-----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, S1wdD8PAHzCm2zu34ijT7GHHGgp5sS38WZyLzZCQjApkDmUPO+U/Wwz1n6hy1Knh cXAlrX3Jqoo6MoPjcqkp7A== 0000950144-97-002527.txt : 19970319 0000950144-97-002527.hdr.sgml : 19970319 ACCESSION NUMBER: 0000950144-97-002527 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970318 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970318 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARBINGER CORP CENTRAL INDEX KEY: 0000947116 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 581817306 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 033-93804 FILM NUMBER: 97558461 BUSINESS ADDRESS: STREET 1: 1055 LENOX PARK BLVD CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048414334 8-K/A 1 HARBINGER CORPORATION 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ______________ FORM 8-K/A ______________ Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report March 18, 1997 (Date of earliest event reported): January 3, 1997 HARBINGER CORPORATION (Exact name of Company specified in its charter) GEORGIA 0-26298 58-1817306 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) 1055 LENOX PARK BOULEVARD, ATLANTA, GEORGIA 30319 (Address of principal executive offices) (Zip Code) (404) 467-3000 (Company's telephone number, including area code) This Form 8-K/A amends Registrant's previously filed Form 8-K, which was dated and filed on or about January 16, 1997. This document includes the financial statements and pro forma financial information which had been omitted from the previously filed document as permitted by Item 7(a)(4) of Form 8-K. ================================================================================ Page 1 of 48 Exhibit Index on Page 4 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired. The following combined financial statements for SupplyTech, Inc. and SupplyTech International, LLC are attached hereto as Exhibit 99.4: - Independent Auditors' Report - KPMG Peat Marwick LLP - 1996 - Independent Auditors' Report - Ciulla, Smith & Dale, LLP - 1995 and 1994 - Combined Balance Sheets as of December 31, 1996 and 1995 - Combined Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994 - Combined Statements of Shareholders' Equity (Deficit) for the Years Ended December 31, 1996, 1995 and 1994 - Combined Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 - Notes to Combined Financial Statements for the Years Ended December 31, 1996, 1995 and 1994 (b) Pro Forma Financial Information. Attached hereto as Exhibit 99.5 are the unaudited pro forma consolidated condensed balance sheet of Harbinger Corporation as of December 31, 1996 and the unaudited pro forma consolidated condensed statements of operations of Harbinger Corporation for each of the years in the three-year period ended December 31, 1996. (c) Exhibits. * 2.1 Merger Agreement, dated January 3, 1997 between the Company, Harbinger Acquisition Corporation II and SupplyTech, Inc. * 2.2 Georgia Certificate of Merger. * 2.3 Michigan Certificate of Merger. * 4.1 Registration Rights Amendment. *99.1 Text of Press Release of Harbinger Corporation, dated January 6, 1997. 99.2 Employment Agreement, effective January 3, 1997 by and between Harbinger Corporation and Ted A. Annis. 99.3 Employment Agreement, effective January 3, 1997 by and between Harbinger Corporation and A. Gail Jackson. 99.4 Audited combined financial statements of SupplyTech, Inc. and SupplyTech International, LLC for the years ended December 31, 1996, 1995 and 1994. 99.5 Unaudited pro forma consolidated condensed financial information of Harbinger Corporation as of December 31, 1996 and for each of the years in the three-year period ended December 31, 1996. --------------------- * Previously filed 2 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. HARBINGER CORPORATION /s/ Joel G. Katz --------------------------------------- JOEL G. KATZ Chief Financial Officer (Principal Financial Officer; Principal Accounting Officer) Date: March 18, 1997 3 4 EXHIBIT INDEX
Exhibit Page No. - ------- -------- * 2.1 Merger Agreement, dated January 3, 1997 between the Company, Harbinger Acquisition Corporation II and SupplyTech, Inc. * 2.2 Georgia Certificate of Merger. * 2.3 Michigan Certificate of Merger. * 4.1 Registration Rights Amendment. *99.1 Text of Press Release of Harbinger Corporation, dated January 6, 1997. 99.2 Employment Agreement, effective January 3, 1997 by and between 5 Harbinger Corporation and Ted A. Annis. 99.3 Employment Agreement, effective January 3, 1997 by and between 13 Harbinger Corporation and A. Gail Jackson. 99.4 Audited combined financial statements of SupplyTech, Inc. and 21 SupplyTech International, LLC for the years ended December 31, 1996, 1995 and 1994. 99.5 Harbinger Corporation unaudited pro forma consolidated condensed 41 financial information as of December 31, 1996 and for each of the years in the three-year period ended December 31, 1996.
- -------------------------- * Previously filed 4 EX-99.2 2 EMPLOYMENT AGREEMENT EFFECTIVE JANUARY 3, 1997 1 EXHIBIT 99.2 5 2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of the 3rd day of January, 1997 by and between Harbinger Corporation, a Georgia corporation (the "Company") and Ted A. Annis, an individual ("Employee"). For and in consideration of the agreement to employ Employee described below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company agrees to employ or continue to employ Employee, and Employee agrees to accept and continue such employment, upon the following terms and conditions. Employee and the Company each acknowledge that this Agreement is being entered in connection with the Company's acquisition of Supply Tech, Inc., of which Employee is a shareholder. 2. DUTIES. (a) Employee shall assume the responsibilities and perform the duties specified in Exhibit A ("Duties"). Such Duties may be revised from time to time at the sole discretion of the Company. Employee agrees to devote his or her full time and energy to the furtherance of the business of the Company and shall not during the term hereof work or perform services in any advisory or other capacity for any individual, firm, company, or corporation other than for the Company without the Company's prior written consent. This Agreement may be supplemented from time to time by rules and regulations of employment issued by the Company, including, without limitation, such rules and regulations described in the Company employee handbook, and Employee agrees to adhere to these rules and regulations. (b) If Employee desires to perform any services during the term hereof for anyone other than the Company, whether or not Employee is compensated, then Employee agrees to contact an officer of the Company to discuss this matter. The Company will review the request and advise Employee of the Company's approval or disapproval of the proposed outside work, in the Company's sole discretion. In making its decision, the Company may consider such factors as whether the outside work may be harmful to the business of the Company or interfere with Employee's ability to satisfactorily discharge his or her Duties, whether the outside work is based directly or indirectly on a business practice of the Company or idea that was conceived by Employee while on the Company's payroll, or whether such outside work could result in a violation of any covenants of Employee in this Agreement. In this case, the Company will notify Employee of the Company's approval or disapproval of such request to perform outside work within a reasonable period of time after the Company is notified by Employee of the request to perform such services. Unless the Company grants such approval in writing, Employee agrees to refrain from such outside work. 3. COMPENSATION. The Company shall pay as compensation for all the services to be rendered the salary and additional compensation, if any, described in Exhibit B (the "Employee Compensation"). The Company's obligation to pay Employee any Employee Compensation shall cease upon termination of Employee's employment with the Company. Employee's annual salary shall be prorated on a daily basis for the years in which Employee commences and terminates his or her employment relationship with the Company. 4. TERM AND TERMINATION. (a) Employee's employment under this Agreement shall begin on the date hereof and shall continue through and until terminated by either party by delivery of six months prior notice; provided that such notice may not be delivered prior to July 3, 1998. The foregoing notwithstanding, the Company has the right to terminate Employee's employment under this Agreement, by notice to Employee in writing at any time, (i) for "Cause" or (ii) due to Disability (as hereinafter defined) of Employee. Any such termination shall be effective upon the date of service of such notice. Termination of Employee's employment under this Agreement shall not affect Employee's continuing obligations under this Agreement. (b) For purposes of this Agreement, "Cause" means any of the following reasons: (a) the Company reasonably determines that Employee's job performance is unsatisfactory; (b) Employee violates any provision of this Employment Agreement; (c) Employee is convicted of a felony, or a misdemeanor involving moral turpitude; or (d) Employee engages in misconduct in the course and scope of his employment with the Company. In the event of a termination for "Cause", the Company shall be obligated to pay to Employee all compensation owing to Employee under this Employment Agreement up to the date of such termination and no more. 6 3 (c) "Disability" means the illness or disability of the Employee that prevents the performance of Employee's material obligations hereunder, and which continues for a consecutive period of one hundred eighty (120) days or longer or an aggregate period of one hundred eighty (180) days or longer in any one-year period. (d) Employee understands and agrees that this Employment Agreement will terminate immediately, without notice, in the event of his death. The Employee understands and agrees that in the event of his death, the Company will pay to the Employee's estate all unpaid commissions, wages or other compensation currently due and owing for services rendered by the Employee prior to his death. 5. OWNERSHIP. (a) For purposes of this Agreement, "Work Product" shall mean the data, materials, documentation, computer programs, inventions (whether or not patentable), and all works of authorship, including all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property right, created or developed in whole or in part by Employee, whether prior to the date of this Agreement or in the future, either (i) while retained by the Company and that have been or will be paid for by the Company, or (ii) while employed by the Company (whether developed during work hours or not). All Work Product shall be considered work made for hire by the Employee and owned by the Company. If any of the Work Product may not, by operation of law, be considered work made for hire by Employee for the Company, or if ownership of all right, title, and interest of the intellectual property rights therein shall not otherwise vest exclusively in the Company, Employee hereby assigns to the Company, and upon the future creation thereof automatically assigns to the Company, without further consideration, the ownership of all Work Product. The Company shall have the right to obtain and hold in its own name copyrights, patents, registrations, and any other protection available in the Work Product. Employee agrees to perform, during or after Employee's employment, such further acts as may be necessary or desirable to transfer, perfect, and defend the Company's ownership of the Work Product that are reasonably requested by the Company. (b) Employee agrees that during the term of employment, any money or other remuneration received by Employee for services rendered to a customer or potential customer of the Company shall be the property of the Company. 