<PAGE> 1
EXHIBIT 99.2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
Inso Corporation, Inc.
We have audited the accompanying statements of the divisional
assets and liabilities of Information Exchange Division (the Division, two
operating units of Inso Corporation, Inc.) as of January 31, 2000 and December
31, 1998, and the related statements of operations, divisional equity and cash
flows for the years ended December 31, 1997 and 1998, one month ended January
31, 1999, and year ended January 31, 2000. These financial statements are the
responsibility of the Division's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the divisional assets and liabilities
of Information Exchange Division as of January 31, 2000 and December 31, 1998
and the results of their operations and their cash flows for the years ended
December 31, 1997 and 1998, one month ended January 31, 1999, and year ended
January 31, 2000, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Grant Thornton LLP
Minneapolis, Minnesota
August 18, 2000
1
<PAGE> 2
INFORMATION EXCHANGE DIVISION
(DIVISION OF INSO CORPORATION, INC.)
STATEMENTS OF DIVISIONAL ASSETS AND LIABILITIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, January 31, April 30,
ASSETS 1998 2000 2000
-------------- -------------- ---------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and equivalents $11,503 $ 651 $ 4,019
Accounts receivable, net 11,937 9,036 9,167
Prepaid expenses and other current assets 241 107 184
------- ------- -------
Total current assets 23,681 9,794 13,370
PROPERTY AND EQUIPMENT, NET 1,377 1,626 1,631
OTHER ASSETS
Accounts receivable, net of current maturities 1,783 577 510
Product development costs, net 3,314 4,855 4,902
Goodwill, net 2,744 1,751 1,509
Deferred taxes 525 1,273 1,370
------- ------- -------
$33,424 $19,876 $23,292
======= ======= =======
LIABILITIES AND DIVISIONAL EQUITY
CURRENT LIABILITIES
Accounts payable $ 217 $ 533 $ 210
Deferred revenues 3,922 5,215 4,470
Current maturities of capital lease - 75 77
Accrued compensation 998 834 1,111
Accrued royalties 9 205 205
Other accrued expenses 104 297 272
Deferred taxes 583 503 525
------- ------- -------
Total current liabilities 5,833 7,662 6,870
Deferred revenue, net of current portion 1,652 414 458
Capital lease, net of current maturities - 142 123
------- ------- -------
Total liabilities 7,485 8,218 7,451
COMMITMENTS AND CONTINGENCIES - - -
DIVISIONAL EQUITY 25,939 11,658 15,841
------- ------- -------
$33,424 $19,876 $23,292
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
INFORMATION EXCHANGE DIVISION
(DIVISION OF INSO CORPORATION, INC.)
STATEMENTS OF DIVISIONAL OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Years ended Three months ended
December 31, One Month Year ended April 30,
--------------------- ended January 31, -------------------
1997 1998 January 31, 1999 2000 1999 2000
------ ------ ---------------- ------ ------ -----
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Product licenses $29,487 $26,724 $ 651 $23,847 $5,640 $5,277
Services 1,830 2,490 209 3,154 740 593
------- ------- ------ ------- ------ ------
Total revenues 31,317 29,214 860 27,001 6,380 5,870
Cost of revenues
Product licenses 1,941 2,015 155 2,037 456 565
Services 331 648 52 977 120 162
------- ------- ------ ------- ------ ------
Total cost of revenues 2,272 2,663 207 3,014 576 727
------- ------- ------ ------- ------ ------
Gross profit 29,045 26,551 653 23,987 5,804 5,143
Operating expenses
Sales and marketing 5,300 5,222 281 6,802 929 1,996
General and administrative 5,354 3,895 358 4,882 1,513 1,174
Research and development 6,294 5,823 451 4,752 1,349 1,290
Purchased in process research and development 1,800 - - - - -
------- ------- ------ ------- ------ ------
Total operating expenses 18,748 14,940 1,090 16,436 3,791 4,460
------- ------- ------ ------- ------ ------
Income (loss) from operations 10,297 11,611 (437) 7,551 2,013 683
Other income (expense) 16 11 (8) 49 1 25
------- ------- ------ ------- ------ ------
Income (loss) before income taxes 10,313 11,622 (445) 7,600 2,014 708
Income taxes (benefit) 4,194 4,424 (106) 3,020 799 286
------- ------- ------ ------- ------ ------
Net income (loss) $ 6,119 $ 7,198 $ (339) $ 4,580 $1,215 $ 422
======= ======= ====== ======= ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
INFORMATION EXCHANGE DIVISION
(DIVISION OF INSO CORPORATION, INC.)
