<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): April 6, 2000
SILVERSTREAM SOFTWARE, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-26981 04-3318325
---------------------------------------------- ------------ -------------------
(State or Other Jurisdiction of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
2 Federal Street, Billerica, Massachusetts 01821
------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
(978) 262-3000
----------------------------------------------------
(Registrant's telephone number, including area code)
One Burlington Woods Drive, Suite 200, Burlington, Massachusetts 01803
--------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
The undersigned Registrant hereby amends Item 7 of its Current Report on Form
8-K filed on April 19, 2000, which excluded certain financial statements because
they were not available at the time of filing, to read in its entirety as
follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
eObject, Inc. (a company in the development stage)
Report of Ernst & Young LLP, Boston Massachusetts,
Independent Auditors
Balance Sheets at March 31, 2000 (unaudited) and
December 31, 1999
Statements of Operations for the three months ended March
31, 2000 (unaudited) and for the period from March 31,
1999 (inception) to December 31, 1999
Statement of Stockholders' Equity for the three months
ended March 31, 2000 (unaudited) and for the period from
March 31, 1999 (inception) to December 31, 1999
Statements of Cash Flows for the three months ended March
31, 2000 (unaudited) and for the period from March 31,
1999 (inception) to December 31, 1999
Notes to Financial Statements
(b) Unaudited Pro Forma Financial Information
Unaudited Pro Forma Condensed Consolidated Balance Sheet
at March 31, 2000
Unaudited Pro Forma Condensed Consolidated Income
Statements for the twelve months ended December 31, 1999
and for the three months ended March 31, 2000
Unaudited Notes to the Unaudited Pro Forma Condensed
Consolidated Financial Information
(c) Exhibits
Item No. Description
2.1* Agreement and Plan of Merger, dated April 5,
2000, by and among the Registrant, eObject
Acquisition Corp., eObject, Inc. and the
Major Stockholders and Indemnification
<PAGE> 3
Representatives named therein.
23.1 Consent of Ernst & Young LLP
99.1* Press release, dated April 6, 2000,
announcing the acquisition of eObject, Inc.
*Incorporated by reference from the Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission on April 19, 2000.
<PAGE> 4
SIGNATURE
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.
Dated: June 20, 2000 SILVERSTREAM SOFTWARE, INC.
/s/ Craig A. Dynes
------------------------------------------
Craig A. Dynes
Vice President and Chief Financial Officer
<PAGE> 5
AUDITED
FINANCIAL STATEMENTS
eOBJECT, INC. (A COMPANY IN THE
DEVELOPMENT STAGE)
For the period from March 31, 1999
(inception) to December 31, 1999
<PAGE> 6
eObject, Inc.
(A company in the development stage)
Audited Financial Statements
For the period from March 31, 1999 (inception) to December 31, 1999
CONTENTS
Report of Independent Auditors.............................................1
Financial Statements
Balance Sheets..............................................................2
Statements of Operations....................................................3
Statements of Stockholders' Equity .........................................4
Statements of Cash Flows....................................................5
Notes to Financial Statements...............................................6
<PAGE> 7
Report of Independent Auditors
To the Stockholders and Board of Directors of eObject, Inc.
We have audited the accompanying balance sheet of eObject, Inc. (a company in
the development stage) (the Company) as of December 31, 1999, and the related
statements of operations, stockholders' equity, and cash flows for the period
from March 31, 1999 (inception) to December 31, 1999. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance as to 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 eObject, Inc. at December 31,
1999, and the results of its operations and its cash flows for the period from
March 31, 1999 (inception) to December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
May 25, 2000
Boston, Massachusetts
<PAGE> 8
eObject, Inc.