6. TRADE SECRETS AND CONFIDENTIAL INFORMATION. (a) The Company may disclose to Employee certain Trade Secrets and Confidential Information (defined below). Employee acknowledges and agrees that the Trade Secrets and Confidential Information are the sole and exclusive property of the Company (or a third party providing such information to the Company) and that the Company or such third party owns all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property right. Employee acknowledges and agrees that the disclosure of the Trade Secrets and Confidential Information to Employee does not confer upon Employee any license, interest or rights of any kind in or to the Trade Secrets or Confidential Information. Employee may use the Trade Secrets and Confidential Information solely for the benefit of the Company while Employee is employed or retained by the Company. Except in the performance of services for the Company, Employee will hold in confidence and not reproduce, distribute, transmit, reverse engineer, decompile, disassemble, or transfer, directly or indirectly, in any form, by any means, or for any purpose, the Trade Secrets or the Confidential Information or any portion thereof. Employee agrees to return to the Company, upon request by the Company, the Trade Secrets and Confidential Information and all materials relating thereto. (b) Employee's obligations under this Agreement with regard to the Trade Secrets shall remain in effect for as long as such information shall remain a trade secret under applicable law. Employee acknowledges that its obligations with regard to the Confidential Information shall remain in effect while Employee is employed or retained by the Company and for three (3) years thereafter. As used herein, "Trade Secrets" means information of the Company, its licensors, suppliers, customers, or prospective licensors or customers, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers, which (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. As used herein, "Confidential Information" means information, other than Trade Secrets, that is of value to its owner and is treated as confidential, including, but not limited to, future business plans, licensing strategies, advertising campaigns, information regarding executives and employees, and the terms and conditions of this Agreement. 7 4 7. CUSTOMER NON-SOLICITATION. Employee agrees that for so long as Employee is employed by the Company and for a period of one (1) year thereafter (but in no event for a period of less than four (4) years following the date hereof) ("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit, contact, call upon, communicate with or attempt to communicate with any customer or prospect of the Company, or any representative of any customer or prospect of the Company, with a view to sale or providing of any deliverable or service competitive or potentially competitive with any deliverable or service sold or provided or under development by the Company during the time of two (2) years immediately preceding cessation of Employee's employment with the Company, provided that the restrictions set forth in this paragraph shall apply only to customers or prospects of the Company, or representatives of customers or prospects of the Company, with which Employee had contact during such two (2) year period. The actions prohibited by this paragraph shall not be engaged in by Employee directly or indirectly, whether as manager, salesperson, agent, technical support, sales, or service representative, or otherwise. 8. EMPLOYEE NON-SOLICITATION. Employee agrees that Employee shall not call upon, solicit, recruit, or assist others in calling upon, recruiting or soliciting any person who is or was an employee of the Company within the Non-Solicitation Period, for the purpose of having such person work in any other corporation, association, entity, or business engaged in providing any of the following: (i) development and operation of computer networks (the "Hosts") to facilitate electronic data interchange and electronic commerce ("EDI") transactions and cash management services; (ii) development, marketing, distribution, and licensing of personal computer, midrange, mainframe, workstation and networking software to facilitate EDI and transaction processing and other communications with the Hosts; (iii) development, marketing, distribution, and licensing of software products for operation on personal computers and workstations relating to the performance of cash management services, including balance and transaction reporting, transfers, stop payments, account reconciliation, check writing, financial record keeping, messaging, and information services; and (iv) consulting, training, and implementation of the products and services described in (i), (ii) and (iii) above (collectively the "Company Business"). 9. NONCOMPETITION. Employee agrees that, without the prior written consent of the Company, Employee shall not, so long as Employee is employed hereunder and for a period of one (1) year thereafter (but in no event for a period of less than four (4) years following the date hereof) within the area described in Exhibit C (the "Territory"), directly or indirectly perform the Duties on behalf of any person, firm, corporation, or other entity in the Company Business, if the Company is also then still engaged in the Company Business. 10. WARRANTIES OF EMPLOYEE. (a) Employee warrants to the Company that (i) Employee is not presently under any contract or agreement with any party that will prevent Employee from performing the Duties assigned by the Company, and (ii) Employee is not in breach of any agreement with respect to any trade secrets or confidential information owned by any other party. (b) Employee agrees to indemnify and hold harmless the Company, any affiliated corporation, and their respective shareholders, directors, officers, agents, and employees, from and against any and all liability, including payment of attorneys' fees, arising directly or indirectly from a violation of Section 10(a). 11. EQUITABLE RELIEF. The parties to this Agreement acknowledge that a breach by Employee of any of the terms or conditions of this Agreement, including without limitation Sections 5, 6, 7, 8 and 9 hereof, will result in irrevocable harm to the Company and that the remedies at law for such breach may not adequately compensate the Company for damages suffered. Accordingly, Employee agrees that in the event of such breach, the Company shall be entitled to injunctive relief or such other equitable remedy as a court of competent jurisdiction may provide. Nothing contained herein will be construed to limit the Company's right to any remedies at law, including the recovery of damages for breach of this Agreement. 12. SEVERABILITY. If any provision or part of any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, such holding shall not affect the enforceability of any other provisions or parts thereof, and all other provisions and parts thereof shall continue in full force and effect. 13. MISCELLANEOUS. This Agreement shall not be amended or modified except by a writing executed by both parties. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Due to the personal nature of this Agreement, Employee shall not have the right to assign Employee's rights or obligations under this Agreement without the prior written consent of the Company. This Agreement shall be governed by the laws of the State of Michigan without regard to its rules governing conflicts of law. Any disputes arising out of this Agreement or the Transactions contemplated hereby shall be subject to the jurisdiction of the State of Georgia, and the parties' consent and submit to the jurisdiction and venue of the State of Georgia. This Agreement and the attached Exhibits represent the entire understanding of the parties 8 5 concerning the subject matter hereof and supersede all prior communications, agreements and understandings, whether oral or written, relating to the subject matter hereof. All communications required or otherwise provided under this Agreement shall be in writing and shall be deemed given when delivered to the address provided below such party's signature (as may be amended by notice from time to time), by hand, by courier or express mail, or by registered or certified United States mail, return receipt requested, postage prepaid. The exhibits attached hereto are incorporated herein by this reference. IN WITNESS WHEREOF, the parties hereto have executed this Agreement and affixed their hands and seals effective as of the date first above written. HARBINGER CORPORATION By: /s/ James C. Davis -------------------------------------------------- James C. Davis, President, Group Operations Date: ------------------------------------------------- Address: 1055 Lenox Park Boulevard Atlanta, Georgia 30319 EMPLOYEE: /s/ Ted A. Annis - ------------------------------------------------------- Ted A. Annis Date: -------------------------------------------------- Address: ----------------------------------------------- - ------------------------------------------------------- - ------------------------------------------------------- 9 6 EXHIBIT A Job Description Name: Ted Annis Title: President and General Manager, Supply Tech Division As President and GM of the Supply Tech Division, Mr. Annis reports to the C.O.O. of Harbinger Corporation. He is responsible for the day-today management of the division, including responsibility for achieving the division's revenues and profit goals. 10 7 EXHIBIT B Annual Salary/Bonus $140,000 Bonus Target: 50% HC Revenues: 5% HC OI: 10% STI Revenues: 5% STI OI: 25% Product/Quality Targets 5%
