<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 EXCHANGE ACT OF 1934.
Date of report (Date of earliest event reported): November 5, 1999
Commission File No. 0-24833
FUTURELINK CORP.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
Delaware 95-4763404
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
100, 6 Morgan, Irvine, California 92618
- --------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
</TABLE>
(949) 837-8252
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This current Report is filed in order to provide pro forma financials not
previously filed in connection with the Registrant's acquisition of CN
Networks, Inc ("CNI"), and Async Technologies, Inc. ("Async").
A. On November 5, 1999, the Company completed its previously announced
acquisition of CNI. Pursuant to the acquisition, CNI's shareholders received
$3.9 million in cash and 1,181,816 shares of the Registrant's common stock.
The Agreement and Plan of Reorganization and Merger dated September 7, 1999
(the "CNI Acquisition Agreement") pursuant to which this acquisition was
completed was filed as exhibit 2.1 to the Current Report on Form 8-K filed
by the Registrant with the Securities and Exchange Commission on November
23, 1999. The CNI Acquisition Agreement was amended to provide that the
acquisition would be effected no later than November 9, 1999 and to clarify
certain terms of the CNI Acquisition Agreement. This amendment to the CNI
Acquisition Agreement was filed as exhibit 2.2 to the Current Report on Form
8-K filed by the Registrant with the Securities and Exchange Commission on
November 23, 1999. This November 23, 1999 Current Report did not contain pro
forma financials which are included in this report.
B. On November 26, 1999, the Registrant completed its previously announced
acquisition of Async. Under the terms of this acquisition, Async's
principals received $6 million in cash and 1,298,705 shares of the
Registrant's common stock. Async shareholders may also earn up to an
additional 519,481 shares of FutureLink common stock if Async is able to
meet certain performance targets for 1999. The Agreement and Plan of
Reorganization and Merger dated September 7, 1999 (the "Async Acquisition
Agreement") pursuant to which this acquisition was completed was filed as
exhibit 2.1 to the Current Report on Form 8-K filed by the Registrant with
the Securities and Exchange Commission on December 8, 1999. The Async
Acquisition Agreement was amended on three occasions to provide that the
acquisition would be effected no later than November 30, 1999 and to clarify
certain terms of the Async Acquisition Agreement. These amendments to the
Async Acquisition Agreement were filed as exhibits 2.1, 2.3 and 2.4 to the
Current Report on Form 8-K filed by the Registrant with the Securities and
Exchange Commission on December 8, 1999. This December 8, 1999 Current
Report did not contain pro forma financials which are included in this
report.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) PRO FORMA FINANCIAL INFORMATION:
Unaudited pro forma financial information for the merged companies
consisting of the Registrant, Micro Visions, CNI and Async, which are based
on financial statements for the 9 month period ended September 30, 1998 and
for the year ended December 31, 1998, which statements also give effect to
the private placement financing completed by the Registrant effective
October 15, 1999, and the conversion of outstanding convertible debentures
and warrants are attached hereto.
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, thereunto duly authorized.
FUTURELINK CORP.