(A company in the development stage)
Balance Sheets
DECEMBER 31, MARCH 31,
1999 2000
------------ ------------
ASSETS (UNAUDITED)
Current assets:
Cash $ 122,459 $ 57,999
Accounts receivable - other 10,000 --
--------- -----------
Total current assets 132,459 57,999
Property and equipment, net 24,971 22,647
Other assets 562 10,230
--------- -----------
Total assets $ 157,992 $ 90,876
========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 21,121 $ 27,837
Accrued expenses - payroll 63,795 63,247
Deferred revenue -- 50,000
--------- -----------
Total current liabilities 84,916 141,084
Stockholders' equity (Deficit):
Common stock, $0.01 par value; 20,000,000
shares authorized, 5,450,000 shares issued
and outstanding at December 31, 1999 and
8,750,000 shares issued and outstanding at
March 31, 2000 (unaudited) 54,500 87,500
Additional paid-in capital 639,250 936,250
Retained deficit (620,674) (1,073,958)
--------- -----------
Total stockholders' equity (deficit) 73,076 (50,208)
--------- -----------
Total liabilities and stockholders' equity (deficit) $ 157,992 $ 90,876
========= ===========
See accompanying notes.
2
<PAGE> 9
eObject, Inc.
(A company in the development stage)
Statements of Operations
PERIOD FROM
MARCH 31, 1999 THREE MONTHS
(INCEPTION) TO ENDED
DECEMBER 31, MARCH 31,
1999 2000
-------------- ------------
(UNAUDITED)
Revenue - other $ 10,000 $ --
Operating expenses:
Research and development
(Excluding Stock Based Compensation) 479,040 166,305
General and administrative 121,634 58,979
Compensation charge for issuance of common
stock 30,000 228,000
--------- ---------
Total operating expenses 630,674 453,284
Net loss $(620,674) $(453,284)
========= =========
See accompanying notes
3
<PAGE> 10
eObject, Inc.
(A company in the development stage)
Statement of Stockholders' Equity
Period from March 31, 1999 (inception) to December 31, 1999
<TABLE>
<CAPTION>
COMMON STOCK
----------------------- ADDITIONAL TOTAL
PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1999 -- -- -- -- --
Issuance of common stock in
exchange for technology
rights (March 1999) 75,000 $ 750 -- -- $ 750
Issuance of common stock for
payment of operating expenses
(March 1999) 30,000 300 $ 29,700 -- 30,000
Issuance of common stock due to
10:1 stock split (August 1999) 945,000 9,450 (9,450) -- --
Issuance of common stock for cash
(December 1999) 4,400,000 44,000 619,000 663,000
Net loss -- -- -- (620,674) (620,674)
----------- --------- --------- ----------- ---------
Balance at December 31, 1999 5,450,000 54,500 639,250 (620,674) 73,076
Issuance of common stock
for cash (January 2000)
(unaudited) 750,000 7,500 67,500 -- 75,000
Issuance of common stock
for payment of operating
expenses (January 2000) 2,280,000 22,800 205,200 -- 228,000
Issuance of common stock
for cash (February)
(unaudited) 50,000 500 4,500 -- 5,000
Issuance of common stock
for cash (March 2000)
(unaudited) 220,000 2,200 19,800 -- 22,000
Net loss (unaudited) -- -- -- (453,284) (453,284)
----------- --------- --------- ----------- ---------
Balance at March 31, 2000
(unaudited) 8,750,000 $ 87,500 $ 936,250 $(1,073,958) $ (50,208)
=========== ========= ========= =========== =========
</TABLE>
See accompanying notes.
4
<PAGE> 11
eObject, Inc.
(A company in the development stage)
Statements of Cash Flows
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 31, 1999 THREE MONTHS
(INCEPTION) TO ENDED
DECEMBER 31, MARCH 31, 2000
1999 (UNAUDITED)
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(620,674) $(453,284)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation expense 5,295 2,324
Amortization expense 188 63
Operating expenses paid for with common stock 30,000 228,000
Changes in operating assets and liabilities:
Accounts receivable other (10,000) 10,000
Other assets -- (9,731)
Accounts payable and accruals 84,916 6,168
Deferred revenue -- 50,000
--------- ---------
Net cash used in operating activities (510,275) (166,460)
INVESTING ACTIVITIES
Purchases of equipment (30,266) --
--------- ---------
Net cash used in investing activities (30,266) --
FINANCING ACTIVITIES
Proceeds from issuance of common stock and capital
contributions 663,000 102,000
--------- ---------
Net cash provided by financing activities 663,000 102,000
Net increase (decreased) in cash 122,459 (64,460)
Cash at beginning of period -- 122,459
--------- ---------
Cash at end of period $ 122,459 $ 57,999
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Issuance of common stock in exchange for technology rights $ 750 $ --
========= =========
</TABLE>
See accompanying notes.
