-----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, SM3MxLtrNourPz7/pdXSlo1FwepAuxU4H1wr+ZCR6mDlsRgdW8qC6qPFC5Ewrx2d iEYcCQkafGJ6CcORAdUYLA== 0000950144-97-011331.txt : 19971030 0000950144-97-011331.hdr.sgml : 19971030 ACCESSION NUMBER: 0000950144-97-011331 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971029 ITEM INFORMATION: FILED AS OF DATE: 19971029 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: SEC FILE NUMBER: 033-93804 FILM NUMBER: 97702940 BUSINESS ADDRESS: STREET 1: 1055 LENOX PARK BLVD CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048414334 8-K/A 1 HARBINGER CORP 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 October 29, 1997 (Date of earliest event reported): August 22, 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 dated August 22, 1997, which was filed on or about September 2, 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 33 Exhibit Index on Page 4 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired. The following financial statements for Acquion, Inc. are attached hereto as Exhibit 99.2: Audited: - Independent Auditors' Report - Balance Sheet as of October 31, 1996 - Statement of Operations for the year ended October 31, 1996 - Statement of Shareholder's Deficit for the year ended October 31, 1996 - Statement of Cash Flows for the year ended October 31, 1996 - Notes to Financial Statements for the year ended October 31, 1996 Unaudited: - Balance Sheet as of August 22, 1997 - Statements of Operations for the periods ended August 22, 1996 and 1997 - Statements of Cash Flows for the periods ended August 22, 1996 and 1997 (b) Pro Forma Financial Information. Attached hereto as Exhibit 99.3 is the unaudited pro forma consolidated statement of operations for the year ended December 31, 1996, reflecting the pro forma adjustments for all acquisitions prior to Acquion, including the notes to the unaudited pro forma consolidated statement of operations. Attached hereto as Exhibit 99.4 is the unaudited pro forma consolidated statements of operations for the year ended December 31, 1996 and the nine months ended September 30, 1997, reflecting the acquisition of Acquion, including the notes to the unaudited pro forma consolidated statements of operations. (c) Exhibits. *2.1 Stock Purchase Agreement by and among Harbinger Corporation, Fluor Corporation and FD Engineers and Constructors, Inc., dated August 22, 1997. *99.1 Text of Press Release of Harbinger Corporation, dated August 25, 1997. 99.2 Audited Financial Statements of Acquion, Inc. as of and for the year ended October 31, 1996 and unaudited financial statements as of August 22, 1997 and for the periods from November 1 through August 22, 1996 and 1997. 99.3 Unaudited pro forma consolidated statement of operations for the year ended December 31, 1996, reflecting the pro forma adjustments for all acquisitions prior to Acquion, Inc., including the notes to the unaudited pro forma consolidated statement of operations. 99.4 Unaudited pro forma consolidated statements of operations for the year ended December 31, 1996 and for the nine months ended September 30, 1997, reflecting the acquisition of Acquion, Inc., including the notes to the unaudited pro forma consolidated statements of operations. - ----------------- * Previously filed Page 2 of 33 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: October 29, 1997 Page 3 of 33 4 EXHIBIT INDEX
Exhibit Page No. - ------------- -------- *2.1 Stock Purchase Agreement by and among Harbinger Corporation, Fluor Corporation and FD Engineers and Constructors, Inc., dated August 22, 1997. *99.1 Text of Press Release of Harbinger Corporation, dated August 25, 1997. 99.2 Audited Financial Statements of Acquion, 5 Inc. as of and for the year ended October 31, 1996 and unaudited financial statements as of August 22, 1997 and for the periods from November 1 through August 22, 1996 and 1997. 99.3 Unaudited pro forma consolidated statement 21 of operations for the year ended December 31, 1996, reflecting the pro forma adjustments for all acquisitions prior to Acquion, including the notes to the unaudited pro forma consolidated statement of operations. 99.4 Unaudited pro forma consolidated statements 28 of operations for the year ended December 31, 1996 and for the nine months ended September 30, 1997, reflecting the acquisition of Acquion, including the notes to the unaudited pro forma consolidated statements of operations.