STATEMENTS OF DIVISIONAL EQUITY
PERIOD FROM JANUARY 1, 1997
THROUGH APRIL 30, 2000
(IN THOUSANDS)
<TABLE>
<S> <C>
Balance at January 1, 1997 $ 11,218
Net issuance of additional capital/ (payment of constructive dividends) (3,038)
Net income for the year 6,119
--------
Balance at December 31, 1997 14,299
Net issuance of additional capital/ (payment of constructive dividends) 4,442
Net income for the year 7,198
--------
Balance at December 31, 1998 25,939
Net issuance of additional capital/ (payment of constructive dividends) 1,436
Net loss for the month ended January 31, 1999 (339)
--------
Balance at January 31, 1999 27,036
Net issuance of additional capital/ (payment of constructive dividends) (19,958)
Net income for the year 4,580
--------
Balance at January 31, 2000 11,658
Net issuance of additional capital/ (payment of constructive dividends) (unaudited) 3,761
Net income for the three months ended April 30, 2000 (unaudited) 422
--------
Balance at April 30, 2000 (unaudited) $ 15,841
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
INFORMATION EXCHANGE DIVISION
(DIVISION OF INSO CORPORATION, INC.)
STATEMENTS OF DIVISIONAL CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Years ended Three months ended
December 31, One month Year ended April 30,
----------------- ended January 31, --------------------
1997 1998 January 31, 1999 2000 1999 2000
------ ------ ---------------- ------ ------ ------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Operating activities:
Net income (loss) $ 6,119 $ 7,198 $ (339) $ 4,580 $ 1,215 $ 422
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation and amortization 2,140 2,631 244 2,941 686 591
(Gain) loss on sale of property and
equipment (79) (1) - 117 - -
Changes in operating assets and
liabilities (1,736) 53 2,112 1,897 (1,115) (988)
------- ------- ------- -------- ------- ------
Net cash flows provided by
operating activities 6,444 9,881 2,017 9,535 786 25
Investing activities:
Purchases of property and equipment (1,375) (586) (30) (738) (46) (196)
Product development costs (1,773) (2,234) (178) (2,936) (841) (205)
Purchase of intangibles (258) - - - - -
------- ------- ------- -------- ------- ------
Net cash flows used in investing
activities (3,406) (2,820) (208) (3,674) (887) (401)
Financing activities:
Payments under capital lease - - - - - (17)
Net issuance of additional capital/
(payment of constructive dividends) (3,038) 4,442 1,436 (19,958) 3,666 3,761
------- ------- ------- -------- ------- ------
Net cash flows provided by (used
in) financing activities (3,038) 4,442 1,436 (19,958) 3,666 3,744
------- ------- ------- -------- ------- ------
Net increase (decrease) in cash - 11,503 3,245 (14,097) 3,565 3,368
Cash and equivalents at beginning of period - - 11,503 14,748 14,748 651
------- ------- ------- -------- ------- ------
Cash and equivalents at end of period $ - $11,503 $14,748 $ 651 $18,313 $4,019
------- ------- ------- -------- ------- ------
Supplemental disclosure of cash flows information:
Cash paid for interest $ - $ - $ - $ 6 $ - $ 6
Cash paid for income taxes - - - - - -
Non-cash financing and investing activities:
Equipment acquired with capital lease
obligation $ - $ - $ - $ 243 $ - $ -
Detail of changes in operating assets and liabilities:
Accounts receivable $(2,270) $ 2,010 $ 1,487 $ 2,620 $(1,210) $ (64)
Prepaid expenses and other assets (437) (53) 6 (620) (253) (174)
Accounts payable 552 524 (48) 364 (35) (323)
Deferred revenues 416 383 505 (450) 165 (701)
Accrued compensation 423 (334) 97 (261) (17) 277
Accrued royalties 4 5 (4) 200 - -
Other accrued expenses and other liabilities (424) (2,482) 69 44 235 (3)
------- ------- ------- -------- ------- ------
Net changes in operating assets
and liabilities $(1,736) $ 53 $ 2,112 $ 1,897 $(1,115) $ (988)
======= ======= ======= ======== ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
INFORMATION EXCHANGE DIVISION
(DIVISION OF INSO CORPORATION, INC.)