5
<PAGE> 12
eObject, Inc.
(A company in the development stage)
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION AND BASIS OF PRESENTATION
eObject, Inc. (the Company) is incorporated in the state of Delaware and is a
provider of a Java based Business Logic Server, which provides an open and
flexible means to rapidly create, deploy and manipulate personalized websites.
The Company is a development-stage enterprise and has, since inception, been
engaged in the research and development of its software product and raising
capital to fund operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements reflect the application of certain
significant accounting policies as described in the following note and elsewhere
in the accompanying financial statements and notes.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation and amortization is
computed by use of the straight-line method over three years.
INCOME TAXES
The Company accounts for income taxes under the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
6
<PAGE> 13
eObject, Inc.
(A company in the development stage)
Notes to Financial Statements
December 31, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK-BASED COMPENSATION
Compensation cost associated with awards of stock or options to employees is
measured using the intrinsic-value method prescribed by Accounting Principles
Board Opinion No. 25.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB
101 is effective no later than the second fiscal quarter of the fiscal year
beginning after December 15, 1999. The Company is currently analyzing the
effect, if any, that the adoption of SAB 101 will have on its financial
condition and results of operations.
In March 2000 the Financial Accounting Standards Board issued FASB
Interpretation No. 44 (FASBI No. 44) Accounting for Certain Transactions
involving Stock Compensation, an interpretation of APB Opinion No. 25. The
Interpretation, which has been adopted prospectively as of July 1, 2000,
requires that stock options that have been modified to reduce the exercise price
be accounted for as variable. The Company has not modified any stock options to
date, therefore, FASBI No. 44 is not expected to have an impact on the Company.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following;
MARCH 31,
DECEMBER 31, 2000
1999 (UNAUDITED)
----------- -----------
Computer equipment $ 24,465 $ 24,465
Computer software 5,801 5,801
-------- --------
30,266 30,266
Less accumulated depreciation and amortization (5,295) (7,619)
-------- --------
$ 24,971 $ 22,647
======== ========
7
<PAGE> 14
eObject, Inc.
(A company in the development stage)
Notes to Financial Statements
December 31, 1999
4. LEASES
The Company leases office facilities under a long-term lease agreement
classified as an operating lease. The following is a schedule of future minimum
lease payments for this lease as of December 31, 1999:
2000 $ 49,704
2001 51,701
---------
$ 101,405
=========
Rental expense aggregated $23,353 for fiscal 1999.
5. STOCK OPTION PLAN
The Company's 1999 stock plan (the "Plan") adopted August 10, 1999, provides for
grants of options to purchase up to 2,250,000 shares of common stock. Grants may
be in the form of incentive stock options or nonqualified options. Exercise
prices and vesting periods are determined by the Board on the date of grant.
Options generally vest ratably over a three year period. A summary of activity
in the Plan is as follows:
WEIGHTED-
AVERAGE
NUMBER EXERCISE
OF SHARES PRICE
--------- ---------
Outstanding at March 31, 1999 -- --
Granted 2,375,000 $ 0.10
Cancelled (125,000) 0.10
--------- -------
Outstanding at December 31, 1999 2,250,000 $ 0.10
========= =======
The following table sets forth information regarding options outstanding at
December 31, 1999:
NUMBER CURRENTLY WEIGHTED-AVERAGE
NUMBER OF OPTIONS EXERCISE PRICE EXERCISABLE REMAINING LIFE
----------------- -------------- ---------------- -----------------
2,250,000 $ 0.10 445,000 8 years
8
<PAGE> 15
eObject, Inc.