- ---------------- * Previously filed Page 4 of 33 EX-99.2 2 AUDITED FINANCIAL STATEMENTS 1 EXHIBIT 99.2 Page 5 of 33 2 INDEX TO FINANCIAL STATEMENTS
ACQUION, INC. PAGE ---- Audited: Independent Auditors' Report........................................................ F-2 Balance Sheet as of October 31, 1996................................................ F-3 Statement of Operations for the year ended October 31, 1996......................... F-4 Statement of Shareholder's Deficit for the year ended October 31, 1996.............. F-5 Statement of Cash Flows for the year ended October 31, 1996......................... F-6 Notes to Financial Statements for the year ended October 31, 1996................... F-7 Unaudited: Balance Sheet as of August 22, 1997................................................. F-12 Statements of Operations for the periods from November 1 through August 22, 1996 and 1997.................................................................. F-13 Statements of Cash Flows for the periods from November 1 through August 22, 1996 and 1997.................................................................. F-14 Notes to Unaudited Financial Statements............................................. F-15 HARBINGER CORPORATION AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 1996, reflecting the pro forma adjustments for all acquisitions prior to Acquion............................................................... F-17 Notes to Unaudited Pro Forma Consolidated Statements of Operations.................. F-19 Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 1996 and the nine months ended September 30, 1997, reflecting the acquisition of Acquion..................................................... F-24 Notes to Unaudited Pro Forma Consolidated Statements of Operations.................. F-27
F-1 Page 6 of 33 3 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholder Acquion, Inc.: We have audited the accompanying balance sheet of Acquion, Inc. (a wholly owned subsidiary of FD Engineers & Constructors, Inc.) as of October 31, 1996 and the related statements of operations, shareholder's deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Acquion, Inc. as of October 31, 1996 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Atlanta, Georgia October 1, 1997 F-2 Page 7 of 33 4 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) BALANCE SHEET OCTOBER 31, 1996 ASSETS Accounts receivable, net of allowance for doubtful accounts of $36,000 $ 123,000 Prepaid expense 129,000 Other current assets 11,000 ---------- Total current assets 263,000 Property and equipment, less accumulated depreciation and amortization 354,000 ---------- $ 617,000 ========== LIABILITIES AND SHAREHOLDER'S DEFICIT Accounts payable $ 315,000 Accrued expenses 196,000 Deferred revenue 48,000 Accrued contract costs and losses 1,093,000 ---------- Total current liabilities 1,652,000 Shareholder's deficit: Common stock, no par value; 10,000 shares authorized, 1,000 shares issued and outstanding - Additional paid-in capital 8,124,000 Accumulated deficit (9,159,000) ---------- Total shareholder's deficit (1,035,000) Commitments and contingencies ---------- $ 617,000 ==========
See accompanying notes to financial statements. F-3 Page 8 of 33 5 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) STATEMENT OF OPERATIONS YEAR ENDED OCTOBER 31, 1996 Revenues: Services $ 41,000 Software 82,000 ------------ Total revenues 123,000 ------------ Cost of revenues: Services 1,074,000 Software 10,000 ------------ Total cost of revenues 1,084,000 ------------ Gross margin (961,000) ------------ Operating expenses: Selling and marketing 1,467,000 General and administrative 1,297,000 Depreciation and amortization 98,000 Product development 1,251,000 ------------ Total operating expenses 4,113,000 ------------ Operating loss (5,074,000) Income taxes - ------------ Net loss $ (5,074,000) ============
See accompanying notes to financial statements. F-4 Page 9 of 33 6 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) STATEMENT OF SHAREHOLDER'S DEFICIT YEAR ENDED OCTOBER 31, 1996
Common stock Total ------------------- Additional Accumulated shareholder's Shares Amount paid-in capital deficit deficit ------ ------ --------------- ------- ------- Balance at October 31, 1995 1,000 $ - 3,268,000 (4,085,000) (817,000) Capital contribution by Parent - - 4,856,000 - 4,856,000 Net loss - - - (5,074,000) (5,074,000) ----- ------ ---------- --------- --------- Balance at October 31, 1996 1,000 $ - 8,124,000 (9,159,000) (1,035,000) ===== ====== ========== ========= =========
See accompanying notes to financial statements. F-5 Page 10 of 33 7 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) STATEMENT OF CASH FLOWS YEAR ENDED OCTOBER 31, 1996 Cash flows from operating activities: Net loss $(5,074,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 98,000 Provision for doubtful accounts 47,000 (Increase) decrease in: Accounts receivable (170,000) Prepaid expense 71,000 Other current assets 4,000 Increase (decrease) in: Accounts payable 270,000 Accrued expenses 94,000 Deferred revenue 48,000 Accrued contract costs and losses (79,000) ----------- Net cash used in operating activities (4,691,000) ----------- Cash flows from investing activities - purchases of property and equipment (165,000) ----------- Cash flows from financing activities - capital contribution by Parent 4,856,000 ----------- Net increase in cash - Cash at beginning of year - ----------- Cash at end of year $ - ===========
