-----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, LRWaMpXLBoEfzZx4ukucPu8bPqLpdQU/qA2TNoU+T7ikYg3e8rT1NQu8DcUqWf5n 7yGaNQtMgNAdJb/27yAlXg== 0000950144-97-008897.txt : 19970814 0000950144-97-008897.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950144-97-008897 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-93804 FILM NUMBER: 97657655 BUSINESS ADDRESS: STREET 1: 1055 LENOX PARK BLVD CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048414334 10-Q 1 HARBINGER CORP 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [MARK ONE] /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________ COMMISSION FILE NUMBER 0-26298 HARBINGER CORPORATION (Exact name of registrant as specified in Its charter) GEORGIA (State or other Jurisdiction of incorporation or 58-1817306 organization) (I.R.S. Employer Identification No.)
1055 LENOX PARK BOULEVARD ATLANTA, GEORGIA 30319 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 467-3000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / The number of shares of the issuer's class of capital stock outstanding as of July 30, 1997, the latest practicable date, is as follows: 21,110,345 shares of Common Stock, $.0001 par value. =============================================================================== Form 10-Q Page 1 of 21 2 HARBINGER CORPORATION FORM 10-Q QUARTER ENDED JUNE 30, 1997 TABLE OF CONTENTS
Page Number ------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - (unaudited) June 30, 1997 and December 31, 1996 3 Consolidated Statements of Operations (unaudited) - Three months and six months ended June 30, 1997 and 1996 4 Consolidated Statements of Cash Flows (unaudited) - Six months ended June 30, 1997 and 1996 5 Notes to Consolidated Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 18 PART III. SIGNATURES 19
Form 10-Q Page 2 of 21 3 ITEM 1. FINANCIAL STATEMENTS HARBINGER CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, ------------ ------------ 1997 1996 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 2,085,000 $ 9,059,000 Accounts receivable, less allowances for returns and doubtful accounts of $1,900,000 at June 30, 1997 and $2,077,000 at December 31, 1996 18,390,000 11,890,000 Deferred income taxes 1,629,000 1,517,000 Due from joint ventures 117,000 1,827,000 Other current assets 1,729,000 1,399,000 ------------ ------------ Total current assets 23,950,000 25,692,000 ------------ ------------ Property and equipment, less accumulated depreciation and amortization 10,675,000 8,226,000 Investments in joint ventures -- 407,000 Intangible assets, less accumulated amortization 13,050,000 13,147,000 Deferred income taxes and other assets -- 1,321,000 ============ ============ $ 47,675,000 $ 48,793,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,438,000 $ 3,053,000 Accrued expenses 10,998,000 9,880,000 Deferred revenues 8,247,000 7,193,000 Note payable to bank -- 1,550,000 Current portion of long-term debt 749,000 907,000 ------------ ------------ Total current liabilities 23,432,000 22,583,000 ------------ ------------ Commitments and contingencies Long-term debt, excluding current portion 1,223,000 1,368,000 Redeemable preferred stock: Zero Coupon; 4,000,000 shares issued and outstanding at June 30, 1997 and December 31, 1996 -- -- Shareholders' equity: Common stock, $0.0001 par value; 100,000,000 shares authorized, 19,291,886 shares and 18,690,265 shares issued and outstanding at June 30, 1997 and December 31, 1996 2,000 2,000 Additional paid-in capital 57,561,000 45,291,000 Accumulated deficit (34,543,000) (20,451,000) ------------ ------------ Total shareholders' equity 23,020,000 24,842,000 ============ ============ $ 47,675,000 $ 48,793,000 ============ ============
See accompanying notes to consolidated financial statements Form 10-Q Page 3 of 21 4 HARBINGER CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, -------------------------- ---------------------------- 1997 1996 1997 1996 ----------- ------------ ------------ ------------ Revenues: Services $12,138,000 $ 9,372,000 $ 24,255,000 $ 16,869,000 Software 7,547,000 5,381,000 12,433,000 9,388,000 ----------- ------------ ------------ ------------ Total revenues 19,685,000 14,753,000 36,688,000 26,257,000 ----------- ------------ ------------ ------------ Direct costs: Services 4,258,000 3,503,000 8,091,000 5,922,000 Software 946,000 691,000 1,640,000 1,366,000 ----------- ------------ ------------ ------------ Total direct costs 5,204,000 4,194,000 9,731,000 7,288,000 ----------- ------------ ------------ ------------ Gross margin 14,481,000 10,559,000 26,957,000 18,969,000 ----------- ------------ ------------ ------------ Operating costs: Selling and marketing 4,009,000 4,146,000 7,491,000 7,202,000 General and administrative 3,714,000 3,304,000 7,070,000 6,056,000 Depreciation and amortization 981,000 747,000 1,966,000 1,238,000 Product development 2,127,000 2,110,000 3,870,000 3,747,000 Charge for purchased in-process product development and acquisition related charges -- -- 16,236,000 8,350,000 ----------- ------------ ------------ ------------ Total operating costs 10,831,000 10,307,000 36,633,000 26,593,000 ----------- ------------ ------------ ------------ Operating income (loss) 3,650,000 252,000 (9,676,000) (7,624,000) Interest (income) expense, net 22,000 (37,000) (42,000) (127,000) Equity in losses of joint ventures 35,000 1,682,000 53,000 2,861,000 ----------- ------------ ------------ ------------ Income (loss) before income tax expense and extraordinary item 3,593,000 (1,393,000) (9,687,000) (10,358,000) Income tax expense 1,396,000 83,000 1,419,000 132,000 ----------- ------------ ------------ ------------ Income (loss) before extraordinary item 2,197,000 (1,476,000) (11,106,000) (10,490,000) Extraordinary loss on debt extinguishment -- -- 2,419,000 -- ----------- ------------ ------------ ------------ Net income (loss) 2,197,000 (1,476,000) (13,525,000) (10,490,000) Preferred stock dividends -- -- -- (28,000) ----------- ------------ ------------ ------------ Net income (loss) applicable to common shareholders $ 2,197,000 $ (1,476,000) $(13,525,000) $(10,518,000) =========== ============ ============ ============ Net income (loss) per share: Income (loss) before extraordinary item applicable to common shareholders $ 0.11 $ (0.08) $ (0.58) $ (0.58) Extraordinary loss on debt extinguishment -- -- $ (0.13) -- ----------- ------------ ------------ ------------ Net income (loss) per common share $ 0.11 $ (0.08) $ (0.71) $ (0.58) =========== ============ ============ ============ Weighted average number of common and common equivalent shares outstanding 20,649,000 18,511,000 19,166,000 18,209,000 =========== ============ ============ ============