By: [signed: R. Kilambi] Date: January 6, 2000
--------------------------------------
Raghu Kilambi, Chief Financial Officer
<PAGE> 4
FUTURELINK CORP.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1999
(all amounts in thousands of United States dollars except Earnings Per Share)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------- PRO FORMA PRO FORMA
FUTURELINK MICRO VISIONS CNI ASYNC ADJUSTMENTS NOTES CONSOLIDATED
---------- ------------- ------ ------ ----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT
Cash $ 7,815 $ 135 $ 272 $ 69 46,000 [6] $ 35,381
-- -- -- -- (10,000) [2.1]
-- -- -- -- (3,510) [3]
-- -- -- -- (5,400) [4]
Accounts receivable 1,811 4,235 1,760 1,411 (105) [2.4] 9,112
Other current assets 297 594 202 316 -- 1,409
------- ------ ------ ------ -------- --------
9,923 4,964 2,234 1,796 26,985 45,902
------- ------ ------ ------ -------- --------
Capital assets 2,597 1,019 37 128 -- 3,782
Other assets 58 44 47 7 -- 155
Goodwill 6,452 -- -- -- -- 88,197
-- -- -- -- 52,018 [2.3]
-- -- -- -- 13,006 [3.2]
-- -- -- -- 16,721 [4.3]
Deposits 3,305 -- -- -- -- (0)
-- -- -- -- (2,268) [2.1]
-- -- -- -- (411) [3]
-- -- -- -- (626) [4]
------- ------ ------ ------ -------- --------
12,412 1,063 84 135 78,440 92,134
------- ------ ------ ------ -------- --------
TOTAL ASSETS $22,335 $6,027 $2,318 $1,931 105,425 $138,036
======= ====== ====== ====== ======== ========
LIABILITIES
CURRENT
Line of credit -- $1,395 -- $ 324 -- $ 1,719
Accounts payable and accrued
liabilities $ 2,700 3,514 $1,232 1,224 (105) [2.4] 9,674
107 [2.2]
504 [3.2]
499 [4.3]
Due to shareholders -- Async 274 [4.2] 274
Other current liabilities 379 712 564 304 -- 1,958
------- ------ ------ ------ -------- --------
3,079 5,620 1,796 1,852 1,279 13,625
------- ------ ------ ------ -------- --------
Convertible debentures, net 22,170 -- -- -- (15,000) [7] 2,503
(4,667) [8]
Other long term debt 885 -- -- -- -- 885
------- ------ ------ ------ -------- --------
TOTAL LIABILITIES $26,134 $5,620 $1,796 $1,852 (18,388) $ 17,013
------- ------ ------ ------ -------- --------
Paid up shares 3 10 10 1 (19) 5
Share capital and surplus 25,501 -- -- -- 150,317
40,050 [2.3]
9,100 [3.2]
10,000 [4.3]
45,999 [6]
15,000 [7]
4,667 [8]
(Deficit)/Retained Earnings (29,299) 397 509 78 (985) (29,300)
------- ------ ------ ------ -------- --------
(3,796) 407 519 80 123,812 121,022
------- ------ ------ ------ -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $22,338 $6,027 $2,315 $1,931 105,424 $138,036
======= ====== ====== ====== ======== ========
</TABLE>
See accompanying notes to the unaudited pro forma consolidated financial
statements.
<PAGE> 5
FUTURELINK CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(all amounts in thousands of United States dollars except Earnings Per Share)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------- PRO FORMA PRO FORMA
FUTURELINK MICRO VISIONS CNI ASYNC ADJUSTMENTS NOTES CONSOLIDATED
---------- ------------- ------ ------ ----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 5,037 $16,557 $5,899 $6,208 $ (105) [2.4] $ 33,597
EXPENSES
Cost of sales 1,333 9,398 3,825 3,783 -- 18,338
Payroll, general and administration
and other 12,028 7,963 1,900 1,733 (105) [2.4] 23,518
Interest expense 7,879 19 35 30 (237) [7.2] 7,563
-- -- -- -- (163) [8.3]
Depreciation 522 84 25 36 668
Amortization 4,756 -- -- -- 12,262 [5.1] 15,025
-- -- -- -- (1,993) [8.4]
--------- ------- ------ ------ -------- ----------
26,518 17,464 5,784 5,581 11,757 65,112
--------- ------- ------ ------ -------- ----------
(LOSS) PROFIT BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (21,481) (907) 115 627 (11,862) (31,515)
Provision for income tax 357 -- (35) (207) -- 115
--------- ------- ------ ------ -------- ----------
NET (LOSS)/PROFIT BEFORE
EXTRAORDINARY (21,124) (907) 80 420 (11,862) (31,400)
Extraordinary item (845) -- -- -- -- (845)
--------- ------- ------ ------ -------- ----------
NET (LOSS)/PROFIT FOR THE PERIOD $ (21,969) $ (907) $ 80 $ 420 $(11,862) $ (32,244)
========= ======= ====== ====== ======== ==========
LOSS PER COMMON SHARE $ (3.36) $ (1.99)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING [NOTE 10] 6,534,575 16,215,096
</TABLE>
See accompanying notes to the unaudited pro forma consolidated financial
statements.
