<PAGE> 1
EXHIBIT 99.5
UNAUDITED PRO FORMA STATEMENTS OF iMANAGE, INC. AND
THOUGHTSTAR, INC.
DECEMBER 31, 1999 AND MARCH 31, 2000
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<PAGE> 2
iMANAGE, INC. AND THOUGHTSTAR, INC.
Effective June 21, 2000, iManage Inc. acquired all of the outstanding stock of
Thoughtstar. The total purchase price of $16.9 million consisted of the
following:
(a) 1,006,717 shares of iManage's common stock with an estimated value of
$11 million, calculated by multiplying the number of shares issued by
iManage by $10.96, which represents the average price of iManage's
stock for the period two days preceding through two days following
iManage's first announcement of the Merger, which occurred on April
13, 2000,
(b) $5.2 million in cash, calculated by adding to the cash consideration
payable to holders of outstanding Thoughstar stock additional monies
loaned by iManage prior to the completion of the Merger, and
(c) $900,000 of acquisition expenses, net of $216,000 of costs to register
the iManage common stock issued to Thoughtstar shareholders which has
been netted against issuance of common stock.
The Merger has been accounted for using the purchase method of accounting and
accordingly the purchase price has been allocated to the tangible and intangible
assets acquired and liabilities assumed on the basis of their respective fair
values on the acquisition date.
The allocation of the purchase price is as follows, (assuming the acquisition
occurred as of March 31, 2000):
<TABLE>
<S> <C>
Workforce $ 400,000
Non-compete agreements $ 400,000
Products in development $ 1,900,000
Goodwill $ 14,545,000
</TABLE>
The acquisition has been structured as a tax free exchange of stock, therefore,
the differences between the recognized fair value of acquired assets, including
tangible assets, and their historical tax bases are not deductible for tax
purposes.
The following unaudited pro forma combined balance sheet gives effect to the
transaction as if it had been consummated as of March 31, 2000, by combining the
balance sheet of iManage as of March 31, 2000 with the balance sheet of
Thoughtstar as of March 31, 2000.
The following unaudited pro forma combined financial statements of operations
for the year ended December 31, 1999 and for the three months ending March 31,
2000 give effect to the acquisition as if it had occurred on January 1, 1999,
with the results of iManage and Thoughtstar being combined for the respective
periods.
The pro forma information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred if the acquisition had been consummated at the beginning of the
earliest period presented, nor is it necessarily indicative of future operating
results or financial position. The pro forma adjustments are based upon
information and assumptions available at the time of the filing of this
Amendment No. 1 to iManage's Report on Form 8-K. The pro forma information
should be read in conjunction with the accompanying notes thereto, with the
historical financial statements and related notes thereto in iManage's Report on
Form 10-K, filed in March 2000, and Thoughtstar's financial statements and
related notes filed with this Amendment No. 1 to iManage's Report on Form 8-K.