See accompanying notes to consolidated financial statements Form 10-Q Form 4 of 21 5 HARBINGER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended -------------------------------- June 30, -------------------------------- 1997 1996 ------------ ------------ Cash flows (used in) provided by operating activities: $ (2,051,000) $ 762,000 ------------ ------------ Cash flows from investing activities: Purchases of property and equipment (3,270,000) (1,865,000) Additions to software development costs (1,714,000) (1,321,000) Acquisitions (1,717,000) (4,603,000) ------------ ------------ Net cash used in investing activities: (6,701,000) (7,789,000) ------------ ------------ Cash flows from financing activities Dividends paid on preferred stock -- (28,000) Exercise of stock options and warrants 1,988,000 532,000 Repayments of notes payable (1,943,000) (1,029,000) Purchase of HNS subordinated debenture (1,500,000) -- ------------ ------------ Net cash used in financing activities (1,455,000) (525,000) ------------ ------------ Net decrease in cash and cash equivalents (10,207,000) (7,552,000) Cash and cash equivalents at beginning of period 9,059,000 12,763,000 Effect of exchange rates on cash (93,000) (100,000) Cash received from acquisitions 3,326,000 356,000 ------------ ------------ Cash and cash equivalents at end of period $ 2,085,000 $ 5,467,000 ============ ============ Supplemental disclosure of cash paid for interest $ 31,000 $ 69,000 ============ ============ Supplemental disclosure of noncash investing activities: Purchase of HNS subordinated debenture in exchange for common stock $ 4,200,000 $ -- ============ ============ Acquisition of HNS minority interest in exchange for issuance of options $ 2,216,000 $ -- ============ ============ Acquisition of businesses in exchange for assumption of liabilities and issuance of common stock $ 677,000 $ -- ============ ============ Acquisition of businesses in exchange for assumption of liabilities and issuance of common stock and options and warrants to acquire common stock $ -- $ 11,294,000 ============ ============ Conversion of Series C preferred stock to common stock $ -- $ 2,485,000 ============ ============
See accompanying notes to consolidated financial statements Form 10-Q Page 5 of 21 6 HARBINGER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information included herein is unaudited; however, the information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary to a fair presentation of the financial position, results of operations, and cash flows for the interim periods. Operating results for the three and six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in Harbinger Corporation's ("Harbinger" or the "Company") Form 10-K for the year ended December 31, 1996 and the Company's current report on Form 8-K dated July 1, 1997. 2. ACQUISITIONS 1996 ACQUISITIONS Effective March 31, 1996, the Company acquired all of the common stock of NTEX Holding, B.V. ("NTEX"), a Dutch corporation based in Rotterdam, The Netherlands, for $8.0 million, consisting of $3,195,000 in cash, 107,778 shares of the Company's common stock valued at $1.2 million, warrants to acquire 18,750 shares of the Company's stock at $11.33 per share valued at $100,500 and the assumption of $3.5 million in liabilities including transaction costs. The Company recorded the acquisition using the purchase method of accounting with $4,449,000 of the purchase price allocated to in-process product development and charged to the consolidated statement of operations on March 31, 1996, $204,000 allocated to purchased technology, $621,000 allocated to tangible assets and $2.8 million allocated to goodwill. Effective March 31, 1996, the Company acquired all of the common stock of INOVIS GmbH & Co. ("INOVIS"), a German corporation based in Karlsruhe, Germany for $6.1 million, consisting of $1,409,000 in cash, 210,276 shares of the Company's common stock valued at $2.4 million, warrants to acquire 30,000 shares of the Company's stock at $10.17 per share valued at $104,000, a note payable of $557,000 and the assumption of $1.7 million in liabilities including transaction costs. The Company recorded the acquisition using the purchase method of accounting with $3.4 million of the purchase price allocated to in-process product development and charged to the consolidated statement of operations on March 31, 1996, $600,000 allocated to purchased technology, $1,077,000 allocated to tangible assets and $1.1 million allocated to goodwill. Effective March 31, 1996, the Company acquired the remaining outstanding common stock of Harbinger N.V. ("HNV"), a Dutch corporation based in Hoofddorp, the Netherlands for $1.2 million, consisting of 58,065 shares of the Company's common stock valued at $668,000 and the assumption of $554,000 in liabilities. The Company recorded the acquisition using the purchase method of accounting with $300,000 of the purchase price allocated to in-process product development and charged to the consolidated statement of operations on March 31, 1996, $518,000 allocated to tangible assets and $447,000 allocated to goodwill and other intangibles. Effective August 1, 1996, the Company acquired all of the common stock of Comtech Management Systems, Inc. ("Comtech"), a Texas corporation based in Amarillo, Texas, for $500,000, consisting of 24,561 shares of the Company's common stock valued at $422,000 and the assumption of $75,000 in liabilities. The Company recorded the acquisition using the purchase method of accounting with $114,000 of the purchase price allocated to tangible assets, $100,000 allocated to purchased technology, and $283,000 allocated to goodwill. Form 10-Q Page 6 of 21 7 HARBINGER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) 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. 