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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
ARTISOFT, INC.
File No. 000-19462
AMENDMENT NO. 2
TO FORM 8-K CURRENT REPORT
FILED FEBRUARY 23, 1996
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K filed
with the Securities and Exchange Commission on February 23, 1996, as set forth
below:
Item 7 - Financial Statements and Exhibits, is hereby amended to
correct a presentational error on the Proforma Condensed Combined Balance Sheet
at December 31, 1995.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) Financial Statements of Business Acquired.
------------------------------------------
Audited financial statements of Stylus Innovation 5
Incorporated 5 for the year ended December 31, 1995
with Independent Auditors' Report Thereon.
(b) Pro Forma Financial Information.
--------------------------------
Pro Forma Condensed Combined Financial Statements:
Pro Forma Condensed Combined Statement of 15
Operations for the fiscal year ended June 30,
1995.
Pro Forma Condensed Combined Statement of 16
Operations for the six-month period ended
December 31, 1995.
Pro Forma Condensed Combined Balance Sheet 17
as of December 31, 1995.
Notes to Pro Forma Condensed Combined 18
Financial Statements.
(c) Exhibits.
---------
None
</TABLE>
2
<PAGE>
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.
Date: May 8, 1996
ARTISOFT, INC.
By /s/ Gary R. Acord
-------------------
Gary R. Acord
Vice President and
Chief Financial Officer
3
<PAGE>
Item 7. (a) Financial Statements of Business Acquired.
------------------------------------------
Audited financial statements of Stylus Innovation Incorporated
as of and for the year ended December 31, 1995.
(b) Pro Forma Financial Information.
--------------------------------
On February 13, 1996, Artisoft, Inc., (the "Company")
completed the acquisition of substantially all the assets and
certain liabilities of Stylus Innovation Incorporated
("Stylus"), a developer of computer telephony software
applications and tools. The aggregate cost of acquiring Stylus
was approximately $13.1 million. The purchase price was paid
in cash from the Company's existing cash balances. The Company
incurred direct transaction costs of approximately $275,000
associated with the acquisition. These costs consisted of fees
for financial, legal and accounting services and are included
in the allocation of the acquisition costs. The direct costs
and purchase price of the acquisition has been allocated to
the assets acquired and liabilities assumed based on their
respective fair values on the date of the acquisition. The
acquisition was accounted for as a purchase business
combination.
On December 21, 1995, the Company completed the acquisition of
the outstanding stock of Triton Technologies, Inc. ("Triton")
and filed the requisite Form 8-K. The pro forma information
contained in this filing is also based on the historical
financial statements of Triton giving effect to the
transaction and the assumptions and adjustments also included
in the accompanying notes to the pro forma condensed combined
financial statements.
The following presents the pro forma condensed combined
balance sheets (unaudited) as of December 31, 1995, and pro
forma condensed combined statements of operations (unaudited)
of the Company, Triton and Stylus for the year ended June 30,
1995 and the six-month period ended December 31, 1995, as if
the acquisitions had occurred at the beginning of the fiscal
year ended June 30, 1995, after giving effect to certain
adjustments including amortization of purchased software, the
charge to operations of in-process technology and related
costs, the decrease in interest income as a result of the
acquisition purchase price being paid from the Company's
existing cash balances and related income tax effects.
These pro forma statements do not necessarily reflect the
results of operations that would have been achieved had the
Company, Triton and Stylus had been combined during such
periods, or which may be obtained in the future. The pro forma
condensed combined financial statements should be read in
conjunction with the audited financial statements and notes
thereto of Stylus [filed with this report under Item 7(a)] and
the audited financial statements of Triton and the Company.
4
<PAGE>
STYLUS INNOVATION INC.
Financial Statements
December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
Stylus Innovation Inc.:
We have audited the accompanying balance sheet of Stylus Innovation Inc., as of
December 31, 1995, and the related statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards 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. 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 financial position of Stylus Innovation Inc. at
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
February 23, 1996
<PAGE>
STYLUS INNOVATION INC.
