<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 23, 1998
COMMISSION FILE NUMBER 000-24677
BINDVIEW DEVELOPMENT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0306721
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3355 WEST ALABAMA, SUITE 1200 HOUSTON, TX 77098
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 843-1799
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
================================================================================
<PAGE> 2
PART I
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 18, 1998, the Registrant acquired Curasoft, Inc.
("Curasoft"), a California corporation, through the acquisition of all of the
outstanding equity interests of Curasoft in exchange for 175,017 shares of
BindView common stock.
ITEM 7. FINANCIAL STATEMENTS, UNAUDITED PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial statement of Businesses Acquired. In accordance with
Item 7 (a) of Form 8-K, the required financial statement are
filed in Exhibit 99.1
(b) Unaudited Pro Forma Financial Information. In accordance with
the requirements of Item 7 (b) of Form 8-K, the required
unaudited pro forma financial information is filed in Exhibit
99.2
(c) Exhibits.
23.1 Consent of Independent Accountants
99.1 Financial Statements of Curasoft, Inc. as of
October 31, 1998 and December 31, 1997.
99.2 Unaudited Pro Forma Financial Information
as of September 30, 1998.
2
<PAGE> 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.
BINDVIEW DEVELOPMENT CORPORATION
Dated: February 22, 1999 By: /S/ Eric J. Pulaski
-------------------------------------------
Eric J. Pulaski
Chairman of the Board, President and
Chief Executive Officer
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
- --------------
<S> <C>
23.1 Consent of Independent Accountants
99.1 Financial Statements of Curasoft, Inc. as of October 31, 1998 and
December 31, 1997.
99.2 Unaudited Pro Forma Financial Information as of September 30, 1998.
</TABLE>
4
<PAGE> 1
EXHIBIT 23.1
DESCRIPTION: CONSENT OF INDEPENDENT ACCOUNTANTS
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Form 8-K for BindView Development
Corporation of our report dated December 16, 1998 relating to the financial
statements of Curasoft, Inc., which appears on page 7 of this Form 8-K. We
hereby consent to the incorporation by reference of said report in the
Registration Statements of BindView Development Corporation on Forms S-8 (File
No. 333-59825, effective July 24, 1998, File No. 333-66331, effective October
29, 1998, and Amendment No. 1 thereto dated February 22, 1999).
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Houston, Texas
February 22, 1999
5
<PAGE> 1
EXHIBIT 99.1
DESCRIPTION: FINANCIAL STATEMENTS OF CURASOFT, INC. AS OF OCTOBER 31, 1998 AND
DECEMBER 31, 1997
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of PricewaterhouseCoopers LLP.............................................................7
Balance Sheet at October 31, 1998 and December 31, 1997..........................................8
Statement of Operations for the ten-month period ended October 31, 1998
and the year ended December 31, 1997....................................................9
Statement of Shareholders' Deficit for the ten-month period ended
October 31, 1998 and the year ended December 31, 1997..................................10
Statement of Cash Flows for the ten-month period ended October 31, 1998
and the year ended December 31, 1997...................................................11
Notes to the Financial Statements...............................................................12
</TABLE>
6
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Curasoft, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, changes of shareholders' deficit and of cash flows present fairly,
in all material respects, the financial position of Curasoft, Inc. at October
31, 1998 and December 31, 1997, and the results of their operations and their
cash flows for the ten-month period ended October 31, 1998 and for the year
ended December 31, 1997 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management; and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
PricewaterhouseCoopers LLP
Houston, Texas
December 16, 1998
7
<PAGE> 3
CURASOFT, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
October 31, December 31,
1998 1997
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,790 $ 18,647
Accounts receivable, net 247,596 163,244
Prepaid expenses and other current assets 5,884 1,200
---------- ----------
Total current assets 269,270 183,091
