-----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, McX4V9o2Z+TQ+Q1rzoKYqq4juGlT1kkhq8309s0R5a2OTL4PqRGsPxWzRsVP2+1x OO15HelmK2Uwr4Q9aLI+DQ== 0000950135-96-003581.txt : 19960814 0000950135-96-003581.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950135-96-003581 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960617 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHIVA CORP CENTRAL INDEX KEY: 0000879136 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 042889151 STATE OF INCORPORATION: MA FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24918 FILM NUMBER: 96611200 BUSINESS ADDRESS: STREET 1: 28 CROSBY DR CITY: BEDFORD STATE: MA ZIP: 01730 BUSINESS PHONE: 6172708300 MAIL ADDRESS: STREET 1: 28 CROSBY DR CITY: BEDFORD STATE: MA ZIP: 01730 8-K/A 1 AMENDMENT NO. 2 FOR SHIVA CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 --------------- FORM 8-K/A AMENDMENT NO. 2 TO FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 17, 1996 SHIVA CORPORATION (Exact name of Registration as specified in its charter) Massachusetts 0-24918 04-2889151 (State or other (Commission (IRS Employer jurisdiction of File Identification Incorporation) Number) No.) 28 Crosby Drive Bedford, Massachusetts 01730 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 270-8300 Page 1 of 3 Pages Exhibit Index appears on Page 4 2 Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements of Business Acquired This item is amended to provide revised financial statements of Airsoft, Incorporated ("Airsoft"), and as so amended this item shall read in its entirety as follows: "The following audited financial statements of Airsoft, together with the report of Deloitte and Touche LLP, are included herein as Exhibit 99.1: Statements of Operations for the years ended December 31, 1995, 1994, and 1993. Statements of Stockholders' Equity for the years ended December 31, 1995, 1994, and 1993. Statements of Cash Flows for the years ended December 31, 1995, 1994, and 1993. (b) Pro Forma Financial Information This item is amended to provide the following unaudited pro forma consolidated financial statements, which are filed as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by this reference. Unaudited Pro Forma Combined Balance Sheet at March 30, 1996. Unaudited Pro Forma Combined Statement of Operations for the years ended December 31, 1995, December 31, 1994, and January 1, 1994 and the three months ended March 30, 1996 and April 1, 1995. (c) Exhibits Exhibit No. Description ----------- ----------- 23.1 Consent of Deloitte & Touche LLP 99.1 Balance Sheets as of December 31, 1995 and December 31, 1994. Statements of Operations for the years ended December 31, 1995, 1994, and 1993. Statements of Stockholders' Equity for the years ended December 31, 1995, 1994, and 1993. Statements of Cash Flows for the years ended December 31, 1995, 1994, and 1993. 99.2 Unaudited interim Balance Sheet at March 30, 1996. Unaudited interim Statement of Operations for the three months ended March 31, 1996 and March 31, 1995. Unaudited interim Statement of Cash Flows for the three months ended March 31, 1996 and March 31, 1995. 99.3 Unaudited Pro Forma Combined Balance Sheet at March 30, 1996. Unaudited Pro Forma Combined Statement of Operations for the years ended December 30, 1995, December 31, 1994, and January 1, 1994, and the three months ended March 30, 1996 and April 1, 1995. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused the report to be signed on its behalf by the undersigned authorized officer. SHIVA CORPORATION August 13, 1996 /s/ Cynthia M. Deysher __________________________________ By: Cynthia M. Deysher Senior Vice President, Finance and Administration and Chief Financial Officer 4 Exhibit Index Exhibit No. Description ----------- ----------- 23.1 Consent of Deloitte & Touche LLP 99.1 Balance Sheets as of December 31, 1995 and December 31, 1994. Statements of Operations for the years ended December 31, 1995, 1994, and 1993. Statements of Stockholders' Equity for the years ended December 31, 1995, 1994, and 1993. Statements of Cash Flows for the years ended December 31, 1995, 1994, and 1993. 99.2 Unaudited interim Balance Sheet at March 30,1996. Unaudited interim Statement of Operations for the three months ended March 31, 1996 and March 31, 1995. Unaudited interim Statement of Cash Flows for the three months ended March 31, 1996 and March 31, 1995. 99.3 Unaudited Pro Forma Combined Balance Sheet at March 30, 1996. Unaudited Pro Forma Combined Statement of Operations for the years ended December 30, 1995, December 31, 1994, and January 1, 1994, and the three months ended March 30, 1996 and April 1, 1995. EX-23.1 2 CONSENT OF DELOITTE & TOUCHE LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement Nos. 33-86514, 333-04231 and 333-08561 on Form S-8 of Shiva Corporation of our report dated March 28, 1996 (June 16, 1996 as to Note 8) relating to the financial statements of AirSoft, Inc., appearing in Amendment No. 2 to the Current Report in Form 8-K/A of Shiva Corporation dated August 13, 1996. /s/ DELOITTE & TOUCHE LLP San Jose, California August 9, 1996 EX-99.1 3 CONSOLIDATED BALANCE SHEETS DATED 12/31/94 & 95 1 EXHIBIT 99.1 INDEPENDENT AUDITORS' REPORT To the Board of Directors AirSoft, Inc.: We have audited the accompanying balance sheets of AirSoft, Inc. as of December 31, 1995 and 1994, and the related statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. 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 statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of AirSoft, Inc. as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. /s/ Deloitte & Touche, LLP March 28, 1996 (June 16, 1996 as to Note 8) 2 AIRSOFT, INC. BALANCE SHEETS