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
(INFORMATION AS OF APRIL 30, 2000 AND FOR THE THREE
MONTHS ENDED APRIL 30, 1999 AND 2000 IS UNAUDITED)
NOTE A - NATURE OF BUSINESS AND BASIS OF PRESENTATION
Information Exchange Division (the "Division") represents two operating units
(Inso Chicago Corporation and Inso Kansas City Corporation) of Inso
Corporation ("the Company"). The Division's customers are primarily located
throughout the United States and in Europe.
The Division is engaged principally in providing text access, conversion and
high-fidelity viewing solutions for various information formats across a
broad range of platforms and computing environments. The Division markets its
solutions worldwide, principally to manufacturers and developers of computer
hardware and software. The Division's products enable customers to provide
comprehensive information access solutions to delivering business information
in both connected and wireless computing environments.
The accompanying financial statements have been prepared from the books and
records maintained by the Division and by the Company. The Statements of
Divisional Operations include allocation of certain administrative expenses
which were determined based on proportional cost allocation methods which
management of the Division believes are reasonable and present the operations
of the Division as though it was on a stand alone basis. Additionally, the
divisional equity gives effect to balances due from or to affiliates, to
reclassify such amounts as capital contributions when they represented net
advances from affiliates and constructive dividends when such amounts
represented net advances to affiliates. Accordingly, the accompanying
financial statements may not necessarily be indicative of the results of
operations that would have been obtained if the Division had been operated as
an independent entity.
In November 1998, the Board of Directors approved a change in the Company's
fiscal year to February 1 through January 31, effective for the twelve-month
period ending January 31, 2000. Through December 31, 1998, the Company
reported results on a calendar year basis.
The accompanying financial statements and related footnote data as of April
30, 2000 and for the three months ended April 30, 1999 and 2000 are
unaudited, but in the opinion of management include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation thereof. The results of operations for the three months ended
April 30, 1999 and 2000 are not necessarily indicative of the results for the
full year.
6
<PAGE> 7
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Division derives its revenues from product license fees with corporate,
government, Original Equipment Manufacturer (OEM) customers and
channel-partners; software maintenance fees from site-license agreements with
corporate and government customers; royalties, including initial
non-refundable royalties from license arrangements with OEMs and
channel-partners; and professional services fees for services provided to
licensees of its products.
Revenue from software product license fees (excluding royalties) is
recognized when there is evidence of an arrangement for a fixed and
determinable fee that is probable of collection and the software has been
delivered to the customer. Royalty revenues are generally recognized in the
Division's financial statements in the period in which the amounts due to the
Division have been determined based on the terms of the royalty agreement.
Typically, the Division's software licenses do not include significant
post-delivery obligations to be fulfilled by the Division and payments are
due within a twelve month period from the date of delivery. Consequently,
license fee revenue is generally recognized upon shipment of the technology.