Balance Sheet
December 31, 1995
Assets
------
Current assets:
Cash $259,482
Accounts receivable, net of allowance of $37,897 208,251
Inventories 62,824
Prepaid expenses 35,746
Prepaid advertising 30,235
--------
Total current assets 596,538
--------
Property and equipment, at cost:
Computer equipment and software 183,521
Furniture and fixtures 7,921
Leasehold improvements 4,957
--------
196,399
Less: accumulated depreciation 49,371
--------
Net property and equipment 147,028
--------
Other assets 28,349
--------
Total assets $771,915
========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 5,774
Accrued expenses 27,275
Accrued compensation and profit sharing expenses 182,067
Advances from officer/stockholders 4,120
Distributions payable to stockholders 167,495
--------
Total current liabilities 386,731
--------
Commitments and contingencies (note 4)
Stockholders' equity (note 3):
Common stock, par value $.01; 1,200,000 shares authorized,
1,000,000 shares issued and outstanding 10,000
Additional paid-in-capital 143,121
Retained earnings 232,063
--------
Total stockholders' equity 385,184
--------
Total liabilities and stockholders' equity $771,915
========
See accompanying notes to financial statements.
<PAGE>
STYLUS INNOVATION INC.
Statement of Operations
For the year ended December 31, 1995
Net revenues:
Software $2,027,131
Hardware 1,512,840
----------
3,539,971
----------
Operating expenses:
Cost of software revenue 138,160
Cost of hardware revenue 1,067,778
Selling expenses 778,594
General and administrative expenses 484,953
Research and development expenses 734,074
----------
Total operating expenses 3,203,559
----------
Operating income 336,412
Interest income 5,721
----------
Net income $ 342,133
==========
See accompanying notes to financial statements.
<PAGE>
STYLUS INNOVATION INC.
Statement of Stockholders' Equity
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------- Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 100,000 $ 1,000 143,121 66,425 210,546
Ten-for-one stock split effectuated by means
of a nine-for-one stock dividend 900,000 9,000 - (9,000) -
Declaration of distributions to stockholders - - - (167,495) (167,495)
Net income - - - 342,133 342,133
--------- --------- ------- ------- -------
Balance, December 31, 1995 1,000,000 $ 10,000 143,121 232,063 385,184
========= ========= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STYLUS INNOVATION INC.
Statement of Cash Flows
For the year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income $ 342,133
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 70,369
Accrued compensation expense - options and
performance units 86,059
Changes in operating assets and liabilities:
Accounts receivable (115,963)
Inventories (62,824)
Prepaid expenses and other assets (70,288)
Accounts payable (13,881)
Accrued expenses (7,956)
Accrued compensation and profit sharing expenses 45,527
Advances from officer/stockholder (2,478)
---------
Net cash provided by operating activities 270,698
---------
Cash flows from investing activities:
Purchase of property and equipment (101,933)
Proceeds from sale of equipment 2,500
Net cash used by investing activities (99,433)
Cash flows from financing activities:
Distribution to stockholders (121,080)
---------
Increase in cash 50,185
Cash, beginning of year 209,297
---------
Cash, end of year $ 259,482
=========
Supplemental disclosure of noncash transactions:
Declaration of distribution to stockholders $ 167,495
=========
Stock dividend $ 9,000
=========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STYLUS INNOVATION INC.
Notes to Financial Statements
December 31, 1995
(1) Operations and Summary of Significant Accounting Policies
Stylus Innovation Inc. was formed in 1992 for the purpose of developing
innovative products in the emerging market of computer technology. The
computer technology market includes hardware and software products
which combine the power of personal computers with the availability
and ease of use of telephones. The Company's principal computer
telephone products to date have been applications which allow users to
communicate with computer applications and databases from any
touch-tone telephone.
The Company sells both its own software and, as a reseller, computers,
boards and certain telecommunications hardware manufactured by others.
Most sales are made directly to end-users in the United States (80-85%
of revenue) and internationally (15-20% of revenue). The Company also
distributes its products domestically and internationally through
qualified resellers. However, such channels account for less than 10%
of annual sales.
