenue is recognized ratably over the term of the maintenance contract. Consulting and training revenue is recognized when a customer's purchase order is received and the services are performed. Cost of license and service revenue consists principally of product royalties, royalty obligations and reserves for estimated bad debts. d. Depreciation and Amortization Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets of two to ten years. 8 9 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1996 e. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of accounts receivable and short-term investments. Credit is extended based on an evaluation of the customer's financial condition. Generally, collateral is not required. As of December 31, 1996, 75% of the accounts receivable were concentrated on three large, well established customers. The Company provides reserves for credit losses and such losses have been insignificant to date. f. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. g. Recently Issued Accounting Standard SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of, which was required to be adopted by the Company in 1996, did not have a material effect on the Company's financial position or its results of operations upon adoption. 3. DEFERRED COST The Company entered into an exclusive software distribution agreement with Versant USA, whereby the Company will act as the sole distributor of Versant USA licenses to a project of a potential European customer. The Company purchased an unlimited right to sublicense Versant USA product to that customer. The authorization to provide this unlimited sublicense expires on December 31, 1998. Under the terms of this agreement the Company paid US$1.4 million in October 1996 to Versant USA. This amount has been recorded as deferred cost in the accompanying consolidated balance sheet and will be recognized as a cost of licenses in the period or periods in which the related licenses are recognized as revenue from the end user. 4. SHAREHOLDER LOAN The shareholder of Versant Object Technology GmbH granted a US$1,819,411 loan to the company during 1996. The loan is unsecured, due on demand and non-interest bearing and consequently no interest has been paid to the shareholder in 1996. 5. COMMITMENTS AND CAPITAL LEASE OBLIGATIONS The Company rents its corporate facilities in Munich, London and Paris. The rental terms provide for certain increases in rental payments during the term. Rental expense under these agreements is recognized on a straightline basis. The annual rent expenses are approximately US$40,000 a year. Aggregate future obligations under this agreement are not material. 6. LINE OF CREDIT The Company has a credit agreement with a German bank which provides for borrowings up to approximately US$0.72 million. Borrowings up to US$0.5 million bear interest at a rate of 5.5%. Additional borrowings bear interest at 8.2%. 9 10 VERSANT OBJECT TECHNOLOGY GMBH AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1996 The borrowings are due on demand. They are secured by personal guarantees of two partners of the stockholder of the Company (US$0.59 million) and by cash (US$0.13 million) of the stockholder of the Company, which has been mortgaged to the bank. The Company was in compliance with its loan covenants at December 31, 1996. 8. INCOME TAXES The Company accounts for income taxes pursuant to the provisions of SFAS No. 109, "Accounting for Income Taxes," which requires an asset and liability approach to accounting for income taxes. The Company incurred net operating losses in 1995 and 1996 and consequently paid no federal or state taxes based on income. Due to the lack of profitability to date, the Company has recorded a valuation allowance against its entire deferred tax asset as of December 31, 1996 and 1995. Net operating losses amount to approximately US$2.0 million as of December 31, 1996. They can be used to offset future taxable income, however such amounts may be limited due to the "change in ownership" provisions of the Internal Revenue Code of 1986. 9. SUBSEQUENT EVENTS On March 25, 1997, 100% of the shares of the company were acquired by Versant USA in exchange for US$2.0 million in cash and 167,545 shares of Versant common stock valued at US$9.75 per share prior to valuation adjustment. 10. SIGNIFICANT CUSTOMERS The customers of the Company are mainly located in Europe. The Company had sales to major customers as follows:
% OF TOTAL REVENUE ----------------- 1995 1996 ---- ---- Customer A......................................... * 34% Customer B......................................... * 10% Customer C......................................... * 10% Customer D......................................... 60% * Customer E......................................... 12% *
- --------------- * less than 10% 10 11 (b) Pro forma Combined Condensed Financial Statements. VERSANT OBJECT TECHNOLOGY CORPORATION AND VERSANT OBJECT TECHNOLOGY GMBH PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) In March 1997, Versant Object Technology Corporation (the "Company" or "Versant") completed the acquisition of Versant Object Technology GmbH., an independently owned distributor of the Company's products in Europe ("Versant Europe"). The acquisition of Versant Europe has been accounted for as a purchase. The accompanying unaudited pro forma combined condensed statement of operations for the fiscal year ended December 31, 1996 assumes that the acquisition took place as of the beginning of fiscal 1996, and combines the Company's and Versant Europe's statement of operations for each company's respective fiscal year ended December 31, 1996. The unaudited pro forma combined condensed balance sheet has been prepared as if the acquisition was consummated as of December 31, 1996. The purchase price allocation reflected in the accompanying pro forma combined condensed financial statements has been prepared on an estimated basis. The effects resulting from any differences in the final allocation of the purchase price are not expected to have a material effect on the Company's financial statements. The method of combining historical financial statements for the preparation of the pro forma combined condensed financial statements is for presentation only. Actual statements of income of the companies will be combined. The accompanying pro forma combined condensed financial statements should be read in conjunction with the historical financial statements and related notes thereto for both the Company and Versant Europe. 11 12 VERSANT OBJECT TECHNOLOGY CORPORATION AND VERSANT OBJECT TECHNOLOGY GMBH PRO FORMA COMBINED CONDENSED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) (UNAUDITED) ASSETS