Company Car (1997 Only): Option to purchase current company car during 1997 at fair market value. Current Company Car Arrangement OR, if car is purchased by you during 1997, then $500/month for the remaining months of 1997. 11 8 EXHIBIT C Territory United States of America United Kingdom Mexico Italy Australia South America Canada 12 EX-99.3 3 EMPLOYMENT AGREEMENT EFFECTIVE JANUARY 3, 1997 1 EXHIBIT 99.3 13 2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective as of the 3rd day of January, 1997 by and between Harbinger Corporation, a Georgia corporation (the "Company") and A. Gail Jackson, an individual ("Employee"). For and in consideration of the agreement to employ Employee described below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company agrees to employ or continue to employ Employee, and Employee agrees to accept and continue such employment, upon the following terms and conditions. Employee and the Company each acknowledge that this Agreement is being entered in connection with the Company's acquisition of Supply Tech, Inc., of which Employee is a shareholder. 2. DUTIES. (a) Employee shall assume the responsibilities and perform the duties specified in Exhibit A ("Duties"). Such Duties may be revised from time to time at the sole discretion of the Company. Employee agrees to devote his or her full time and energy to the furtherance of the business of the Company and shall not during the term hereof work or perform services in any advisory or other capacity for any individual, firm, company, or corporation other than for the Company without the Company's prior written consent. This Agreement may be supplemented from time to time by rules and regulations of employment issued by the Company, including, without limitation, such rules and regulations described in the Company employee handbook, and Employee agrees to adhere to these rules and regulations. (b) If Employee desires to perform any services during the term hereof for anyone other than the Company, whether or not Employee is compensated, then Employee agrees to contact an officer of the Company to discuss this matter. The Company will review the request and advise Employee of the Company's approval or disapproval of the proposed outside work, in the Company's sole discretion. In making its decision, the Company may consider such factors as whether the outside work may be harmful to the business of the Company or interfere with Employee's ability to satisfactorily discharge his or her Duties, whether the outside work is based directly or indirectly on a business practice of the Company or idea that was conceived by Employee while on the Company's payroll, or whether such outside work could result in a violation of any covenants of Employee in this Agreement. In this case, the Company will notify Employee of the Company's approval or disapproval of such request to perform outside work within a reasonable period of time after the Company is notified by Employee of the request to perform such services. Unless the Company grants such approval in writing, Employee agrees to refrain from such outside work. 3. COMPENSATION. The Company shall pay as compensation for all the services to be rendered the salary and additional compensation, if any, described in Exhibit B (the "Employee Compensation"). The Company's obligation to pay Employee any Employee Compensation shall cease upon termination of Employee's employment with the Company. Employee's annual salary shall be prorated on a daily basis for the years in which Employee commences and terminates his or her employment relationship with the Company. 4. TERM AND TERMINATION. (a) Employee's employment under this Agreement shall begin on the date hereof and shall continue through and until terminated by either party by delivery of six months prior notice; provided that such notice may not be delivered prior to July 3, 1998. The foregoing notwithstanding, the Company has the right to terminate Employee's employment under this Agreement, by notice to Employee in writing at any time, (i) for "Cause" or (ii) due to Disability (as hereinafter defined) of Employee. Any such termination shall be effective upon the date of service of such notice. Termination of Employee's employment under this Agreement shall not affect Employee's continuing obligations under this Agreement. (b) For purposes of this Agreement, "Cause" means any of the following reasons: (a) the Company reasonably determines that Employee's job performance is unsatisfactory; (b) Employee violates any provision of this Employment Agreement; (c) Employee is convicted of a felony, or a misdemeanor involving moral turpitude; or (d) Employee engages in misconduct in the course and scope of his employment with the Company. In the event of a termination for "Cause", the Company shall be obligated to pay to Employee all compensation owing to Employee under this Employment Agreement up to the date of such termination and no more. 14 3 (c) "Disability" means the illness or disability of the Employee that prevents the performance of Employee's material obligations hereunder, and which continues for a consecutive period of one hundred eighty (120) days or longer or an aggregate period of one hundred eighty (180) days or longer in any one-year period. (d) Employee understands and agrees that this Employment Agreement will terminate immediately, without notice, in the event of his death. The Employee understands and agrees that in the event of his death, the Company will pay to the Employee's estate all unpaid commissions, wages or other compensation currently due and owing for services rendered by the Employee prior to his death. 5. OWNERSHIP. (a) For purposes of this Agreement, "Work Product" shall mean the data, materials, documentation, computer programs, inventions (whether or not patentable), and all works of authorship, including all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property right, created or developed in whole or in part by Employee, whether prior to the date of this Agreement or in the future, either (i) while retained by the Company and that have been or will be paid for by the Company, or (ii) while employed by the Company (whether developed during work hours or not). All Work Product shall be considered work made for hire by the Employee and owned by the Company. If any of the Work Product may not, by operation of law, be considered work made for hire by Employee for the Company, or if ownership of all right, title, and interest of the intellectual property rights therein shall not otherwise vest exclusively in the Company, Employee hereby assigns to the Company, and upon the future creation thereof automatically assigns to the Company, without further consideration, the ownership of all Work Product. The Company shall have the right to obtain and hold in its own name copyrights, patents, registrations, and any other protection available in the Work Product. Employee agrees to perform, during or after Employee's employment, such further acts as may be necessary or desirable to transfer, perfect, and defend the Company's ownership of the Work Product that are reasonably requested by the Company. (b) Employee agrees that during the term of employment, any money or other remuneration received by Employee for services rendered to a customer or potential customer of the Company shall be the property of the Company. 6. TRADE SECRETS AND CONFIDENTIAL INFORMATION. (a) The Company may disclose to Employee certain Trade Secrets and Confidential Information (defined below). Employee acknowledges and agrees that the Trade Secrets and Confidential Information are the sole and exclusive property of the Company (or a third party providing such information to the Company) and that the Company or such third party owns all worldwide rights therein under patent, copyright, trade secret, confidential information, or other property right. Employee acknowledges and agrees that the disclosure of the Trade Secrets and Confidential Information to Employee does not confer upon Employee any license, interest or rights of any kind in or to the Trade Secrets or Confidential Information. Employee may use the Trade Secrets and Confidential Information solely for the benefit of the Company while Employee is employed or retained by the Company. Except in the performance of services for the Company, Employee will hold in confidence and not reproduce, distribute, transmit, reverse engineer, decompile, disassemble, or transfer, directly or indirectly, in any form, by any means, or for any purpose, the Trade Secrets or the Confidential Information or any portion thereof. Employee agrees to return to the Company, upon request by the Company, the Trade Secrets and Confidential Information and all materials relating thereto. (b) Employee's obligations under this Agreement with regard to the Trade Secrets shall remain in effect for as long as such information shall remain a trade secret under applicable law. Employee acknowledges that its obligations with regard to the Confidential Information shall remain in effect while Employee is employed or retained by the Company and for three (3) years thereafter. As used herein, "Trade Secrets" means information of the Company, its licensors, suppliers, customers, or prospective licensors or customers, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers, which (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. As used herein, "Confidential Information" means information, other than Trade Secrets, that is of value to its owner and is treated as confidential, including, but not limited to, future business plans, licensing strategies, advertising campaigns, information regarding executives and employees, and the terms and conditions of this Agreement. 15 4 7. CUSTOMER NON-SOLICITATION. Employee agrees that for so long as Employee is employed by the Company and for a period of one (1) year thereafter (but in no event for a period of less than four (4) years following the date hereof) ("Non-Solicitation Period"), Employee shall not, on Employee's own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit, contact, call upon, communicate with or attempt to communicate with any customer or prospect of the Company, or any representative of any customer or prospect of the Company, with a view to sale or providing of any deliverable or service competitive or potentially competitive with any deliverable or service sold or provided or under development by the Company during the time of two (2) years immediately preceding cessation of Employee's employment with the Company, provided that the restrictions set forth in this paragraph shall apply only to customers or prospects of the Company, or representatives of customers or prospects of the Company, with which Employee had contact during such two (2) year period. The actions prohibited by this paragraph shall not be engaged in by Employee directly or indirectly, whether as manager, salesperson, agent, technical support, sales, or service representative, or otherwise. 8. EMPLOYEE NON-SOLICITATION. Employee agrees that Employee shall not call upon, solicit, recruit, or assist others in calling upon, recruiting or soliciting any person who is or was an employee of the Company within the Non-Solicitation Period, for the purpose of having such person work in any other corporation, association, entity, or business engaged in providing any of the following: (i) development and operation of computer networks (the "Hosts") to facilitate electronic data interchange and electronic commerce ("EDI") transactions and cash management services; (ii) development, marketing, distribution, and licensing of personal computer, midrange, mainframe, workstation and networking software to facilitate EDI and transaction processing and other communications with the Hosts; (iii) development, marketing, distribution, and licensing of software products for operation on personal computers and workstations relating to the performance of cash management services, including balance and transaction reporting, transfers, stop payments, account reconciliation, check writing, financial record keeping, messaging, and information services; and (iv) consulting, training, and implementation of the products and services described in (i), (ii) and (iii) above (collectively the "Company Business"). 