(A company in the development stage)
Notes to Financial Statements
December 31, 1999
5. STOCK OPTION PLAN (CONTINUED)
PRO FORMA DISCLOSURE
As described in Note 2, the Company uses the intrinsic-value method to measure
compensation for equity awards to employees. Had the Company used the fair-value
method to measure compensation, reported net loss would have been $642,924 in
1999.
The minimum-value method was used to measure the fair value of equity awards in
this disclosure. Key assumptions used to apply this pricing model were average
risk-free rate of 8.94% and expected option life of eight years. The estimated
fair value of awards made in 1999 was $112,500.
6. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and income tax purposes. Significant components of the Company's deferred tax
assets are as follows:
December 31, 1999
Deferred tax assets:
Net operating loss carryforward $ 118,000
Research and development credit carryforward 35,000
Deferred start up costs 126,000
Less valuation allowance for deferred tax assets (279,000)
---------
Total $ 0
=========
As of December 31, 1999, the Company has net operating loss carryforwards and
reserach and development tax carryforwards of approximately $303,000 and
$150,000, respectively, available to offset future federal and state taxable
income. These carryforwards begin to expire in 2012 and may be subject to
certain limitations. The valuation allowance increased by $279,000 during the
period ended December 31, 1999.
9
<PAGE> 16
eObject, Inc.
(A company in the development stage)
Notes to Financial Statements
December 31, 1999
The Company believes that, based upon a number of factors, the available
objective evidence creates sufficient uncertainty regarding the realization of
the deferred tax assets such that a full valuation allowance has been recorded.
The Company will continue to assess the realization of the deferred tax assets
based on actual and forecasted operating results.
7. SUBSEQUENT EVENTS
Effective January 4, 2000, the Company adopted the 2000 Stock Plan (2000 Plan),
which allows for option grants up to 2,000,000 million shares and annual
limitations of 750,000 shares.
On April 3, 2000, the Company entered into its first software license and
consulting services agreement with a customer. The license fee, which granted
the customer a worldwide non-exclusive and non-transferable restricted right and
license to use the Company's software, was $100,000. Payment was due upon the
consummation of the agreement. The consulting services fee was for $100,000 and
was due in two equal installments of $50,000 on May 8, 2000 and July 6, 2000.
On April 5, 2000, SilverStream Software, Inc. ("SilverStream") purchased all of
the outstanding stock of the Company. The purchase price consists of 473,581
shares of SilverStream common stock valued at approximating $23,000,000. Under
the terms of the purchase agreement, SilverStream is committed to making
additional issuances of common stock and cash based upon the achievement of
future goals and deliverables.
SilverStream has committed to provide sufficient support for a period of at
least one year from May 25, 2000 to allow the Company to meet its financial
obligations as they come due.
10
<PAGE> 17
SILVERSTREAM SOFTWARE, INC. UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Overview
On April 5, 2000, SilverStream acquired the Company. The Company,
which was incorporated in March 1999, provides a Java based Business Logic
Server, which allows for an open and flexible means to rapidly create, deploy
and manipulate personalized websites. The purchase price was approximately $23.0
million. The acquisition was completed through the issuance of approximately
473,581 shares of SilverStream's common stock. On May 26, 2000, SilverStream
issued additional contingent consideration of 175,000 shares of its common
stock, valued at $4.4 million, and cash of $1.0 million, as outlined in the
Agreement and Plan of Merger between the parties. This contingent consideration
was added to goodwill and will be amortized over the remaining life.
The Unaudited Pro Forma Condensed Consolidated Income Statements for
the year ended December 31, 1999 and for the three months ended March 31, 2000
give effect to the acquisition of the Company as if it had occurred on January
1, 1999. The Unaudited Pro Forma Condensed Consolidated Income Statements
include the historical results of operations of the Company for the period from
March 31, 1999 through December 31, 1999 and the three months ended March 31,
2000.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives
effect to the acquisition of the Company as if it had occurred on March 31,
2000. The following pro forma statements and accompanying notes should be read
in conjunction with the historical financial statements of SilverStream.