Property and equipment, net 71,088 43,133
Other assets 19,833 2,541
---------- ----------
Total assets $ 360,191 $ 228,765
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 38,636 $ 6,102
Accrued liabilities 17,931 23,980
Accrued compensation 201,543 57,836
Current portion of notes payable to related parties 204,146 149,798
Deferred revenues 94,948 59,718
---------- ----------
Total current liabilities 557,204 297,434
---------- ----------
Commitments and contingencies (Note 9)
Shareholders' deficit:
Preferred stock, no par value, 5,000,000 shares
authorized, 0 issued and outstanding
Common stock, no par value, 20,000,000 shares
authorized, 7,142,857 shares issued and outstanding 33,550 33,550
Accumulated deficit (230,563) (102,219)
---------- ----------
Total shareholders' deficit (197,013) (68,669)
---------- ----------
Total liabilities and shareholders' deficit $ 360,191 $ 228,765
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
<PAGE> 4
CURASOFT, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED
OCTOBER 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Revenues:
Licenses $ 665,445 $ 416,719
Services 141,205 84,026
------------ -------------
Total revenues 806,650 500,745
------------ -------------
Cost of revenues:
Cost of licenses 13,500 11,000
Cost of services 64,338 57,081
------------ -------------
Total cost of revenues 77,838 68,081
------------ -------------
Gross profit 728,812 432,664
Costs and expenses:
Sales and marketing 329,755 203,869
Research and development 207,936 167,770
General and administrative 299,640 152,050
------------ -------------
Operating loss (108,519) (91,025)
Other expense (19,825) (4,343)
------------ -------------
Loss before income tax provision (128,344) (95,368)
Provision for income tax
------------ -------------
Net loss $ (128,344) $ (95,368)
============ =============
Loss per share:
Basic loss per share $ (.02) $ (.01)
Diluted loss per share (.02) (.01)
Shares used in computing EPS:
Basic 7,142,857 7,142,857
Diluted 7,142,857 7,142,857
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE> 5
CURASOFT, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON COMMON
STOCK STOCK ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
<S> <C> <C> <C> <C>
Balance, January 1, 1997 7,142,857 $ 33,550 $ (6,851) $ 26,699
Net loss for the year (95,368) (95,368)
---------- ----------- ------------ -----------
Balance, January 1, 1998 7,142,857 33,550 (102,219) (68,669)
Net loss through October 31, 1998 (128,344) (128,344)
---------- ----------- ------------ -----------
Balance, October 31, 1998 7,142,857 $ 33,550 $ (230,563) $ (197,013)
---------- ----------- ------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE> 6
CURASOFT, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED
OCTOBER 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:-
Net loss $ (128,344) $ (95,368)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization expense 13,317 12,733
Changes in assets and liabilities:
Increase in trade accounts receivable (84,352) (98,010)
Increase in prepaid expenses and
other current assets (4,684) (1,200)
Increase in accounts payable 32,534 3,915
(Decrease) increase in accrued liabilities (6,049) 6,227
Increase in deferred revenues 35,230 15,718
Increase in accrued compensation 143,707 40,692
------------ ------------
Net cash provided (used) by operating activities 1,359 (115,293)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (41,272) (24,685)
Other (17,292)
------------ ------------
Net cash (used) by investing activities (58,564) (24,685)
------------ ------------
Cash flows from financing activities:
Borrowings under notes payable to related parties 54,348 116,048
------------ ------------
Net cash provided by financing activities 54,348 116,048
------------ ------------
Net decrease in cash and cash equivalents (2,857) (23,930)
Cash and cash equivalents at beginning of period 18,647 42,577
------------ ------------
Cash and cash equivalents at end of period $ 15,790 $ 18,647
============ ============
Supplemental disclosures for cash flow information:
Cash paid during the year for interest $ 500
Cash paid during the year for income taxes $ 13,146
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE> 7
CURASOFT, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
Curasoft Systems, a sole proprietorship, began operations in July 1994.
Curasoft Systems, Inc., a California corporation, was incorporated in
January 1995. In January 1997, Curasoft Systems, Inc. changed its name
to Curasoft, Inc. (the Company).