DECEMBER 31, ----------------------------- 1995 1994 ----------- ----------- ASSETS Current assets: Cash and cash equivalents .......................................... $ 849,767 $ 2,638,010 Accounts receivable (no allowance for doubtful accounts in 1995 and 1994) .............................. 2,308,883 31,189 Prepaid expenses and other current assets ........................... 14,713 22,030 ----------- ----------- Total current assets ........................................... 3,173,363 2,691,229 Property and equipment, net .......................................... 111,169 80,595 Other assets ......................................................... -- 23,453 ----------- ----------- Total ................................................................ $ 3,284,532 $ 2,795,277 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ................................................... $ 80,774 $ 118,268 Accrued expenses ................................................... 232,067 43,045 Deferred revenue ................................................... 2,305,328 -- ----------- ----------- Total current liabilities .................................... 2,618,169 161,313 ----------- ----------- Stockholders' equity: Convertible preferred stock - $.001 par value; authorized, 7,000,000 shares; 6,739,514 shares outstanding, liquidation value of $4,544,050 ...................... 4,486,127 4,486,127 Common stock - $.001 par value; authorized, 23,000,000 shares; 5,012,500 and 5,000,000 shares outstanding in 1995 and 1994, respectively ................ 486,667 481,667 Accumulated deficit ................................................ (4,306,431) (2,333,830) ----------- ----------- Total stockholders' equity ................................... 666,363 2,633,964 ----------- ----------- Total ................................................................ $ 3,284,532 $ 2,795,277 =========== ===========
See notes to financial statements. -2- 3 AIRSOFT, INC. STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, ------------------------------------------- 1995 1994 1993 ---------- ---------- --------- Product sales.......................... $ 859,736 $ 86,720 $ 3,361 ---------- ---------- --------- Costs and expenses: Cost of sales....................... 35,327 15,632 - Research and development............ 1,176,450 773,406 280,989 Sales and marketing................. 1,050,930 873,172 85,634 General and administrative.......... 635,922 301,569 129,681 ---------- ---------- --------- Total costs and expenses...... 2,898,629 1,963,779 496,304 ---------- ---------- --------- Operating loss......................... (2,038,893) (1,877,059) (492,943) Other income........................... 66,292 36,172 - ---------- ---------- --------- Net loss............................... ($1,972,601) ($1,840,887) ($492,943) ========== ========== ========= Net loss per common share.............. $ (0.39) $ (0.37) $ (0.12) ========== ========== ========= Shares used in computation............. 5,012,500 5,000,000 4,265,753 ---------- ---------- ---------
See notes to financial statements. -3- 4 AIRSOFT, INC. - ------------------------------------------------------------------------------- STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 1995, 1994 and 1993
Convertible Preferred Stock Common Stock -------------------------- --------------------------- Shares Amount Shares Amount ---------- ----------- ---------- ---------- Issuance of common stock at $.01 per share for technology and notes................................. 3,166,667 $ 31,667 Issuance of common stock at $.15 to $.40 per share for cash and notes............................. 1,833,333 450,000 Notes receivable, exchanged for consulting services........ Net loss................................................... ---------- ----------- --------- --------- BALANCES, December 31, 1993................................ -- -- 5,000,000 481,667 Issuance of Series A convertible preferred stock at $.5286 per share for cash, net of issuance costs of $23,033................... 2,885,000 $1,501,978 Issuance of Series B convertible preferred stock at $.7822 per share for cash, net of issuance costs of $30,853................... 3,854,514 2,984,149 Collection of notes receivable............................. Net loss................................................... ---------- ----------- --------- --------- BALANCES, December 31, 1994................................ 6,739,514 4,486,127 5,000,000 481,667 Issuance of common stock at $.40 per share for cash........ 12,500 5,000 Net loss................................................... ---------- ----------- --------- --------- BALANCES, December 31, 1995................................ 