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<PAGE> 3
iMANAGE, INC. AND THOUGHTSTAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
iMANAGE THOUGHTSTAR ADJUSTMENTS PROFORMA
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 33,889 $ 64 $ (5,186)(1) $ 28,767
Short-term investments 6,605 6,605
Trade accounts receivable 7,373 7,373
Advances to Thoughtstar 150 (150)(2) --
Other current assets 1,267 1,267
-------- -------- -------- --------
TOTAL CURRENT ASSETS 49,284 64 (5,336) 44,012
PROPERTY AND EQUIPMENT, NET 2,448 232 2,680
LONG-TERM INVESTMENTS 11,344 11,344
GOODWILL 14,545 (1,3,4,6,7) 14,545
OTHER INTANGIBLES 2,700 (1,3,4,6,7) 2,700
OTHER ASSETS 1,192 3 1,195
======== -------- -------- --------
TOTAL ASSETS $ 64,268 $ 299 $ 11,909 $ 76,476
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 472 $ 339 $ 900 (3) $ 1,711
Accrued liabilities 2,959 73 3,032
Equipment line of credit, current
portion 612 -- 612
Note Payable, current portion -- 65 (65)(1) --
Interest bearing advance from iManage 150 (150)(2) --
Deferred revenue 9,384 75 9,459
-------- -------- -------- --------
TOTAL CURRENT LIABILITIES 13,427 702 685 14,814
-------- -------- -------- --------
EQUIPMENT LINE OF CREDIT, LESS CURRENT
PORTION 1,360 -- 1,360
NOTE PAYABLE, NET OF CURRENT PORTION -- 196 (196)(1) --
-------- -------- -------- --------
TOTAL LIABILITIES 14,787 898 489 16,174
-------- -------- -------- --------
SHAREHOLDERS' EQUITY
Common stock 22 -- 1 (4) 23
Additional paid in capital 63,540 2,321 9,482 (4) 75,343
Deferred stock compensation (2,984) (230) (753)(5) (3,967)
Notes receivable for common stock (992) -- (992)
Accumulated other comprehensive loss (90) -- (90)
Retained Earnings/Accumulated Deficit (10,015) (2,690) 2,690 (6) (10,015)
-------- -------- -------- --------
Total Stockholders' Equity 49,481 (599) 11,420 60,302
-------- -------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 64,268 $ 299 $ 11,909 $ 76,476
======== ======== ======== ========
</TABLE>
(1) Reflects cash paid to Thoughstar shareholders in connection with the
acquisition and additional monies loaned by iManage to Thoughstar prior to
the completion of the Merger, and amounts provided by iManage to settle
third party notes payable.
(2) Reflects the elimination of the interest bearing advance from iManage to
Thoughtstar as of March 31, 2000. Upon acquisition of Thoughtstar, Inc. the
loan and all related interest was forgiven.
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<PAGE> 4
iMANAGE, INC. AND THOUGHTSTAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2000
(IN THOUSANDS)
(3) Reflects the recording of transaction expenses and the costs anticipated to
register the iManage common stock issued to Thoughtstar shareholders.
(4) Reflects the issuance of approximately 1,007,000 shares of iManage common
stock in exchange for all of the outstanding shares of Thoughstar common
stock net of anticipated registration costs and fees of approximately
$216,000, the estimated fair value of unvested options exchanged for
iManage options of $983,000 and the elimination of the Thoughstar
additional paid in capital of $2,321,000.
(5) Reflects the recording of stock-based compensation associated with the
options assumed by iManage and the elimination of the previously recorded
Thoughtstar stock-based compensation.
(6) Reflects the elimination of Thoughtstar's accumulated deficit.
(7) Reflects the allocation of the purchase price of $16,961,000 to the
tangible and intangible assets acquired between identifiable intangibles of
workforce totaling $400,000, non-compete agreements totaling $400,000,
purchased technology of $1,900,000 and the remaining $14,261,000 to
goodwill.
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<PAGE> 5
iMANAGE, INC. AND THOUGHTSTAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
IMANAGE THOUGHTSTAR ADJUSTMENTS PROFORMA
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Licenses $ 14,257 $ -- $ -- $ 14,257
Support and services 4,313 -- -- 4,313
-------- -------- -------- --------
Total revenues 18,570 -- -- 18,570
-------- -------- -------- --------
COST OF REVENUES:
Licenses 773 -- -- 773
Support and services 2,875 -- -- 2,875
-------- -------- -------- --------
Total cost of revenues 3,648 -- -- 3,648
-------- -------- -------- --------
GROSS PROFIT 14,922 -- -- 14,922
-------- -------- -------- --------
OPERATING EXPENSES:
Sales and marketing 10,929 255 -- 11,184
Research & development 4,680 318 284 (1) 5,282
General & administration 2,774 651 541 (1) 3,966
Amortization of goodwill and other
intangibles -- -- 8,480 (2) 8,480
-------- -------- -------- --------
Total operating expenses 18,383 1,224 9,305 28,912
-------- -------- -------- --------
LOSS FROM OPERATIONS (3,461) (1,224) (9,305) (13,990)
INTEREST INCOME 813 7 -- 820
INTEREST EXPENSE (95) (32) -- (127)
-------- -------- -------- --------
LOSS BEFORE PROVISION FOR INCOME TAXES (2,743) (1,249) (9,305) (13,297)
-------- -------- -------- --------
PROVISION FOR INCOME TAXES 32 -- -- 32
-------- -------- -------- --------
NET LOSS $ (2,775) $ (1,249) $ (9,305) $(13,329)
OTHER COMPREHENSIVE LOSS:
Unrealized loss on investments (42) -- -- (42)
-------- -------- -------- --------
COMPREHENSIVE LOSS $ (2,817) $ (1,249) $ (9,305) $(13,371)
-------- -------- -------- ========
NET LOSS PER SHARE-BASIC AND DILUTED $ (0.28) $ (0.14) $ (1.16) $ (1.22)
======== ======== ======== ========
SHARES USED IN NET LOSS PER SHARE -
BASIC AND DILUTED 9,988 9,029 (8,022)(3) 10,995
======== ======== ======== ========
</TABLE>
(1) Reflects the recording of stock-based compensation associated with the
options assumed by iManage.
