-----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, BeeJDU5k1TxDWWRIZ6nb4X4FivcvFZbWHGqy0jFUAKZbab6r2LyKYjYv2L/kuuLb mwJdFHMZMKa1bix02RS6VA== 0000950135-98-003706.txt : 19980609 0000950135-98-003706.hdr.sgml : 19980609 ACCESSION NUMBER: 0000950135-98-003706 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980326 ITEM INFORMATION: FILED AS OF DATE: 19980608 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: 1228 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-24918 FILM NUMBER: 98644052 BUSINESS ADDRESS: STREET 1: 28 CROSBY DR CITY: BEDFORD STATE: MA ZIP: 01730 BUSINESS PHONE: 7816871000 MAIL ADDRESS: STREET 1: 28 CROSBY DR CITY: BEDFORD STATE: MA ZIP: 01730 8-K/A 1 SHIVA CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 26, 1998 Shiva Corporation ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts ---------------------------------------------- (State or other jurisdiction of incorporation) 0-24918 04-2889151 - ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 28 Crosby Drive, Bedford, Massachusetts 01730 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (781) 687-1000 2 The undersigned Registrant hereby amends Item 7 of its Current Report on Form 8-K dated April 9, 1998 to read in its entirety as follows: ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired Report of KPMG, Toronto, Canada, Chartered Accountants Isolation Systems Limited Consolidated Balance Sheets as at August 31, 1997 and 1996 Isolation Systems Limited Consolidated Statements of Earnings and Deficit for the years ended August 31, 1997 and 1996 Isolation Systems Limited Consolidated Statements of Changes in Financial Position for the years ended August 31, 1997 and 1996 Isolation Systems Limited Notes to Consolidated Financial Statements (b) Pro Forma Financial Information Pro Forma Condensed Statement of Operations for the year ended January 3, 1998 (c) Exhibits Item No. Description -------- ----------- *2. Asset Purchase Agreement Between Shiva Corporation and Isolation Systems Limited dated as of February 18, 1998 23. Consent of KPMG *Incorporated by reference from the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 9, 1998. 3 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. SHIVA CORPORATION By: /s/ Robert P. Cirrone ------------------------------------------ Dated: June 8, 1998 Robert P. Cirrone Senior Vice President, Finance and Administration and Chief Financial Officer 4 AUDITORS' REPORT The Board of Directors of Isolation Systems Limited We have audited the consolidated balance sheets of Isolation Systems Limited as at August 31, 1997 and 1996 and the consolidated statements of earnings and deficit and changes in financial position for the years then ended. 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 an audit to obtain reasonable assurance 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. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at August 31, 1997 and 1996 and the results of its operations and the changes in its financial position for the years then ended in accordance with generally accepted accounting principles in Canada. /s/ KPMG KPMG Chartered Accountants Toronto, Canada October 3, 1997 (except as to Note 10 which is as of March 26, 1998) 5 ISOLATION SYSTEMS LIMITED CONSOLIDATED BALANCE SHEETS (in Canadian dollars) AUGUST 31, 1997 AND 1996
================================================================================================== 1997 1996 - -------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash $ 1,401,429 $ -- Accounts receivable 483,521 64,832 Investment tax credits receivable 546,630 282,258 Inventory 131,932 149,909 Prepaid expenses 49,005 5,525 - -------------------------------------------------------------------------------------------------- 2,612,517 502,524 Capital assets (note 2) 282,068 77,479 - -------------------------------------------------------------------------------------------------- $ 2,894,585 $ 580,003 ================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Bank indebtedness (note 3) $ -- $ 312,322 Accounts payable and accrued liabilities 576,449 295,449 Current portion of long-term debt (note 4) -- 32,237 - -------------------------------------------------------------------------------------------------- 576,449 640,008 Long-term debt (note 4) -- 265,000 Shareholders' equity (deficiency): Capital stock (note 5) 12,241,287 6,613,040 Contributed surplus 210,600 210,600 Deficit (10,133,751) (7,148,645) - -------------------------------------------------------------------------------------------------- 2,318,136 (325,005) Commitments (note 9) Subsequent events (note 10) - -------------------------------------------------------------------------------------------------- $ 2,894,585 $ 580,003 ==================================================================================================
See accompanying notes to consolidated financial statements. -2- 6 ISOLATION SYSTEMS LIMITED CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT (in Canadian dollars) YEARS ENDED AUGUST 31, 1997 AND 1996