6,739,514 $4,486,127 5,012,500 $486,667 ========== =========== ========= ========= Notes Receivable from Accumulated Stockholders Deficit Total ------------ ------------ ----- Issuance of common stock at $.01 per share for technology and notes................................. $ (7,619) $ 24,048 Issuance of common stock at $.15 to $.40 per share for cash and notes............................. (62,272) 125,000 Notes receivable, exchanged for consulting services........ 6,352 6,352 Net loss................................................... $ (492,943) (492,943) --------- ----------- ----------- BALANCES, December 31, 1993................................ (63,539) (492,943) (74,815) Issuance of Series A convertible preferred stock at $.5286 per share for cash, net of issuance costs of $23,033................... 1,501,978 Issuance of Series B convertible preferred stock at $.7822 per share for cash, net of issuance costs of $30,853................... 2,984,149 Collection of notes receivable............................. 63,539 63,539 Net loss................................................... (1,840,887) (1,840,887) --------- ----------- ----------- BALANCES, December 31, 1994................................ -- (2,333,830) 2,633,964 Issuance of common stock at $.40 per share for cash........ 5,000 Net loss................................................... (1,972,601) (1,972,601) --------- ----------- ----------- BALANCES, December 31, 1995................................ $ -- $(4,306,431) $ 666,363 ========= =========== ===========
See notes to financial statements. - 4 - 5 AIRSOFT, INC. STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, ------------------------------------------- 1995 1994 1993 ----------- ----------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss........................................ $(1,972,601) $(1,840,887) $(492,943) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation................................. 51,290 21,533 5,233 Loss on disposal of property................. 28,785 -- -- Technology acquired through issuance of common stock expensed..................... -- -- 24,048 Notes receivable exchanged for consulting services.................................. -- -- 6,352 Changes in assets and liabilities: Accounts receivable....................... (2,277,694) (31,189) -- Prepaid expenses and other assets......... 30,770 (32,015) (13,468) Accounts payable.......................... (37,494) 66,160 52,108 Accrued expenses.......................... 189,022 (38,892) 81,937 Deferred revenue.......................... 2,305,328 -- -- ----------- ------------ --------- Net cash used in operating activities.. (1,682,594) (1,855,290) (336,733) ----------- ------------ --------- CASH FLOWS FROM INVESTING ACTIVITIES -- Purchases of property and equipment............. (110,649) (71,541) (35,820) ----------- ------------ --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock.......... 5,000 -- 387,728 Proceeds from issuance of preferred stock....... -- 4,486,127 -- Collection of notes receivable.................. -- 63,539 -- ----------- ------------ --------- Net cash provided by financing activities.......................... 5,000 4,549,666 387,728 ----------- ------------ --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..................................... (1,788,243) 2,622,835 15,175 CASH AND CASH EQUIVALENTS: Beginning of year............................... 2,638,010 15,175 -- ----------- ----------- --------- End of year..................................... $ 849,767 $ 2,638,010 $ 15,175 =========== =========== ========= NONCASH FINANCING ACTIVITIES -- Issuance of common stock for notes receivable... $ -- $ -- $ 69,891 =========== =========== =========
See notes to financial statements. -5- 6 AIRSOFT, INC. NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1. FORMATION AND BUSINESS AND NATURE OF OPERATIONS The Company was incorporated on January 5, 1993. The Company develops, markets, sells and supports remote access acceleration software (Powerburst) for dial-in computer system networks. Powerburst, accounting for the majority of the Company's revenue to date, accelerates a wide range of applications, including e-mail products, file-system-based databases, spreadsheets and word processors, over remote node servers to help customers increase productivity and lower telecommunication and remote node equipment costs. The principal market for Powerburst has been North America. 