Revenue for maintenance agreements is recognized as service income over the
term of the agreement using the straight-line method. Revenue from training,
consulting, and implementation services is recognized as services are
performed.
Customer advances, prepaid maintenance revenue and billed amounts due from
customers in excess of revenue recognized are recorded as deferred revenue.
Accounts Receivable
Accounts receivable is presented net of allowances of $1,939, $2,194 and
$2,194 as of December 31, 1998, January 31, 2000, and April 30, 2000,
respectively. Credit is extended based on an evaluation of the customer's
financial condition and a cash deposit is generally not required. The Company
estimates its potential losses on trade receivables on an ongoing basis and
provides for anticipated losses in the period in which the revenues are
recognized. Credit losses have historically been within management's
expectations.
7
<PAGE> 8
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Long-term accounts receivable represent advance billings on long-term
contracts which are recorded as deferred revenue until the revenue is earned.
Product Development Costs
Software and other costs incurred in connection with product development is
capitalized once the technological feasibility is established. The product
development costs that may be capitalized are subject to limitations based on
the net realizable value of the potential product.
Amortization of capitalized product development costs begins when the related
product is available for general release to customers. These costs are
amortized using the shorter of the estimated future product revenue streams
or the straight-line method over periods not exceeding three years.
Acquired developed software is capitalized as part of the allocation of the
purchase price on the basis of the estimated fair market value. Acquired
developed software is amortized on the lessor of the straight-line basis over
its estimated useful life ranging from two to three years or the useful life
of the Division's product.
Amortization of product development costs of $503, $1,036, and $1,441 for the
years ended December 31, 1997 and 1998 and January 31, 2000, respectively,
and $333 and $511 for the three months ended April 30, 1999 and 2000, is
included as a component of cost of revenues. Amortization of $132 for the one
month ended January 31, 1999 is included as a component of cost of revenues.
Property and Equipment
Property and equipment including leasehold improvements are recorded at cost.
Amortization is provided on leasehold improvements using the straight-line
method over the economic life of the asset or the lease term, whichever is
shorter. For property and equipment, depreciation is provided using primarily
the straight-line method over the estimated economic life of the assets,
generally three to five years.
8
<PAGE> 9
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Goodwill
Goodwill, representing the excess of purchase price over fair value of net
assets acquired, is being amortized on a straight line basis over five to
seven years. Accumulated amortization was $2,658, $3,650, and $3,892 at
December 31, 1998, January 31, 2000 and April 30, 2000.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of", if facts and circumstances suggest
that an impairment may have occurred, the unamortized balances of these
assets are reviewed. If indicators of impairment are present, and the
estimated undiscounted cash flows to be derived from the related assets are
not expected to be sufficient to recover the asset's carrying amount, an
impairment loss is charged to expense in the period identified. We noted no
impairment to goodwill for the periods ended December 31, 1997, 1998, January
31, 1999, January 31, 2000, April 30, 1999 and April 30, 2000.
Advertising
The Division expenses the cost of advertising as it is incurred. Advertising
expense for the years ended December 31, 1997 and 1998 and January 31, 2000
and for the three months ended April 30, 1999 and 2000, was $144, $133, $435,
$19, and $152. Advertising expense for the month ended January 31, 1999 was
$10.
Use of Estimates
Preparing financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
9
<PAGE> 10
NOTE C - BUSINESS ACQUISITION
On February 6, 1997, the Company acquired the intellectual property and
certain other assets of Adobe Systems Inc.'s document access and conversion
business, formerly known as Mastersoft, for $2,965 in cash. The transaction
was accounted for as a purchase and has been included in the Division's
financial statements since the date of acquisition. The purchase price has
been allocated on the basis of the estimated fair market value of the assets
acquired and liabilities assumed. The acquisition included the purchase of
certain technology under research and development, which resulted in a charge
to the Division's results for the year ended December 31, 1997 of $1,800.