9. NONCOMPETITION. Employee agrees that, without the prior written consent of the Company, Employee shall not, so long as Employee is employed hereunder and for a period of one (1) year thereafter (but in no event for a period of less than four (4) years following the date hereof) within the area described in Exhibit C (the "Territory"), directly or indirectly perform the Duties on behalf of any person, firm, corporation, or other entity in the Company Business, if the Company is also then still engaged in the Company Business. 10. WARRANTIES OF EMPLOYEE. (a) Employee warrants to the Company that (i) Employee is not presently under any contract or agreement with any party that will prevent Employee from performing the Duties assigned by the Company, and (ii) Employee is not in breach of any agreement with respect to any trade secrets or confidential information owned by any other party. (b) Employee agrees to indemnify and hold harmless the Company, any affiliated corporation, and their respective shareholders, directors, officers, agents, and employees, from and against any and all liability, including payment of attorneys' fees, arising directly or indirectly from a violation of Section 10(a). 11. EQUITABLE RELIEF. The parties to this Agreement acknowledge that a breach by Employee of any of the terms or conditions of this Agreement, including without limitation Sections 5, 6, 7, 8 and 9 hereof, will result in irrevocable harm to the Company and that the remedies at law for such breach may not adequately compensate the Company for damages suffered. Accordingly, Employee agrees that in the event of such breach, the Company shall be entitled to injunctive relief or such other equitable remedy as a court of competent jurisdiction may provide. Nothing contained herein will be construed to limit the Company's right to any remedies at law, including the recovery of damages for breach of this Agreement. 12. SEVERABILITY. If any provision or part of any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, such holding shall not affect the enforceability of any other provisions or parts thereof, and all other provisions and parts thereof shall continue in full force and effect. 13. MISCELLANEOUS. This Agreement shall not be amended or modified except by a writing executed by both parties. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Due to the personal nature of this Agreement, Employee shall not have the right to assign Employee's rights or obligations under this Agreement without the prior written consent of the Company. This Agreement shall be governed by the laws of the State of Michigan without regard to its rules governing conflicts of law. Any disputes arising out of this Agreement or the Transactions contemplated hereby shall be subject to the jurisdiction of the State of Georgia, and the parties' consent and submit to the jurisdiction and venue of the State of Georgia. This Agreement and the attached Exhibits represent the entire understanding of the parties 16 5 concerning the subject matter hereof and supersede all prior communications, agreements and understandings, whether oral or written, relating to the subject matter hereof. All communications required or otherwise provided under this Agreement shall be in writing and shall be deemed given when delivered to the address provided below such party's signature (as may be amended by notice from time to time), by hand, by courier or express mail, or by registered or certified United States mail, return receipt requested, postage prepaid. The exhibits attached hereto are incorporated herein by this reference. IN WITNESS WHEREOF, the parties hereto have executed this Agreement and affixed their hands and seals effective as of the date first above written. HARBINGER CORPORATION By: /s/ James C. Davis -------------------------------------------------- James C. Davis, President, Group Operations Date: ------------------------------------------------- Address: 1055 Lenox Park Boulevard Atlanta, Georgia 30319 EMPLOYEE: /s/ A. Gail Jackson - ------------------------------------------------------- A. Gail Jackson Date: -------------------------------------------------- Address: ----------------------------------------------- - ------------------------------------------------------- - ------------------------------------------------------- 17 6 EXHIBIT A Job Description Name: Gail Jackson Title: Vice President, Technology, Supply Tech Division As Vice President, Technology, Supply Tech Division, Ms. Jackson reports to the President and GM of the Supply Tech Division. She is responsible for management of the division's software development activities and all related activities for developing and maintaining the division's software products. This includes responsibility of the operating budget for this department. In addition, Ms. Jackson is responsible for keeping current on industry standards for the benefit of Harbinger Corporation. 18 7 EXHIBIT B Annual Salary/Bonus $115,000 Bonus Target: 30% HC Revenues: 3% HC OI: 7% STI Revenues: 3% STI OI: 7% Product/Quality Targets 10%
Company Car (1997 Only): Option to purchase current company car during 1997 at fair market value. Current Company Car Arrangement OR, if car is purchased by you during 1997, then $500/month for the remaining months of 1997. 19 8 EXHIBIT C Territory United States of America United Kingdom Mexico Italy Australia 20 EX-99.4 4 AUDITED COMBINED FINANCIAL STATEMENTS 1 EXHIBIT 99.4 21 2 INDEX TO COMBINED FINANCIAL STATEMENTS SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC PAGE ---- Independent Auditors' Report - KPMG Peat Marwick LLP - 1996.................. F-2 Independent Auditors' Report - Ciulla, Smith & Dale, LLP - 1995 and 1994..... F-3 Combined Balance Sheets as of December 31, 1996 and 1995..................... F-4 Combined Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994.............................................................. F-5 Combined Statements of Shareholders' Equity (Deficit) for the Years Ended December 31, 1996, 1995 and 1994........................................... F-6 Combined Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994.............................................................. F-7 Notes to Combined Financial Statements for the Years Ended December 31, 1996, 1995 and 1994.............................................................. F-9
HARBINGER CORPORATION AND SUBSIDIARIES Unaudited Pro Forma Consolidated Condensed Balance Sheet as of December 31, 1996.......................................................... F-22 Unaudited Pro Forma Consolidated Condensed Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994........................... F-23 Notes to Unaudited Pro Forma Consolidated Condensed Financial Information................................................................ F-26
F-1 22 3 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders SupplyTech, Inc. and SupplyTech International, LLC: We have audited the combined balance sheet of SupplyTech, Inc. and SupplyTech International, LLC as of December 31, 1996 and the related combined statements of operations, shareholders' equity (deficit), and cash flows for the year then ended. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the 1996 combined financial statements referred to above present fairly, in all material respects, the financial position of SupplyTech, Inc. and SupplyTech International, LLC, as of December 31, 1996, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP ------------------------- KPMG PEAT MARWICK LLP Atlanta, Georgia February 19, 1997 F-2 23 4 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders SupplyTech, Inc. and SupplyTech International, LLC: We have audited the combined balance sheet of SupplyTech, Inc. and SupplyTech International, LLC as of December 31, 1995 and the related combined statements of operations, shareholders' equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 1995. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined 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 combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of SupplyTech, Inc. and SupplyTech International, LLC, as of December 31, 1995, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 1995 in conformity with generally accepted accounting principles. As discussed in Note 11 to the financial statements, the Company's 1995 accrued expenses previously reported as $903,000 should have been $1,903,000. In addition, the Company's 1995 net intangible assets previously reported as $2,617,000 should have been $1,457,000. These discoveries were made subsequent to the issuance of the financial statements. The financial statements have been restated to reflect these corrections. /s/ CIULLA, SMITH & DALE LLP ---------------------------- CIULLA, SMITH & DALE, LLP Southfield, Michigan March 15, 1996 (except for Note 11, as to which the date is February 19, 1997) F-3 24 5 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES COMBINED BALANCE SHEETS
ASSETS DECEMBER 31, --------------------------------- 1996 1995 ----------- ----------- Current assets: Cash and cash equivalents.............................. $ 664,000 $ 845,000 Accounts receivable, less allowances for returns and doubtful accounts of $525,000 in 1996............. 2,095,000 2,056,000 Due from joint venture................................. 67,000 - Other current assets................................... 350,000 439,000 ----------- ----------- Total current assets............................. 3,176,000 3,340,000 ----------- ----------- Property and equipment, less accumulated depreciation and amortization....................................... 1,381,000 1,297,000 Investments in joint venture............................. - 37,000 Intangible assets, less accumulated amortization......... 1,742,000 1,457,000 Other assets............................................. 37,000 13,000 ----------- ----------- $ 6,336,000 $ 6,144,000 =========== =========== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Note payable to bank.................................... $ 1,550,000 $ - Note payable to related party........................... - 440,000 Current portion of long-term debt....................... 907,000 600,000 Accounts payable........................................ 1,483,000 506,000 Accrued expenses........................................ 3,956,000 1,903,000 Deferred revenues....................................... 3,442,000 2,647,000 ----------- ----------- Total current liabilities......................... 11,338,000 6,096,000 ----------- ----------- Long-term debt, excluding current portion................. 1,368,000 1,672,000 Investment in joint venture............................... 81,000 - Shareholders' deficit: Common stock; no par value; 500,000 shares authorized, 8,100 shares issued and outstanding as of December 31, 1996 and 1995, respectively............. - - Additional paid-in capital.............................. 32,000 32,000 Accumulated deficit..................................... (6,483,000) (1,656,000) ----------- ----------- Total shareholders' deficit....................... (6,451,000) (1,624,000) ----------- ----------- Commitments and contingencies............................. - - $ 6,336,000 $ 6,144,000 =========== ===========
