-----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, HSv3CKww2FfbFPMiwfAw4NP6A9m5icwz+lE3Vghog8PIc6R3Nrq6Wh77Cv31HUZs qAIH+zaQZopGibf3bvU0UA== /in/edgar/work/20000808/0000930661-00-001869/0000930661-00-001869.txt : 20000921 0000930661-00-001869.hdr.sgml : 20000921 ACCESSION NUMBER: 0000930661-00-001869 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000804 ITEM INFORMATION: FILED AS OF DATE: 20000808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TUT SYSTEMS INC CENTRAL INDEX KEY: 0000878436 STANDARD INDUSTRIAL CLASSIFICATION: [3661 ] IRS NUMBER: 942958543 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25291 FILM NUMBER: 688444 BUSINESS ADDRESS: STREET 1: 2495 ESTAND WAY CITY: PLEASANT HILL STATE: CA ZIP: 94523 BUSINESS PHONE: 9256826510 MAIL ADDRESS: STREET 1: 2495 ESTAND WAY CITY: PLEASANT HILL STATE: CA ZIP: 94523 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------- FORM 8-K/A Amendment No. 1 to Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 June 9, 2000 (Date of Original Filing) August 8, 2000 (Date of Current Filing) Date of Report (Date of earliest event reported): Tut Systems, Inc. (Exact name of registrant as specified in its charter) Delaware 000-25291 94-2958543 (State or other (Commission (IRS employer jurisdiction of file number) identification no.) incorporation or organization) 5964 W. Las Positas Pleasanton, California 94588 (Address and zip code of principal executive offices) (925) 682-6510 (Registrant's telephone number, including area code) 2495 Estand Way Pleasant Hill, California 94523 (Former name or former address, if changed since last report) On June 9, 2000, Tut Systems, Inc. ("Tut") filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting, among other things, the acquisition on May 26, 2000 of the entire issued share capital of Xstreamis Plc ("Xstreamis"). Tut indicated in such report that it would file certain financial statements by amendment, as permitted under Item 7 of Form 8-K. The purpose of this amendment is to include such financial statements. Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits. (a) Financial Statements of Business Acquired. The audited financial statements of Xstreamis for the year ended December 31, 1999 and unaudited for the three months ended March 31, 2000 are submitted herewith as Exhibit 99.1. (b) Pro Forma Financial Statements. The unaudited pro forma financial information of Tut and Xstreamis are submitted herewith as Exhibit 99.2. (c) Exhibits. The following exhibits are filed herewith: 99.1 Audited Financial Statements of Xstreamis Plc for the year ended December 31, 1999 and unaudited for the three months ended March 31, 2000. 99.2 Unaudited Pro Forma Financial Information of Tut and Xstreamis 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 thereunto duly authorized. TUT SYSTEMS, INC. By:/s/ Nelson B. Caldwell ------------------------------------- Nelson B. Caldwell Vice President and Chief Financial Officer Date: August 8, 2000 EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99.1* Audited Financial Statements of Xstreamis Plc for the year ended December 31, 1999 and unaudited for the three months ended March 31, 2000. 99.2* Unaudited Pro Forma Financial Information of Tut Systems, Inc. and Xstreamis Plc. - ---------------------- * Filed herewith. EX-99.1 2 0002.txt AUDITED FINANCIAL STATEMENTS OF XSTREAMIS PLC. EXHIBIT 99.1 FINANCIAL STATEMENTS OF BUSINESS ACQUIRED: XSTREAMIS LIMITED (FORMERLY XSTREAMIS PLC.) Table of Contents Page ---- Report of Independent Accountants......................................... F-1 Balance Sheets............................................................ F-2 Statements of Operations.................................................. F-3 Statements of Stockholders' Equity........................................ F-4 Statements of Cash Flows.................................................. F-5 Notes to Financial Statements............................................. F-6 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Xstreamis Limited In our opinion, the accompanying balance sheet and the related statements of operations, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Xstreamis Limited at December 31, 1999, and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles in the United States. 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 of these financial statements in accordance with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1(b) to the financial statements, the Company has incurred a cumulative net loss since inception that causes substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1(b). Continuation of the Company as a going concern is dependent upon the successful conclusion of its acquisition by Tut Systems, Inc. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers Reading United Kingdom July 16, 2000 F-1 XSTREAMIS LIMITED (FORMERLY KNOWN AS XSTREAMIS PLC) BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