1997 ACQUISITIONS HNS On January 1, 1997, because of the expiration of restrictions on the Company's ability to appoint a majority of the HNS Board of Managers, the Company exercised its rights as majority shareholder of HNS by appointing a majority of the members of the HNS Board of Managers. As a result, effective January 1, 1997, the Company began accounting for its investment in HNS by consolidating the statements of financial position and results of operations of HNS with those of the Company. Also on January 1, 1997, the Company entered into a debenture purchase agreement with the holder of the Debenture whereby the Company acquired the Debenture in exchange for $1.5 million in cash and 242,288 shares of the Company's common stock valued at $4.2 million. The Company recorded an extraordinary loss on early debt extinguishment of $2.4 million in the first quarter of 1997 related to this transaction which represents the amount paid of $5.7 million in excess of the face amount of the Debenture of $3.0 million plus accrued interest of $280,000. Immediately after this transaction, the Company acquired the minority interest in HNS, consisting of 585,335 shares of HNS common stock and stock options to acquire 564,727 shares of HNS common stock at exercise prices ranging from $0.70 per share to $1.65 per share, by exchanging cash of $1.6 million and stock options to acquire 355,317 shares of the Company's common stock at exercise prices ranging from $15.22 per share to $16.53 per share which were valued by the Company at $2.2 million. Including transaction and other costs of $350,000, the Company paid $4.1 million for the acquisition of the HNS minority interest which was accounted for using the purchase method of accounting with $2.7 million of the purchase price allocated to in-process product development and charged to the consolidated statement of operations on January 1, 1997, and $1.4 million allocated to goodwill and purchased technology. The Company also incurred integration costs during the first quarter of 1997 related to this acquisition of $1.6 million which have been reflected in the acquisition related charges in the accompanying consolidated statement of operations. The Company recorded a net deferred income tax asset of approximately $840,000 as a result of this acquisition and provided a valuation allowance against such net deferred income tax asset to reduce it to zero. Smart Solutions Effective May 1, 1997, the Company acquired all of the common stock of Smart Solutions, a Michigan corporation based in Traverse City, Michigan, for $677,000, consisting of 19,757 unregistered shares of the Company's common stock valued at $454,000 and the assumption of $223,000 in liabilities. The Company recorded the acquisition using the purchase method of accounting with $100,000 of the purchase price allocated to purchased technology, $71,000 allocated to tangible assets and $506,000 allocated to goodwill. PRO FORMA FINANCIAL INFORMATION The balance sheets of the above companies have been included in the Company's consolidated balance sheet as of June 30, 1997 and the results of operations of the acquired companies have been included in the Company's consolidated statements of operations beginning on March 31, 1996, except for Comtech, EISL, HNS and Smart Solutions, which have been included beginning on August 1, 1996, October 15, 1996, January 1, 1997, and May 1, 1997, respectively. Form 10-Q Page 7 of 21 8 HARBINGER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) The unaudited proforma results of operations of the Company for the three and six months ended June 30, 1996 as if the acquisitions described above had been effected on January 1, 1996 is summarized as follows:
Three months Six months ended ended June 30, 1996 June 30, 1996 ------------- ------------- Revenues $ 14,943,000 $ 28,024,000 ============ ============ Loss before extraordinary item applicable to common shareholders (1,688,000) (14,375,000) Extraordinary loss on debt extinguishment -- (2,419,000) ============ ============ Net loss applicable to common shareholders $ (1,688,000) $(16,794,000) ============ ============ Net loss per share applicable to common shareholders before extraordinary item $ (0.09) $ (0.77) Extraordinary loss per share on debt extinguishment -- (0.13) ------------ ------------ Net loss per share applicable to common shareholders $ (0.09) $ (0.90) ============ ============ Weighted average outstanding common share and common share equivalent 18,773,000 18,659,000 ============ ============
The unaudited pro forma results do not necessarily represent results which would have occurred if the acquisitions had taken place on the dates indicated nor are they necessarily indicative of the results of future operations. The unaudited pro forma results for 1997 reflecting the acquisition of Smart Solutions as if it had occurred on January 1, 1997 would not be significantly different than presented in the accompanying 1997 consolidated statement of operations. STI ACQUISITION On January 3, 1997, the Company acquired SupplyTech, Inc., a Michigan corporation, and its affiliate, SupplyTech International, LLC, a Michigan limited liability company (collectively "STI"), for 2,400,000 unregistered shares of the Company's common stock in transactions accounted for using the pooling-of-interests method of accounting. SupplyTech, Inc. was acquired in a merger transaction pursuant to the terms of a merger agreement, dated January 3, 1997, by and among the Company, SupplyTech, Inc. and Harbinger Acquisition Corporation II, a Georgia corporation and a wholly owned subsidiary of the Company. SupplyTech, Inc. survived the merger as a wholly owned subsidiary of the Company. SupplyTech International, LLC was acquired by the Company in a series of related share purchases, which included the exchange of the Company's common stock for all the outstanding shares of SupplyTech International, LLC. In connection with the STI Acquisition, the Company incurred a charge of $7.1 million in January 1997 for acquisition related expenses and asset write downs and incurred integration costs of $4.8 million during the first quarter of 1997. The Company recorded a net deferred income tax asset during the first quarter 1997 of approximately $1.8 million relating to the STI Acquisition and provided a valuation allowance against such net deferred income tax asset to reduce it to zero. The financial position and results of operations of the Company have been restated for all periods prior to the merger to give retroactive effect to the STI Acquisition. Form 10-Q Page 8 of 21 9 HARBINGER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) Total revenues and net income (loss) for the individual companies as previously reported are as follows:
Three months Six months ended ended June 30, 1996 June 30, 1996 ------------ ------------ Total revenues Harbinger Corporation $ 10,081,000 $ 17,243,000 STI 4,672,000 9,014,000 ------------ ------------ $ 14,753,000 $ 26,257,000 ============ ============ Net loss Harbinger Corporation $ (107,000) $ (8,408,000) STI (1,369,000) (2,110,000) ------------ ------------ $ (1,476,000) $(10,518,000) ============ ============