2. SIGNIFICANT ACCOUNTING POLICIES Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect reported amounts of assets, liabilities, revenues and expenses as of the dates and for the periods presented. Actual results could differ from those estimates. Concentrations of Credit Risk - Financial instruments which potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Cash and cash equivalent balances consist of deposits and money market funds held with local U.S. commercial banks. The Company performs credit evaluations of its customers and generally does not require collateral on accounts receivable as the majority of the Company's customers are large, well established U.S. companies. One customer accounted for 97% and 61% of the accounts receivable balance and product sales, respectively, at December 31, 1995. Additionally, one other customer accounted for approximately 21% of product sales at December 31, 1995. At December 31, 1994, another customer represented 55% and 20% of accounts receivable and product sales, respectively. Property and Equipment - Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets, generally three years. Revenue Recognition - The Company recognizes product sales upon shipment provided that any remaining obligations are insignificant and collection is probable. Insignificant vendor obligations are accrued and charged to cost of product sales. Revenue from customer support contracts and from contracts with customer support bundled with the software license is recognized ratably over the contract period, which is typically one year. Unearned amounts are recorded as deferred revenue. Research and Development - Development costs incurred for the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility is established. After technological feasibility is established, any additional costs are capitalized. Such costs are stated at the lower of cost or net realizable value. Since net realizable value and economic life of the Company's products are not currently determinable, all development costs have been expensed as incurred to date. -6- 7 Income Taxes - Deferred taxes are accounted for using the asset and liability approach. Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as tax credit carryforwards, net of valuation allowance to reduce deferred tax assets to amounts that are more likely than not to be realizable. Fair Value of Financial Instruments - Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures about Fair Value of Financial Instruments," requires the disclosure of fair value information about both on and off balance sheet financial instruments where it is practicable to estimate the value. The Company believes that the carrying amount reported in the balance sheet for financial instruments at December 31, 1995 approximates fair value. Recently Issued Accounting Pronouncements - The Company is required to adopt SFAS No. 123, "Accounting for Stock-Based Compensation," in fiscal 1996. SFAS No. 123 establishes accounting and disclosure requirements using a fair value method of accounting for stock-based employee compensation plans. Under SFAS No. 123, the Company may either adopt the new fair value based accounting method or continue the intrinsic value based method and provide pro forma disclosures of net income as if the accounting provisions requirements of SFAS No. 123 had been adopted. The Company plans to adopt only the disclosure requirements of SFAS No. 123; therefore, such adoption will have no effect on the Company's consolidated operations or cash flows. Reclassifications - Certain reclassifications have been made to the 1994 and 1993 amounts to conform with the 1995 presentation. Net loss per common share is computed using the weighted average number of common shares outstanding. Because there was a net loss in each year presented, common stock equivalents (none in 1993, 3,684,022 in 1994 and 6,854,514 in 1995) were not included in the calculation of net loss per share as their impact would be anti-dilutive. 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following:
1995 1994 ------------ ------------ Furniture and fixtures......................... $ 31,899 $ 13,289 Office equipment............................... 157,326 94,072 -------- -------- 189,225 107,361 Accumulated depreciation....................... (78,056) (26,766) -------- -------- Property and equipment, net.................... $111,169 $ 80,595 ======== ========
-7- 8 4. STOCKHOLDERS' EQUITY Convertible Preferred Stock Convertible preferred stock consists of the following:
Shares --------------------------- Designated Outstanding Amount ---------- ----------- ---------- Series A 2,885,000 2,885,000 $1,501,978 Series B 4,115,000 3,854,514 2,984,149 ---------- ----------- ---------- Total 7,000,000 6,739,514 $4,486,127 ========== =========== ==========
Significant terms of the convertible preferred stock are as follows: * Each share is convertible into one share of common stock. Such shares will be converted automatically upon an underwritten public offering of the Company's common stock meeting certain criteria. * Each share has the right to one vote for each share of common stock into which such stock is convertible. Preferred shareholders are entitled to elect one member of the Company's directors. * In the event of liquidation, dissolution or winding up of the Company, shareholders are entitled to receive $.5286 per share for Series A and $.7822 per share for Series B (subject to adjustment for events of dilution) plus all declared but unpaid dividends, prior to any distribution to the common shareholders (no dividends have been declared through December 31, 1995). * Dividends may be declared at the discretion of the Board of Directors and are noncumulative. Dividends of $.04 per share for Series A and $.055 per share for Series B must be declared and paid prior to any dividends on common stock. Common Stock The Company has the right to repurchase 782,807 shares of common stock, at the original purchase price, previously sold to employees and directors under stock purchase agreements. This right expires over a four-year period. At December 31, 1995, the Company had reserved shares of common stock for issuance as follows: Conversion of outstanding preferred stock.............. 6,739,514 Issuance under stock option plan....................... 2,030,063 --------- Total.................................................. 8,769,577 =========