<PAGE> 6
FUTURELINK CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(all amounts in thousands of United States dollars except Earnings Per Share)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------- PRO FORMA PRO FORMA
FUTURELINK MICRO VISIONS CNI ASYNC ADJUSTMENTS NOTES CONSOLIDATED
---------- ------------- ------ ------ ----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 2,437 $13,669 $5,568 $6,057 -- $ 27,730
EXPENSES
Cost of sales 880 6,775 3,179 4,095 -- 14,930
Payroll, general and administration and
other 4,648 5,990 2,147 1,709 -- 14,494
Interest expense 1,304 10 41 33 -- 1,388
Depreciation 119 39 83 33 -- 274
Goodwill and other amortization 697 -- -- -- $ 16,349 [5.1] 17,046
Other 874 -- -- -- -- 874
--------- ------- ------ ------ -------- ----------
8,522 12,814 5,451 5,871 16,349 49,006
--------- ------- ------ ------ -------- ----------
(LOSS) PROFIT BEFORE INCOME TAXES (6,085) 855 118 186 (16,349) (21,276)
Provision for income taxes 205 (178) (37) (60) (71)
--------- ------- ------ ------ -------- ----------
NET (LOSS)/PROFIT FOR THE PERIOD $ (5,880) $ 677 $ 81 $ 126 $(16,349) $ (21,347)
========= ======= ====== ====== ======== ==========
LOSS PER COMMON SHARE $ (1.86) $ (1.66)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING [NOTE 10] 3,169,314 12,849,835
</TABLE>
<PAGE> 7
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
1. The accompanying unaudited pro forma consolidated financial statements have
been prepared by management from the following information:
- unaudited financial statements of FutureLink Corp. ("FutureLink"),
Executive LAN Management, Inc. ("Micro Visions"), CN Networks, Inc.
("CNI"), and Async Technologies, Inc. ("Async") as at September 30, 1999
and for the nine month period then ended;
- audited financial statements of FutureLink, Micro Visions, CNI and Async
as at December 31, 1998 and for the year then ended,
- other information available to the companies.
In the opinion of FutureLink management these pro forma consolidated
financial statements include all adjustments necessary for fair
presentation in accordance with accounting principles generally accepted in
the United States. These pro forma consolidated financial statements may
not be indicative of the financial position or the results of operations
that actually would have occurred if the events reflected therein had been
in effect on the dates indicated nor of the financial position or the
results of operations which may be obtained in the future.
These pro forma financial statements should be read in conjunction with the
audited and unaudited financial statements of the companies.
2. On June 2, 1999, FutureLink signed an Agreement and Plan of Reorganization
and Merger (the "Micro Visions Agreement") with Micro Visions. The Micro
Visions Agreement provided for a merger of Micro Visions with FutureLink
with a subsidiary of FutureLink such that all of Micro Visions' outstanding
stock shall be sold to FutureLink in exchange for $12,000,000 cash and
6,000,000 FutureLink common shares, as well as contingent consideration of
2,400,000 common shares subject to the achievement of certain targets. On
October 15, 1999 the merger was completed.
The pro forma consolidated balance sheet at September 30, 1999 gives effect
to the following assumptions and transactions, as if they had occurred on
September 30, 1999:
2.1 The acquisition by FutureLink of all of the outstanding common shares
of Micro Visions in exchange for cash consideration of $12,000,000
and 7,200,000 FutureLink common shares with an ascribed value of
$33,375,000 based on the average share trading price at the date a
definitive agreement was reached, June 2, 1999. As at September 30,
1999, $2,000,000 had been paid to the former shareholders of Micro
Visions as a deposit towards the acquisition and $268,000 of
acquisition costs had been incurred.
<PAGE> 8
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
2.2 The allocation to goodwill of the estimated costs of the acquisition
described in 2.1 above, in the amount of $375,000, $107,000 of which
was payable and $268,000 of which had been incurred prior to
September 30, 1999 and the elimination of the share capital ($10,000)
and retained earnings ($397,000) of Micro Visions on its acquisition.