The Company develops, markets and supports Internet enabled enterprise
management and customer care solutions that maximize uptime and
availability of systems, Web clients and servers, networks and
applications. The Company offers scalable, open standards-based
scheduling, notification, dispatching, escalation and response
management software that works seamlessly in intranets, and in internet
and distributed client/server environments.
REVENUE RECOGNITION
In October 1997 the American Institute of Certified Public Accountants
issued Statement of Position (SOP) No. 97-2, "Software Revenue
Recognition", which is adopted into the Company's financial statements
as of January 1, 1997. The Company sells its products under perpetual
licenses and recognizes its license revenues upon meeting each of the
following criteria: (i) execution of a written purchase order, license
agreement or contract; (ii) delivery of software or, if the customer
has previously received evaluation software, delivery of the software
license code; and (iii) issuance of the related license, with no
significant vendor obligations or customer acceptance rights
outstanding; (iv) the license fee is fixed or determinable; and (v)
collectibility is assessed as being probable. Revenues from perpetual
licenses are recorded as license revenue in the Statement of
Operations. Service revenues include maintenance contracts and
professional services. Support and maintenance contracts are purchased
separately by customers at their discretion and related revenues are
recognized ratably over the one year contract term. The portion of
support and maintenance contract revenues that have not yet been
recognized as revenues is reported as deferred revenue in the
accompanying Balance Sheet.
The Company also derives a portion of its revenues through the sale of
its products by distributors, value-added resellers and system
integrators. Resellers have no return rights and end customers have,
under the Company's standard shrink-wrap license agreement, 30 days to
return products. To date, returns have been minor and, accordingly, the
Company has not recorded a reserve for returns. Revenues are recognized
on these transactions upon (i) receipt of an executed purchase order
from the reseller and (ii) shipment of the software to the end
customer.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to operations when incurred.
In accordance with the provisions of Statement Financial Accounting
Standards (SFAS) No. 86, "Accounting for the Costs of Computer Software
to be Sold, Leased or Otherwise Marketed", the Company capitalizes
costs incurred in the development of software once technological
feasibility has been determined. The Company currently considers
technological feasibility to have been established once a working model
of a product has been produced and tested. To date, costs incurred
subsequent to the establishment of technological feasibility have not
been material and no such amounts have been capitalized.
EARNINGS PER SHARE
The Company's earnings per share data is presented in accordance with
SFAS No. 128, "Earnings Per Share". Basic earnings per share is
computed using the weighted average number of shares outstanding.
Diluted earnings per share is computed using the weighted average
number of shares outstanding adjusted for the incremental shares
attributed to outstanding securities with the right to purchase or
convert into common stock. Diluted and basic earnings per share are the
same for the periods presented because a net loss has been incurred.
12
<PAGE> 8
CASH AND CASH EQUIVALENTS
The Company considers investments with original maturity dates of three
months or less from the date of purchase to be cash equivalents.
CONCENTRATION OF CREDIT RISK
Financial instruments which subject the Company to concentration of
credit risk consist primarily of accounts receivable. Management
believes that concentrations of credit risk with respect to accounts
receivable are limited due to there being no individual customers with
significant balances and their dispersion across many different
industries and geographic regions. The Company performs ongoing credit
evaluations of its customers to minimize credit risk.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed by
applying the straight-line method over the estimated useful lives of
the assets.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets, liabilities, sales and
expenses and the disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of cash and cash equivalents, accounts receivable and
accounts payable reflected in the October 31, 1998 and December 31,
1997 Balance Sheet approximate their carrying value due to their short
maturities.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued SFAS
129, "Disclosure of Information About Capital Structure", for all
periods ending after December 15, 1997. SFAS 129 contains no changes in
the disclosure requirements of the Company because it was previously
subject to such requirements pursuant to other Statements and Opinions.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income", and SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information". The adoption
of both statements is required for the Company's fiscal year ending
December 31, 1998. Under SFAS No. 130, companies are required to report
in the financial statements, in addition to net income, comprehensive
income including, as applicable, foreign currency items, minimum
pension liability adjustments and unrealized gains and losses on
certain investments in debt and equity securities. SFAS 131 requires
that companies report separately, in the financial statements, certain
financial and descriptive information about operating segments, if
applicable. The Company does not expect the adoption of SFAS No. 130 or
SFAS No. 131 to have a material impact on its financial statements and
related disclosures.