The Unaudited Pro Forma Condensed Consolidated Financial Information is
intended for informational purposes only and is not necessarily indicative of
the future position or future results of operations of the consolidated entity
after the acquisition of the Company or of the financial position or results of
operations of the consolidated entity that would have actually occurred had the
acquisition been effected on January 1, 1999. Since the Company had no
operations prior to March 31 (Date of Inception), 1999, only pro forma
information subsequent to January 1, 1999 has been provided.
<PAGE> 18
SILVERSTREAM SOFTWARE, INC.
PRO FORMA BALANCE SHEET
MARCH 31, 2000
<TABLE>
<CAPTION>
PRO FORMA
MAR. 31, PRO FORMA MAR. 31,
2000 eOBJECT ADJUSTMENTS 2000
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $204,582,925 $ 57,999 -- $204,640,924
Marketable securities 20,498,954 -- -- 20,498,954
Accounts Receivable 12,088,592 -- -- 12,088,592
Note Receivable 2,000,000 -- -- 2,000,000
Prepaid Expenses 819,893 -- -- 819,893
Other 3,129 -- -- 3,129
-----------------------------------------------------------
Total current assets 239,993,493 57,999 -- 240,051,492
Furniture and Fixtures, net 3,906,645 22,436 -- 3,929,081
Intangibles, net 35,738,035 10,441 23,255,677(A) 59,004,153
-----------------------------------------------------------
Total assets $279,638,173 $ 90,876 $ 23,255,677 $302,984,726
===========================================================
Current Liabilities:
Accounts payable $ 5,057,824 $ 27,837 -- $ 5,085,661
Accrued expenses 7,332,811 63,247 -- 7,396,058
Deferred Revenue 6,621,947 50,000 -- 6,671,947
Current portion of long-term debt 1,115,773 -- -- 1,115,773
-----------------------------------------------------------
Total current liabilities 20,128,355 141,084 -- 20,269,439
Long-term debt, less current portion 395,833 -- -- 395,833
Common Stock 19,634 1,023,750 $ (1,023,276)(B) 20,108
APIC 317,045,932 -- 24,278,953(B) 341,324,885
Deferred compensation (6,868,785) -- -- (6,868,785)
Accumulated deficit (50,770,305) (1,073,958) -- (51,844,263)
Other comprehensive loss (208,991) -- -- (208,991)
Notes receivable from stockholders (103,500) -- -- (103,500)
-----------------------------------------------------------
Total stockholders' equity (deficit) 259,113,985 (50,208) 23,255,677 282,319,454
-----------------------------------------------------------
Total liabilities and stockholders' equity (deficit) $279,638,173 $ 90,876 $ 23,255,677 $302,984,726
===========================================================
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 19
SILVERSTREAM SOFTWARE, INC.
PRO FORMA STATEMENT
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRO FORMA
DEC. 31, DEC. 31,
1999 eOBJECT ADJUSTMENTS 1999
----------------------------------------------------
<S> <C> <C> <C> <C>
Revenue
Software license $13,825,676 -- -- $13,825,676
Services 9,238,731 $ 10,000 -- 9,248,731
----------------------------------------------------
Total revenue 23,064,407 10,000 -- 23,074,407
Cost of Revenue:
Software license 1,412,175 -- -- 1,412,175
Services 10,252,589 -- -- 10,252,589
----------------------------------------------------
Total cost of revenue 11,664,764 -- -- 11,664,764
Gross profit (loss) 11,399,643 10,000 -- 11,409,643
Operating expenses:
Sales and marketing 20,419,430 -- -- 20,419,430
Research and development 7,090,691 479,040 7,569,731
General and administrative 4,300,713 121,634 4,422,347
Compensation charge for issuance of stock options 438,594 30,000 -- 468,594
Amortization of goodwill 384,729 -- 4,651,135(C) 5,035,864
In-process research and development charge 1,986,659 -- -- 1,986,659
----------------------------------------------------
Total operating expenses 34,620,816 630,674 4,651,135 39,902,625
----------------------------------------------------
Loss from operations (23,221,173) (620,674) (4,651,135) (28,492,982)
Interest income 1,421,743 -- -- 1,421,743
Interest expense (189,863) -- -- (189,863)
------------ -----------
Net loss $(21,989,293) $(620,674) $(4,651,135) (27,261,102)
=====================
Beneficial conversion feature of Series D preferred stock (263,158) (263,158)
------------ -----------
Net loss applicable to common stockholders $(22,252,451) $(27,524,260)
=========== ===========
Basic and diluted net loss per share applicable to common (2.64) (3.10)
stockholders =========== ===========
Weighted-average common shares used in computing basic and
diluted net loss per share applicable to common stockholders 8,419,116 8,892,697(D)
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE> 20
SILVERSTREAM SOFTWARE, INC.