3. SHAREHOLDERS' EQUITY Stock Split On January 10, 1997, the Board of Directors declared a three-for-two stock split in the form of a 150% stock dividend on the Company's common stock payable on January 31, 1997, to shareholders of record on January 17, 1997. All share, per share and shareholder's equity amounts included in the Company's consolidated financial statements have been retroactively restated to reflect the split for all periods presented. Secondary Stock Offering On July 29, 1997, the Company completed the public offering of 2.9 million shares of Common Stock, consisting of 1.8 million shares sold by the Company and 1.1 million shares sold by selling shareholders, at a public offering price of $30.75 per share. The offering resulted in net proceeds to the Company of approximately $52.6 million. 4. CREDIT FACILITY Effective April 16, 1997, the Company increased its credit facility to $10 million with an interest rate of Prime and a commitment fee on the unused portion of .375%. 5. NEW ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 requires companies that have publicly held common stock or common stock equivalents to present both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is calculated as income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and results in additional common stock that would share in the earnings of the Company. This statement is effective for financial statements issued for interim and annual periods ending after December 15, 1997. The Company does not believe the adoption of SFAS No. 128 will have a significant impact on its reported EPS. Form 10-Q Page 9 of 21 10 HARBINGER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information about Capital Structure." SFAS No. 129 is effective for financial statements for periods ending after December 15, 1997. The Company does not expect that SFAS No. 129 will require significant revision of prior disclosures since SFAS No. 129 lists required disclosures that had been included in a number of previously existing separate statements or opinions. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires companies to display, with the same prominence as other financial statements, the components of comprehensive income. SFAS No. 130 requires that an enterprise classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company's financial statements will include the disclosure of comprehensive income in accordance with the provisions of SFAS No. 130 beginning the first quarter of 1998. Form 10-Q Page 10 of 21 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein and the Company's Form 10-K for the year ending December 31, 1996 and the Company's current report on Form 8-K dated July 1, 1997. OVERVIEW Harbinger Corporation (the "Company") generates revenues from various sources, including revenues for services and license fees for software. Revenues for services principally includes subscription fees for transactions on the Company's Value Added Network ("VAN"), software maintenance and implementation charges and charges for consulting and training services. Subscription fees are based on a combination of monthly access charges and transaction-based usage charges. Software maintenance and implementation revenues represent recurring charges to customers and are deferred and recognized ratably over the service period. Revenues for consulting and training services are based on actual services rendered and are recognized as services are performed. License fees for software are recognized upon shipment, net of estimated returns. Software revenues include royalty revenues under the Company's distribution agreement with a third party distributor which are recognized based upon sales to end users by that distributor. 1996 ACQUISITIONS Effective March 31, 1996, the Company completed the acquisition of NTEX Holding B.V. ("NTEX") for $8.0 million and the acquisition of INOVIS GmbH ("INOVIS") for $6.1 million. NTEX is a Rotterdam, The Netherlands-based supplier of EC products and services with about 40 employees at the time of the acquisition. It develops software for EDI, wide area communications, and web site development, and it operates an electronic clearing center in The Netherlands. NTEX builds value-added applications that utilize EDI and manages trading communities for such markets as healthcare, agriculture, shipping and education. INOVIS is a Karlsruhe, Germany-based supplier of EC products and services with about 30 employees at the time of the acquisition. INOVIS develops software for electronic catalogs and ordering systems that use both CD-ROM and the Internet. It also manages an electronic clearing center serving the German-speaking market. INOVIS builds value-added applications that utilize EDI and manages trading communities for the music, book publishing, sporting goods, and other markets. The Company's acquisitions of NTEX and INOVIS are expected to accelerate the Company's realization of opportunities for its products in international markets. The Company also completed two other acquisitions during 1996, the acquisition of the remaining outstanding common stock of Harbinger N.V. ("HNV") and the acquisition of Comtech Management Systems, Inc., which did not have a significant impact on the Company's financial position or results of operations. 1997 ACQUISITIONS Harbinger Net Services LLC ("HNS") On January 1, 1997, because of the expiration of restrictions on the Company's ability to appoint a majority of the HNS Board of Managers, the Company exercised its rights as majority shareholder of HNS by appointing a majority of the members of the HNS Board of Managers. As a result, effective January 1, 1997, the Company began accounting for its investment in HNS by consolidating the statements of financial position and results of operations of HNS with those of the Company. Also on January 1, 1997, the Company entered into a debenture purchase agreement with the holder of the Debenture whereby the Company acquired the Debenture in exchange for $1.5 million in cash and 242,288 shares of the Company's common stock valued at $4.2 million. The Company recorded an extraordinary loss on early debt extinguishment of $2.4 million in the first quarter of 1997 related to this transaction which represents the amount paid of $5.7 million in excess of the face amount of the Debenture of $3.0 million plus accrued interest of $280,000. Form 10-Q Page 11 of 21 12 Immediately after this transaction, the Company acquired the minority interest in HNS, consisting of 585,335 shares of HNS common stock and stock options to acquire 564,727 shares of HNS common stock at exercise prices ranging from $0.70 per share to $1.65 per share, by exchanging cash of $1.6 million and stock options to acquire 355,317 shares of the Company's common stock at exercise prices ranging from $15.22 per share to $16.53 per share which were valued by the Company at $2.2 million. Including transaction and other costs of $350,000, the Company paid $4.1 million for the acquisition of the HNS minority interest which was accounted for using the