2.3 Additional contingent consideration payable to the former
shareholders of Micro Visions has been reflected in these pro forma
consolidated financial statements to the extent the following
performance criteria have been met for the period from January 1,
1999 to December 31, 1999:
a) 1,200,000 FutureLink common shares to be issued if Micro Visions
achieves sales in excess of $18,000,000;
b) 720,000 FutureLink common shares to be issued if Micro Visions
enlists 100 new customers; and
c) 480,000 FutureLink common shares to be issued if Micro Visions
installs and integrates at least 200 new servers.
The amounts referred to in b) and c) above have been achieved and
this additional consideration has been recorded as part of the
purchase price in the accompanying pro forma consolidated financial
statements.
The acquisition has been accounted for in these pro forma
consolidated financial statements using the purchase method, whereby
the aggregate purchase price of $52,425,000 has been allocated to the
net assets acquired based on their estimated fair values, as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE
ALLOCATION
$(000'S)
--------------
<S> <C> <C>
Net assets acquired 407
Goodwill 52,018
-------
Purchase price $52,425
=======
Consideration:
Cash 12,000
Common shares of FutureLink - contingent consideration 33,375
Common shares of FutureLink - non contingent consideration 6,675 40,050
------
Acquisition costs 375
-------
Total consideration $52,425
=======
</TABLE>
2.4 During the nine months ending September 30, 1999, FutureLink obtained
services totaling $105,000 from Micro Visions. This transaction has
been eliminated by way of reducing revenues and expenses by $105,000.
<PAGE> 9
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
3. On September 7, 1999, FutureLink signed an Agreement and Plan of
Reorganization and Merger (the "CNI Agreement") with CNI. The CNI Agreement
provides for a merger of CNI with a subsidiary of FutureLink such that all
of CNI's outstanding stock shall be sold to FutureLink in exchange for
$3,900,000 cash and 1,181,816 FutureLink common shares. Prior to September
30, 1999, FutureLink paid $390,000 as a deposit towards the acquisition,
and $21,000 of acquisition costs had been incurred. On November 5, 1999 the
merger was completed, 1,181,816 shares were issued, and the remaining
$3,510,000 cash was paid.
The pro forma consolidated balance sheet at September 30, 1999 gives effect
to the following assumptions and transactions as if they had occurred on
September 30, 1999:
3.1 The acquisition of all of the outstanding common shares of CNI in
exchange for cash consideration of $3,900,000 and 1,181,816 common
shares of FutureLink with an ascribed value of $9,100,000, based on
the average share trading price at the date a definitive agreement
was reached, September 7, 1999.
3.2 The allocation to goodwill of the estimated costs of the acquisition
described in 3.1 above, in the amount of $525,000, $504,000 of which
is payable and $21,000 of which had been incurred prior to September
30, 1999 and the elimination of the share capital ($10,000) and
retained earnings ($509,000) of CNI on its acquisition.
The acquisition has been accounted for in these pro forma
consolidated financial statements using the purchase method, whereby
the aggregate purchase price of $13,525,000 has been allocated to the
net assets acquired based on their estimated fair values, as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE
ALLOCATION
$(000'S)
--------------
<S> <C>
Net assets acquired 519
Goodwill 13,006
------
Purchase price 13,525
======
Consideration:
Cash 3,900
Common shares of FutureLink 9,100
Acquisition costs 525
------
Total consideration 13,525
======
</TABLE>
<PAGE> 10
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
4. On September 7, 1999, FutureLink signed an Agreement and Plan of
Reorganization and Merger (the "Async Agreement") with Async and Async
Technical Institute, Inc. ("ATII"). The Async Agreement provides for an
initial merger of Async and ATII, with Async being the surviving entity,
and then a subsequent merger of Async with a subsidiary of FutureLink such
that Async's outstanding stock shall be sold to FutureLink in exchange for
$6,000,000 cash and 1,298,705 FutureLink common shares. Prior to September
30, 1999, FutureLink paid $600,000 as a deposit towards the acquisition,
and $26,000 of acquisition costs had been incurred. On November 29, 1999
the merger was completed, 1,181,816 shares were issued and the remaining
$5,400,000 cash was paid.
The pro forma consolidated balance sheet at September 30, 1999 gives effect
to the following assumptions and transactions as if they had occurred on
September 30, 1999:
4.1 The acquisition of all of the outstanding common shares of Async in
exchange for cash consideration of $6,000,000 and 1,298,705 common
shares of FutureLink with an ascribed value of $10,000,000 based on
the average share trading price at the date the definitive agreement
was reached, September 7, 1999.