December 31, March 31, 1999 2000 ---------------- ---------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 2,193 $ 2,032 Prepaid expenses and other current assets 80 78 ---------------- ---------------- Total current assets 2,273 2,110 Property and equipment, net 195 158 ---------------- ---------------- Total assets $ 2,468 $ 2,268 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 94 $ 183 Accrued liabilities 1,436 1,608 ---------------- ---------------- Total liabilities 1,530 1,791 ================ ================ Contingencies (Note 5) Stockholders' equity: Common stock, $0.040 par value 30,000,000 shares authorized 16,593,253 and 16,843,253 shares issued and outstanding as of December 31, 1999 and March 31, 2000 (unaudited), respectively 670 679 Additional paid in capital 7,958 8,146 Accumulated deficit (7,711) (8,363) Cumulative translation adjustment 21 15 ---------------- ---------------- Total stockholders' equity 938 477 ---------------- ---------------- Total liabilities and stockholders' equity $ 2,468 $ 2,268 ================ ================
The accompanying notes are an integral part of these financial statements. F-2 XSTREAMIS LIMITED (FORMERLY KNOWN AS XSTREAMIS PLC) STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE DATA) Year Ended Three Months Ended December 31, March 31, 1999 1999 2000 =========== ========== =========== (unaudited) Revenue $ 12 $ - $ - Cost of revenue (4) - - =========== ========== =========== Gross margin 8 - - Operating expenses: Sales and marketing 469 133 247 Research and development 1,031 232 74 General administration 1,294 133 361 =========== ========== =========== Total Operating expenses 2,794 498 682 Loss from operations (2,786) (498) (682) Interest income 28 7 30 ----------- ---------- ----------- Net loss $ (2,758) $ (491) $ (652) =========== ========== =========== Net loss per share Basic and diluted (0.19) $ (0.04) $ (0.04) =========== ========== =========== Weighted average shares 14,447,419 13,593,253 16,718,253 =========== ========== =========== The accompanying notes are an integral part of these financial statements. F-3 XSTREAMIS LIMITED (FORMERLY KNOWN AS XSTREAMIS PLc) STATEMENTS STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA
Common Stock Additional Total -------------------------- Paid-In Accumulated Stockholders' Shares Amount Capital Deficit Equity ---------- ----------- ---------- ----------- ------------ Balance at January 1, 1999 13,593,253 $ 549 $ 5,664 $ (4,953) $ 1,260 Issuance of common stock 3,000,000 121 2,294 - 2,415 Comprehensive loss Cumulative translation adjustment - - - 21 - Net loss for the period - - - (2,758) - ---------- ----------- ---------- ----------- ------------ Total comprehensive loss (2,737) ---------- ----------- ---------- ----------- ------------ Balance at December 31, 1999 16,593,253 670 7,958 (7,690) 938 Issuance of common stock (unaudited) 250,000 9 188 197 Comprehensive loss Cumulative translation adjustment (unaudited) - - - (6) Net loss for the period (unaudited) - - - (652) ---------- ----------- ---------- ----------- ------------ Total comprehensive loss (unaudited) (658) ---------- ----------- ---------- ----------- ------------ Balance at March 31, 2000 (unaudited) 16,843,253 $ 679 $ 8,146 $ (8,348) $ 477 ========== =========== ========== =========== ============
The accompanying notes are an integral part of these financial statements. F-4 XSTREAMIS LIMITED (FORMERLY KNOWN AS XSTREAMIS PLc) STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Three Months Ended Year Ended March 31, December 31, ------------------------ 1999 1999 2000 ----------- ---------- ---------- (unaudited) Cash flows used in operating activities: Net loss $ (2,758) $ (491) $ (652) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 143 34 38 Write-off of investment 504 - - Changes in operating assets and liabilities: Prepaid expenses and other current assets 294 105 1 Accounts payable (157) (83) 91 Accrued liabilities 1,416 34 186 --------- --------- --------- Net cash used in operating activities (603) (401) (336) --------- --------- --------- Cash flows used in investing activities: Purchase of