purchase method of accounting with $2.7 million of the purchase price allocated to in-process product development and charged to the consolidated statement of operations on January 1, 1997, and $1.4 million allocated to goodwill and purchased technology. The Company also incurred integration costs during the first quarter of 1997 related to this acquisition of $1.6 million which has been reflected in the acquisition related charges in the accompanying consolidated statement of operations. The Company recorded a net deferred income tax asset of approximately $840,000 as a result of this acquisition and intends to provide a valuation allowance against such net deferred income tax asset to reduce it to zero. STI On January 3, 1997, the Company acquired SupplyTech, Inc., a Michigan corporation, and its affiliate, SupplyTech International, LLC, a Michigan limited liability company (collectively "STI"), for 2,400,000 unregistered shares of the Company's common stock in transactions accounted for using the pooling-of-interests method of accounting. SupplyTech, Inc. was acquired in a merger transaction pursuant to the terms of a merger agreement, dated January 3, 1997, by and among the Company, SupplyTech, Inc. and Harbinger Acquisition Corporation II, a Georgia corporation and a wholly owned subsidiary of the Company. SupplyTech, Inc. survived the merger as a wholly owned subsidiary of the Company. SupplyTech International, LLC was acquired by the Company in a series of related share purchases, which included the exchange of the Company's common stock for all the outstanding shares of SupplyTech International, LLC. In connection with the STI Acquisition, the Company incurred a charge of $7.1 million in January 1997 for acquisition related expenses and asset write downs and incurred integration costs of $4.8 million during the first quarter of 1997. The Company recorded a net deferred income tax asset during the first quarter 1997 of approximately $1.8 million relating to the STI Acquisition and provided a valuation allowance against such net deferred income tax asset to reduce it to zero. The financial position and results of operations of the Company have been restated for all periods prior to the merger to give retroactive effect to the STI Acquisition. Smart Solutions On May 1, 1997, the Company acquired Smart Solutions, which is not expected to have a significant impact on the Company's financial position or results of operations. Smart Solutions, located in Traverse City, Michigan, is a provider of advanced ship notice and bar coding software. RESULTS OF OPERATIONS REVENUES Total revenues increased 40% from $26.3 million in the six months ended June 30, 1996 to $36.7 million in the same period in 1997. Revenues for services increased 44% from $16.9 million in the six months ended June 30, 1996 to $24.3 million in the same period in 1997, primarily reflecting an increase in the number of subscribers utilizing the Company's VAN, increases in the average volume of transmissions by subscribers, and an increase in professional services revenues. In addition, increases in revenues for services reflect revenues generated from the Company's European subsidiaries which were acquired at the end of the first quarter 1996. Revenues from software maintenance and implementation also increased, reflecting primarily an increase in the number of customers. Revenue from software sales increased 32% from $9.4 million in the six months ended June 30, 1996 to $12.4 million in the same period in 1997. This increase primarily reflects increases in licensed PC software, software Form 10-Q Page 12 of 21 13 revenues generated from the Company's European subsidiaries which were acquired at the end of the first quarter in 1996, and increases in software license fees attributable to the licensing of enterprise-wide software products. The increase in software license fees was offset by a $1.7 million decrease in royalties recognized for software products licensed through a third party distributor. Total revenues increased 33% from $14.8 million in the three months ended June 30, 1996 to $19.7 million in the same period in 1997. Revenues for services increased 30% from $9.4 million in the three months ended June 30, 1996 to $12.1 million in the same period in 1997, primarily reflecting an increase in the number of subscribers utilizing the Company's VAN, increases in the average volume of transmissions by subscribers and increases in professional services revenues. Revenues from software maintenance and implementation also increased, reflecting primarily an increase in the number of customers. Revenues from software license fees increased 40% from $5.4 million in the three months ended June 30, 1996 to $7.5 million in the same period in 1997. This increase primarily reflects increases in licensed PC and enterprise-wide software products. The increase in software license fees was offset by a $633,000 decrease in royalties recognized for software products licensed through a third party distributor. DIRECT COSTS Direct costs for services increased from $5.9 million, or 35.1% of services revenues, in the six months ended June 30, 1996, to $8.1 million, or 33.4% of services revenues, in the six months ended June 30, 1997. The decrease in direct costs for services, as a percentage of services revenues reflects increased operating leverage on higher revenues and operating synergies realized from the STI merger. Direct costs for software increased from $1.4 million, or 14.6% of software revenues, in the six months ended June 30, 1996, to $1.6 million, or 13.2% of software revenues, in the six months ended June 30, 1997. The decrease in direct costs for software, as a percentage of software revenues, is due to a higher level of software license revenues. Direct costs for services increased from $3.5 million, or 37.4% of services revenue in the three months ended June 30, 1996, to $4.3 million, or 35.1% of services revenue in the three months ended June 30, 1997. The decrease in direct costs for services, as a percentage of services revenues reflects increased operating leverage on higher revenues and operating synergies realized from the STI merger. Direct costs for software increased from $691,000, or 12.8% of software revenues, in the three months ended June 30, 1996, to $946,000, or 12.5% of software revenues, in the three months ended June 30, 1997. SELLING AND MARKETING Selling and marketing expenses increased 4% from $7.2 million or 27.4% of revenues in the six months ended June 30, 1996 to $7.5 million or 20.4% of revenues in the six months ended June 30, 1997. The decrease in selling and marketing expenses as a percentage of revenues is