See accompanying notes to combined financial statements. F-4 25 6 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, ----------------------------------------------------------- 1996 1995 1994 ------------------ ------------------ ------------------- Revenues: Services and hardware.................. $10,016,000 $ 8,076,000 $ 6,793,000 Software............................... 7,522,000 6,637,000 7,448,000 ----------- ----------- ----------- Total revenues................... 17,538,000 14,713,000 14,241,000 ----------- ----------- ----------- Direct costs: Services and hardware.................. 5,006,000 4,011,000 3,310,000 Software............................... 747,000 602,000 408,000 ----------- ----------- ----------- Total direct costs............... 5,753,000 4,613,000 3,718,000 ----------- ----------- ----------- Gross margin................... 11,785,000 10,100,000 10,523,000 ----------- ----------- ----------- Operating costs: Selling and marketing.................. 7,128,000 4,916,000 5,073,000 General and administrative............. 4,865,000 3,815,000 2,752,000 Depreciation and amortization.......... 974,000 567,000 534,000 Product development.................... 3,368,000 2,118,000 2,133,000 Charge for purchased in-process product development.......................... - 1,160,000 - ----------- ----------- ----------- Total operating costs............ 16,335,000 12,576,000 10,492,000 ----------- ----------- ----------- Operating income (loss)........ (4,550,000) (2,476,000) 31,000 Interest expense (income), net........... 149,000 (3,000) (11,000) Equity in losses of joint venture........ 119,000 - - ----------- ----------- ----------- Income (loss) before income tax expense.................. (4,818,000) (2,473,000) 42,000 ----------- ----------- ----------- Income tax expense....................... 516,000 19,000 ----------- ----------- ----------- Net income (loss).............. $(4,818,000) $(2,989,000) $ 23,000 =========== =========== =========== Pro forma net income (loss) (See Note 7) Income (loss) before income tax expense as reported.......................... $(4,818,000) $(2,473,000) Pro forma income tax expense........... - - ----------- ----------- Pro forma net income (loss)............ $(4,818,000) $(2,473,000) =========== ===========
See accompanying notes to combined financial statements. F-5 26 7 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
Retained Total Common Stock Additional earnings shareholders' -------------------- paid-in (accumulated equity Shares Amount capital deficit) (deficit) --------- --------- ----------- ------------ ------------ BALANCE, DECEMBER 31, 1993......... 8,100 $ - $ 2,000 $ 1,310,000 $ 1,312,000 Net income......................... - - - 23,000 23,000 ----- -------- -------- ----------- ----------- BALANCE, DECEMBER 31, 1994......... 8,100 - 2,000 1,333,000 1,335,000 Capital contribution by the members upon formation of SupplyTech International, LLC................ - - 30,000 - 30,000 Net loss........................... - - - (2,989,000) (2,989,000) ----- -------- -------- ----------- ----------- BALANCE, DECEMBER 31, 1995......... 8,100 - 32,000 (1,656,000) (1,624,000) Net loss........................... - - - (4,818,000) (4,818,000) Cumulative currency translation adjustment........................ - - - (9,000) (9,000) ----- -------- -------- ----------- ----------- BALANCE, DECEMBER 31, 1996......... 8,100 $ - $32,000 $(6,483,000) $(6,451,000) ===== ======== ======== =========== ===========
See accompanying notes to combined financial statements. F-6 27 8 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, -------------------------------------------------- 1996 1995 1994 ----------- ------------ --------- Cash flow from operating activities: Net income (loss).................... $(4,818,000) $(2,989,000) $ 23,000 ----------- ----------- --------- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Charge for purchased in-process product development............... - 1,160,000 - Depreciation and amortization...... 1,149,000 605,000 534,000 Loss on sale of property and equipment......................... 54,000 65,000 14,000 Equity in losses of joint venture.. 119,000 - 59,000 Deferred income tax expense........ - 516,000 51,000 (Increase) decrease in: Accounts receivable............... (39,000) 110,000 (585,000) Due from joint venture............ (67,000) - 55,000 Other current assets.............. 224,000 (121,000) 230,000 Increase in: Accounts payable.................. 962,000 107,000 139,000 Accrued expenses.................. 1,894,000 596,000 471,000 Deferred revenues................. 795,000 191,000 373,000 ----------- ----------- --------- Net cash provided by operating activities....................... 273,000 240,000 1,364,000 ----------- ----------- --------- Cash flows from investing activities: Purchases of property and equipment.. (812,000) (582,000) (539,000) Proceeds from sale of property and equipment.......................... 57,000 21,000 5,000 Organizational costs................ - (11,000) Investments in acquisition, purchased technology and alliance agreement.................. (134,000) (450,000) - Investment in joint venture.......... - (37,000) - ----------- ----------- --------- Net cash used in investing activities....................... (889,000) (1,059,000) (534,000) ----------- ----------- ---------
See accompanying notes to combined financial statements. F-7 28 9 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES COMBINED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, --------------------------------------------------- 1996 1995 1994 ----------- ---------- ---------- Cash flows from financing activities: Proceeds received from line of credit, net...... $ 1,550,000 $ - $ - Proceeds received from (repayment of) notes payable to related parties............. (1,091,000) 470,000 (54,000) Principal payments under capital lease obligations............................ (28,000) (49,000) (47,000) ----------- ---------- ---------- Net cash provided by (used in) financing activities...................................... 431,000 421,000 (101,000) ----------- ---------- ---------- Net increase (decrease) in cash and cash equivalents..................................... (185,000) (398,000) 729,000 Effect of exchange rates on cash held in foreign currencies.............................. 4,000 - - Cash and cash equivalents at beginning of year......................................... 845,000 1,243,000 514,000 ----------- ---------- ---------- Cash and cash equivalents at end of year......................................... $ 664,000 $ 845,000 $1,243,000 =========== ========== ========== Supplemental disclosure of cash paid for interest........................................ $ 173,000 $ 5,000 $ 6,000 =========== ========== ========== Supplemental disclosure of non-cash investing and financing activities: Acquisition of business and assumption of note payable.............................. $ 670,000 $ - $ - =========== ========== ========== Acquisition of purchased technology and alliance agreement and assumption of note payable................................. $ - $2,200,000 $ - =========== ========== ==========
See accompanying notes to combined financial statements. F-8 29 10 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 1. PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS AND PRESENTATION The accompanying combined financial statements include the accounts of SupplyTech, Inc. and SupplyTech International, LLC and subsidiaries (the "Company"). The companies were controlled by common shareholders and were both acquired through a merger with Harbinger Corporation on January 3, 1997 (see Note 12). SupplyTech, Inc. develops, markets, and supports software products to enable businesses to engage in electronic commerce. The Company's products and services are primarily targeted in the automotive, retail, manufacturing and governmental industries. SupplyTech International, LLC primarily sells, markets and supports software products developed by SupplyTech, Inc. in certain international markets including Italy, Mexico and the United Kingdom. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these combined financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. REVENUE RECOGNITION Software Revenues derived from software license fees and hardware are recognized upon shipment, net of estimated returns. Services and Hardware Revenues derived from services include maintenance and implementation fees that are generally billed annually in advance. Maintenance and implementation fees include fixed fees for providing customer support and product updates and are recognized ratably over the service period. Hardware revenues are derived from the resale of purchased computer equipment and are recognized upon shipment. Deferred Revenue Deferred revenues represent payments received from customers or billings invoiced to customers for software and services billed in advance. DIRECT COSTS Direct costs for services include the costs of personnel to conduct customer support, consulting and other personnel-related expenses. Direct costs for software include duplication, packaging and amortization of purchased technology. F-9 30 11 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets as follows: Computer and communications equipment 3 - 5 years Furniture, fixture and leasehold improvements 5 - 10 years Transportation equipment 3 years Building 10 years