property and equipment (99) (15) (2) --------- --------- --------- Net cash used in investing activities (99) (15) (2) --------- --------- --------- Cash flows provided by financing activities: Proceeds from issuance of common stock 2,427 - 199 --------- --------- --------- Net cash provided by financing activities 2,427 - 199 --------- --------- --------- Effect of exchange rate changes on cash (22) (13) (22) --------- --------- --------- Net increase (decrease) in cash and cash equivalents 1,703 (429) (161) Cash and cash equivalents, beginning of period 490 490 2,193 --------- --------- --------- Cash and cash equivalents at end of period $ 2,193 $ 61 $ 2,032 ========= ========= =========
The accompanying notes are in integral part of these financial statements. F-5 XSTREAMIS LIMITED (FORMERLY KNOWN AS XSTREAMIS PLc) NOTES TO FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE DATA) NOTE 1 - DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a) The Company Xstreamis Limited ("Xstreamis" or "the Company") was incorporated as Valueway Limited on January 18, 1995 as a private limited company. The Company changed its name to Xstreamis Plc, a public limited company on January 26, 1999, previously being known as EPL (Holdings ) Limited. On May 26, 1999 the Company changed its name to Xstreamis Limited, and re-registered as a private limited company. The Company develops switching and routing systems that utilize ATM and Label Switching Routing to provide IP based, multi-service delivery platforms. Xstreamis' technology incorporates new mechanisms for reducing the cost of owning and operating a broadband network. (b) Basis of presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The company has incurred a cumulative net deficit since inception of $7,771 that raises substantial doubt about its ability to continue as going concern. The accompanying financial statements have been prepared assuming the Company continues in existence as a going concern. Continuation of the Company as a going concern is dependent upon the successful conclusion of its acquisition by Tut Systems, Inc. (c) Management's 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 amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. (d) Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited with high credit quality financial institutions. (e) Fair value of financial instruments The Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable are carried at cost. (f) Cash and cash equivalents Cash equivalents consist of investments in and other interest bearing instruments with initial maturities of three months or less. Such investments are carried at cost which approximates fair value. F-6 (g) Property and equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the equipment, generally three years. Assets under capital leases are amortized over the shorter of the lease terms or the estimated useful lives of the assets. (h) Revenue recognition The Company generates revenue from hardware sales. Revenue is recognized when a product has been shipped to the customer, provided remaining obligations are insignificant and collection of the receivable is probable. (i) Stock-based compensation The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board ("APB") Opinion No 25, "Accounting for Stock Issued to Employees," and related interpretations. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income or loss disclosures for employee options granted as if the fair value-based method defined in SFAS No. 123 had been applied. The Company has elected to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123 and complies with the disclosure provisions of Statement of Financial Accounting Standards ("SFAS") No 123, "Accounting for Stock-Based Compensation." Under APB No 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the Company's stock and the exercise price. (j) Income taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of the events that have been included in the consolidated financial statements or tax returns in accordance with SFAS 109, "Accounting for income Taxes" ("SFAS 109"). Deferred tax liabilities and assets are determined on the basis of the difference between the income tax basis of assets and liabilities and their respective financial reporting amounts at tax rates in effect for the periods in which the differences are expected to reverse. The Company provides a valuation allowance for deferred tax assets when it is more likely than not, based on available evidence, that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (k) Comprehensive