-8- 9 Stock Option Plan The Company's stock option plan authorized the issuance of incentive stock options (ISO) and nonstatutory stock options (NSO) to purchase up to 1,692,563 shares of common stock. ISO's may be granted at prices not less than the fair market value at the date of grant (85% of fair market value for an NSO), or, 110% in the case of a shareholder owning ten percent or more of the Company's outstanding stock. Options become exercisable in installments (generally ratably over four years) and expire ten years from the date of grant. Activity under this plan is as follows:
Outstanding Stock Options Outstanding Stock Options ------------------------ Shares Number Price Available of Shares Per Share --------- --------- ---------- Reserved for issuance .............................. 851,311 Granted ............................................ (120,000) 120,000 $.30 -------- --------- Balances, December 31, 1993 ........................ 731,311 120,000 .30 Additional shares reserved for issuance ............ 841,252 Granted ............................................ (638,500) 638,500 .40 Canceled ........................................... 60,000 (60,000) .40 -------- --------- Balances, December 31, 1994 ........................ 994,063 698,500 .30 - .40 -------- --------- Granted ............................................ (845,872) 845,872 .40 Exercised .......................................... -- (12,500) .40 Canceled ........................................... 180,000 (180,000) .40 -------- --------- Balances, December 31, 1995 ........................ 328,191 1,351,872 $.30 - .40 ======== ========= ==========
At December 31, 1995, options to purchase 176,073 shares of common stock were exercisable. Other Stock Options During 1993, the Company granted to certain key employees options to purchase 650,000 shares of common stock at an exercise price of $.30 per share. Such options vest over a period of four years. During 1994, 300,000 options were canceled. Of the remaining 350,000 options outstanding 298,958 were vested at December 31, 1995. -9- 10 5. OPERATING LEASES The Company leases its facility under an operating lease which expires in June 1996. The Company also leases various equipment under operating leases with terms expiring through March 1998. Following is a schedule of future minimum rental payments under noncancelable operating leases at December 31, 1995.
Years Ending December 31, ------------ 1996...................................... $44,305 1997...................................... 1,880 1998...................................... 184 ------- Total......................................... $46,369 =======
Rent expense under operating leases was $85,222, $75,942 and $22,192 for the years ended December 31, 1995, 1994 and 1993, respectively. 6. INCOME TAXES Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards. The tax effects of significant items consisting of the Company's deferred taxes are as follows:
DECEMBER 31, ------------------------- 1995 1994 ----------- --------- Deferred tax assets: Net operating loss carryforwards.... $ 1,482,000 $ 836,000 Capitalized research and development expenses............. 88,000 42,000 Research and development credits.... 110,000 80,000 Other............................... 17,000 9,000 ----------- --------- $ 1,697,000 967,000 Valuation allowance................... (1,697,000) (967,000) ----------- --------- Total................................. $ -- $ -- =========== =========
The Company provided a valuation allowance in full against the net deferred income tax assets at December 31, 1995 and 1994 due to uncertainties regarding the Company's ability to generate sufficient taxable income to utilize the deferred tax assets. The net increase in the total valuation allowance for the years ended December 31, 1995 and 1994 was $730,000 and $797,000, respectively. At December 31, 1995, the Company had federal net operating loss carryforwards of approximately $4,075,000 which expire through 2010. In addition, the Company had California net operating loss carryforwards of approximately $1,600,000 which expire through 2000. The extent to which the loss carryforwards can be used to offset future taxable income may be limited in the event of an "ownership change" as defined by the Internal Revenue Code. -10- 11 7. BENEFIT PLAN Effective January 1, 1995, the Company adopted a 401(k) plan (the "Plan") to provide retirement benefits for substantially all of its employees. Each participant in the Plan may elect to contribute up to 15% of their annual compensation to the Plan, subject to statutory limits. The Company, at its discretion, may make annual contributions to the Plan. The Company has made no contributions to the Plan through December 31, 1995. 8. SUBSEQUENT EVENT On June 17, 1996, all shares of common and preferred stock of the Company were acquired by Shiva Corporation (Shiva) in exchange for 691,587 shares of Shiva common stock. Subsequent to this date, the Company is a wholly-owned subsidiary of Shiva. * * * * * -11- EX-99.2 4 UNAUDITED INTERIM BALANCE SHEET DATED 3/30/96 1 EXHIBIT 99.2 AIRSOFT INCORPORATED BALANCE SHEET (IN THOUSANDS, EXCEPT SHARE RELATED DATA)