(a) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure 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.
(b) Revenue Recognition
The Company recognizes revenue on software licenses and hardware sales
when the products are shipped to customers. Software and hardware
warranties are limited to a 30-day customer support-return privilege.
The Company provides a reserve equal to the actual cost of support
services rendered and product returns made in the 30-day period
subsequent to the end of the year.
The Company does not offer maintenance contracts for customer product
support beyond the 30-day warranty period since the need for such
technical support is insignificant.
(c) Inventory
The Company's inventory is stated at the lower of cost (first-in,
first-out) or market and consists solely of finished goods.
(d) Property and Equipment
Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. The estimated useful
lives of property and equipment are as follows:
Description Useful Lives
----------- ------------
Computer equipment and software 3-5 years
Furniture and fixtures 5 years
Leasehold improvements Lease Term
(Continued)
<PAGE>
2
STYLUS INNOVATION INC.
Notes to Financial Statements
(e) Patents
The Company's policy is to capitalize the cost of obtaining patents and
to amortize those costs over the estimated useful life of the patented
products. During 1995, the Company charged to expense $23,743 of
unamortized patent costs that were no longer recoverable from
anticipated revenues from the patented products.
(2) Income Taxes
The Company has elected to be treated as an "S" Corporation for federal
and state income tax purposes. Accordingly, the Company is not subject
to income taxes directly; rather, all taxable earnings and losses are
reflected in the personal income tax returns of the stockholders.
(3) Stockholders' Equity
Stock Dividend
In 1995, the Company declared a ten-for-one stock split through a
nine-for-one stock dividend.
Performance Unit Plan
During 1995, the Company adopted the 1995 Performance Unit Plan to
formalize the grant of certain incentive awards to key employees and
to provide for such additional incentive awards as may be granted in
the future. Units granted vest at the sole discretion of the Company,
although all units issued to date provide for immediate vesting. The
specific terms of the performance units are as follows:
1. Each grantee's equity in the performance unit is equal to the per
share change in the Company's net book value measured from the
fiscal year-end preceding the date of grant through the most
recent valuation date. This per share change is computed as if all
performance units granted were, in fact, outstanding shares of
common stock.
2. Performance units entitle grantees to certain annual per unit cash
payments. These cash payments are to be equal to per share S
Corporation distributions to stockholders, but only to the extent
those distributions are in excess of the amount required to pay
federal and state income taxes, at the maximum statutory rate, on
S Corporation earnings.
3. Award units may be redeemed by the Company at any time at its sole
discretion, although awards are to be redeemed upon termination of
employment of the grantee as provided in the Plan.
4. In the event of a significant sale of corporate assets or change
in control of the Company, the outstanding performance units
become redeemable at the excess of fair market value over the
applicable per unit net book value.
(Continued)
<PAGE>
3
STYLUS INNOVATION INC.
Notes to Financial Statements
Through December 31, 1995, the Company had granted 33,850 performance
units consisting of 16,400 units in 1994 and 17,450 in 1995. No
performance units have been redeemed or have expired since the
inception of the program. The status of outstanding units at December
31, 1995 and for the year then ended was as follows:
Performance Ascribed Ascribed Excess as
Units Value at Value at Accrued
Outstanding Issuance Year-End Compensation
----------- -------- -------- ------------
Balance, December 31, 1994 16,400 $2,207 3,406 1,199
Units granted in 1995 17,450 3,589 9,566 5,977
------ ------ ------ -----
Balance, December 31, 1995 33,850 $5,796 12,972 7,176
====== ====== ====== =====
Non-Qualified Stock Option Plan
During 1995 the Company adopted the Non-Qualified Stock Option Plan to
document the grant of certain stock options issued to key employees
during 1993 and 1994, and to provide for such options as may be
granted in the future. The Plan provides that key employees may be
granted options to purchase up to an aggregate of 105,000 shares of
the Company's common stock at an exercise price as determined by the
Board of Directors. Shares granted vest at the sole discretion of the
Board of Directors, although all options issued to date have vested in
three equal annual installments, starting with the first anniversary
of the grant. A change in voting control of the Company will, however,
cause immediate vesting of all stock options.