(2) Reflects twelve months of amortization of goodwill and amounts allocated to
the workforce, non-compete agreements and purchased technology based upon
estimated two-year lives.
(3) Reflects the issuance of approximately 1,007 shares of iManage common stock
in exchange for all of the outstanding shares of Thoughstar's and the
cancellation of Thoughtstar's outstanding stock.
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<PAGE> 6
iMANAGE, INC. AND THOUGHTSTAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
iMANAGE THOUGHTSTAR ADJUSTMENTS PROFORMA
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Licenses $ 5,410 $ -- $ -- $ 5,410
Support and services 1,772 -- -- 1,772
-------- -------- -------- --------
Total revenues 7,182 -- -- 7,182
-------- -------- -------- --------
COST OF REVENUES
Licenses 280 -- -- 280
Support and services 1,048 -- -- 1,048
-------- -------- -------- --------
Total cost of revenues 1,328 -- -- 1,328
-------- -------- -------- --------
GROSS PROFIT 5,854 -- -- 5,854
-------- -------- -------- --------
OPERATING EXPENSES:
Sales and marketing 3,984 238 -- 4,222
Research & development 1,674 126 98(1) 1,898
General & administration 957 247 187(1) 1,391
Amortization of goodwill and other intangibles -- -- 2,119(2) 2,119
-------- -------- -------- --------
Total operating expenses 6,615 611 2,404 9,630
-------- -------- -------- --------
LOSS FROM OPERATIONS (761) (611) (2,404) (3,776)
-------- -------- -------- --------
INTEREST INCOME 788 -- -- 788
INTEREST EXPENSE (52) (8) -- (60)
-------- -------- -------- --------
LOSS BEFORE PROVISION FOR INCOME TAXES (25) (619) (2,404) (3,048)
-------- -------- -------- --------
PROVISION FOR INCOME TAXES (23) -- -- (23)
NET LOSS $ (48) $ (619) $ (2,404) $ (3,071)
OTHER COMPREHENSIVE LOSS
Unrealized loss on investments (48) -- -- (48)
-------- -------- -------- --------
COMPREHENSIVE LOSS $ (96) $ (619) $ (2,404) $ (3,119)
======== ======== ======== ========
NET LOSS PER SHARE-BASIC AND DILUTED $ (0.00) $ (0.07) $ (0.29) $ (0.14)
======== ======== ======== ========
SHARES USED IN NET LOSS PER SHARE -
BASIC AND DILUTED 21,289 9,380 (8,373)(3) 22,296
======== ======== ======== ========
</TABLE>
(1) Reflects the recording of stock-based compensation associated with the
options assumed by iManage.
(2) Reflects three months of amortization of goodwill and amounts allocated to
the workforce, non-compete agreements and purchased technology based upon
estimated two-year lives.
(3) Reflects the issuance of approximately 1,007 shares of iManage common stock
in exchange for all of the outstanding shares of Thoughstar's common stock
and the retirement of Thoughtstar's outstanding shares.
30