income (loss) The Company has adopted the provisions of SFAS No 130, "Reporting Comprehensive Income" ("SFAS No 130") effective January 1, 1999. SFAS No 130 requires the presentation of comprehensive income and its components. Comprehensive income is the change in equity from transactions and other events and circumstances other than those resulting from investments by owners and distribution to owners. (l) Impairment of long-lived assets In accordance with SFAS No. 121, Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of, management evaluates the Company's long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During the year to December 31, 1999, an amount of $505 was charged to the profit and loss account in respect of impairment of investments. F-7 (m) Net loss per share The Company computes net loss per Ordinary share in accordance with SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"). Under the provisions of SFAS No. 128, basic net loss per share is computed using the weighted-average number of vested outstanding shares of common stock. Diluted net loss per share is computed using the weighted-average number of shares of vested common stock outstanding and when dilutive, unvested common stock outstanding, potential common shares from options and warrants to purchase common and preferred stock using the treasury stock method and from convertible securities using the as-if- converted basis. All potential common shares have been excluded from the computation of diluted net loss per share for all periods presented because the effect would be antidilutive. (n) Advertising costs The Company recognizes advertising costs in accordance with Statement of Position ("SOP") 93-7 "Reporting on Advertising Costs." As such, the Company expenses the cost of producing advertisements at the time the production occurs, and expenses the cost of communicating advertising in the period in which the advertising space or airtime is used. Advertising expense for the year ended December 31, 1999 and three months ended March 31, 2000 (unaudited) was $41 and $1, respectively. (o) Foreign currency translation For the purposes of preparing these financial statements, the Company selected U.S. dollars as its reporting currency. Assets and liabilities denominated in foreign currencies at fiscal year end are translated at the prevailing exchange rate on that date. The results of operations are translated at the average rate of exchange for each period. Cumulative translation gains and losses are shown as accumulated comprehensive loss in stockholders' equity. (p) Segment information The Company has adopted the provisions of the SFAS 131, "Disclosures about Segments of an Enterprise and Related Information." The Company identifies its operating segments based on business activities and geographical location. During the year to December 31, 1999, the Company operated a single business segment, primarily in the United Kingdom. (q) Recently issued accounting standards In June 1998, the Financial Accounting Standard Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Company will adopt SFAS No. 133 during its year ended December 31, 2001. To date, the Company has not engaged in derivative or hedging activities. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. Management has complied with the guidance in SAB 101. F-8 In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). This Interpretation clarifies the definition of employees for purposes of applying Accounting Practice Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), the criteria for determining whether a plan qualifies as a noncompensatory plan, the accounting consequence of various modifications to the terms of a previously fixed stock option or award, and the accounting for an exchange of stock compensation awards in a business combination. This Interpretation is effective July 1, 2000, but certain conclusions in this Interpretation cover specific events that occur after either December 15, 1998, or January 12, 2000. Management believes that FIN 44 will not have a material effect on the financial position or results of operations of the Company. NOTE 2 - PROPERTY AND EQUIPMENT: Property and equipment consist of the following: December 31, March 31, 1999 2000 ------------ ------------ (unaudited) Computer equipment and purchased software $ 416 $ 406 Office equipment 70 69 ------------ ------------ 486 475 Less Accumulated depreciation (291) (317) ------------ ------------ $ 195 $ 158 ============ ============ NOTE 3 - ACCRUED LIABILITIES: December 31, March 31, 1999 2000 ------------ ------------ (unaudited) Accrued expenses for professional services $ 184 $ 173 Other liabilities 1,252 1,435 ------------ ------------ $ 1,436 $ 1,608 ============ ============ NOTE 4 - STOCKHOLDERS' EQUITY: Common stock The Company's amended and restated Articles of Incorporation authorizes 30,000,000 of common stock for issuance. Each share of common stock is entitled to one vote. The common stockholders are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to the prior rights of all classes of stock outstanding. F-9 Xstreamis Plc Share Option Scheme The Company's Share Option (the "Scheme") authorizes the granting of incentive common stock options to employees at exercise prices no less than the fair market value of the common stock on the day the Eligible Employee's employment with the company commenced, as determined by the Board of Directors. The options may be exercised on or after the first anniversary of the date employment with the company commenced and have a term of 10 years. Options may only be exercised up to 25% of the shares under options after one year, up to 50% between two and three years, 75% between three and four years and 100% after four years. Upon termination of service, an employee's unvested shares will immediately lapse. Shares issuable or issued under the scheme shall not exceed 5% of the issued common stock of the company from time to time. Accounting for stock-based compensation Under APB Opinion No. 25, the Company has recorded no compensation cost related to its stock option plan for the year ended December 31, 1999, and for the three months ended March 31, 2000 (unaudited) because the exercise price of each employee option equals or exceeds the market value of the underlying common stock as of the grant date. Had compensation cost for the Company's plans been determined consistent with the fair value approach enumerated in SFAS No. 123, the Company's pro forma net loss would have been as follows: Three Months Year Ended Ended December 31, March 31, 1999 2000 ------------ ------------ (unaudited) Net loss attributable to common stockholders - as reported $ (2,758) $ (652) Net loss attributable to common stockholders - pro forma $ (2,833) $ (663) Net loss per share attributable to common stockholders - as reported $ (0.17) $ (0.04) Net loss per share attributable to common stockholders - pro forma $ (0.17) $ (0.04) The fair value of employee options granted was estimated on the date of grant using the minimum-value method. The Company did not grant non-employee options during the year ended December 31, 1999 nor during the three months ended March 31, 2000 (unaudited). Weighted-average assumptions used in determining the fair value for grants in 1999 and for the three months ended March 31, 2000 (unaudited) include a risk-free interest rate of 2.18% and an expected life of four years each. Volatility and dividend yields are not factors in the Company's minimum value calculation. The Company has not paid dividends and has no intention to do so. The weighted average fair values of options granted in 1999 was $0.13. A summary of activity under the Company's option plans for the period from January 1, 1999 to March 31, 2000 (unaudited) is presented below. No options were exercised during this period and no options were granted during the three months ended March 31, 2000 (unaudited). No further options are available for grant. Weighted Average Exercise Shares Price -------- -------- Balance as of January 1, 1999 293,619 $ 0.482 Granted 123,000 $ 1.612 -------- Balances as of December 31, 1999 and March 31, 2000 (unaudited) 416,619 $ 0.815 ======== F-10 A breakdown of the Company's outstanding options as of December 31, 1999 is presented below: Options Outstanding --------------------------------------- Weighted Average Weighted Remaining Average Range of Number of Contractual Exercise Exercise Price Shares Life (Years) Price -------------- --------- ------------ -------- $0.403 150,000 3.00 $0.403 $0.564 143,619 8.50 $0.564 $1.612 123,000 9.19 $1.612 $0.403 - $1.612 416,619 6.71 $0.815 NOTE 5 - CONTINGENCIES: The Company is subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company's management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. NOTE 6 - INCOME TAXES: The loss before income taxes comprises wholly UK losses. A reconciliation of taxes on net loss at the statutory rate 30% for the year ended December 31, 1999 and three months ended March 31, 2000 (unaudited), to actual tax expense is as follows: Three