4.2 The accrual and distribution of the estimated amount to be paid by
Async to former shareholders in the amount of $274,000 relating to
the income tax owing by former shareholders for income earned by
Async to September 30, 1999. Prior to acquisition, Async was a
Subchapter S Corporation as defined by the Internal Revenue Code and
therefore the net income of Async is passed through and taxable to
the individual shareholders of Async. The income taxes owing on such
income will be paid by way of an equal distribution from Async to
such former shareholders.
4.3 The allocation to goodwill of the estimated costs of the acquisition
described in 4.1 above, in the amount of $525,000 of which $499,000
is accrued at and $26,000 incurred as at September 30, 1999 and the
elimination of the share capital of Async and ATII ($1,000 and $100,
respectively) and retained earnings ($78,000) of Async and ATII on
their acquisition.
The acquisition has been accounted for in these pro forma
consolidated financial statements using the purchase method, whereby
the aggregate purchase price of $16,525,000 has been allocated to the
net assets acquired based on their estimated fair values, as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE
ALLOCATION
$(000'S)
--------------
<S> <C>
Net assets acquired 78
Accrual for distribution to shareholders for income taxes (274)
Goodwill 16,721
------
Purchase price 16,525
======
Consideration:
Cash 6,000
Common shares of FutureLink 10,000
Acquisition costs 525
------
Total consideration 16,525
======
</TABLE>
<PAGE> 11
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
4.4 Additional contingent consideration payable to the former
shareholders of Async has not been reflected in these pro forma
consolidated financial statements as the outcome of the contingency
cannot be reasonably determined at this time. The additional share
consideration, which will be recorded as additional purchase price
consideration (goodwill) if and when it becomes payable, is based
upon the achievement of gross revenue in excess of $8,000,000 during
the period from January 1, 1999 to December 31, 1999. The additional
consideration is equal to 2.6 FutureLink common shares for every
dollar of gross revenue in excess of $8,000,000 to a maximum of
516,129 shares.
5. The pro forma consolidated statements of income for the nine month period
ended September 30, 1999 and the year ended December 31, 1998 give effect
to the acquisition of Micro Visions as described in item 2 above, CNI as
described in item 3 above, and Async as described in item 4 above as if the
transactions had occurred January 1, 1999, and January 1, 1998,
respectively. The following adjustments are reflected:
5.1 Purchased goodwill is amortized on a straight line basis over a
period of 5 years, as follows:
<TABLE>
<CAPTION>
AMORTIZATION FOR THE NINE MONTH AMORTIZATION FOR THE YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1999 DECEMBER 31, 1999
ACQUISITION $(000'S) $(000'S)
- ----------- ------------------------------- -------------------------------
<S> <C> <C>
Micro Visions 7,803 10,404
CNI 1,951 2,601
Async 2,508 3,344
------ ------
Total 12,262 16,349
====== ======
</TABLE>
6. During October and November, 1999, the Company sold for $50,000,000
9,090,909 common shares and 2,372,728 common share purchase warrants less
$4,000,000 in issue costs. The warrants are exercisable for up to five
years at an exercise price of $8.50 per share.
The Company also issued 909,091 common share purchase warrants to the
placement agent. The warrants are exercisable for up to five years at an
exercise price of $8.50 per share.
The pro forma consolidated balance sheet at September 30, 1999 gives effect
to the following assumptions and transactions in relation to the private
placement, as if the effective date of the agreement and transaction
occurred September 30, 1999:
6.1 Issuance of 9,090,909 common shares at $5.50 per share for a total of
$50,000,000. These pro forma consolidated financial statements assume
all cash has been received as at September 30, 1999.
6.2 Issue cost of $4,000,000 recorded as a reduction of capital in excess
of par.
<PAGE> 12
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
7. During October, 1999, $15,000,000 of 8% senior subordinated convertible
promissory notes were converted into 2,727,273 common shares. An additional
711,811 common share purchase warrants were also issued. The warrants are
exercisable for up to five years at an exercise price of $8.50 per common
share.