The Company accounts for the compensatory element of stock option grants
in accordance with Accounting Principles Board Opinion Number 25 ("APB
No. 25") whereby the compensatory element of stock options is
determined at the date of grant. This compensatory element is equal to
the excess of the fair market value of the optioned common stock at
the grant date over the option's exercise price. The compensation
amount is expensed and accrued over the prospective three-year period
during which the grantee is expected to perform services.
Through December 31, 1995, the Company had granted options to purchase
105,000 shares of common stock at $.025 per share. At December 31,
1995 no options were exercised and options to purchase 10,000 shares
had expired, leaving options to purchase 95,000 shares still
outstanding. No options were granted during 1995. At December 31,
1995, options to purchase 45,000 shares were exercisable. The status
of outstanding options at December 31, 1995 was as follows:
<TABLE>
<CAPTION>
Shares Estimated
Under Value at Date Exercise Compensatory Accrued
Option of Grant Price Element Compensation
------ -------- ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 95,000 $123,329 2,375 120,954 38,751
Add: Activity in 1995 -- -- -- -- 40,318
------ -------- ----- ------- ------
Balance, December 31, 1995 95,000 $123,329 2,375 120,954 79,069
====== ======== ===== ======= ======
</TABLE>
(Continued)
<PAGE>
4
STYLUS INNOVATION INC.
Notes to Financial Statements
(4) Commitments
The Company leases its office facilities under a sublease agreement.
Effective January 1, 1996, the agreement provides for monthly payments
of $6,974 for a period of two years and one month. The Company is also
a tenant-at-will with respect to office facility parking spaces at a
monthly expense of $1,100.
Future minimum obligations under the Company's operating leases are as
follows:
Year ending December 31:
1996 $ 83,688
1997 83,688
1998 6,974
----------
$ 174,350
===========
Rent expense for the year ended December 31, 1995 was $49,316.
(5) Defined Contribution Plan
The Company has established a defined contribution plan (the "Plan"). The
Company makes discretionary contributions to the Plan each year. All
employees with one year of service who have reached the age of 21 are
eligible to participate in the Plan. Each eligible employee receives a
percentage of the Company's annual contribution based on individual
compensation as a percentage of total compensation of eligible
employees. The contribution vests to each employee at 20% per year
beginning one year after the employee becomes eligible.
The Company contributed $87,408 to the Plan for the year ended December
31, 1995.
(6) Subsequent Event
On February 12, 1996, substantially all of the Company's assets and
certain of its liabilities were sold to Artisoft, Inc. for $12.6
million in cash. As a result, the outstanding performance units of the
Performance Unit Plan (see note 3) became redeemable at the excess of
fair market value over the applicable per unit book value. The Company
paid $364,801 to fully redeem the performance units which will be
recorded as compensation expense in 1996.