2. LIQUIDITY
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. In light of the Company's
current projected earnings and cash flow, management believes the
Company has the financial resources to maintain its current level of
operations. However, cash generated alone from operations may not be
sufficient to generate necessary levels of positive cash flow without
additional borrowings and increases in the Company's line of credit
guaranteed by the owners. As a result, the Company is exploring
strategic alternatives which include among other things, a business
combination. There can be no assurance that the Company will be
successful in its attempt to consummate one of the strategic
alternatives being considered.
13
<PAGE> 9
If the Company does not increase its line of credit or generate
sufficient positive cash flow, it may be unable to continue its normal
operations.
3. ACCOUNTS RECEIVABLE
Accounts receivable balances are summarized as follows:
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Trade accounts receivable $ 252,596 $ 163,244
Less - allowance for doubtful accounts (5,000)
----------- -----------
$ 247,596 $ 163,244
=========== ===========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment balances are summarized as follows:
<TABLE>
<CAPTION>
ESTIMATED OCTOBER 31, DECEMBER 31,
USEFUL LIVES 1998 1997
<S> <C> <C> <C>
Property and equipment 3 years $ 107,686 $ 66,414
Less - accumulated depreciation (36,598) (23,281)
----------- ----------
$ 71,088 $ 43,133
=========== ==========
</TABLE>
Depreciation expense totaled $13,317 in the ten months ended October
31, 1998 and $10,819 in 1997.
14
<PAGE> 10
5. NOTES PAYABLE TO RELATED PARTIES
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Note payable to principal shareholder at 8%, interest
and principal payable on demand after January 1, 1998 $ 22,750 $ 22,750
Note payable to principal shareholder at 8%, interest
and principal payable on demand after January 1, 1998 11,000 11,000
Note payable to related party at 8%, interest and
principal payable on demand after January 1, 1998 11,048 11,048
Note payable to related party at 8%, interest and
principal payable on demand after January 1, 1998 90,000 90,000
Note payable to principal shareholder at 8%, interest
and principal payable on demand after January 1, 1998 10,000
Convertible notes:
Note payable to related party at 8%, interest and
principal payable on demand, February 21, 1998 15,000 15,000
Note payable to related party at 8%, interest and
principal payable on demand, April 18, 1999 10,000
Note payable to related party at 8%, interest and
principal payable on demand, April 19, 1999 20,000
Note payable to related party at 8%, interest and
principal payable on demand, April 21, 1999 5,000
Note payable to related party at 8%, interest and
principal payable on demand, April 1, 1999 10,000
Other (652)
---------- ----------
204,146 149,798
Less - current portion (204,146) (149,798)
---------- ----------
$ - $ -
========== ==========
</TABLE>
The convertible notes are convertible into common stock at the election
of the Company in the event the Company issues shares of its stock for
aggregate proceeds of at least $500,000. The conversion rate would be
based upon the price at which the new shares are issued.
6. CREDIT AGREEMENTS AND FINANCING ARRANGEMENTS
In February 1998, the Company secured a $50,000 line of credit. The
line of credit is guaranteed by the owners of the Company and there is
no definite termination date. At October 31, 1998 the line had a zero
balance.
7. INCOME TAXES
Effective January 1, 1995, the Company elected to be treated as a C
Corporation for federal income tax purposes.