primarily due to the effect of increased revenues and efficiencies associated with other costs to support increased sales activity as well as efficiencies associated with the STI merger. Selling and marketing expenses decreased 3% from $4.1 million, or 28.1% of revenues in the three months ended June 30, 1996 to $4.0 million, or 20.4% of revenues in the three months ended June 30, 1997. The decrease in selling and marketing expenses as a percentage of revenues is primarily due to the effect of increased revenues and efficiencies associated with other costs to support increased sales activity as well as efficiencies associated with the STI merger. GENERAL AND ADMINISTRATIVE General and administrative expenses increased 17% from $6.1 million in the six months ended June 30, 1996 to $7.1 million in the six months ended June 30, 1997. As a percentage of revenues, these expenses decreased from 23.1% of revenues in the six months ended June 30, 1996 to 19.3% of revenues in the six months ended June 30, 1997. The decrease as a percentage of revenues reflects efficiencies associated with expanding the Company's Form 10-Q Page 13 of 21 14 operations and the effect of increases in software and services revenue as well as efficiencies associated with the STI merger. General and administrative expenses increased 12% from $3.3 million in the three months ended June 30, 1996 to $3.7 million in the three months ended June 30, 1997. As a percentage of revenues, these expenses decreased from 22.4% of revenues in the three months ended June 30, 1996 to 18.9% of revenues in the three months ended June 30, 1997. The decrease as a percentage of revenues reflects efficiencies associated with expanding the Company's operations and the effect of increases in software and services revenue as well as efficiencies associated with the STI merger. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased 59% from $1.2 million in the six months ended June 30, 1996 to $2.0 million in the six months ended June 30, 1997. As a percentage of revenues, these expenses increased from 4.7% of revenues in the six months ended June 30, 1996 to 5.4% of revenues in the six months ended June 30, 1997. The increase as a percentage of revenues is primarily the result of the amortization of the intangible assets related to the acquisitions completed at the end of first quarter 1996 and increases in capital expenditures purchased during 1996 and 1997. Depreciation and amortization increased 31% from $747,000 in the three months ended June 30, 1996 to $981,000 in the three months ended June 30, 1997. As a percentage of revenues, these expenses decreased from 5.1% of revenues in the three months ended June 30, 1996 to 5.0% of revenues in the three months ended June 30, 1997. The percentage of revenue in the three months ended June 30, 1997 is comparable to the three months ended June 30, 1996 as a result of revenues increasing at a faster rate than the increase in depreciation and amortization. PRODUCT DEVELOPMENT Total expenditures for product development, including capitalized software development costs, increased from $5.1 million in the six months ended June 30, 1996 to $5.6 million in the same period in 1997. This increase primarily reflects the additional product development personnel related costs associated with the acquisitions. The Company capitalized product development costs of $1.3 million and $1.7 million, in the six months ended June 30, 1996 and 1997, respectively, which represented 26.1% and 30.7% of total expenditures for product development in these respective periods. As a percentage of total revenues, expenditures for product development costs decreased from 19.3% of revenues in the six months ended June 30, 1996 to 15.2% of revenues in the six months ended June 30, 1997. The decrease in product development expenditures as a percentage of revenue is primarily attributable to increased revenues. Amortization of capitalized software development costs is charged to direct costs of software revenues and totaled $843,000 and $771,000, respectively, in the six months ended June 30, 1996 and 1997. Total expenditures for product development, including capitalized software development costs, increased from $2.6 million in the three months ended June 30, 1996 to $3.1 million in the same period in 1997. This increase primarily reflects the additional product development personnel related costs associated with the acquisitions. The Company capitalized software development costs of $494,000 and $936,000 in the three months ended June 30, 1996 and 1997, respectively, which represented 19% and 30.6% of total expenditures for product development in these respective periods. The increase in capitalized software development costs as a percentage of total expenditures for product development is due to development activities on products that have reached technological feasibility. As a percentage of total revenues, expenditures for product development costs were 17.7% of revenues in the three months ended June 30, 1996 and 15.6% in the three months ended June 30, 1997. The decrease in product development expenditures as a percentage of revenue is primarily attributable to increased revenues and a higher level of capitalization. Amortization of capitalized software development costs is charged to direct cost of software revenues and totaled $421,000 and $378,000 in the three months ended June 30, 1996 and 1997, respectively. Form 10-Q Page 14 of 21 15 CHARGE FOR PURCHASED IN-PROCESS PRODUCT DEVELOPMENT AND OTHER ACQUISITION RELATED CHARGES The Company incurred a $16.2 million charge for acquired research and development and other acquisition related charges during the six months ended June 30, 1997. In connection with the HNS acquisition described above, the Company acquired in-process product development of approximately $2.7 million. Since the Company determined that certain of the acquired technologies had not reached technological feasibility, the Company expensed the portion of the purchase price allocable to such in-process product development. In connection with the STI acquisition, the Company incurred approximately $7.1 million for acquisition related expenses and asset write downs. Additionally, the Company incurred integration costs of $6.4 million in connection with both the HNS and STI acquisitions. Because of costs and resources expended in connection with these integration activities, some expense categories may increase in the future as a percentage of total revenues. In 1996, the Company incurred an $8.4 million charge for acquired in-process product development in connection with the European acquisitions. INTEREST INCOME AND EXPENSE The Company