INVESTMENT IN JOINT VENTURE The Company's 50% investment in SupplyTech Australia, Pty., an Australian Corporation that sells, markets and services the Company's products in Australia, is accounted for using the equity method of accounting. The financial position and results of operations of SupplyTech Australia, Pty. are insignificant. INTANGIBLE ASSETS Purchased Technology, Alliance Agreement and Goodwill Purchased technology, alliance agreement and goodwill are being amortized over periods of three to ten years. The Company evaluates the recoverability of these intangible assets at each period end using the undiscounted estimated future net operating cash flows expected to be derived from such assets. If such evaluation indicates a potential impairment, the Company uses fair value in determining the amount of these intangible assets that should be written off. Software Development Costs Product development costs consist principally of compensation and benefits paid to the Company's employees. All product development costs not qualifying for capitalization as software development costs are expensed as incurred. The Company's policy is to expense all software development costs associated with establishing technological feasibility. Because the Company's products have reached this state of development almost concurrently with general release, the Company has not capitalized any software development costs in the accompanying combined financial statements, due to the amounts being insignificant. F-10 31 12 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 INCOME TAXES Effective January 1, 1995, SupplyTech, Inc. elected to be taxed as an S Corporation under the Internal Revenue Code. SupplyTech International, LLC was incorporated under the laws of the state of Michigan as a Limited Liability Corporation ("LLC"). As a LLC, SupplyTech International, LLC has elected to be taxed as a partnership under the Internal Revenue Code. As a result of these elections, the Company has been taxed in a manner similar to a partnership for 1995 and 1996 and has not provided for any Federal or state income taxes as the results of operations are passed through to, and the related income taxes become the individual responsibility of the Company's shareholders. Prior to January 1, 1995, the Company accounted for income taxes using the asset and liability method of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. The accompanying pro forma income tax information for 1996 and 1995 reflects the income tax expense that would have been reported if the Company had been a C corporation and subject to SFAS No. 109 during these periods. RECLASSIFICATIONS Certain amounts in the accompanying 1995 and 1994 combined financial statements have been reclassified to conform to the presentation adopted in the 1996 combined financial statements. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company uses financial instruments in the normal course of its business. The carrying values of cash equivalents, accounts receivable, accounts payable, accrued expenses, and deferred revenues approximate fair value due to the short-term maturities of these assets and liabilities. The carrying values of the Company's long-term debt is less than fair value, but such difference is insignificant. The Company's investment in joint venture is accounted for using the equity method and pertains to a privately held company for which a fair value is not readily available. The Company believes the fair value of its joint venture investment exceeds the carrying value. FOREIGN CURRENCY TRANSLATION Foreign currency financial statements of the Company's foreign operations and foreign joint venture are translated into U.S. dollars at current exchange rates, except for revenues, costs and expenses, and net losses which are translated at average exchange rates during each reporting period. Net exchange gains or losses resulting from the translation of assets and liabilities of the Company's foreign operations and foreign joint venture were not significant to the Company's 1996 combined financial statements. F-11 32 13 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 2. ACQUISITION, PURCHASED TECHNOLOGY AND ALLIANCE AGREEMENT PURCHASED TECHNOLOGY AND ALLIANCE AGREEMENT On December 31, 1995, the Company entered into an agreement to purchase certain software products and entered into an alliance agreement with General Electric Information Services, Inc. ("GEIS"). The total purchase price was $2.5 million, consisting of $300,000 in cash and the assumption of a note payable to GEIS in the amount of $2.2 million. The Company recorded the purchase of the technology and the alliance agreement based upon fair value with $1,160,000 of the purchase price allocated to in-process product development and charged to the combined statement of operations on December 31, 1995, $375,000 allocated to purchased technology, $950,000 allocated to the alliance agreement and $15,000 allocated to tangible assets. Certain terms of the alliance agreement include the referral of customers to the Company by GEIS, the performance of certain software maintenance services by GEIS, and a $1.2 million guaranteed payment by GEIS to the Company for the two year period ending December 31, 1997 relating to software maintenance revenues to be paid by GEIS to the Company. ACQUISITION Effective October 15, 1996, the Company acquired all of the common stock of EDI Integration Services Limited ("EISL"), a company based in Hampshire, United Kingdom for $804,000 consisting of $134,000 in cash and the assumption of a $670,000 note payable. The Company recorded the acquisition using the purchase method of accounting with $250,000 allocated to purchased technology, $548,000 allocated to goodwill, and $6,000 allocated to tangible assets. The results of operations of EISL have been included in the Company's accompanying 1996 statement of operations since the acquisition date. The unaudited pro forma results of operations of the Company for 1996 and 1995 as if the acquisition described above had been effected on January 1, 1995 are summarized below:
Years Ended December 31, ------------------------- 1996 1995 ----------- ----------- Revenues........................ $17,927,000 $15,276,000 =========== =========== Net loss........................ $(4,764,000) $(2,925,000) =========== ===========
The unaudited pro forma results do not necessarily represent results which would have occurred if the acquisition had taken place on the date indicated nor are they necessarily indicative of the results of future operations. F-12 33 14 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31, 1996 and 1995:
1996 1995 --------------- --------------- Computer and communications equipment........................ $ 2,081,000 $ 1,653,000 Furniture, fixtures and leasehold improvements..................... 932,000 937,000 Transportation equipment............. 134,000 143,000 Buildings............................ 59,000 59,000 ----------- ----------- 3,206,000 2,792,000 Less accumulated depreciation and amortization................. (1,825,000) (1,495,000) ----------- ----------- $ 1,381,000 $ 1,297,000 =========== ===========
4. INTANGIBLE ASSETS Intangible assets consist of the following at December 31, 1996 and 1995:
1996 1995 --------- ---------- Purchased technology............... $ 775,000 $ 525,000 Alliance Agreement................. 950,000 950,000 Goodwill........................... 548,000 - Organization costs................. 30,000 30,000 ---------- ---------- 2,303,000 1,505,000 Less accumulated amortization.. (561,000) (48,000) ---------- ---------- $1,742,000 $1,457,000 ========== ==========
5. ACCRUED EXPENSES Accrued expenses consist of the following at December 31, 1996 and 1995:
1996 1995 --------- ---------- State income, property, sales and other taxes.. $1,803,000 $1,000,000 Accrued salaries and wages..................... 542,000 173,000 Accrued litigation............................. 600,000 - Accrued rent................................... 229,000 254,000 Accrued royalties.............................. 308,000 279,000 Other accrued expenses......................... 474,000 197,000 ---------- ---------- $3,956,000 $1,903,000 ========== ==========
F-13 34 15 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 6. NOTE PAYABLE TO BANK AND LONG-TERM DEBT NOTE PAYABLE TO BANK The Company maintains a revolving credit facility payable to a bank which is effective through June 1997 and which provides a line of credit to the Company up to $2.0 million, subject to the terms of the facility, bearing an interest rate equal to the bank's prime rate. The credit facility is secured by all of the Company's accounts receivable and restricts the Company, among other things, from incurring additional indebtedness, as defined by the terms of the facility. The Company had $1,550,000 outstanding under the credit facility as of December 31, 1996. LONG-TERM DEBT Long-term debt outstanding as of December 31, 1996 and 1995 consisted of the following:
1996 1995 ---------- ---------- 6% promissory note payable to GEIS due in equal quarterly principal installments of $137,500 plus accrued interest through September 1999 (see Note 2)................................... $1,650,000 $2,200,000 Non-interest bearing note payable to the former shareholders of EISL due in equal quarterly principal installments through September 1998 (see Note 2)................................... 625,000 - Other............................................. - 72,000 ---------- ---------- Total long-term debt....................... 2,275,000 2,272,000 Less current portion of long-term debt............ (907,000) (600,000) ---------- ---------- Long-term debt, excluding current portion.................................. $1,368,000 $1,672,000 ========== ==========
Future annual minimum payments under long-term debt are as follows: 1997................................. $ 907,000 1998................................. 818,000 1999................................. 550,000 ---------- $2,275,000 ==========
In previous years, the Company had entered into a capital lease with an unrelated party for telephone equipment. The lease was canceled in 1996 when the Company upgraded their telephone system under an operating lease arrangement. F-14 35 16 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 7. INCOME TAXES For 1994, the provision for income tax expense (benefit) includes income taxes currently payable and those deferred because of temporary differences between the financial statement and tax bases of assets and liabilities and any increase or decrease in the valuation allowance for deferred income tax assets. Effective January 1, 1995, SupplyTech, Inc. elected to be taxed as an S corporation under the Internal Revenue Code. SupplyTech International, LLC was incorporated under the laws of the state of Michigan as a Limited Liability Corporation ("LLC"). As a LLC, SupplyTech International, LLC has elected to be taxed as a partnership under the Internal Revenue Code. As a result of these elections, the Company has been taxed in a manner similar to a partnership for 1995 and 1996 and has not provided for any Federal or state income taxes as the results of operations are passed through to, and the related income taxes become the individual responsibility of the Company's shareholders. Although the income tax recognition of timing differences originating before S corporation status was elected will reverse, they will not generate a net deferred income tax asset for the Company because the S corporation election is in effect. Thus, the net deferred income tax asset in the amount of $516,000 recorded as of December 31, 1994 has been charged to income tax expense in 1995. The pro forma provision income tax expense for 1996 and 1995 reflects the income tax expense that would have been reported if the Company had been a C corporation and subject to SFAS No. 109 during these periods. Actual income tax expense (benefit) for the years ended December 31, 1995 and 1994 is summarized as follows:
1995 1994 -------- -------- Current: Federal..................... $ - $(35,000) Foreign..................... - 7,000 State....................... - (4,000) -------- -------- Total current............ $ - $(32,000) -------- -------- Deferred: Federal..................... $462,000 $ 46,000 Foreign..................... - - State....................... 54,000 5,000 -------- -------- Total deferred........... $516,000 $ 51,000 -------- -------- Total income tax expense.... $516,000 $ 19,000 ======== ========
F-15 36 17 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 Pro forma income tax expense (benefit) for the years ended December 31, 1996 and 1995 is summarized as follows:
1996 1995 --------- --------- Current: Federal............................... $ - $ - Foreign............................... - - State................................. - - --------- --------- Total current..................... - - --------- --------- Deferred: Federal............................... - - Foreign............................... - - State................................. - - --------- --------- Total deferred.................... - - --------- --------- Total income tax expense (benefit).... $ - $ - ========= =========
Actual income tax expense (benefit) differs from the amounts computed by applying the federal statutory income tax rate of 34% to income (loss) before income taxes as a result of the following:
1994 ------- Computed "expected" income tax expense............... $14,000 Increase in income tax expense resulting from: State income taxes, net of federal income tax benefit................................... 2,000 Other........................................... 3,000 ------- $19,000 =======
Pro forma income tax expense (benefit) differs from the amounts computed by applying the federal statutory income tax rate of 34% to income (loss) before income taxes as a result of the following:
1996 1995 ----------- --------- Computed "expected" income tax benefit............ $(1,638,000) $(841,000) Increase in income tax benefit resulting from: Differences due to purchase accounting adjustments................................ 230,000 - Equity in foreign subsidiary.................. 45,000 - Increase in the valuation allowance for deferred income tax assets................. 1,325,000 805,000 Other......................................... 38,000 36,000 =========== ========= $ - $ - =========== =========
F-16 37 18 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 The significant components of actual deferred income tax expense for the year ended December 31, 1994 is summarized as follows:
1994 ------- Deferred income tax expense..................... $51,000 Increase in the valuation allowance for deferred income tax assets........................... - ------- $51,000 =======
Pro forma significant components of deferred income tax expense (benefit) for the years ended December 31, 1996 and 1995 are summarized as follows:
1996 1995 ----------- --------- Deferred income tax benefit..................... $(1,325,000) $(805,000) Increase in the valuation allowance for deferred income tax assets........................... 1,325,000 805,000 ----------- --------- $ - $ - =========== =========
8. SEGMENT INFORMATION, INTERNATIONAL OPERATIONS AND MAJOR CUSTOMERS SEGMENT INFORMATION The Company operates in a single industry segment: the development, marketing and supporting of software products to enable businesses to engage in electronic commerce. INTERNATIONAL OPERATIONS A summary of the Company's operations by geographic area as of and for the year ended December 31, 1996 is presented below:
United States Europe Mexico Eliminations Total ------------- ---------- ---------- -------------- ------------ Revenues................... $16,445,000 $1,303,000 $358,000 $ (568,000) $17,538,000 Operating income (loss).... (4,524,000) 12,000 5,000 (43,000) (4,550,000) Identifiable assets........ 5,398,000 3,795,000 112,000 (2,969,000) 6,336,000
MAJOR CUSTOMERS No single customer comprised 10% or greater of the Company's consolidated revenues in 1996, 1995 and 1994. F-17 38 19 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 9. RELATED PARTY TRANSACTIONS Two officers of the Company made advances to the Company totaling $440,000 during 1995 payable on demand with interest at 8.5%, payable annually. These loans were paid in full by the Company during 1996. The Company paid these officers interest of $4,065 which is included in interest expense during the year ended December 31, 1996. 10. COMMITMENTS AND CONTINGENCIES 401(K) PROFIT SHARING PLAN The Company maintains a 401(k) Profit Sharing Plan (the "401(k) Plan") for the benefit of all eligible employees, which is intended to be a tax-qualified defined contribution plan under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees who have completed six months of service and are at least 21 years of age are eligible to participate. Subject to certain Internal Revenue Code limitations, the Company has elected to make a matching contribution of 25% of the first 6% of employee contributions. The contribution made by the Company to the 401(k) Plan was $68,000, $51,000 and $53,000 for the years ended December 31, 1996, 1995 and 1994, respectively. OPTION AGREEMENT Pursuant to an agreement dated February 15, 1996, between SupplyTech, Inc. and Endeavor Capital Management, LLC ("Endeavor"), Endeavor was retained to assist SupplyTech, Inc. with strategy, operational and management issues, raising capital, business expansion, and/or sale of SupplyTech, Inc.. The Company is obligated to pay Endeavor a monthly retainer of $10,000 for these services and certain other fees based on capital raised. The Company paid $100,000 in retainer fees associated with this agreement during 1996. Concurrent with the Endeavor agreement, Endeavor was granted an option to purchase 657 shares (7.5%) of the Company's common stock at a price of $100 per share which vests only upon the sale of the Company for an amount greater than a specified amount. LEASE COMMITMENTS The Company leases office space, communication equipment and automobiles under operating leases which extend through 2001. Rent expense under all operating leases was approximately $788,000, $624,000 and $588,000 for the years ended December 31, 1996, 1995 and 1994, respectively. Future minimum lease payments under operating leases with noncancelable lease terms in excess of one year for the next five years and in the aggregate are as follows: 1997................... $1,049,000 1998................... 1,051,000 1999................... 1,040,000 2000................... 985,000 2001................... 199,000 ---------- $4,324,000 ==========
F-18 39 20 SUPPLYTECH, INC. AND SUPPLYTECH INTERNATIONAL, LLC AND SUBSIDIARIES NOTES TO COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 CONTINGENCIES The Company is subject to lawsuits, claims and other complaints arising out of the ordinary conduct of its business. In the opinion of management, based in part upon the advice of legal counsel, all matters are adequately covered by accruals or involve such amounts that management believes that they will not have a material adverse effect on the Company's results of operations or financial position. 11. RESTATED FINANCIAL STATEMENTS The Company has restated its financial statements for the year ended December 31, 1995 due to the discovery of certain facts by management existing at the date the financial statements were previously issued. Specifically the Company has identified certain costs related to the GEIS product line purchase as in-process product development which should have been expensed. In addition, as a result of the Company's ongoing analysis of overall tax exposures and the discovery of certain facts, an additional accrual for taxes was required as of December 31, 1995. The impact of these adjustments on the Company's combined balance sheet and statement of operations for 1995 is summarized as follows:
Previously issued Restated financial financial statements Change statements -------------- ------------ -------------- Intangible assets, net... $2,617,000 $ 1,160,000 $ 1,457,000 ========== =========== =========== Accrued expenses......... $ 903,000 $ 1,000,000 $ 1,903,000 ========== =========== =========== Net loss................. $ (829,000) $(2,160,000) $(2,989,000)
========== =========== =========== 12. SUBSEQUENT EVENT (UNAUDITED) SALE OF THE COMPANY On January 3, 1997, the Company was acquired by Harbinger Corporation in a business combination transaction through a merger which included the exchange of 2,400,000 shares of Harbinger Corporation common stock for all outstanding equity of the Company. In connection with and immediately prior to this transaction, Endeavor exercised its option to purchase 657 shares of the Company at a price of $100 per share. F-19 40 EX-99.5 5 HARBINGER CORPORATION UNAUDITED PRO FORMA 1 EXHIBIT 99.5 F-20 41 2 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION The following unaudited pro forma consolidated condensed financial information of Harbinger Corporation and subsidiaries (the "Company") set forth below as of December 31, 1996 and for each of the years in the three-year period ended December 31, 1996 give effect to the Company's acquisition of SupplyTech, Inc. ("STI") and SupplyTech International, LLC ("STILLC") (collectively, the "STI Merger") which will be accounted for by the Company using the pooling-of-interests method of accounting. The unaudited pro forma consolidated condensed financial information should be read in conjunction with the historical consolidated financial statements and notes of the Company and the historical combined financial statements and notes of STI and STILLC. The unaudited pro forma consolidated condensed financial information do not necessarily represent results which would have occurred if the transactions had taken place on the dates indicated nor are they necessarily indicative of the results of future operations. F-21 42 3 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET (IN THOUSANDS)
December 31, 1996 ------------------------------------------------ Historical -------------- Pro Forma Pro Forma Company STI Adjustments Consolidated -------------- ----------- ------------ ASSETS Current assets: Cash and cash equivalents............... $ 8,395 $ 664 $ 9,059 Accounts receivable, net................ 9,795 2,095 11,890 Deferred income taxes................... 1,517 - 1,517 Due from joint ventures................. 1,760 67 1,827 Other current assets.................... 1,049 350 (150) (2) 1,249 ------- ------ -------- Total current assets................... 22,516 3,176 25,542 ------- ------ -------- Property and equipment, net.............. 6,845 1,381 (300) (2) 7,926 Investments in joint ventures............ 407 - 407 Intangible assets, net................... 11,405 1,742 (2,453) (2) 10,694 Deferred income taxes.................... 1,284 - 1,284 Other assets............................. 37 37 ------- ------ -------- $42,457 $6,336 $ 45,890 ======= ====== ======== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Note payable to bank.................... $ - $1,550 $ 1,550 Current portion of long-term debt....... - 907 907 Accounts payable........................ 1,570 1,483 3,053 Accrued expenses........................ 5,843 3,956 950 (1) 10,749 Deferred revenues....................... 3,751 3,442 7,193 ------- ------ -------- Total current liabilities.............. 11,164 11,338 23,452 ------- ------ -------- Long-term debt, excluding current portion - 1,368 1,368 Investments in joint ventures............ - 81 81 Shareholders' equity (deficit): Common stock............................ 2 - 2 Additional paid in capital.............. 45,259 32 3,179 (1) 48,470 Accumulated deficit..................... (13,968) (6,483) (4,129) (1) (27,483) (2,903) (2) ------- ------ -------- 31,293 (6,451) 20,989 ------- ------ -------- $42,457 $6,336 $ 45,890 ======= ====== ========