=============================================================================== 1997 1996 - ------------------------------------------------------------------------------- Revenue $ 1,039,883 $ 1,002,621 Cost of revenues 520,901 566,563 - ------------------------------------------------------------------------------- 518,982 436,058 Expenses: Research and development (note 6) 731,284 208,478 General and administration 1,008,885 526,742 Selling and marketing 1,721,775 385,765 Amortization 91,477 22,069 Interest (income) (49,333) 82,676 - ------------------------------------------------------------------------------- 3,504,088 1,225,730 - ------------------------------------------------------------------------------- Loss from continuing operations (2,985,106) (789,672) Discontinued operations (note 7): Loss from operations -- (22,626) Gain on disposal -- 114,425 - ------------------------------------------------------------------------------- -- 91,799 - ------------------------------------------------------------------------------- Loss for the year (2,985,106) (697,873) - ------------------------------------------------------------------------------- Deficit, beginning of year (7,148,645) (6,450,772) - ------------------------------------------------------------------------------- Deficit, end of year $(10,133,751) $(7,148,645) ===============================================================================
See accompanying notes to consolidated financial statements. -3- 7 ISOLATION SYSTEMS LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (in Canadian dollars) YEARS ENDED AUGUST 31, 1997 AND 1996
=================================================================================================== 1997 1996 - --------------------------------------------------------------------------------------------------- Cash provided by (used in): Operations: Loss from continuing operations $(2,985,106) $(789,672) Item not involving cash: Amortization 91,477 22,069 Change in non-cash operating working capital (427,564) (49,678) - --------------------------------------------------------------------------------------------------- Cash used in continuing operations (3,321,193) (817,281) Income from discontinued operations -- 91,799 Item not involving cash: Gain on sale of medical business -- (114,425) - --------------------------------------------------------------------------------------------------- Cash used in discontinued operations -- (22,626) - --------------------------------------------------------------------------------------------------- (839,907) Financing: Repayment of long-term debt (297,237) (80,456) Proceeds from issuance of common shares 163,199 431,695 Proceeds from issuance of special warrants, net of issue costs of $572,591 5,465,048 -- - --------------------------------------------------------------------------------------------------- 5,331,010 351,239 Investments: Proceeds on sale of medical business -- 201,750 Additions to capital assets (296,066) (46,765) - --------------------------------------------------------------------------------------------------- (296,066) 154,985 - --------------------------------------------------------------------------------------------------- Increase (decrease) in cash 1,713,751 (333,683) Cash (bank indebtedness), beginning of year (312,322) 21,361 - --------------------------------------------------------------------------------------------------- Cash (bank indebtedness), end of year $ 1,401,429 $(312,322) ===================================================================================================
See accompanying notes to consolidated financial statements. -4- 8 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1997 AND 1996 ================================================================================ Isolation Systems Limited (the "Company") is incorporated under the laws of Ontario, Canada, and its principal business is the design, development and manufacture of high performance encryption devices and network security systems. 1. SIGNIFICANT ACCOUNTING POLICIES: (a) Basis of presentation: These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles. All amounts contained in such consolidated financial statements and accompanying notes are expressed in Canadian dollars unless otherwise noted. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Isolation Systems, Inc., 512719 Ontario Ltd., and Grenadier Microvisual Inc. All material intercompany transactions and balances have been eliminated. (b) 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Capital assets: Capital assets are stated at cost less accumulated amortization using the straight-line method. During 1997, the Company changed its amortization rates on office equipment and furnishings from 10% and on research equipment and computers from 20% per annum to the following annual rates:
============================================================== Asset Rate -------------------------------------------------------------- Office equipment and furnishings 30% Research equipment 30% Computers 30% Leasehold improvements Over the term of the lease ==============================================================
(d) Revenue recognition: Revenue is recognized upon shipment of product to customers. -5- 9 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): (e) Research and development costs: Research expenditures are expensed as incurred. Expenses related to development projects are deferred and capitalized only when they meet the criteria set out under Canadian generally accepted accounting principles. To date, no development costs have been capitalized. (f) Investment tax credits and government assistance: The Company, as a Canadian-controlled private corporation, is entitled to investment tax credits which are earned at a rate of 35% of the first $2,000,000 of eligible current and capital research and development expenditures, and 20% of expenditures in excess of $2,000,000. Investment tax credits earned at the 35% rate are fully refundable to the Company. Investment tax credits earned at the 20% rate are refundable at a rate of 40% of the earned amount, with the balance being available to be applied against future Canadian federal income taxes. The benefit of these investment tax credits is only recognized when the Company has reasonable assurance that the benefit will be