MARCH 30, 1996 --------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 1,286 Accounts receivable, net 1,159 Inventories 12 ------- Total current assets 2,457 Property, plant and equipment, net 136 Other assets 6 ------- Total assets $ 2,599 ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 113 Accrued expenses 169 Deferred revenue 1,677 ------- Total liabilities 1,959 Stockholders' equity: Preferred stock, $.001 par value; 7,000,000 shares authorized, 6,739,514 shares oustanding 4,486 Common stock, $.001 par value; 23,000,000 shares authorized, 5,012,500 shares outstanding 487 Accumulated deficit (4,333) ------- Total stockholders' equity 640 ------- Total liabilities and stockholders' equity $ 2,599 =======
The accompanying notes are an integral part of the financial statements. 2 AIRSOFT INCORPORATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED ----------------------- MARCH 30, MARCH 31, 1996 1995 --------- - -------- Revenues $ 796 $ 34 Cost of revenues - 11 ------ ------ Gross profit 796 23 ------ ------ Operating expenses: Research and development 363 298 Selling, general and administrative 470 530 ------ ------ Total operating expenses 833 828 ------ ------ Loss from operations (37) (805) Interest income 10 30 ------ ------ Net loss $ (27) $ (775) ====== ====== Net loss per share $(0.01) $(0.15) ====== ====== Shares used in computing net loss per share 5,013 5,007 ====== ======
The accompanying notes are an integral part of the financial statements. 3 AIRSOFT INCORPORATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (IN THOUSANDS)
THREE MONTHS ENDED --------------------- MARCH 30, MARCH 31, 1996 1995 --------------------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (27) $ (775) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 15 13 Loss on disposal of property - 29 Changes in assets and liabilities: Accounts receivable 1,150 (18) Inventories (12) Prepaid expenses and other current assets 15 15 Accounts payable 32 (1) Accrued expenses (63) 42 Deferred revenue (628) - ------ ------ Net cash provided by (used in) operating activities 482 (695) ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (40) (52) ------ ------ Change in other assets (6) - ------ ------ Net cash used by investing activities (46) (52) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of stock options and warrants - 5 ------ ------ Net increase (decrease) in cash and cash equivalents 436 (742) Cash and cash equivalents, beginning of period 850 2,638 ------ ------ Cash and cash equivalents, end of period $1,286 $1,896 ====== ======
The accompanying notes are an integral part of the financial statements 4 AIRSOFT, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION: The accompanying unaudited financial statements include the accounts of AirSoft, Inc., and have been prepared by AirSoft, Inc. in accordance with generally accepted accounting principles. In the opinion of management, these unaudited financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair presentation of the Company's financial position, results of operations and cash flows at the dates and for the periods indicated. The results of operations for the three-months ended March 30, 1996 are not necessarily indicative of the results expected for the full fiscal year. While the Company believes that the disclosures presented are adequate to make these financial statements not misleading, these financial statements should be read in conjunction with the audited financial statements of AirSoft, Inc. included elsewhere in this Form 8-K/A. 2. NET LOSS PER SHARE: Net loss per share is calculated based on the weighted average number of common shares and common equivalent shares assumed outstanding during the period. Because there was a net loss in each period presented, common stock equivalents were not included in the calculation of net loss per share as their impact would be anti-dilutive. 3. CASH AND CASH EQUIVALENTS: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents, and those with maturities of greater than three months as short-term investments. At March 30, 1996 all of the Company's cash was invested in bank and money market deposit accounts. 4. SUBSEQUENT EVENT: On June 17, 1996, all shares of common and preferred stock of the Company were acquired by Shiva Corporation in exchange for 691,587 shares of Shiva Corporation common stock. Subsequent to this date, the Company is a wholly-owned subsidiary of Shiva Corporation. EX-99.3 5 UNAUDITED PRO FORMA COMBINED BALANCE SHEET 3/30/96 1 EXHIBIT 99.3 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following unaudited pro forma combined financial statements assume a business combination between Shiva and AirSoft, Inc. accounted for as a pooling of interests and are based on the respective historical financial statements and the notes thereto. The unaudited pro forma combined balance sheet gives effect to the AirSoft Acquisition as if it had occurred on March 30, 1996, combining the balance sheets of Shiva and AirSoft at March 30, 1996. The unaudited pro forma combined statements of operations give effect to the AirSoft Acquisition as if it had occurred at the beginning of each of the periods presented. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the AirSoft Acquisition had been consummated at the beginning of the earliest period presented, nor is it necessarily indicative of future operating results or financial position. These unaudited pro forma combined financial statements are based on, and should be read in conjunction with, Shiva's Annual Report on Form 10-K for the year ended December 30, 1995 and quarterly report on Form 10-Q for the quarter ended March 30, 1996, incorporated herein by reference, and the financial statements of AirSoft, Inc. included elsewhere in this Form 8-K/A. 2 UNAUDITED PRO FORMA COMBINED BALANCE SHEET MARCH 30, 1996 (IN THOUSANDS)
HISTORICAL PRO FORMA (1) ------------------- --------------------- SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED -------- ------- ----- ----------- -------- Assets Current assets: Cash and cash equivalents $ 93,398 $ 1,286 $ - $ 94,684 Short-term investments 7,065 - - 7,065 Accounts receivable, net 26,524 1,159 (2) (1,120) 26,563 Inventories 11,591 12 11,603 Prepaid expenses and other current assets 2,264 - 2,264 -------- ------- ------- -------- Total current assets 140,842 2,457 (1,120) 142,179 Property, plant and equipment, net 15,124 136 - 15,260 Deferred income taxes 548 - - 548 Other assets 1,388 6 - 1,394 -------- ------- ------- -------- Total assets $157,902 $ 2,599 $(1,120) $159,381 ======== ======= ======= ======== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt and capital lease obligations $ 588 $ - $ - $ 588 Accounts payable 10,403 113 - 10,516 Accrued compensation and benefits 4,366 57 - 4,423 Accrued expenses 8,100 112 - 8,212 Deferred revenue 3,609 1,677 (2) (1,120) 4,166 -------- ------- ------- -------- Total current liabilities 27,066 1,959 (1,120) 27,905 Long-term debt and capital lease obligations 244 - - 244 Other long-term obligations 391 - - 391 Deferred income taxes 232 - - 232 -------- ------- ------- -------- Total liabilities 27,933 1,959 (1,120) 28,772 -------- ------- ------- -------- Stockholders' equity: Convertible preferred stock - 4,486 (3) (4,486) - Common stock 277 5 (3) 2 284 Additional paid-in capital 131,922 482 (3) 4,484 136,888 Unrealized gains on investments 87 - - 87 Cumulative translation adjustment (605) - - (605) Accumulated deficit (1,712) (4,333) - (6,045) -------- ------- ------- -------- Total stockholders' equity 129,969 640 - 130,609 -------- ------- ------- -------- Total liabilities and stockholders' equity $157,902 $ 2,599 $(1,120) $159,381 ======== ======= ======= ========
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements. 3 UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED MARCH 30, 1996
HISTORICAL PRO FORMA (1) ------------------- ---------------------- SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED ------- ------- ----- ----------- -------- Revenues $42,513 $ 796 $ - $43,309 Cost of revenues 17,385 - - 17,385 ------- ------ ----- ------- Gross profit 25,128 796 - 25,924 ------- ------ ----- ------- Operating expenses: Research and development 4,831 363 5,194 Selling, general and administrative 14,236 470 14,706 ------- ------ ----- ------- Total operating expenses 19,067 833 - 19,900 ------- ------ ----- ------- Income (loss) from operations 6,061 (37) - 6,024 Interest income 1,334 10 - 1,344 Interest expense (117) - - (117) ------- ------ ----- ------- Income (loss) before income taxes 7,278 (27) - 7,251 Income tax provision 2,912 - - 2,912 ------- ------ ----- ------- Net income (loss) $ 4,366 $ (27) $ - $ 4,339 ======= ====== ===== ======= Net income (loss) per share $ 0.14 $(0.01) (4) $ 0.14 ======= ====== ======= Shares used in computing net income (loss) per share 30,230 5,013 30,525 ======= ====== =======
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements. 4 UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED APRIL 1, 1995
HISTORICAL PRO FORMA (1) ------------------- ---------------------- SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED ------- ------- ----- ----------- -------- Revenues $25,703 $ 34 $- $25,737 Cost of revenues 11,067 11 - 11,078 ------- ------ -- ------- Gross profit 14,636 23 - 14,659 ------- ------ -- ------- Operating expenses: Research and development 2,522 298 2,820 Selling, general and administrative 9,221 530 9,751 ------- ------ -- ------- Total operating expenses 11,743 828 - 12,571 ------- ------ -- ------- Income (loss) from operations 2,893 (805) - 2,088 Interest income 476 30 - 506 Interest expense (247) - - (247) ------- ------ -- ------- Income (loss) before income taxes 3,122 (775) - 2,347 Income tax provision 965 - - 965 ------- ------ -- ------- Net income (loss) $ 2,157 $ (775) $- $ 1,382 ======= ====== == ======= Net income (loss) per share $ 0.08 $(0.15) (4) $ 0.05 ======= ====== ======= Shares used in computing net income (loss) per share 26,766 5,007 27,061 ======= ====== =======