Months Year Ended Ended December 31, March 31, 1999 2000 ------------ ------------ (unaudited) Tax at statutory rate $ (827) $ (196) Permanent differences 237 61 Temporary differences on property and equipment 20 7 Change in valuation allowance 570 128 ------------ ------------ $ - $ - ============ ============ SFAS No 109 requires the recognition of deferred tax assets, net of applicable reserves, related to net operating loss carryforward and certain temporary differences. The standard requires recognition of a future tax benefit to the extent that realization of such benefits is more likely than not. Otherwise, a valuation allowance is applied. F-11 The major tax effected components of the Company's net deferred tax assets are as follows: As at As at December 31, March 31, 1999 2000 ------------ ------------ (unaudited) Deferred tax assets: Net operating loss carryforwards $ 1,033 $ 1,154 ------------ ------------ Total deferred tax assets 1,033 $ 1,154 ------------ ------------ Deferred tax liabilities: Temporary differences on property and equipment (39) (33) ------------ ------------ Total deferred tax liabilities (39) (33) ------------ ------------ Less Valuation allowance (994) (1,121) ------------ ------------ Net deferred tax assets $ - $ - ------------ ------------ At December 31, 1999, the Company had net operating loss carryforwards which may be used to offset future taxable income. There is no time limit to the UK carryforwards. Should certain changes in the nature and conduct of the Company's trade occur, there could be a limitation on the utilization of its net operating losses due to the circumstances indicated in Note 7. NOTE 7 - SUBSEQUENT EVENTS (UNAUDITED): On May 26, 2000, the Company was acquired by Tut Systems, Inc. F-12 EX-99.2 3 0003.txt UNAUDITED PRO FORMA FINANCIALS STATEMENTS EXHIBIT 99.2 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF TUT SYSTEMS, INC. AND XSTREAMIS LIMITED The following unaudited pro forma combined financial information for Tut Systems, Inc. (the "Company") consist of the Unaudited Pro Forma Combined Statements of Operations for the three months ended March 31, 2000 and for the year ended December 31, 1999 and the Unaudited Pro Forma Combined Balance Sheets as of March 31, 2000. This pro forma financial information gives effect to Tut's acquisition of Xstreamis Limited ("Xstreamis") to be accounted for as purchase. The Xstreamis acquisition was consummated on May 26, 2000. The stockholders of Xstreamis received 439,137 shares of Tut common stock and $100,000 in cash on a pro-rata basis among the shareholders in exchange for 16,843,253 shares of Xstreamis. Additionally, Tut exchanged fully vested stock options to purchase 10,863 shares of Tut common stock for fully vested stock options to purchase 416,619 of Xstreamis shares. The unaudited pro forma combined balance sheet at March 31, 2000 gives effect to the acquisition as if it had occurred on March 31, 2000, by consolidating the balance sheet of Xstreamis with the balance sheet of Tut at March 31, 2000. The unaudited pro forma combined statement of operations for the three months ended March 31, 2000 gives effect to the acquisition as if it had occurred on January 1, 2000, by consolidating the results of Xstreamis with the results of Tut. The unaudited pro forma combined statements of operations for the year ended December 31, 1999 gives effect to the acquisition as if it had occurred on January 1, 1999, by consolidating the results of operations of Xstreamis with the results of operations of Tut. The unaudited pro forma combined statements of operations are not necessarily indicative of the operating results that would have been achieved had the transaction been in effect as of the beginning of the periods presented and should not be constructed as being representative of future operating results. 1 TUT SYSTEMS, INC. UNAUDITED PRO FORMA COMBINED BALANCE SHEET (IN THOUSANDS)