15
<PAGE> 11
The Company's income tax benefit was comprised of the following:
<TABLE>
<CAPTION>
TEN-MONTH
PERIOD ENDED YEAR ENDED
OCTOBER 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Deferred:
Federal $ 47,500 $ 31,300
State 2,500 1,700
--------- ---------
50,000 33,000
Increase in valuation allowance (50,000) (33,000)
--------- ---------
$ - $ -
========= =========
</TABLE>
The Company's income tax benefit varies from the statutory tax rate
primarily because the realization of potential benefits from net
operating loss carryforwards is not reasonably assured and,
accordingly, a valuation allowance has been provided.
Deferred tax assets are comprised of the following:
<TABLE>
<CAPTION>
OCTOBER 31,
1998
<S> <C>
Assets:
Net operating loss carryforward $ 78,300
Allowance for bad debts 1,800
Accrued liabilities (2,100)
----------
78,000
Less - valuation allowance (78,000)
----------
Net deferred tax asset $ -
==========
</TABLE>
The Company has a net operating loss carryforward of approximately
$220,000 at October 31, 1998 which expires in 2010 through 2013.
8. SHAREHOLDERS' EQUITY
INCENTIVE STOCK OPTION PLAN
In 1996, the Company's Board of Directors adopted the Incentive Stock
Option Plan. Options on 225,446 shares were exercisable at October 31,
1998 with weighted average exercise price per share of $0.10. There
were no options exercisable at December 31, 1997. Options granted under
the Plan vest monthly over four years with a one year cliff, monthly
vesting thereafter.
NONQUALIFIED STOCK OPTION PLAN
In 1996, the Company's Board of Directors adopted the Nonqualified
Stock Option Plan. There were no options exercisable at December 31,
1997. Options on 15,000 shares were exercisable at October 31, 1998,
with a weighted average exercise price per share of $0.10.
16
<PAGE> 12
The following table summarizes combined activity under the stock option plans
for the ten-month period ended October 31, 1998 and the year ended December 31,
1997:
<TABLE>
<CAPTION>
EXERCISE
PRICE PER
OPTIONS SHARE
<S> <C> <C>
Options outstanding, December 31, 1996 133,333 $ .10
Options granted 758,571 .10
Options lapsed or canceled
Options exercised
--------
Options outstanding, December 31, 1997 891,904
Options granted 345,000 .12
Options lapsed or canceled (248,333) .12
Options exercised
--------
Options outstanding, October 31, 1998 988,571 $0.10 - $0.12
--------
</TABLE>
The following table summarizes information about stock options
outstanding at October 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------- --------------------------
RANGE OF AVERAGE WEIGHTED WEIGHTED
EXERCISE REMAINING AVERAGE AVERAGE
PRICE NUMBER LIFE PRICE NUMBER PRICE
<S> <C> <C> <C> <C> <C>
$0.10 - 0.12 988,571 10 $ .11 240,446 $ .10
</TABLE>
The Company applies APB 25 and related interpretations in accounting
for its stock option plans. Accordingly, no compensation cost has been
recognized for these plans. The weighted average fair values of options
granted during the ten months ended October 31, 1998 and for the year
ended December 31, 1997 were $.03 and $.03, respectively. Had
compensation cost for the Company's option plans been determined based
upon the fair value at the grant dates for awards under these plans
consistent with the method set forth under SFAS 123, "Accounting for
Stock-Based Compensation", the Company's net loss for the period ended
October 31, 1998 and for the year ended December 31, 1997 would have
been increased by approximately $5,100 and $6,200, respectively.
Earnings per share would not have been materially impacted.
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes options-repricing model with the following
weighted-average assumptions used for grants in 1998 and 1997,
respectively: risk-free interest rates of 6% and 6%, zero dividend
yield and an expected life of four years.
9. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company leases office space and equipment under noncancellable
operating leases. Total expense for operating leases amounted to
$45,163 and $15,550 at October 31, 1998 and December 31, 1997,
respectively.