See accompanying notes to financial statements. F-6 Page 11 of 33 8 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) NOTES TO FINANCIAL STATEMENTS YEAR ENDED OCTOBER 31, 1996 (1) Description of Business and Summary of Significant Accounting Policies (a) Business and Basis of Presentation Acquion, Inc. (the "Company") was organized as a wholly owned subsidiary of FD Engineers & Constructors, Inc. (the "Parent") in August 1994 and began operations in November 1994. The Company develops, markets, and supports software products to enable businesses to engage in electronic commerce using the Internet and value-added networks (VAN). The Company's operations have historically been funded by the Parent. The funding of Company expenses by the Parent are recorded in an intercompany payable account to the Parent. Cash receipts of the Company are transferred to the Parent and are recorded as a reduction of the intercompany payable account. At the end of each reporting period, the net intercompany payable balance is treated as a capital contribution by the Parent and recorded as additional paid-in capital. Because of operating losses incurred since inception and expected to continue, the Company's ability to continue operations is dependent upon continued funding by the Parent. 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 as of the date of the financial statements and revenues and expenses for the reporting period to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (b) Revenue and Cost Recognition The Company's revenues are derived primarily from fixed-price customer contracts which generally include licensing computer software to customers and providing consulting services which provide customers with a tailored software solution. Revenues from fixed-price contracts are recognized on the percentage-of-completion method, measured by the percentage of contract costs incurred to date to estimated total contract costs for each contract. Contract costs include all direct and indirect costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Revenues derived from contracts to provide services on a time-and-materials basis are recognized as the related services are performed. F-7 Page 12 of 33 9 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) NOTES TO FINANCIAL STATEMENTS (c) 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: Furniture and fixtures 10 years Purchased computer software 7 years Computer and office equipment 3-7 years (d) Product and Software Development Costs Product development costs consist principally of compensation and benefits paid to the Company's employees or contractors. 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. Historically, development costs incurred after establishing technological feasibility but before customer release have been insignificant. (e) Income Taxes The Company accounts 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 in income in the period that includes the enactment date. (f) Fair Value of Financial Instruments The Company uses financial instruments in the normal course of its business. The carrying values of accounts receivable, prepaid expense, other current assets, accounts payable, accrued expenses, deferred revenues, and accrued contract losses approximate fair value due to the short-term maturities of these assets and liabilities. F-8 Page 13 of 33 10 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) NOTES TO FINANCIAL STATEMENTS (2) Property and Equipment Property and equipment as of October 31, 1996 consist of the following: Computer and office equipment $365,000 Purchased computer software 140,000 Furniture and fixtures 22,000 -------- 527,000 Less accumulated depreciation and amortization 173,000 -------- $354,000 ======== (3) Accrued Expenses Accrued expenses as of October 31, 1996 consist of the following: Accrued vacation costs $128,000 Accrued travel costs 68,000 -------- $196,000 ========
(4) Shareholder's Deficit The Company's initial capitalization was provided by FD Engineers & Constructors, Inc. in August 1994 through the issuance of 1,000 shares of the Company's common stock in exchange for $1,000. The Company received $4,856,000 in capital contributions from the Parent to fund operations for the fiscal year ended October 31, 1996. (5) Income Taxes The Company is included in the consolidated federal income tax return filed by the Parent; however, the Company has provided for income taxes as if it were filing a separate income tax return. The Company has not recorded any income tax expense (benefit) during the year ended October 31, 1996 because of operating losses incurred since inception. As a result, the effective income tax rate is different from amounts computed by applying the statutory U.S. Federal income tax rate of 34% to loss before income taxes because of the Company's provision for a valuation allowance on all deferred income tax assets. F-9 Page 14 of 33 11 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) NOTES TO FINANCIAL STATEMENTS The income tax effects of the temporary differences that give rise to the Company's deferred income tax assets and liabilities as of October 31, 1996 are as follows:
Deferred income tax assets: Net operating loss carryforwards $ 2,873,000 Accrued contract costs and losses 475,000 Accrued expenses 75,000 Other 32,000 ----------- Gross deferred income tax assets 3,455,000 Valuation allowance 3,455,000 ----------- Deferred income tax assets, net of valuation allowance $ - ===========