<PAGE>
Artisoft, Inc. and Subsidiaries
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Year Ended June 30, 1995
<TABLE>
<CAPTION>
Historical (unaudited)
---------------------------------------------------------
Triton Stylus Innovation
Artisoft, Inc. Technologies, Inc. Incorporated
-------------- ------------------ -----------------
<S> <C> <C> <C>
Net sales $ 84,243 $ 4,457 $ 2,779
Cost of sales 42,796 168 791
-------------- ------------------ -----------------
Gross margin 41,447 4,289 1,988
-------------- ------------------ -----------------
Operating expenses:
Marketing and sales 33,010 2,065 510
Product development 7,655 1,317 493
General and administrative 7,495 792 579
Purchased in-process technology
and related costs -- -- --
Costs to exit hardware development and manu-
facturing business, net of gain on disposition 3,119 -- --
-------------- ------------------ -----------------
Total operating expenses 51,279 4,174 1,582
-------------- ------------------ -----------------
Income (loss) from operations (9,832) 115 406
Other expense, net (3) (13) --
-------------- ------------------ -----------------
Income (loss) before income taxes (9,835) 102 406
Income taxes (benefit) (3,987) 20 --
-------------- ------------------ -----------------
Net income (loss) $ (5,848) $ 82 $ 406
============== ================== =================
Net loss per common and equivalent share $ (0.41)
==============
Shares used in per share calculation 14,315
==============
</TABLE>
<TABLE>
<CAPTION>
Pro Forma (unaudited)
------------------------------------------------
Adjustments
------------------------------
Triton A-1 Stylus D-1 Combined
---------- ---------- ---------
<S> <C> <C> <C>
Net sales $ -- $ -- $ 91,479
Cost of sales -- -- 43,755
---------- --------- ---------
Gross margin -- -- 47,724
---------- --------- ---------
Operating expenses:
Marketing and sales -- -- 35,585
Product development 335 A-2 207 D-2 10,007
General and administrative -- 365 D-3 9,231
Purchased in-process technology
and related costs 13,450 A-3 11,500 D-4 24,950
Costs to exit hardware development and manu-
facturing business, net of gain on disposition -- -- 3,119
---------- --------- ---------
Total operating expenses 13,785 12,072 82,892
---------- --------- ---------
Income (loss) from operations (13,785) (12,072) (35,168)
Other expense, net (660) A-4 (768)D-5 (1,444)
---------- --------- ---------
Income (loss) before income taxes (14,445) (12,840) (36,612)
Income taxes (benefit) (3,110) A-5 (3,888)D-6 (10,965)
---------- --------- ---------
Net income (loss) $ (11,335) $ (8,952) $(25,647)
========== ========= =========
Net loss per common and equivalent share $ (1.79)
=========
Shares used in per share calculation 14,315
=========
</TABLE>
<PAGE>
Artisoft, Inc. and Subsidiaries
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
Six-Month Period Ended December 31, 1995
<TABLE>
<CAPTION>
Historical (unaudited)
----------------------------------------------------------------
Triton Stylus Innovation
Artisoft, Inc. Technologies, Inc. Incorporated
---------------- ----------------------- -------------------
<S> <C> <C> <C>
Net sales $ 29,305 $ 2,976 $ 1,943
Cost of sales 10,587 104 627
---------------- ----------------------- -------------------
Gross margin 18,718 2,872 1,316
---------------- ----------------------- -------------------
Operating expenses:
Marketing and sales 13,067 1,510 515
Product development 2,593 863 477
General and administrative 2,612 432 228
Purchased in-process technology
and related costs 14,450 - -
---------------- ----------------------- -------------------
Total operating expenses 32,722 2,805 1,220
---------------- ----------------------- -------------------
Income (loss) from operations (14,004) 67 96
Other expense, net 834 (5) (27)
---------------- ----------------------- -------------------
Income (loss) before income taxes (13,170) 62 69
Income taxes (benefit) (400) 10 -
---------------- ----------------------- -------------------
Net income (loss) $ (12,770) $ 52 $ 69
---------------- ----------------------- -------------------
Net loss per common and equivalent share $ (0.88)
----------------
Shares used in per share calculation 14,452
----------------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma (unaudited)
----------------------------------------------------------------------
Adjustments
----------------------------------------
Triton B-1 Stylus E-1 Combined
------------------ ---------------- ----------------
<S> <C> <C> <C>
Net sales $ (650) B-2 $ - $ 33,574
Cost of sales (4) B-2 - 11,314
------------------ ---------------- ----------------
Gross margin (646) - 22,260