recorded net interest income of $42,000 for the six months ended June 30, 1997 as compared to net interest income of $127,000 for the six months ended June 30, 1996. This decrease is primarily due to the decrease in cash balances available for investment resulting from the cash payments related to the acquisitions completed in 1996 and the acquisition of HNS in 1997 as well as the use of cash for operating purposes. The Company recorded net interest expense of $22,000 for the three months ended June 30, 1997 as compared to net interest income of $37,000 for the three months ended June 30, 1996. This decrease is primarily due to the decrease in cash balances available for investment resulting from the cash payments related to the acquisitions completed in 1996 and the acquisition of HNS in 1997. EQUITY IN LOSSES OF JOINT VENTURES The Company recognized equity in loss of SupplyTech Australia, Pty., a joint venture investment in the second quarter of 1996, in the three and six months ended June 30, 1997 as compared to equity losses of Harbinger NV ("HNV") and HNS in the three and six months ended June 30, 1996. Effective March 31, 1996, the Company acquired the remaining outstanding stock of HNV. Effective January 1, 1997, the Company acquired the remaining outstanding minority interest of HNS. INCOME TAXES The Company recorded income tax expense of $1.4 million for the six months ended June 30, 1997 as compared to income tax expense of $132,000 for the six months ended June 30, 1996. The Company recorded income tax expense of $1.4 million for the three months ended June 30, 1997 as compared to income tax expense of $83,000 for the three months ended June 30, 1996. The income tax expense provided during 1997 reflects the nondeductible nature of certain of the 1997 acquisition related charges. LOSS ON EARLY EXTINGUISHMENT OF DEBT The Company recorded a loss of $2.4 million on early debt extinguishment in the first quarter of 1997 related to the HNS transactions. NET INCOME (LOSS) AND EARNINGS PER SHARE The Company realized a net loss of $13.5 million for the six months ended June 30, 1997 as compared to a net loss of $10.5 million for the six months ended June 30, 1996. The net loss in the period ended June 30, 1997 reflects the effect of the charge for purchased in-process product development and acquisition related charges of $16.2 million and the extraordinary loss on early debt extinguishment of $2.4 million as compared to the effect of the $8.4 million charge for purchased in-process product development and other acquisition related charges Form 10-Q Page 15 of 21 16 resulting from the acquisition of the European subsidiaries at the end of the first quarter of 1996. The Company realized a loss per share of $(0.71) for the six months ended June 30, 1997 as compared to the loss per share of $(0.58) for the six months ended June 30, 1996. Excluding the charges for purchased in-process product development, acquisitions, extraordinary loss on debt extinguishment, equity loss of HNS in 1996, and the related income tax effects, the Company would have reported net income of $4 million or $0.19 per share as compared to net income of $431,000 or $0.02 per share for the six months ended June 30, 1997 and 1996, respectively. The Company realized net income of $2.2 million for the three months ended June 30, 1997 as compared to a net loss of $1.5 million for the three months ended June 30, 1996. The Company realized income per share of $0.11 for the three months ended June 30, 1997 as compared to the loss of $(0.08) for the three months ended June 30, 1996. Excluding the equity loss of HNS in 1996, and the related income tax effects, the Company would have reported net income of $157,000 or $0.01 per share in the three months ended June 30, 1996. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital decreased $2.6 million from $3.1 million as of December 31, 1996 to $518,000 as of June 30, 1997. This decrease principally reflects the liabilities assumed and the consideration given related to the acquisitions which occurred in the first half of 1997. In the six months ended June 30, 1997, the Company used cash in operating activities of $2.1 million as compared to cash provided by operations of $762,000 for the six months ended June 30, 1996. This decrease is primarily due to the merger and integration costs incurred related to the acquisitions which occurred in the first quarter of 1997. The Company used net cash in investing activities of $6.7 million for the six months ended June 30, 1997 as compared to $7.8 million for the six months ended June 30, 1996. Cash used in investing activities for the period ended June 30, 1997 included cash used in acquisitions, purchases of property and equipment and additions to capitalized software development costs. The Company used net cash in financing activities of $1.5 million in the six months ended June 30, 1997 as compared to $525,000 for the six months ended June 30, 1996 in order to pay off debt assumed from the acquisitions. These uses were offset by proceeds received from exercises of options in the six months ended June 30, 1997. The Company received $52.6 million from a public offering completed on July 29, 1997. Management expects that the Company will continue to be able to fund its acquisitions, operations, investment needs and capital expenditures through cash flows generated from operations, cash on hand, borrowings under a line of credit and additional equity capital. Management believes that outside sources for debt and additional equity capital, if needed, will be available to finance expansion projects and any possible acquisitions. The form of any financing will vary depending upon prevailing market and other conditions and may include short- or long-term borrowings from financial institutions, or the issuance of additional equity securities. However, there can be no assurances that funds will be available on terms acceptable to the Company. Form 10-Q Page 16 of 21 17 This Form 10-Q includes "forward looking" statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 related to the Company that involve risks and uncertainties including, but not limited to, quarterly fluctuations in results, the management of growth, market acceptance of certain products and other risks. For further information about these and other factors that could affect the Company's future results, please see the Company's reports filed with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 1996 and the Company's current report on Form 8-K dated July 1, 1997. Investors are cautioned that any forward looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward looking statements. SECONDARY