The increase in the valuation allowance for the year ended October 31, 1996 was $1,916,000. Under SFAS No. 109, deferred income tax assets and liabilities are recognized for differences between the financial statement carrying amounts and the tax bases of assets and liabilities which will result in future deductible or taxable amounts and for net operating loss and tax credit carryforwards. A valuation allowance is then established to reduce the deferred income tax assets to the level at which it is "more likely than not" that the tax benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss and tax credit carryforwards depends on having sufficient taxable income within the carryback and carryforward periods. Sources of taxable income that may allow for the realization of tax benefits include (1) taxable income in the current year or prior years that is available through carryback, (2) future taxable income that will result from the reversal of existing taxable temporary differences, and (3) future taxable income generated by future operations. Because of operating losses incurred since inception, the Company has provided a valuation allowance against all deferred income tax assets. At October 31, 1996, the Company has net operating loss carryforwards of approximately $7,560,000. The net operating loss carryforwards will expire at various times through 2011. (6) Provision for Contract Losses The Company entered into a software development contract with a customer in August 1995 for which estimated costs to complete are greater than total contract revenues. The Company has accrued an estimated loss of $1,093,000 relating to this contract at October 31, 1996. F-10 Page 15 of 33 12 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) NOTES TO FINANCIAL STATEMENTS (7) Related Party Transactions The Company is allocated charges from the Parent for the Company's estimated share of rent, computer leasing, marketing, and other shared services. These charges were approximately $317,000 for the year ended October 31, 1996 and are included in selling and marketing, general and administrative, and product development costs in the accompanying statement of operations. The Company believes that the charges for these items are comparable to those that could have been obtained in transactions with unaffiliated parties. (8) Segment Information and Major Customer The Company operates in a single industry segment: the development, marketing, and supporting of software products and the providing of consulting services to enable businesses to engage in Electronic Commerce. Revenues from one customer represented approximately 18% of the Company's revenues for the year ended October 31, 1996. No other single customer comprised 10% or greater of the Company's revenues in 1996. (9) Commitments and Contingencies (a) Contractual Commitments In the normal course of its business, the Company has entered into service contracts with its customers. These contracts contain commitments, including, but not limited to, minimum standards and time frames against which the Company's performance is measured. In the event the Company does not meet its contractual commitments with its customers, the Company may incur penalties and/or certain customers may have the right to terminate their contracts with the Company. The Company does not believe it will fail to meet its contractual commitments to an extent that will result in a material adverse effect on its financial condition or results of operations. (b) 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 insurance or, if not covered, are without merit or are of such kind or involve such amounts as would not have a material effect on the financial condition or results of operations of the Company if disposed of unfavorably. (10) Subsequent Event (Unaudited) On August 22, 1997, Harbinger Corporation (Harbinger) acquired all of the common stock of the Company for $12.0 million in cash and the assumption of $1.6 million in liabilities including transaction costs. F-11 Page 16 of 33 13 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) UNAUDITED BALANCE SHEET AUGUST 22, 1997 ASSETS
AUGUST 22, 1997 --------------- Accounts receivable, net of allowance for doubtful accounts of $0 $ 503,000 Property and equipment, less accumulated depreciation and amortization 342,000 ------------ $ 845,000 ============ LIABILITIES AND SHAREHOLDER'S DEFICIT Accounts payable $ 111,000 Accrued expenses 335,000 Deferred revenue 323,000 Accrued contract costs and losses 305,000 ------------ Total current liabilities 1,074,000 ------------ Shareholder's deficit: Common stock, no par value; 10,000 shares authorized, 1,000 shares issued and outstanding - Additional paid-in capital 14,395,000 Accumulated deficit (14,625,000) ------------ Total shareholder's deficit (229,000) ------------ Commitments and contingencies $ 845,000 ============
See accompanying notes to unaudited financial statements. F-12 Page 17 of 33 14 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) UNAUDITED STATEMENTS OF OPERATIONS PERIODS FROM NOVEMBER 1 THROUGH AUGUST 22, 1996 AND 1997
1996 1997 ----------- ----------- Revenues: Services .............................. $ 34,000 $ 575,000 Software - 30,000 ----------- ----------- Total revenues.................... 34,000 605,000 ----------- ----------- Cost of revenues: Services .............................. 895,000 1,810,000 Software - - ----------- ----------- Total cost of revenues............ 895,000 1,810,000 ----------- ----------- Gross margin.................. (861,000) (1,205,000) ----------- ----------- Operating expenses: Selling and marketing.................. 1,262,000 1,921,000 General and administrative............. 1,042,000 811,000 Depreciation and amortization.......... 82,000 98,000 Product development.................... 1,043,000 1,431,000 ----------- ----------- Total operating expenses.......... 3,428,000 4,261,000 ----------- ----------- Operating loss................ (4,288,000) (5,466,000) Income taxes .............................. - - ----------- ----------- Net loss...................... $(4,288,000) $(5,466,000) =========== ===========