March 31, 2000 ------------------------------------------------------------------ Pro Forma Tut Xstreamis Adjustments Combined ----------- ----------- ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 157,248 $ 2,032 $ - $ 159,280 Short-term investments 9,246 - - 9,246 Accounts receivable, net 10,378 - - 10,378 Inventory 11,692 - - 11,692 Prepaid expenses and other current assets 3,007 78 - 3,085 ----------- ----------- ----------- ----------- Total current assets 191,571 2,110 - 193,681 Property and equipment, net 4,188 158 - 4,346 Other assets 32,706 - 19,948 A 52,654 ----------- ----------- ----------- ----------- Total assets $ 228,465 $ 2,268 $ 19,948 $ 250,681 =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,286 $ 183 $ - $ 6,469 Accrued expenses and other payables 6,297 1,608 597 A 8,502 Lines of credit 1,571 - - 1,571 Deferred revenue 815 - - 815 ----------- ----------- ----------- ----------- Total current liabilities 14,969 1,791 597 17,357 Deferred revenue, net of current portion 2,338 - - 2,338 Other liabilities 376 - - 376 ----------- ----------- ----------- ----------- Total liabilities 17,683 1,791 597 20,071 ----------- ----------- ----------- ----------- Stockholders' equity: Common stock 15 679 (679) A 15 Additional paid in capital 275,037 8,146 11,682 A 294,865 Note receivable from stockholders (1,372) - - (1,372) Deferred compensation (2,690) - - (2,690) Accumulated comprehensive income 515 15 (15) A 515 Accumulated deficit (60,723) (8,363) 8,363 A (60,723) ----------- ----------- ----------- ----------- Total stockholders' equity 210,782 477 19,351 230,610 ----------- ----------- ----------- ----------- Total liabilities and stockholders' equity $ 228,465 $ 2,268 $ 19,948 $ 250,681 =========== =========== =========== ===========
The accompanying notes are an integral part of these unaudited financial statements. 2 TUT SYSTEMS, INC. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE DATA)
Three Months Ended March 31, 2000 --------------------------------------------------------------------- Tut Xstremis Adjustments Pro Forma ---------- -------- ----------- --------- Revenues Product and services $ 16,164 $ - $ - $ 16,164 License and royalty 310 - - 310 ---------- ---------- ---------- ---------- Total revenues 16,474 - - 16,474 Cost of goods sold 9,137 - - 9,137 ---------- ---------- ---------- ---------- Gross margin 7,337 - - 7,337 ---------- ---------- ---------- ---------- Operating expenses Sales and marketing 4,819 247 - 5,066 Research and development 3,183 74 - 3,257 General and administrative 2,175 361 - 2,536 In-process research and development 800 - - 800 Amortization of intangibles 746 - 1,011 B 1,757 Noncash compensation expense 114 - - 114 ---------- ---------- ---------- ---------- Total operating expenses 11,837 682 1,011 13,530 ---------- ---------- ---------- ---------- Loss from operations (4,500) (682) (1,011) (6,193) Interest expense (310) - - (310) Interest income and other 575 30 - 605 ---------- ---------- ---------- ---------- Loss before income taxes (4,235) (652) (1,011) (5,898) Income tax expense 1 - - 1 ---------- ---------- ---------- ---------- Net loss (4,236) (652) (1,011) (5,899) Dividend accretion on preferred stock - - - - ---------- ---------- ---------- ---------- Net loss attributable to common stockholders $ (4,236) $ (652) $ (1,011) $ (5,899) ========== ========== ========== ========== Net loss per share attributable to common stockholders, basic and diluted $ (0.34) $ (0.04) $ (0.46) ========== ========== ========== Shares used in computing net loss per share attributable to common stockholders, basic and diluted 12,435 16,718 439 12,874 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 3 TUT SYSTEMS, INC. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE DATA)
Year Ended December 31, 1999 -------------------------------------------------------- Tut Xstreamis Adjustments Pro Forma --------- ---------- ----------- ----------- Revenues Product and services $ 26,266 $ 12 $ - $ 26,278 License and royalty 1,541 - - 1,541 --------- ------- ------- ----------- Total revenues 27,807 12 - 27,819 Cost of goods sold 15,459 4 - 15,463 --------- ------- ------- ----------- Gross margin 12,348 8 - 12,356 --------- ------- ------- ----------- Operating expenses Sales and marketing 10,523 469 - 10,992 Research and development 7,618 1,031 - 8,649 General and administrative 4,429 1,294 - 5,723 In-process research and development 2,600 - - 2,600 Amortization of intangibles 52 - 4,044 B 4,096 Noncash compensation expense 455 - - 455 --------- ------- ------- ----------- Total operating expenses 25,677 2,794 4,044 32,515 --------- ------- ------- ----------- Loss from operations (13,329) (2,786) (4,044) (20,159) Interest expense (608) - - (608) Interest income and other (2,204) 28 - 2,232 --------- ------- ------- ----------- Loss before income taxes (11,733) (2,758) (4,044) (18,535) Income tax expense 1 - - 1 --------- ------- ------- ----------- Net loss (11,734) (2,758) (4,044) (18,536) Dividend accretion on preferred stock 235 - - 235 --------- ------- ------- ----------- Net loss attributable to common stockholders $ (11,969) $(2,758) $(4,044) $ (18,771) ========= ======= ======= =========== Net loss per share attributable to common stockholders, basic and diluted $ (1.12) $ (0.19) $ (1.68) ========= ======= =========== Shares used in computing net loss per share attributable to common stockholders, basic and diluted 10,729 14,447 439 11,168 ========= ======= ======= ===========