DECEMBER 31, 1996 ----------------------------------------------------------- HISTORICAL HISTORICAL PRO FORMA PRO FORMA VERSANT VERSANT EUROPE ADJUSTMENTS COMBINED ---------- -------------- ----------- --------- CURRENT ASSETS Cash and cash equivalents................. $ 5,267 25 (2,000)(a) $ 3,292 Short term investments.................... 14,716 -- 14,716 Accounts receivable, net of allowance for doubtful accounts...................... 4,747 289 (395)(b) 4,641 Other current assets...................... 198 47 245 Deferred cost............................. -- 1,400 1,400 ------- ------ ------- Total current assets.............. 24,928 1,761 24,294 Property and equipment, net............... 675 102 777 Other assets.............................. 85 -- 85 Excess of cost of investment over fair value of net assets acquired, net...... -- -- 3,336(a) 3,336 ------- ------ ------- 25,688 1,863 28,492 ======= ====== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of capitalized lease obligations............................ 226 -- 226 Short term loan........................... -- 690 690 Accounts payable.......................... 475 638 (395)(b) 718 Accrued liabilities....................... 2,374 369 358(a) 3,101 Deferred revenue.......................... 2,811 -- 2,811 Accrued income taxes...................... 115 -- 115 ------- ------ ------- Total current liabilities......... 6,001 1,697 7,661 Long-term liabilities, net of current portion Capitalized lease obligations............. 413 -- 413 Shareholder loan.......................... -- 1,819 (1,819)(a) -- ------- ------ ------- Total long-term liabilities....... 413 1,819 413 Common stock........................... 40,889 195 949(a) 42,033 Accumulated deficit.................... (21,615) (1,943) 1,943(a) (21,615) Intercompany translation adjustment.... -- 95 (95)(a) -- ------- ------ ------- Total shareholders' equity........ 19,274 (1,653) 20,418 ------- ------ ------- $ 25,688 1,863 $28,492 ======= ====== =======
The accompanying notes are an integral part of these 12 13 VERSANT OBJECT TECHNOLOGY CORPORATION AND VERSANT OBJECT TECHNOLOGY GMBH PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
YEAR ENDED DECEMBER 31, 1996 ----------------------------------------------------------- HISTORICAL HISTORICAL PRO FORMA PRO FORMA VERSANT VERSANT EUROPE ADJUSTMENTS CONSOLIDATED ------- -------------- ----------- ------------ REVENUE: License.................................. $12,202 $ 1,046 $(1,770)(c) $ 11,478 Services................................. 6,191 370 -- 6,561 ------- ------- ------- Total revenue.................... 18,393 1,416 18,039 ------- ------- ------- COST OF REVENUE: License.................................. 1,144 425 (425)(d) 1,144 Services................................. 2,987 81 ( 81)(d) 2,987 ------- ------- ------- Total cost of revenue............ 4,131 506 4,131 ------- ------- ------- GROSS PROFIT............................... 14,262 910 13,908 ------- ------- ------- OPERATING EXPENSES: Sales, general and administrative........ 9,828 2,729 12,557 Research and development................. 3,323 -- 3,223 Amortization of excess of cost of investment over fair value of net assets acquired, net.................. -- -- 441(e) 441 ------- ------- ------- Total operating expenses......... 13,151 2,729 16,221 ------- ------- ------- Operating income (loss).......... 1,111 (1,819) (2,313) INTEREST AND OTHER INCOME (EXPENSE), net... 429 (19) 410 ------- ------- ------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES.................................... 1,540 (1,838) (1,903) PROVISION FOR INCOME TAXES................. 129 -- (126)(f) 3 ------- ------- ------- NET INCOME (LOSS).......................... $ 1,411 (1,838) $ (1,906) ------- ------- ------- NET INCOME (LOSS) PER SHARE................ $ 0.18 $ (0.25) ======= ======= PRO FORMA WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES................. 7,781 7,586 ======= =======
13 14 VERSANT OBJECT TECHNOLOGY CORPORATION AND VERSANT OBJECT TECHNOLOGY GMBH NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. PRO FORMA ADJUSTMENTS Certain pro forma adjustments have been made to the accompanying pro forma combined condensed financial statements as described below: a. Reflects the acquisition of Versant Europe for approximately $3.6 million ($2 million in cash and $1.6 million in common stock prior to a $490,000 valuation adjustment related to certain restictions of the trading of such shares) and the allocation of $3.3 million of the purchase price to goodwill. Also reflects conversion of Versant Europe's shareholder loan to equity prior to the acquisition by the Company. b. Eliminates intercompany receivables and payables. c. Reflects elimination of $1,770,000 of intercompany revenue from Versant Europe initially recorded as royalty and licensing revenue in the year ended December 31, 1996. d. Reflects elimination of intercompany cost of revenue. e. Reflects the amortization for 12 months of the excess of cost of investment over the fair value of net assets acquired of approximately $3.3 million, which will be amortized on a straight line basis over seven (7) years. f. Reflects the elimination of the Company's domestic income tax provision for fiscal 1996 due to the pro forma 1996 net loss. NOTE 2. PURCHASE PRICE ALLOCATION In connection with the acquisition, the Company paid $3.6 million to the shareholder of Versant Europe consisting of $2.0 million in cash and 167,545 shares of common stock valued at $9.75 per share prior to valuation adjustment. The Company also accrued acquisition related costs of approximately $109,000. As a result of the purchase price allocation and other adjustments, the excess of the investment over the fair value of net assets acquired is $3.3 million which is being amortized on a straight-line basis over a period of 7 years. Management believes that the unamortized balance is recoverable through future operating results. 14 15 SIGNATURES 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. VERSANT OBJECT TECHNOLOGY CORPORATION June 2, 1997 By /s/ GARY RHEA Gary Rhea Chief Financial Officer 15 -----END PRIVACY-ENHANCED MESSAGE-----