See accompanying notes to unaudited financial statements. F-13 Page 18 of 33 15 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) UNAUDITED STATEMENTS OF CASH FLOWS PERIODS FROM NOVEMBER 1 THROUGH AUGUST 22, 1996 AND 1997
1996 1997 ------------ ----------- Cash flows from operating activities: Net loss $(4,288,000) $(5,466,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization....................... 82,000 98,000 (Increase) decrease in: Accounts receivable............................. (82,000) (380,000) Prepaid expense................................. 47,000 129,000 Other current assets............................ 3,000 11,000 Increase (decrease) in: Accounts payable................................ 180,000 (204,000) Accrued expenses................................ 63,000 139,000 Deferred revenue................................ 32,000 275,000 Accrued contract costs and losses............... (53,000) (788,000) ----------- ----------- Net cash used in operating activities........ (4,016,000) (6,186,000) ----------- ----------- Cash flows from investing activities--purchases of property and equipment (127,000) (85,000) ----------- ----------- Cash flows from financing activities--capital contribution by Parent ................................................ 4,143,000 6,271,000 ----------- ----------- Net increase in cash................................ - - Cash at beginning of period................................... - - ----------- ----------- Cash at end of period......................................... $ - $ - =========== ===========
See accompanying notes to unaudited financial statements. F-14 Page 19 of 33 16 ACQUION, INC. (A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.) NOTES TO UNAUDITED FINANCIAL STATEMENTS 1) Basis of Presentation These unaudited financial statements include the financial position as of August 22, 1997 and results of operations of Acquion, Inc. for the periods from November 1 through August 22, 1996 and 1997. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the unaudited financial statements of Acquion, Inc. as of August 22, 1997 and for the periods from November 1 through August 22, 1996 and 1997 have been included. F-15 Page 20 of 33 EX-99.3 3 UNAUDITED PROFORMA 1 EXHIBIT 99.3 F-16 Page 21 of 33 2 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS The following unaudited pro forma consolidated statement of operations of Harbinger Corporation (the "Company") set forth below for the year ended December 31, 1996 give effect to the Company's acquisitions of (i) Harbinger Net Services, LLC ("HNS") effective January 1, 1997, (ii) Harbinger N.V. ("HNV") effective March 31, 1996, (iii) INOVIS GmbH & Co. ("INOVIS") effective March 31, 1996, and (iv) NTEX Holding B.V. ("NTEX") effective March 31, 1996, which have all been accounted for using the purchase method of accounting. The unaudited pro forma consolidated statement of operations should be read in conjunction with the historical financial statements and notes thereto of the Company, HNS, HNV, INOVIS and NTEX. The unaudited pro forma consolidated statement of operations does 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-17 Page 22 of 33 3 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Adjusted Historical Pro Forma Company Company HNS HNV NTEX INOVIS Adjustments Subtotal (*) ---------- ------- ------- ------- ------- ------------ ----------- Revenues: Services $ 37,822 $ 117 $ 13 $ 607 $ 609 $ 39,168 Software 21,441 2,036 - 32 131 (1,199)(2) 22,441 -------- ------- ------- ------- ------- --------- Total revenues 59,263 2,153 13 639 740 61,609 -------- ------- ------- ------- ------- --------- Direct costs: Services 13,625 644 23 184 227 14,703 Software 2,912 1,617 - 2 9 (1,199)(2) 3,341 -------- ------- ------- ------- ------- --------- Total direct costs 16,537 2,261 23 186 236 18,044 -------- ------- ------- ------- ------- --------- Gross margin 42,726 (108) (10) 453 504 43,565 -------- ------- ------- ------- ------- --------- Operating costs: Selling and marketing 15,057 926 12 121 178 16,294 General and administrative 12,664 1,614 354 289 147 15,068 Depreciation and amortization 2,966 621 7 10 45 172 (3) 3,981 8 (5) 78 (7) 74 (9) Product development 9,000 4,303 6 109 109 13,527 Charge for purchased in-process product development and acquisition-related charges 8,775 - - - - (8,149)(11) 626 -------- ------- ------- ------- ------- --------- Total operating costs 48,462 7,464 379 529 479 49,496 -------- ------- ------- ------- ------- --------- Operating income (loss) (5,736) (7,572) (389) (76) 25 (5,931) Interest expense (income), net (7) (130) (8) 25 8 (186)(1) 50 245 (4) 64 (8) 39 (10) Foreign currency exchange loss - - 18 - - 18 Equity in loss of joint ventures 7,192 - - - - (7,004)(2) 119 (69)(6) -------- ------- ------- ------- ------- --------- Loss before income tax expense (12,921) (7,442) (399) (101) 17 (6,118) Income tax expense 146 - - - 22 168 -------- ------- ------- ------- ------- --------- Net loss (13,067) (7,442) (399) (101) (5) (6,286) Preferred stock dividends (28) - - - - (28) ======== ======= ======= ======= ======= ========= Net loss applicable to common shareholders $(13,095) $(7,442) $ (399) $ (101) $ (5) $ (6,314) ======== ======= ======= ======= ======= ========= Net loss per common share $ (0.71) (0.34) ======== ========= Weighted average common shares outstanding 18,465 242 (12) 18,707 ======== =========