STOCK OFFERING On July 29, 1997, the Company completed the public offering of 2.9 million shares of Common Stock, consisting of 1.8 million shares sold by the Company and 1.1 million shares sold by selling shareholders, at a public offering price of $30.75 per share. The offering resulted in net proceeds to the Company of approximately $52.6 million. NEW ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 requires companies that have publicly held common stock or common stock equivalents to present both basic and diluted earnings per share ("EPS") on the face of the income statement. Basic EPS is calculated as income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and results in additional common stock that would share in the earnings of the Company. This statement is effective for financial statements issued for interim and annual periods ending after December 15, 1997. The Company does not believe the adoption of SFAS No. 128 will have a significant impact on its reported EPS. In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information about Capital Structure." SFAS No. 129 is effective for financial statements for periods ending after December 15, 1997. The Company does not expect that SFAS No. 129 will require significant revision of prior disclosures since SFAS No. 129 lists required disclosures that had been included in a number of previously existing separate statements or opinions. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires companies to display, with the same prominence as other financial statements, the components of comprehensive income. SFAS No. 130 requires that an enterprise classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company's financial statements will include the disclosure of comprehensive income in accordance with the provisions of SFAS No. 130 beginning the first quarter of 1998. Form 10-Q Page 17 of 21 18 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 11. Computation of earnings per share Exhibit 27. Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K Form 8-K dated April 28, 1997 reporting under Item 5 the retroactively restated financial information related to the pooling-of-interests business combination of Harbinger Corporation and SupplyTech, Inc. and SupplyTech International, LLC and subsidiaries. Form 8-K dated July 1, 1997 reporting under Item 5 the retroactively restated financial information related to the pooling-of-interests business combination of Harbinger Corporation and SupplyTech, Inc. and SupplyTech International, LLC and subsidiaries. Form 10-Q Page 18 of 21 19 S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HARBINGER CORPORATION Date: August 12, 1997 /s/ David T. Leach --------------------------- --------------------------- David T. Leach Chief Executive Officer (Principal Executive Officer) Date: August 12, 1997 /s/ Joel G. Katz --------------------------- --------------------------- Joel G. Katz Chief Financial Officer (Principal Financial Officer; Principal Accounting Officer) Form 10-Q Page 19 of 21 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 HARBINGER CORPORATION COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended June 30, June 30, -------------------------- ---------------------------- PRIMARY 1997 1996 1997 1996 ----------- ------------ ------------ ------------ Weighted average common stock outstanding 19,281,000 18,511,000 19,166,000 18,209,000 Net effect of dilutive stock options and warrants - based on the treasury method 1,368,000 -- -- -- ----------- ------------ ------------ ------------ Total 20,649,000 18,511,000 19,166,000 18,209,000 =========== ============ ============ ============ Income (loss) before extraordinary item applicable to common shareholders $ 2,197,000 $ (1,476,000) $(11,106,000) $(10,518,000) Extraordinary loss on debt extinguishment -- -- (2,419,000) -- ----------- ------------ ------------ ------------ Net income (loss) applicable to common shareholders $ 2,197,000 $ (1,476,000) $(13,525,000) $(10,518,000) =========== ============ ============ ============ Income (loss) per share applicable to common shareholders before extraordinary item $ 0.11 $ (0.08) $ (0.58) $ (0.58) Extraordinary loss per share on debt extinguishment -- -- (0.13) -- =========== ============ ============ ============ Net income (loss) per share applicable to common shareholders $ 0.11 $ (0.08) $ (0.71) $ (0.58) =========== ============ ============ ============
Computational note: In connection with the computations for 1996 and the six months ended June 30, 1997, all common share equivalents have been excluded because their impact on the Company's net loss per share is antidilutive. Form 10-Q Page 20 of 21 2 EXHIBIT 11 HARBINGER CORPORATION COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Six Months Ended June 30, June 30, --------------------------- ----------------------------- FULLY DILUTED 1997 1996 1997 1996 ----------- ------------ ------------ ------------ Weighted average common stock outstanding 19,281,000 18,511,000 19,166,000 18,209,000 Net effect of dilutive stock options and warrants - based on the treasury method 1,482,000 -- -- -- ----------- ------------ ------------ ------------ Total 20,763,000 18,511,000 19,166,000 18,209,000 =========== ============ ============ ============ Income (loss) before extraordinary item applicable to common shareholders $ 2,197,000 $ (1,476,000) $(11,106,000) $(10,518,000) Extraordinary loss on debt extinguishment -- -- (2,419,000) -- ----------- ------------ ------------ ------------ Net income (loss) applicable to common shareholders $ 2,197,000 $ (1,476,000) $(13,525,000) $(10,518,000) =========== ============ ============ ============ Income (loss) per share applicable to common shareholders before extraordinary item $ 0.11 $ (0.08) $ (0.58) $ (0.58) Extraordinary loss per share on debt extinguishment -- -- (0.13) -- =========== ============ ============ ============ Net income (loss) per share applicable to common shareholders $ 0.11 $ (0.08) $ (0.71) $ (0.58) =========== ============ ============ ============
Computational note: In connection with the computations for 1996 and the six months ended June 30, 1997, all common share equivalents have been excluded because their impact on the Company's net loss per share is antidilutive. Form 10-Q Page 21 of 21 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF HARBINGER CORPORATION FOR THE SIX MONTHS ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 2,085 0 20,290 1,900 0 23,950 18,515 7,840 47,675 23,432 1,223 0 0 2 23,018 47,675 12,433 36,688 1,640 9,731 36,633 0 (42) (9,687) 1,419 0 0 2,419 0 (13,525) (0.71) (0.71)
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