The accompanying notes are an integral part of these financial statements. 4 TUT SYSTEMS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 1 - BASIS OF PRESENTATION: The pro forma combined financial information give effect to Tut's acquisition of Xstreamis consummated on May 26, 2000. The acquisition will be accounted for as purchase. Xstreamis stockholders and optionholders received an aggregate total of 450,000 shares of Tut common stock and shares subject to options. The pro forma combined financial information has been prepared on the basis of assumptions described in the following notes and include assumptions relating to the allocation of the consideration paid for the assets and liabilities based on estimated of their fair values. The Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 1999 gives effect to the acquisition as if it had taken place on January 1, 1999. The Unaudited Pro Forma Combined Balance Sheet as of December 31, 1999 gives effect to the acquisition as if it had taken place on December 31, 1999. The Unaudited Pro Forma Combined Statement of Operations for the three months ended March 31, 2000 gives effect to the acquisition as if it had taken place on January 1, 2000. The Unaudited Pro Forma Combined Balance Sheet as of March 31, 2000 gives effect to the acquisition as if it had taken place on March 31, 2000. The pro forma combined financial information is not necessarily indicative of what the actual financial results would have been had the transaction taken place as of the beginning of the periods presented and do not purport to be indicative of the results of future operations. NOTE 2 - PURCHASE PRICE ALLOCATION: The unaudited pro forma combined information reflects a total purchase price for the Xstreamis acquisition of $19.8 million. The Xstreamis acquisition was consummated on May 26, 2000. The stockholders of Xstreamis received 439 shares of Tut common stock and $100 in cash on a pro-rata basis among the shareholders in exchange for 16,843 shares of Xstreamis. Additionally, Tut exchanged fully vested stock options to purchase 11 shares of Tut common stock for fully vested stock options to purchase 417 Xstreamis shares. The Company valued the options using the Black-Scholes option pricing model, applying an average expected life of four years, a weighted average risk free rate of 6%, an expected dividend yield of zero percent, a volatility of 80% and a deemed fair value of common stock of $41.75. 5 TUT SYSTEMS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) The Company's allocation of the aggregate purchase price to the tangible and identifiable assets acquired in connection with the Xstreamis acquisition has been based on a preliminary analysis by the Company: March 31, --------- 2000 Net liabilities assumed $ (120) Purchased technology 7,180 Assembled workforce 410 Goodwill 12,358 --------- Total purchase price $ 19,828 ========= Net liabilities assumed are derived as follows: Total stockholders' equity $ 477 Transaction costs accrued (597) --------- Total $ (120) ========= 6 TUT SYSTEMS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE 3 - UNAUDITED PRO FORMA COMBINED NET LOSS PER SHARE: The net loss per share and shares used in computing the net loss per share for the three months ended March 31, 2000 and for the year ended December 31, 1999 is based upon the Tut historical weighted average common shares outstanding together with the shares issued in the transactions as if such shares were issued January 1, 2000 and January 1, 1999, respectively. Common stock issuable upon the conversion of convertible preferred stock and exercise of Tut stock options and warrants has been excluded as the effect would be anti-dilutive. NOTE 4 - PURCHASE ADJUSTMENTS: The following adjustments were applied to the pro forma combined financial information: (A) To reflect the issuance of shares in the acquisition and to record estimated transactions costs and other assets and liabilities at their fair values. (B) To reflect amortization of goodwill and other intangibles related to the acquisition over their estimated useful lives of five years for goodwill and purchased technology and three years for assembled workforce. 7 -----END PRIVACY-ENHANCED MESSAGE-----