* Adjusted Company subtotal is prior to the purchase of Acquion, Inc. See page F-24 for unaudited pro forma consolidated statement of operations reflecting the purchase of Acquion, Inc. See Notes to Unaudited Pro Forma Consolidated Statements of Operations. F-18 Page 23 of 33 4 HARBINGER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS On January 1, 1997, because of the expiration of restrictions on the Harbinger Corporation's (the "Company") ability to appoint a majority of the Harbinger Net Services, LLC ("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 debt extinguishment of $2.4 million in the first quarter of 1997 related to this transaction which represents the amount paid 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 incurred integration costs related to these transactions of $1.6 million during the first quarter of 1997. The Company recorded a net deferred income tax asset of approximately $840,000 as a result of these transactions and provided a valuation allowance against such net deferred tax asset to reduce it to zero. Effective March 31, 1996, the Company acquired all of the common stock of Harbinger N.V. ("HNV"), a Dutch corporation based in Hoofddorp, The Netherlands for the issuance of 58,065 shares of the Company's common stock at a price of $11.50 per share. The Company recorded the acquisition, which was completed on April 20, 1996, 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 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 $3,195,000 in cash, the issuance of 107,728 shares of the Company's common stock at a price of $11.12 per share and warrants to purchase up to 18,750 shares of the Company's common stock. The Company recorded the acquisition, which was completed on April 4, 1996, 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 shares of INOVIS GmbH & Co. ("INOVIS"), a German partnership based in Karlsruhe, Germany for $1,409,000 in cash, $557,000 note payable, the issuance of 210,276 shares of the Company's common stock at a price of $11.50 per share and warrants to purchase up to 30,000 shares of the Company's common stock. The Company recorded the acquisition, which was completed on April 19, 1996, using the purchase method of accounting with $3,400,000 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. F-19 Page 24 of 33 5 HARBINGER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS The accompanying unaudited pro forma consolidated statement of operations illustrates the estimated effects of the transactions described above as if they had occurred as of January 1, 1996. The historical statements of operations of the Company and HNS are derived from the audited financial statements of the Company and HNS for the year ended December 31, 1996. The historical statements of operations of HNV, INOVIS, and NTEX for the three months ended March 31, 1996 are estimated based on the audited statements of HNV, INOVIS, and NTEX for the year ended December 31, 1995. The operating results of HNV, INOVIS, and NTEX for the period from April 1, 1996 to December 31, 1996 are included in the historical results of the Company. The unaudited pro forma consolidated statement of operations does not purport to represent what the results of operations of the Company would actually have been if the transactions had occurred on January 1, 1996 or to project the results of operations of the Company for any future date or period. The unaudited pro forma consolidated statement of operations should be read together with the audited financial statements and notes of the Company, HNS, HNV, NTEX, and INOVIS. HNS 1) Reflects adjustment to record the elimination of the interest expense recorded with respect to the HNS Debenture. 2) Reflects the elimination of intercompany revenues and expenses between HNS and the Company and the elimination of the Company's equity in losses of HNS. 3) Reflects an increase in amortization expense as a result of the acquisition of HNS. Amortization of goodwill arising from the acquisition is provided using the straight-line method over ten years. Purchased technology is amortized using the straight-line method over the remaining estimated economic life of the product or enhancement, which was determined to be five years. 4) Reflects interest expense on the cash payment of $3,057,000 to fund the HNS transactions on January 1, 1996 at a rate of 8% for the year. The Company incurred integration costs related to the HNS transactions of $1.6 million during the first quarter of 1997. The unaudited pro forma consolidated statement of operations for the year ended December 31, 1996 does not reflect the $1.6 million of integration costs, the $2.4 million loss on extinguishment of the Debenture or the $2.7 million charge for in-process product development related to the acquisition of the minority interest of HNS. F-20 Page 25 of 33 6 HARBINGER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS HNV 5) Reflects an increase in amortization expense as a result of the acquisition of HNV. Amortization of goodwill arising from the acquisition is provided using the straight-line method over ten years. Purchased technology is amortized using the straight-line method over the remaining estimated economic life of the product or enhancement, which was determined to be five years. 6) Reflects the elimination of the Company's equity in losses of HNV. The unaudited pro forma consolidated statement of operations does not reflect the $300,000 charge for in-process product development related to the acquisition of HNV which was directly attributable to the transaction. NTEX 7) Reflects an increase in amortization expense as a result of the acquisition of NTEX. Amortization of goodwill arising from the acquisition is provided using the straight-line method over ten years. Purchased technology is amortized using the straight-line method over the remaining estimated economic life of the product or enhancement, which was determined to be five years. 