realized. The Company uses the cost reduction method in accounting for investment tax credits. Investment tax credits related to the acquisition of assets are deducted from the cost of the related assets with amortization calculated on the net amount. Investment tax credits related to current expenses are included in the determination of net income. (g) Foreign currency translation: The Company translates foreign currency denominated transactions and the financial statements of operationally dependent foreign operations using the temporal method. Monetary assets and liabilities which are denominated in foreign currencies are translated at year-end exchange rates. Non-monetary assets and liabilities are translated at rates in effect on the dates of the transactions. Revenue and expenses are translated at average rates in effect during the year with the exception of amortization which is translated at historic rates. Exchange gains or losses on translation of current monetary items are reflected in income immediately. (h) Inventory: Inventory is recorded at the lower of cost and net realizable value. -6- 10 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): (i) Financial instruments and concentration of credit risk: Financial instruments consist of cash, accounts receivable, investment tax credits receivable, and accounts payable and accrued liabilities. The Company determines the fair value of its financial instruments based on quoted market values or discounted cash flow analyses. Unless otherwise indicated, the fair value of financial assets and liabilities approximates their recorded amounts. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. Cash consists of deposits with a major commercial bank, the maturities of which are 3 months or less from the date of purchase. The Company performs periodic credit evaluations of the financial condition of its customers and typically does not require collateral from its customers. Allowances are maintained for potential credit losses consistent with the credit risk of specific customers, historical trends and other information, and have been within management's range of expectations. 2. CAPITAL ASSETS:
1997 ----------------------------------------------------------------------- Accumulated Net Book Cost Amortization Value ----------------------------------------------------------------------- Office equipment and furnishings $124,558 $ 39,303 $ 85,255 Research equipment 161,785 88,198 73,587 Computers 264,874 170,949 93,925 Leasehold improvements 34,472 5,171 29,301 ----------------------------------------------------------------------- $585,689 $303,621 $282,068 =======================================================================
1996 ----------------------------------------------------------------------- Accumulated Net Book Cost Amortization Value ----------------------------------------------------------------------- Office equipment and furnishings $ 20,648 $ 16,712 $ 3,936 Production machinery and equipment 113,947 108,858 5,089 Research equipment 78,973 74,307 4,666 Computers 189,997 126,209 63,788 ----------------------------------------------------------------------- $403,565 $326,086 $77,479 =======================================================================
-7- 11 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 3. BANK INDEBTEDNESS: Under the terms of its banking agreement, the Company has a demand revolving line of credit available for a maximum of $200,000 which can be drawn in either Canadian or U.S. dollars. The line of credit is subject to a borrowing formula which limits the credit available based on the level of accounts receivable and investment tax credits receivable, and is secured by way of a general security agreement covering all of the Company's assets. The interest rate on the line of credit is at bank prime rate plus 1% per annum, based on either Canadian or U.S. prime rates, as applicable. 4. LONG-TERM DEBT:
======================================================================= 1997 1996 ----------------------------------------------------------------------- Loan bearing interest at 12 1/2% per annum, $ -- $ 32,237 repaid in December 1996 Loan of $430,000 bearing interest at 12 1/2% per annum. In October 1996 the loan was settled by issuing 379,518 special warrants, each of which is convertible into common shares (note 5) -- 265,000 ----------------------------------------------------------------------- -- 297,237 Less current portion -- 32,237 ----------------------------------------------------------------------- $ -- $265,000 =======================================================================
Interest on long-term debt included in interest expense amounts to $8,300 (1996 - $43,000). 5. CAPITAL STOCK:
======================================================================= 1997 1996 ----------------------------------------------------------------------- Common shares $ 6,776,239 $6,613,040 Special warrants 6,037,639 -- Share issue costs (572,591) -- ----------------------------------------------------------------------- $12,241,287 $6,613,040 =======================================================================
-8- 12 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 5. CAPITAL STOCK (CONTINUED): (a) Authorized: On October 29, 1996, the Articles of the Company were changed to increase the authorized capital stock as follows: Unlimited number of preference shares, issuable in series, ranking prior to the common shares and with such other rights, privileges, restrictions and conditions attaching as may be fixed by the Board of Directors at the time the series is created. Unlimited number of common shares. (b) Issued:
======================================================================= 1997 1996 ---------------------- ----------------------- Number of Number of Common shares Shares Amount Shares Amount ----------------------------------------------------------------------- Opening balance 12,597,756 $6,613,040 10,996,928 $6,181,345 Issued during year 206,582 163,199 1,600,828 431,695 ----------------------------------------------------------------------- 12,804,338 $6,776,239 12,597,756 $6,613,040 =======================================================================
(c) Special warrants: On October 29, 1996, the Company closed a private placement of special warrants. The Company issued a total of 6,329,114 special warrants for gross proceeds of approximately $5 million. These special warrants are convertible into 6,831,013 common shares using a conversion ratio which is based on the current assets and liabilities of the Company as at August 31, 1996. In addition, 379,519 special warrants, each convertible into one common share, were issued as payment in full of certain long-term debt having a principal balance outstanding of $265,000 and interest owing of approximately $35,000. Costs associated with this issue amounted to $534,231. As contemplated in the special warrant offering referred to above, the Company closed a private placement of additional special warrants (the "New Warrants") on February 26, 1997. The Company issued a total of 933,948 New Warrants for gross proceeds of approximately $738,000. Costs associated with this issue amounted to $38,360. These New Warrants are convertible into 1,008,010 common shares using a conversion ratio which is based on the current assets and liabilities of the Company as at August 31, 1996. All special warrants and New Warrants were converted into common shares as a condition of the sale of substantially all of the Company's non-cash net assets to Shiva Corporation as described in Note 10(b). -9- 13 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 5. CAPITAL STOCK (CONTINUED): (c) Special warrants (continued): The special warrants and New Warrants are convertible into common shares once a receipt is issued by the Ontario Securities Commission for the final prospectus to qualify the distribution on the common shares to be issued on the exercise of the special warrants and New Warrants. (d) Stock options: The Company has established a stock option plan under which the maximum number of common shares for which options may be granted shall not exceed 2,345,000 shares. During the period from September 1, 1995 to August 31, 1997, the Company had the following stock option transactions:
==================================================================== Expiry Exercise Number of Date Price Options -------------------------------------------------------------------- Balance as at August 31, 1995 -- Options granted: Employees 2003 0.27 245,000 Director 2000 0.27 50,000 -------------------------------------------------------------------- Balance as at August 31, 1996 295,000 Options granted: Senior officers 2003 0.79 1,329,300 Employees 2004 0.79 358,000 Options expired on termination: Senior officers 2003 0.79 (250,000) Employees 2003 0.27 (5,000) -------------------------------------------------------------------- Balance as at August 31, 1997 1,727,300 ====================================================================
-10- 14 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 5. CAPITAL STOCK (CONTINUED): (d) Stock options (continued): As at August 31, 1997, the Company has the following outstanding stock options to directors and employees:
===================================================================== Vesting Exercise Number of Expiry Date Privileges Price Options --------------------------------------------------------------------- Employees 2003 Over 3 years $0.27 240,000 Director 2000 Immediate 0.27 50,000 Senior officers 2003 Over 3 years 0.79 1,079,300 Employees 2004 Over 4 years 0.79 358,000 --------------------------------------------------------------------- 1,727,300 =====================================================================
(e) Shareholder warrants: The Company granted to shareholders of record on October 29, 1996, warrants to purchase an aggregate of 1,000,000 common shares at an exercise price of $0.79 per share ("Shareholder Warrants"). The Shareholder Warrants are exercisable immediately, non-transferable and expire no later than October 29, 1998. As of August 31, 1997, all Shareholder Warrants remain outstanding. 6. RESEARCH AND DEVELOPMENT:
========================================================================= 1997 1996 ------------------------------------------------------------------------- Gross research and development expenditures $1,013,679 $ 462,963 Investment tax credits (282,395) (254,485) ------------------------------------------------------------------------- $ 731,284 $ 208,478 =========================================================================
-11- 15 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 7. DISCONTINUED OPERATIONS: On August 31, 1995, the Company adopted a formal plan to dispose of the assets and business operations of its medical business and completed its sale on October 27, 1995. To October 27, 1995, the Company recorded loss of operations of $22,626 in respect of the medical business. The net proceeds on the sale of the medical business were $201,750 (U.S. $150,000) resulting in a gain on disposition of $114,425. 8. INCOME TAXES: The Company has losses of approximately $3,266,000 available to reduce future Canadian taxable income. These losses expire as follows:
========================================================================== 2002 $ 321,000 2003 970,000 2004 1,975,000 ==========================================================================