PRO FORMA INCOME STATEMENT
MARCH 31, 2000
<TABLE>
<CAPTION>
PRO FORMA
MAR. 31, MAR. 31,
2000 eOBJECT ADJUSTMENTS 2000
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Software license $ 7,442,308 -- -- 7,442,308
Services 5,561,047 -- -- 5,561,047
------------------------------------------------------------
Total revenue 13,003,355 -- -- 13,003,355
Cost of Revenue:
Software license 743,791 -- -- 743,791
Services 5,111,119 -- -- 5,111,119
------------------------------------------------------------
Total cost of revenue 5,854,910 -- -- 5,854,910
Gross profit (loss) 7,148,445 -- -- 7,148,445
Operating expenses:
Sales and marketing 9,868,452 -- -- 9,868,452
Research and development 2,701,681 $ 166,305 2,867,986
General and administrative 2,090,166 58,979 2,149,145
Compensation charge for issuance of stock options 344,574 228,000 -- 572,574
Amortization of goodwill 1,015,723 -- 1,156,620(E) 2,172,343
------------------------------------------------------------
Total operating expenses 16,020,595 453,284 1,156,620 17,630,499
Loss from operations (8,872,150) (453,284) (1,156,620) (10,482,054)
Interest income 2,279,304 -- -- 2,279,304
Interest expense (16,440) -- -- (16,440)
------------------------------------------------------------
Net loss $(6,609,286) $(453,284) $(1,156,620) $ (8,219,190)
============================================================
Basic and diluted net loss per share applicable to common
stockholders $ (0.36) $ (0.44)
=========== ============
Weighted-average common shares used in computing basic and
diluted net loss per share applicable to common stockholders 18,170,791 18,644,372(D)
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 21
SILVERSTREAM SOFTWARE, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
1. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS -- BALANCE SHEET
The pro forma adjustments to the unaudited pro forma condensed consolidated
balance sheet, assuming the acquisition occurred on March 31, 2000 are as
follows:
(A) Adjustment to record the purchase price and intangible assets of the
Company are as follows:
Total purchase price for the Company ............................ $23,205,469
Add: Fair value of the Company estimated net liabilities as of
March 31, 2000 ............................................. (50,208)
----------
Estimated cost in excess of fair value of net assets
acquired (goodwill) ........................................ $23,255,677
===========
SilverStream has assumed the goodwill to have an estimated useful life of 5
years. The purchase price allocation and estimated useful life of goodwill is
preliminary and will be finalized upon an analysis by SilverStream of the
intangible assets acquired in connection with this acquisition.
(B) Adjustment to eliminate the equity of the Company in consolidation of
$1,023,276.
2. PRO FORMA ADJUSTMENT AND ASSUMPTIONS -- INCOME STATEMENT
The pro forma adjustments to the unaudited pro forma condensed consolidated
statement of operations, assuming the acquisition occurred on January 1, 1999,
are as follows:
(C) Adjustment to record 12 months of amortization associated with the
Company's intangible assets acquired by SilverStream.
(D) Adjusted to reflect the 473,581 shares issued in the acquisition.
(E) Adjustments to record 3 months of amortization associated with the
Company's intangible assets acquired by SilverStream.
For calculation of the net loss per share SilverStream has excluded shares
subject to repurchase by SilverStream from the calculation of loss per share
because all such securities are antidilutive for all periods presented. Shares
subject to repurchase by SilverStream will be included in the computation of
earnings per share when SilverStream's option to repurchase these shares
expires.