8) Reflects interest expense on the cash payment of $3,195,000 to fund the NTEX acquisition at a rate of 8% for the three months ended March 31, 1996. The unaudited pro forma consolidated statement of operations does not reflect a $4,449,000 charge for in-process product development related to the acquisition of NTEX which was directly attributable to the transaction. INOVIS 9) Reflects an increase in amortization expense as a result of the acquisition of INOVIS. Amortization of goodwill arising from the acquisition is provided using the straight-line method over ten years. Purchased technology is amortized using the straight-line method over the remaining estimated economic life of the product or enhancement, which was determined to be five years. 10) Reflects interest expense on the cash payment of $1,409,000 and the note payable in the amount of $557,000 to fund the INOVIS acquisition at a rate of 8% for the three months ended March 31, 1996. The unaudited pro forma consolidated statement of operations does not reflect a $3,400,000 charge for in-process product development related to the acquisition of INOVIS which was directly attributable to the transaction. F-21 Page 26 of 33 7 HARBINGER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS OTHER 11) Reflects reduction of non-recurring charges for in-process product development related to the acquisitions of HNV, NTEX and INOVIS that were included in the Company's historical consolidated statement of operations. 12) Reflects the increase in weighted average common shares outstanding for the shares issued in connection with the acquisition of HNS. The shares issued in connection with the acquisitions of HNV, NTEX, and INOVIS are included in the historical weighted average common shares outstanding of the Company. F-22 Page 27 of 33 EX-99.4 4 UNAUDITED PROFORMA 1 EXHIBIT 99.4 F-23 Page 28 of 33 2 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS The following unaudited pro forma consolidated statements of operations of Harbinger Corporation (the "Company") set forth below for the year ended December 31, 1996 and for the nine months ended September 30, 1997 give effect to the Company's acquisition of Acquion, Inc. ("Acquion") which has been accounted for using the purchase method of accounting. The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 1997 also reflects the elimination of the charge of $2.7 million for acquired in-process product development costs and the $2.4 million loss on extinguishment of the Debenture related to the acquisition of the minority interest of HNS since this purchase business combination occurred on January 1, 1997 (see page F-19). The operations of HNS have been included in the Company's historical operations since January 1, 1997. The unaudited pro forma consolidated statements of operations should be read in conjunction with the historical financial statements and notes thereto of the Company and Acquion. The unaudited pro forma consolidated statements of operations 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-24 Page 29 of 33 3 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Adjusted Company Historical Pro Forma Pro Forma Subtotal (1) Acquion (2) Adjustments Consolidated ------------ ----------- ------------ ------------ Revenues: Services $ 39,168 $ 41 $ 39,209 Software 22,441 82 22,523 ----------- ------- -------- Total revenues 61,609 123 61,732 ----------- ------- -------- Direct costs: Services 14,703 1,074 15,777 Software 3,341 10 3,351 ----------- ------- -------- Total direct costs 18,044 1,084 19,128 ----------- ------- -------- Gross margin 43,565 (961) 42,604 ----------- ------- -------- Operating costs: Selling and marketing 16,294 1,467 17,761 General and administrative 15,068 1,297 16,365 Depreciation and amortization 3,981 98 330 (3) 4,409 Product development 13,527 1,251 14,778 Charge for purchased in-process product development and acquisition-related charges 626 - 626 ----------- ------- -------- Total operating costs 49,496 4,113 53,939 ----------- ------- -------- Operating loss (5,931) (5,074) (11,335) Interest expense (income), net 50 - 959 (4) 1,009 Foreign currency exchange loss 18 - 18 Equity in losses of joint ventures 119 - 119 ----------- ------- -------- Loss before income tax (benefit) (6,118) (5,074) (12,481) Income tax expense (benefit) 168 - 168 ----------- ------- -------- Net loss (6,286) (5,074) (12,649) Preferred stock dividends (28) - (28) ----------- ------- -------- Net loss applicable to common shareholders $ (6,314) (5,074) $(12,677) =========== ======= ======== Net loss per common share $ (0.34) $ (0.68) =========== ======== Weighted average common and common equivalent shares outstanding 18,707 18,707 =========== ========