Intangible assets of approximately $258 were recorded at the time of the
acquisition and are being amortized on a straight-line basis over their
estimated useful lives of five years.
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31, January 31, April 30,
1998 2000 2000
------------ ----------- ---------
<S> <C> <C> <C>
Equipment and furniture $3,909 $4,645 $4,841
Leasehold improvements 241 232 232
------ ------ ------
4,150 4,877 5,073
Less accumulated depreciation 2,773 3,251 3,442
------ ------ ------
$1,377 $1,626 $1,631
====== ====== ======
</TABLE>
10
<PAGE> 11
NOTE E - INCOME TAXES
The activity of the Division has been included in the income tax returns of
the Company. For financial reporting purposes, the Division has been
allocated a provision for income taxes in an amount generally equivalent to
the provision that would have resulted had the Division filed separate income
tax returns. Tax liabilities related to these provisions are recorded through
divisional equity. The provision for income tax expense (benefit) consists of
the following:
<TABLE>
<CAPTION>
One month Three months ended
Years ended December 31, ended Year ended April 30,
------------------------ January 31, January 31, ---------------------------
1997 1998 1999 2000 1999 2000
------ ---------- ----------- ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Current
Federal $3,886 $ 5,348 $(174) $3,076 $ 813 $284
State 1,228 1,182 - 841 222 77
------ ------- ----- ------ ------ ----
5,114 6,530 (174) 3,917 1,035 361
Deferred
Federal (783) (1,790) 58 (762) (201) (64)
State (137) (316) 10 (135) (35) (11)
------ ------- ----- ------ ------ ----
(920) (2,106) 68 (897) (236) (75)
------ ------- ----- ------ ------ ----
Total income tax
(benefit) expense $4,194 $ 4,424 $(106) $3,020 $ 799 $286
====== ======= ===== ====== ====== ====
</TABLE>
Differences between the effective tax rate and the statutory federal tax rate
is as follows:
<TABLE>
<CAPTION>
One month Three months ended
Years ended December 31, ended Year ended April 30,
------------------------ January 31, January 31, ---------------------------
1997 1998 1999 2000 1999 2000
------ ---------- ----------- ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Federal statutory
income tax rate 34.0% 34.0% 34.0% 34.0% 34.0% 34.0%
State income
taxes, net of
federal benefit 7.0 4.9 (6.8) 7.3 6.1 6.2
Other (0.3) (0.8) (3.4) (1.6) (0.5) 0.2
----- ---- ---- ---- ---- ----
40.7% 38.1% 23.8% 39.7% 39.6% 40.4%
===== ==== ==== ==== ==== ====
</TABLE>
11
<PAGE> 12
NOTE E - INCOME TAXES - Continued
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities were as follows:
<TABLE>
<CAPTION>
December 31, January 31,
1998 2000 April 30, 2000
------------ ------------ --------------
<S> <C> <C> <C>
Deferred tax asset (liability)
Short-term deferred taxes
Accounts receivable and other reserves
$ 776 $ 878 $ 878
Deferred revenue (1,359) (1,381) (1,403)
------ ------ ------
Short-term deferred tax liability (583) (503) (525)
Long-term deferred taxes
Depreciation and amortization 996 599 614
Research and development (560) 585 667
Other 89 89 89
------- ------- -----
Long-term deferred tax asset 525 1,273 1,370
------- ------- -----
$ (58) $ 770 $ 845
======= ======= ======
</TABLE>
Deferred tax liabilities and deferred tax assets reflect the net tax effects
of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes.