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements. 5 UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) TWELVE MONTHS ENDED DECEMBER 30, 1995
HISTORICAL PRO FORMA (1) -------------------- ----------------------- SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED -------- ------- ----- ----------- -------- Revenues $117,721 $ 860 $- $118,581 Cost of revenues 49,151 35 - 49,186 -------- ------- -- -------- Gross profit 68,570 825 - 69,395 -------- ------- -- -------- Operating expenses: Research and development 13,610 1,177 14,787 Selling, general and administrative 42,975 1,687 44,662 Merger expenses 13,986 - 13,986 -------- ------- -- -------- Total operating expenses 70,571 2,864 - 73,435 -------- ------- -- -------- Loss from operations (2,001) (2,039) - (4,040) Interest income 2,213 66 - 2,279 Interest expense (705) - - (705) -------- ------- -- -------- Loss before income taxes (493) (1,973) - (2,466) Income tax provision 2,386 - - 2,386 -------- ------- -- -------- Net loss $ (2,879) $(1,973) $- $ (4,852) ======== ======= == ======== Net loss per share $ (0.11) $ (0.39) (4) $ (0.18) ======== ======= ======== Shares used in computing net loss per share 26,645 5,013 26,940 ======== ======= ========
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements. 6 UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) TWELVE MONTHS ENDED DECEMBER 31, 1994
HISTORICAL PRO FORMA (1) -------------------- ---------------------- SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED ------- ------- ----- ----------- -------- Revenues $80,971 $ 87 $ - $81,058 Cost of revenues 34,784 16 - 34,800 ------- ------- ----- ------- Gross profit 46,187 71 - 46,258 ------- ------- ----- ------- Operating expenses: Research and development 9,199 773 9,972 Selling, general and administrative 31,252 1,175 32,427 ------- ------- ----- ------- Total operating expenses 40,451 1,948 - 42,399 ------- ------- ----- ------- Income (loss) from operations 5,736 (1,877) - 3,859 Interest income 188 36 - 224 Interest expense (1,122) - - (1,122) ------- ------- ----- ------- Income (loss) before income taxes 4,802 (1,841) - 2,961 Income tax provision 921 - - 921 ------- ------- ----- ------- Net income (loss) $ 3,881 $(1,841) $ - $ 2,040 ======= ======= ===== ======= Net income (loss) per share $ 0.17 $ (0.37) (4) $ 0.09 ======= ======= ======= Shares used in computing net income (loss) per share 22,254 5,000 22,548 ======= ======= =======
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements. 7
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) TWELVE MONTHS ENDED JANUARY 1, 1994 HISTORICAL PRO FORMA (1) -------------------- ---------------------- SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED ------- ------- ----- ----------- -------- Revenues $61,259 $ 3 $ - $61,262 Cost of revenues 27,969 - - 27,969 ------- ------ ----- ------- Gross profit 33,290 3 - 33,293 ------- ------ ----- ------- Operating expenses: Research and development 7,881 281 8,162 Selling, general and administrative 23,152 215 23,367 ------- ------ ----- ------- Total operating expenses 31,033 496 - 31,529 ------- ------ ----- ------- Income (loss) from operations 2,257 (493) - 1,764 Interest expense (1,048) - - (1,048) ------- ------ ----- ------- Income (loss) before income taxes 1,209 (493) - 716 Income tax provision 300 - - 300 ------- ------ ----- ------- Net income (loss) $ 909 $ (493) $ - $ 416 ======= ====== ===== ======= Net income (loss) per share $ 0.05 $(0.12) (4) $ 0.02 ======= ====== ======= Shares used in computing net income (loss) per share 16,538 4,266 16,789 ======= ====== =======
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements. 8 Notes to Unaudited Pro Forma Combined Financial Statements 1. The unaudited pro forma combined financial statements of Shiva (the "Company") and AirSoft give retroactive effect to the acquisition of AirSoft which is being accounted for as a pooling of interests, and as a result, such statements are presented as if the combining companies had been combined for all periods presented. The pro forma financial data combines the Company's financial data for the three months ended March 30, 1996 and April 1, 1995, and the three years ended December 30, 1995, December 31, 1994 and January 1, 1994 with AirSoft's financial data for the three months ended March 31, 1996 and 1995, and the three fiscal years ended December 31, 1995, 1994 and 1993, respectively. Certain amounts have been reclassified to conform to the pro forma presentation. 2. These pro forma adjustments reflect the elimination of accounts receivable and deferred revenue related to a contract for which the receivable is not contractually due, in order to conform AirSoft's accounting policies to those of the Company. 3. These pro forma adjustments reflect the exchange of AirSoft's capital stock for an aggregate of approximately 691,587 shares of Shiva Common Stock to effect the AirSoft Acquisition. 4. Pro forma per share amounts are based on weighted average shares outstanding during each period, assuming each then outstanding share of AirSoft stock is exchanged for .058848195 shares of Common Stock. -----END PRIVACY-ENHANCED MESSAGE-----