17
<PAGE> 13
A summary of future minimum rental payments required under those
noncancellable operating leases is as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNTS
<S> <C>
1999 $ 72,404
2000 74,287
2001 77,187
2002 80,202
2003 27,373
</TABLE>
10. SUBSEQUENT EVENT (UNAUDITED)
On December 18, 1998 the Company was acquired by BindView Development
Corporation for approximately 175,000 shares of BindView's common
stock. The acquisition will be accounted for as a purchase. In
addition, BindView may be obligated to make certain contingent payments
to the former employees of the Company based on the achievement of
certain future revenue targets on the Company's existing products,
products currently under development and their continued employment
with BindView. The maximum aggregate amount of these contingent
payments is approximately $4,800,000.
18
<PAGE> 1
EXHIBIT 99.2
DESCRIPTION: UNAUDITED PRO FORMA FINANCIAL INFORMATION
BINDVIEW DEVELOPMENT CORPORATION ACQUISITION OF CURASOFT, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION (IN THOUSANDS)
On December 18, 1998, BindView Development Corporation ("BindView" or "Company")
acquired Curasoft, Inc. ("Curasoft), a privately held California based provider
of fully-integrated, automated event management software that enables businesses
to maximize the uptime and availability of their applications, network services,
and systems. Under the terms of the agreement, BindView issued approximately 175
shares of its common stock in exchange for all of the outstanding equity
interests in Curasoft in a transaction accounted for as a purchase. The
aggregate consideration in the transaction was valued at approximately $3,350.
In addition, the Company may be obligated to make certain contingent payments to
former employees based on the achievement of certain future revenue targets on
the acquired product, in-process technologies and the continued employment with
the Company. As of December 31, 1998, the maximum aggregate amount of these
contingent payments is approximately $4,800. When it is determined that the
payment of any of these contingent payments is probable, the Company will record
a corresponding charge to compensation expense related to these payments.
The Unaudited Pro Forma Consolidated Statement of Income set forth below for the
nine months ended September 30, 1998, gives effect to the acquisition as if it
occurred on January 1, 1998. It has been derived from the Company's historical
Consolidated Statement of Income for the nine months ended September 30, 1998
and from Curasoft's Statement of Operations for the same nine-month period.
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1998 has
been derived from the unaudited interim balance sheets of each entity at such
date, assuming the acquisition occurred at such date. The Unaudited Pro Forma
Consolidated Financial Statements do not purport to be indicative of the results
of operations or financial position which would have actually been reported if
the acquisition had been consummated on the date indicated, or which may be
reported in the future.
19
<PAGE> 2
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS PRO FORMA BINDVIEW
BINDVIEW ACQUISITION DEVELOPMENT
DEVELOPMENT CURASOFT, INC. ADJUSTMENTS PRO FORMA
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 48,374 $ $ $ 48,374
Accounts receivable, net 3,706 244 3,950
Other current assets 686 5 691
Deferred tax asset 3,939 (420)(2) 3,519
-------------- -------------- ------------ ------------
Total current assets 56,705 249 (420) 56,534
Property and equipment, net 3,784 59 3,843
Capitalized software, net 1,381 (2) 1,381
Other assets 31 20 43 (2) 94
-------------- -------------- ------------ ------------
Total assets $ 60,520 $ 328 $ 1,004 $ 61,852
============== ============== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,496 $ 125 $ $ 1,621
Accrued liabilities 908 17 140 (1) 1,065
Accrued compensation 822 202 1,024
Current portion of notes payable to 204 204
related parties
Deferred revenue 4,357 115 4,472
-------------- -------------- ------------ ------------
Total current liabilities 7,583 663 140 8,386
-------------- -------------- ------------ ------------
Shareholders' equity:
Common stock 1 34 35
Additional paid-in capital 56,244 3,352 (1) 59,596
Accumulated deficit (3,308) (369) (2,488)(2) (6,165)
-------------- -------------- ------------ ------------
Total shareholders' equity 52,937 (335) 864 53,466
-------------- -------------- ------------ ------------
Total liabilities and shareholders'
equity $ 60,520 $ 328 $ 1,004 $ 61,852
============== ============== ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS FOR EXPLANATION OF UNAUDITED PRO FORMA ACQUISITION ADJUSTMENTS.