NOTE F - EMPLOYEE BENEFIT PLAN
The Company has a 401(k) retirement plan (the Plan), available to
substantially all of the Division's domestic employees. Eligible employees
are permitted to make pre-tax contributions, up to 15% of their compensation
subject to an annual limit. Under the Plan, the Company may make
contributions either in cash or common stock of the Company at the discretion
of the Company's Board of Directors. The contribution may match in whole or
in part the salary deferral contributions of the participants and/or
represent additional profit-sharing contributions tied to the Company's net
income performance. During the years ended December 31, 1997 and 1998 and
January 31, 2000, the Division's total matching contribution amounted to
12
<PAGE> 13
NOTE F - EMPLOYEE BENEFIT PLAN - Continued
approximately $145, $203 and $298, respectively and $66 and $86 for the three
months ended April 30, 1999 and 2000. For the month ended January 31, 1999,
the Division's contribution was $16. All of the Company matching
contributions have been made in the form of cash, for all periods presented.
NOTE G - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Division has various lease agreements for office space and certain
equipment under operating leases that expire between 2002 and 2007. The
Division's office space leases include certain renewal and expansion options,
escalation clauses for the Company's proportionate share of increases in
building maintenance costs, and periods of free rent. At January 31, 2000,
future minimum lease commitments for non-cancelable leases are as follows:
<TABLE>
<S> <C>
2001 $ 534
2002 542
2003 558
2004 575
2005 494
Thereafter 858
------
$3,561
======
</TABLE>
Rent expense was approximately $745, $522 and $773, for the years ended
December 31, 1997 and 1998 and January 31, 2000, respectively and $217 and
$238 for the three months ended April 30, 1999 and 2000. Rent expense was
approximately $71 for the month ended January 31, 1999.
13
<PAGE> 14
NOTE G - COMMITMENTS AND CONTINGENCIES - Continued
Capital Lease Obligations
The Division leases certain machinery and equipment under a capital lease,
which is secured by the equipment acquired. As of January 31, 2000, scheduled
future minimum payments approximate $93 in both fiscal 2001 and 2002 and $61
in fiscal 2003. Of the total future minimum payments of $247, approximately
$30 represents interest charges.
The cost of equipment subject to capital leases totaled $243 with accumulated
depreciation of $40 at January 31, 2000.
Claims
The Division is subject to claims in the normal course of its business
operations. Management believes, the outcome of these claims will not have a
material impact on the Division's financial position.
NOTE H - SEGMENTS OF BUSINESS AND GEOGRAPHIC AREA INFORMATION
The Division operates in a single reporting segment. A summary of the
Division's operations by geographic area is as follows:
<TABLE>
<CAPTION>
Years ended One month Three months ended
December 31, ended Year ended April 30,
--------------------- January 31, January 31, ------------------
1997 1998 1999 2000 1999 2000
-------- -------- ----------- ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Revenues:
United States $21,715 $21,579 $852 $15,222 $5,421 $3,954
Europe 5,498 4,573 6 4,548 411 1,469
Canada 2,223 774 - 2,755 356 125
Other 1,881 2,288 2 4,476 192 322
------- ------- ---- ------- ------ ------
$31,317 $29,214 $860 $27,001 $6,380 $5,870
======= ======= ==== ======= ====== ======
</TABLE>
14
<PAGE> 15
NOTE H - SEGMENTS OF BUSINESS AND GEOGRAPHIC AREA INFORMATION -
Continued
Sales are attributed to countries or region based on the location of the
customer. Substantially all long-lived assets are located in the United
States.
NOTE I - SIGNIFICANT CUSTOMERS
The Division had revenues from one customer totaling $3,304 (11% of revenues)
in 1998, Accounts receivable from this customer was $67 at December 31, 1998.
NOTE J - SUBSEQUENT EVENTS
On July 10, 2000, the Division and the Company entered into an agreement and
plan of merger with IntraNet Solutions, Inc., a Minnesota corporation. Under
terms of the agreement, IntraNet Solutions, Inc. acquired the Division for
$55 million in cash. Pursuant to the merger agreement, Inso Corporation
entered into a license agreement with the Division under which Inso
Corporation licenses the right to use certain software owned by the Division
in exchange for royalty payments of not less than $1.5 million.
15