Capital losses of approximately $26,000, which may be carried forward indefinitely, are available to reduce capital gains in future years. In addition, the Company has accumulated research and development expenditures of $3,130,000 (1996 - $2,429,000) available to be applied against future taxable income. 9. COMMITMENTS: The Company lease office space and equipment under operating leases. Future minimum lease payments by fiscal year are as follows:
========================================================================== Year ending August 31 1998 $196,900 1999 191,700 2000 190,700 2001 188,000 2002 125,300 -------------------------------------------------------------------------- $892,600 ==========================================================================
-12- 16 ISOLATION SYSTEMS LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED AUGUST 31, 1997 AND 1996 ================================================================================ 10. SUBSEQUENT EVENTS: (a) On December 18, 1997, the Company completed a private placement of special warrants whereby 6,000,000 special warrants were issued for gross proceeds of $7,500,000. Each special warrant was converted into one common share as a condition of the sale of substantially all of the Company's non-cash net assets to Shiva Corporation as described in Note 10(b). (b) On March 26, 1998, the Company sold substantially all of its non-cash assets to Shiva Corporation for which approximately US $37 million of which US $1,476,000 will be held in escrow until March, 1999. As a result of this sale, the Company has discontinued operations and will have cash on hand of approximately $63.5 million if holders of all of the Company's outstanding options and shareholder warrants exercise such options or warrants, the investment tax credit receivable by the Company is collected and all funds held in escrow pursuant to the Shiva sale transaction are released. -13- 17 SHIVA CORPORATION ISOLATION SYSTEMS LIMITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 3, 1998 (UNAUDITED) The following pro forma condensed statement of operations gives effect to the acquisition of substantially all the assets and liabilities of Isolation Systems Limited ("Isolation") by Shiva Corporation (the "Company"). This pro forma condensed statement of operations combines the audited statement of operations of the Company with the unaudited statement of operations of Isolation for the year ended January 3, 1998 and assumes the transaction was accounted for as a purchase and effective on December 28, 1996. The pro forma data reflect the acquisition of Isolation by the Company for approximately $39,724,000 in cash. The pro forma data do not purport to be indicative of the statement of operations that would actually have been reported if the acquisition had been effected at December 28, 1996 or which may be reported in the future. The pro forma data do not reflect any other adjustments which might be realized from the combination of the entities. This pro forma condensed statement of operations should be read in conjunction with the accompanying notes, the respective historical consolidated financial statements and related notes of the Company. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) TWELVE MONTHS ENDED JANUARY 3, 1998
HISTORICAL PRO FORMA ------------------------- ------------------------ Shiva Isolation Notes Adjustments Combined -------- --------- ----- ----------- -------- Product and other revenues $126,757 $ 1,574 $ - $128,331 Royalty revenues 17,572 - - 17,572 -------- ------- ------- -------- Total revenues 144,329 1,574 - 145,903 Cost of revenues 71,416 668 (1) 767 72,851 -------- ------- ------- -------- Gross profit 72,913 906 (767) 73,052 Operating expenses: Research and development 25,545 889 - 26,434 Selling, general and administrative 72,903 2,884 (2) 727 76,514 -------- ------- ------- -------- Total operating expenses 98,448 3,773 727 102,948 -------- ------- ------- -------- Loss from operations (25,535) (2,867) (1,494) (29,869) -------- ------- ------- -------- Interest income 4,003 54 (3) (1,569) 2,488 Interest and other expense (481) - - (481) -------- ------- ------- -------- Loss before income taxes (22,013) (2,813) (3,063) (27,889) Income tax benefit (8,366) (195) (4) (2,037) (10,598) -------- ------- ------- -------- Net loss $(13,647) $(2,618) $(1,026) $(17,291) ======== ======= ======= ======== Net loss per share-basic and diluted $ (0.47) $ (0.59) ======= ======== Shares used in computing net loss per share - basic and diluted 29,266 29,266 ======== ========
(1) Represents amortization of developed technology and assembled workforce on a straight-line basis over their estimated useful lives of three years. (2) Represents amortization of goodwill on a straight-line basis over the estimated useful live of three years. (3) Represents lost interest income on funds used for acquisition of Isolation Systems. (4) Reflects increased tax benefit related to foregoing adjustments. EX-23 2 CONSENT OF KPMG 1 Exhibit 23 The Board of Directors Isolation Systems Limited We consent to the inclusion of our report dated October 3, 1997, except for note 10 which is as of March 24, 1998, with respect to the consolidated balance sheets of Isolation Systems Limited as of August 31, 1997 and 1996, and the related consolidated statements of earnings and deficit, and changes in financial position for each of the years in the two year period ended August 31, 1997, which report appears in the Form 8-K of Shiva Corporation dated June 5, 1998. /s/ KPMG Toronto, Canada June 5, 1998 -----END PRIVACY-ENHANCED MESSAGE-----