F-22 43 4 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Year Ended December 31, 1996 ------------------------------------------------------- Historical ----------------------- Pro Forma Pro Forma Company STI Adjustments Consolidated ------------ --------- ----------- ----------------- Revenues: Services........................................................ $27,806 $10,016 $ 37,822 Software........................................................ 13,919 7,522 21,441 Total revenues................................................. 41,725 17,538 59,263 ------- ------- -------- Direct costs: Services........................................................ 8,619 5,006 13,625 Software........................................................ 2,165 747 2,912 -------- Total direct costs............................................. 10,784 5,753 16,537 ------- ------- -------- Gross margin.................................................. 30,941 11,785 42,726 ------- ------- -------- Operating costs: Selling and marketing........................................... 7,929 7,128 15,057 General and administrative...................................... 7,799 4,865 12,664 Depreciation and amortization................................... 1,992 974 2,966 Product development............................................. 5,632 3,368 9,000 Charge for purchased in-process product development, write-off of software development costs and acquisition related charges................................................ 8,775 - 8,775 ------- ------- -------- Total operating costs......................................... 32,127 16,335 48,462 ------- ------- -------- Operating loss................................................ (1,186) (4,550) (5,736) Interest expense (income), net................................... (156) 149 (7) Equity in losses of joint venture................................ 7,073 119 7,192 ------- ------- -------- Loss before income tax expense................................... (8,103) (4,818) (12,921) Income tax expense............................................... 146 - 146 ------- -------- -------- Net loss......................................................... (8,249) (4,818) (13,067) Preferred stock dividends........................................ (28) - (28) ------- ------- -------- Net loss applicable to common shareholders............................................. $(8,277) $(4,818) $(13,095) Net loss per common share........................................ $ (0.52) $ (0.71) ======= ======== Weighted average common and common equivalent shares outstanding................................... 16,065 18,465 ======= ========
F-23 44 5 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Year Ended December 31, 1995 ------------------------------------------------------------ Historical ---------------------- Pro Forma Pro Forma Company STI Adjustments Consolidated ----------- --------- ----------- --------------- Revenues: Services.................................. $16,418 $ 8,076 $24,494 Software.................................. 6,699 6,637 13,336 ---------- -------- ------- Total revenues........................... 23,117 14,713 37,830 ---------- -------- ------- Direct costs: Services.................................. 4,323 4,011 8,334 Software.................................. 1,349 602 1,951 ---------- -------- ------- Total direct costs..................... 5,672 4,613 10,285 ---------- -------- ------- Gross margin........................ 17,445 10,100 27,545 ---------- -------- ------- Operating costs: Selling and marketing..................... 4,875 4,916 9,791 General and administrative................ 4,832 3,815 8,647 Depreciation and amortization............. 794 567 1,361 Product development....................... 3,809 2,118 5,927 Charge for purchased in-process product development, write-off of software development costs and acquisition related charges........................ - 1,160 1,160 ---------- -------- ------- Total operating costs.............. 14,310 12,576 26,886 ---------- -------- ------- Operating income (loss)............ 3,135 (2,476) 659 Interest expense (income), net............. (65) (3) (68) Equity in losses of joint ventures......... 1,266 - 1,266 ---------- --------- ------- Income (loss) before income tax expense.... 1,934 (2,473) (539) Income tax expense......................... 687 516 1,203 ---------- -------- ------- Net income (loss).......................... 1,247 (2,989) (1,742) Preferred stock dividends.................. (199) - (199) ---------- -------- ------- Net income (loss) applicable to common shareholders....................... $ 1,048 $(2,989) $(1,941) ========== ======== ======= Net income (loss) per common share......... $ 0.08 $ (0.13) ========== ======= Weighted average common and common equivalent shares outstanding............. 13,398 15,008 ========== =======
F-24 45 6 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Year Ended December 31, 1994 ------------------------------------------------------ Historical Pro Forma ------------------------ Pro Forma --------------- Company STI Adjustments Consolidated ------------ ---------- ----------- --------------- Revenues: Services.................................. $10,688 $ 6,793 $17,481 Software.................................. 2,964 7,448 10,412 ------- ------- ------- Total revenues......................... 13,652 14,241 27,893 ------- ------- ------- Direct costs: Services.................................. 3,011 3,310 6,321 Software.................................. 689 408 1,097 ------- ------- ------- Total direct costs..................... 3,700 3,718 7,418 ------- ------- ------- Gross margin......................... 9,952 10,523 20,475 ------- ------- ------- Operating costs: Selling and marketing..................... 2,922 5,073 7,995 General and administrative................ 3,132 2,752 5,884 Depreciation and amortization............. 512 534 1,046 Product development....................... 1,767 2,133 3,900 Charge for purchased in-process product development, write off of software development costs and acquisition related charges........................ 4,317 - 4,317 ------- ------- ------- Total operating costs................ 12,650 10,492 23,142 ------- ------- ------- Operating income (loss).............. (2,698) 31 (2,667) Interest expense (income), net............. 38 (11) 27 Equity in losses of joint venture.......... 227 - 227 ------- ------- ------- Income (loss) before income tax expense.... (2,963) 42 (2,921) Income tax expense (benefit)............... (1,052) 19 (1,033) ------- ------- ------- Net income (loss).......................... (1,911) 23 (1,888) Preferred stock dividends.................. (200) - (200) ------- ------- ------- Net income (loss) applicable to common shareholders....................... $(2,111) $ 23 $(2,088) ======= ======= ======= Net loss per common share.................. $ (0.21) $ (0.16) ======= ======= Weighted average common and common equivalent shares outstanding............. 10,293 12,693 ======= =======
F-25 46 7 HARBINGER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION On January 3, 1997, the Company completed the acquisition of SupplyTech, Inc., a Michigan corporation ("STI"), and its affiliate, SupplyTech International, LLC, a Michigan limited liability company ("STILLC") (the "STI Merger"), for two million four hundred thousand shares of the Company's common stock, par value of $0.0001 per share. STI was acquired in a merger transaction pursuant to the terms of a Merger Agreement, dated as of January 3, 1997, by and among the Company, STI and Harbinger Acquisition Corporation II, a Georgia corporation and a wholly owned subsidiary of the Company. STI survived the merger as a wholly owned subsidiary of the Company. STILLC was acquired simultaneously by the Company in a series of related stock purchase transactions, which included the exchange of the Company's common stock for all the outstanding shares of STILLC. The STI Merger will be accounted for by the Company using the pooling-of-interest method of accounting. The accompanying unaudited pro forma consolidated condensed financial information illustrate the estimated effects of the transaction described above as if it had occurred as of December 31, 1996 with respect to the unaudited pro forma consolidated condensed balance sheet. The accompanying unaudited pro forma consolidated condensed statements of operations for each of the years in the three-year period ended December 31, 1996 give retroactive effect to the STI Acquisition. These unaudited pro forma consolidated condensed statements of operations do not include adjustments to record the transaction costs of the STI Merger totaling $4.1 million, nor do they reflect write-downs of certain assets of $2.9 million expected to result from the STI Merger, both of which will be recorded in the Company's consolidated statement of operations during the first quarter of 1997. Additionally, the Company anticipates that it will incur integration costs related to the STI Merger of $2.5 million to $3.5 million during 1997. These costs have not been reflected in the accompanying unaudited pro forma consolidated condensed balance sheet or unaudited pro forma consolidated condensed statements of operations. There is no pro forma provision for income taxes for 1995 and 1996 to reflect the tax expense (benefit) that would have been reported if SupplyTech Inc. (a S corporation for income tax reporting purposes) and SupplyTech International LLC (a partnership for income tax reporting purposes) had been a C corporation during those periods since any income tax expense (benefit) would be offset by a valuation allowance. The historical financial statements are derived from the audited financial statements of the Company and the audited combined financial statements of STI and STILLC. F-26 47 8 HARBINGER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION The unaudited pro forma consolidated condensed financial information does not purport to represent what the results of operations or financial position of the Company would actually have been if the STI Merger had occurred on such dates or to project the results of operations or financial position of the Company for any future date or period. The unaudited pro forma consolidated condensed financial information should be read together with the historical consolidated financial statements and notes of the Company and the historical combined financial statements and notes of STI and STILLC. The unaudited pro forma consolidated condensed balance sheet reflects the following adjustments: 1) Reflects adjustments to record the transaction costs of the merger totaling $4.1 million which include accrued transaction costs of $950,000 and investment brokerage fees in the form of common stock of $3.2 million. 2) Reflects adjustments to record the write-down of certain assets to net realizable value totaling $2.9 million due to duplicative assets and products of the combined companies. All share, per share and shareholders' equity amounts for the Company have been adjusted to reflect a three-for-two stock split effected in the form of a 150% stock dividend paid on January 31, 1997. F-27 48 -----END PRIVACY-ENHANCED MESSAGE-----