The pro forma balance sheet at September 30, 1999 gives effect to the
following assumption in relation to the notes, as if the effective date of
the transaction occurred on September 30, 1999:
7.1 Issuance of 2,727,273 common shares and 711,811 common share purchase
warrants.
The pro forma consolidated income statement for the nine months ended
September 30, 1999 gives effect to the following assumptions and
transactions in relation to the conversion of notes, as if the
effective date of the transaction occurred July 27, 1999, the date
the notes and related warrants were issued:
7.2 Interest expense of $237,000 relating to $15,000,000 of converted
debt would not have been incurred.
8. Subsequent to September 30, 1999, 5,988,824 common shares were issued in
relation to the conversion of $5,090,500 of 8% senior subordinated
convertible promissory notes. In addition, 3,696,500 warrants exercisable
for no additional consideration where exercised for 3,517,933 common
shares. These warrants were issued in connection with the original issuance
of the promissory notes.
The pro forma balance sheet at September 30, 1999 gives effect to the
following transactions in relation to the notes, as if the effective date
of the transaction occurred on September 30, 1999:
8.1 Issuance of 5,988,824 common shares.
8.2 Issuance of 3,517,933 common shares. The amount recorded to par value
and capital in excess of par in total represents the related amount
originally booked to contributed surplus as the value of the
warrants.
The pro forma consolidated income statement for the nine months ended
September 30, 1999 gives effect to the following assumptions and
transactions in relation to the conversion of notes, as if the
effective date of the transaction occurred May 7, 1999, the date the
notes were issued:
8.3 Interest expense of $163,000 relating to $5,090,500 of converted debt
would not have been incurred.
8.4 Amortization of deferred finance fees and debt discount in the amount
of $1,993,000 relating to $5,090,500 of converted debt would not have
been incurred.
9. Subsequent to September 30, 1999, 3,799,974 shares were issued on a non
cash basis relating to the exercise of 4,000,001 warrants. These warrants
included 2,000,000 previously issued as a placement fee in relation to the
issuance of 8% senior subordinated convertible promissory notes, as well as
2,000,001 previously issued for advisory services.
<PAGE> 13
FUTURELINK CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(all amounts in United States dollars unless otherwise stated)
September 30, 1999
The pro forma balance sheet at September 30, 1999 gives effect to the
following transaction in relation to the warrants, as if the effective date
of the transaction occurred on September 30, 1999:
9.1 Issuance of 3,799,974 common shares. The amount recorded to par value
and capital in excess of par in total represents the related amount
originally booked to contributed surplus as the value of the
warrants.
10. The weighted average number of shares outstanding and the loss per share
give retroactive effect to the share consolidation of 5 to 1 on June 1,
1999.
The weighted average number of shares outstanding has been adjusted to give
effect to the shares issued upon acquisition of Micro Visions, CNI and
Async as though they had been outstanding as at the beginning of the
period, as well as the shares issued upon issuance of the private
placement, conversion of debt and exercise of warrants as though they had
been outstanding as at the beginning of the period or the date of issuance
if later. The weighted average number of shares outstanding includes only
the contingent share consideration for which the performance criteria has
been met (see 2.3). The weighted average number of shares outstanding has
been calculated as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES FOR NUMBER OF SHARES
NINE MONTHS ENDED FOR YEAR ENDED
ACQUISITION SEPTEMBER 30, 1999 DECEMBER 31, 1999
- ----------- -------------------- -----------------
<S> <C> <C>
FutureLink 6,534,575 3,169,314
Micro Visions 7,200,000 7,200,000
CNI 1,181,816 1,181,816
Async 1,298,705 1,298,705
$15,000,000 note conversion (see 7.1) 649,351 n/a
$5,090,500 note conversion (see 8.1) 3,202,814 n/a
Warrant exercise (see 8.2) 1,881,385 n/a
Warrant exercise (see 9.1) 2,032,221 n/a
---------- ----------
Total 23,980,867 12,849,835
========== ==========
</TABLE>
Diluted earnings per share does not differ from basic earnings per share.
<PAGE> 14
FUTURELINK CORP.
UNAUDITED PROFORMA CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998