20
<PAGE> 3
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA BINDVIEW
BINDVIEW ACQUISITION DEVELOPMENT
DEVELOPMENT CURASOFT, INC. ADJUSTMENTS PRO FORMA
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Licenses $ 18,587 $ 509 $ 19,096
Services 5,366 124 5,490
-------------- -------------- ------------ ------------
Total revenues 23,953 633 -- 24,586
-------------- -------------- ------------ ------------
Cost of revenues:
Cost of licenses 790 11 150 (3) 951
Cost of services 722 64 786
-------------- -------------- ------------ ------------
Total cost of revenues 1,512 75 150 1,737
-------------- -------------- ------------ ------------
Gross profit (loss) 22,441 558 (150) 22,849
-------------- -------------- ------------ ------------
Costs and expenses:
Sales and marketing 10,935 322 11,257
Research and development 5,944 185 6,129
General and administrative 2,313 298 2,611
-------------- -------------- ------------ ------------
Operating income (loss) 3,249 (247) (150) 2,852
Other income (expenses), net 756 (19) 737
-------------- -------------- ------------ ------------
Income (loss) before income tax provision 4,005 (266) (150) 3,589
Provision (benefit) for income tax 1,276 -- (129)(4) 1,147
-------------- -------------- ------------ ------------
Net income (loss) $ 2,729 $ (266) $ (21) $ 2,442
============== ============== ============ ============
Earnings per common share:
Basic $ 0.24 $ 0.21
Diluted $ 0.14 $ 0.12
Shares used in computing earnings per common share:
Basic 11,492 175 (5) 11,667
Diluted 19,543 175 (5) 19,718
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS FOR EXPLANATION OF UNAUDITED PRO FORMA ACQUISITION ADJUSTMENTS.
21
<PAGE> 4
BINDVIEW DEVELOPMENT CORPORATION ACQUISITION OF CURASOFT, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS)
(1) Acquisition Consideration
The outstanding equity interests in Curasoft, Inc. ("Curasoft") was acquired by
BindView Development Corporation ("BindView" or "Company") in exchange for
approximately 175 shares of BindView common stock. The transaction was valued at
approximately $3,350. In addition, there were transaction costs of approximately
$140 in connection with the transaction, principally for legal and accounting
professional services.
(2) Allocation of Purchase Price
The purchase price was allocated first to tangible net assets and then to
identified intangible assets. The fair value of tangible assets approximated
their historical book values at September 30, 1998. The following intangible
assets were identified:
<TABLE>
<S> <C>
Capitalized software $1,381
Purchased in-process research and development $2,488
</TABLE>
As the future amortization of the acquired capitalized software is not
deductible for federal income tax purposes, a corresponding reduction in the
deferred tax asset was recorded.
The value assigned to purchased in-process research and development efforts, in
accordance with generally accepted accounting principles, was written off at the
time of the acquisition and is reflected in the unaudited pro forma balance
sheet adjustments as an unaudited pro forma reduction of shareholders' equity.
In accordance with Regulation S-X of the Securities and Exchange Commission,
this write off is not reflected as an adjustment to the Unaudited Pro Forma
Consolidated Statement of Income as it represents a nonrecurring charge directly
attributable to the transaction.
(3) Amortization of Capitalized Software
The amortization period for the acquired capitalized software reflected in the
Unaudited Pro Forma Consolidated Statement of Income is based on the estimated
useful life of 7 years.
(4) Pro Forma Provision for Income Tax
The unaudited acquisition adjustment related to the pro forma provision for
income tax is related to tax benefit from Curasoft's current loss before income
taxes and the effect of the other pro forma acquisition adjustments at
BindView's effective tax rate over this period.
(5) Pro Forma Income Per Share
The unaudited pro forma basic and diluted historical net income per share uses
the historical amounts for BindView adjusted for the Curasoft acquisition. This
includes Curasoft's historical net loss for the nine month period ended
September 30, 1998, purchase accounting adjustments and the shares of common
stock issued in connection with the acquisition.
22