See Notes to Unaudited Pro Forma Consolidated Statements of Operations. F-25 Page 30 of 33 4 HARBINGER CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Historical Historical Pro Forma Pro Forma Company Acquion (5) Adjustments Consolidated ----------- ----------- ----------- ------------ Revenues: Services $ 37,892 460 $ 38,352 Software 20,307 24 20,331 ---------- --------- -------- Total revenues 58,199 484 58,683 ---------- --------- -------- Direct costs: Services 12,921 1,448 14,369 Software 2,520 - 2,520 ---------- --------- -------- Total direct costs 15,441 1,448 16,889 ---------- --------- -------- Gross margin 42,758 (964) 41,794 ---------- --------- -------- Operating costs: Selling and marketing 11,614 1,537 13,151 General and administrative 10,999 649 11,648 Depreciation and amortization 5,700 78 248 (3) 6,026 Product development 3,033 1,145 4,178 Charge for purchased in-process product development and acquisition-related charges 31,185 - (10,917) (6) 17,568 (2,700) (7) ---------- --------- -------- Total operating costs 62,531 3,409 52,571 ---------- --------- -------- Operating loss (19,773) (4,373) (10,777) Interest expense (income), net (426) - 720 (4) 294 Foreign currency exchange loss - - - Equity in losses of joint ventures 38 - 38 ---------- --------- -------- Loss before income tax expense (19,385) (4,373) (11,109) Income tax expense 1,419 - 1,419 ---------- --------- -------- Net loss (20,804) (4,373) (12,528) Extraordinary loss on debt extinguishment (2,419) - 2,419 (7) - ========== ========= ======== Net loss applicable to common shareholders $ (23,223) $ (4,373) $(12,528) ========== ========= ======== Net loss per share of common stock $ (1.19) $ (0.64) ========== ======= Weighted average common and common equivalent shares outstanding 19,587 19,587 ========== =======
See Notes to Unaudited Pro Forma Consolidated Statements of Operations. F-26 Page 31 of 33 5 HARBINGER CORPORATION NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS Effective August 22, 1997, Harbinger (the "Company") acquired all of the outstanding shares of Acquion, Inc. ("Acquion"), a California corporation based in Greenville, South Carolina for $13.6 million, consisting of $12.0 million in cash and the assumption of $1.6 million in liabilities including transaction costs. The Company recorded the acquisition using the purchase method of accounting with $10.9 million of the purchase price allocated to in-process product development costs, $641,000 allocated to purchased technology, and $2.0 million allocated to goodwill. The Company determined that certain of the acquired technologies had not reached technological feasibility and therefore expensed the portion of the purchase price allocable to such in-process product development to the consolidated statement of operations on August 22, 1997. The unaudited pro forma consolidated statements of operations for the year ended December 31, 1996 and the nine months ended September 30, 1997 illustrate the estimated effects on the Company's consolidated statements of operations of the acquisition as if it had occurred as of the beginning of those two periods. The unaudited pro forma consolidated statements of operations have been prepared using the purchase method of accounting, whereby the total cost of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the effective date of the acquisition. For purposes of the unaudited pro forma consolidated statements of operations, such allocations have been made based upon currently available information and management's estimates. The historical statements are derived from the audited consolidated financial statements of the Company as of and for the year ended December 31, 1996, the audited statements of Acquion as of and for the year ended October 31, 1996 and the unaudited financial statements of the Company and Acquion for the nine months ended September 30, 1997. The unaudited pro forma consolidated statements of operations do not purport to represent what the results of operations of the Company would actually have been if the acquisition had occurred on such dates or to project the results of operations of the Company for any future date or period. The unaudited pro forma consolidated statements of operations should be read together with the historical financial statements and notes thereto of the Company and Acquion. The unaudited pro forma consolidated statements of operations reflect the following pro forma adjustments: 1) Reflects the pro forma operating results of the Company for the year ended December 31, 1996 as combined with HNS, HNV, NTEX and INOVIS. 2) Reflects the historical operating results of Acquion for the year ended October 31, 1996. 3) Reflects the additional amortization of intangible assets recorded as a result of the allocation of the purchase price. These intangible assets and their lives are as follows: Goodwill $ 2,014,000 10 years Acquired technology $ 641,000 5 years
4) Reflects interest expense on the borrowings to fund the cash portion of the purchase price of Acquion at the rate of 8% per annum. F-27 Page 32 of 33 6 HARBINGER CORPORATION NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS 5) Reflects the historical unaudited operating results of Acquion for the period from January 1, 1997 through August 22, 1997. The operating results of Acquion for the period from August 23, 1997 to September 30, 1997 are included in the Company's unaudited operating results. 6) Reflects the elimination of the charge of $10.9 million for acquired in-process product development costs resulting from the acquisition of Acquion and the Company's purchase price allocation. 7) Reflects the elimination of the charge of $2.7 million for acquired in-process product development costs and the $2.4 million loss on extinguishment of the Debenture related to the acquisition of the minority interest of HNS recorded in the first quarter of 1997. The unaudited pro forma consolidated statements of operations do not reflect the $10.9 million charge for in-process product development related to the acquisition of Acquion, or the $2.7 million charge for the in-process product development and $2.4 million loss on the extinguishment of the Debenture related to the acquisition of the minority interest in HNS, all of which were directly attributable to the transactions. F-28 Page 33 of 33 -----END PRIVACY-ENHANCED MESSAGE-----