------------------ ---------------- ----------------
Operating expenses: (350) B-3 }
Marketing and sales (59) B-2 - } 14,683
(44) B-2 }
Product development 168 B-4 104 } E-2 4,161
General and administrative (5) B-2 (100) E-3 3,167
Purchased in-process technology
and related costs (13,450) B-5 - 1,000
------------------ ---------------- ----------------
Total operating expenses (13,740) 4 23,011
------------------ ---------------- ----------------
Income (loss) from operations 13,094 (4) (751)
Other expense, net (280) B-6 (320) E-4 202
------------------ ---------------- ----------------
Income (loss) before income taxes 12,814 (324) (549)
Income taxes (benefit) 300 B-7 (130) E-5 (220)
------------------ ---------------- ----------------
Net income (loss) $ 12,514 $ (194) $ (329)
================== ================ ================
Net loss per common and equivalent share $ (0.02)
================
Shares used in per share calculation
14,452
=================
</TABLE>
<PAGE>
Artisoft, Inc. and Subsidiaries
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands)
December 31, 1995
<TABLE>
<CAPTION>
Historical (unaudited)
---------------------------------------------------------------
Triton Stylus Innovation
Artisoft, Inc. Technologies, Inc. C-1 Incorporated
---------------- ------------------------- ------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,980 $ - $ 260
Receivables:
Trade accounts, net 14,609 - 208
Notes and other 2,169 - -
Inventories 2,579 - 63
Prepaid expenses 2,272 - 66
Deferred income taxes 3,495 - -
---------------- ------------------------- ----------------
Total current assets 64,104 - 597
---------------- ------------------------- ----------------
Property and equipment, net 9,611 - 147
---------------- ------------------------- -----------------
Other assets 2,352 - 28
---------------- ------------------------- ----------------
$ 76,067 $ - $ 772
================ ========================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and advances under line of credit $ 10,623 $ - $ -
Accounts payable 2,854 - 6
Accrued liabilities 6,165 - 197
Income taxes payable 148 - -
Notes payable-related parties - - 4
Distributions payable to stockholders - - 168
Current portion of long-term obligations 60 - -
---------------- ------------------------- ----------------
Total current liabilities 19,850 - 375
---------------- ------------------------- ----------------
Shareholders' equity 56,217 - 397
---------------- ------------------------- ----------------
$ 76,067 $ - $ 772
================ ========================= ================
</TABLE>
<TABLE>
<CAPTION>
Pro Forma (unaudited)
---------------------------------------------------------------------
Adjustments
--------------------------------------
Triton C-1 Stylus F-1 Combined
----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets: $ (12,800)} F-2
Cash and cash equivalents $ - (90)} F-3 $ 26,350
Receivables:
Trade accounts, net - (4) F-3 14,813
Notes and other - - 2,169
Inventories - 45 F-3 2,687
Prepaid expenses - (3) F-3 2,335
Deferred income taxes - - 3,495
----------------- ----------------- ---------------
Total current assets - (12,852) 51,849
----------------- ----------------- ---------------
Property and equipment, net - - 1 F-3 9,759
----------------- ----------------- ---------------
12,535 } F-5
Other assets - (11,500)} F-6 3,415
----------------- ----------------- ---------------
$ - $ (11,816)} $ 65,023
================= ================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and advances under line of credit $ - $ - $ 10,623
Accounts payable - 147 F-3 3,007
- 275} F-4
Accrued liabilities - (173)}F-3 6,464
Income taxes payable - - 148
Notes payable-related parties - - 4
Distributions payable to stockholders - (168) F-3 -
Current portion of long-term obligations - - 60
----------------- ----------------- ---------------
Total current liabilities - 81 $ 20,306
----------------- ----------------- ---------------
Shareholders' equity - (11,897) F-2 > F-6 44,717
----------------- ------------------ ---------------
$ - $ (11,816) $ 65,023
================= ================== ===============
</TABLE>
<PAGE>
Artisoft, Inc and Subsidiaries
NOTES TO PRO FORMA
TRITON TECHNOLOGIES, INC.
(Unaudited)
CONDENSED COMBINED FINANCIAL STATEMENTS
(in thousands)
A.) Pro Forma Condensed Combined Statement of Operations for the Year Ended June
30, 1995:
1) The unaudited pro forma condensed combined statement of operations
gives effect to the acquisition of Triton Technologies, Inc.
("Triton") as if such transaction had taken place on July 1, 1994.
2) To reflect the amortization of purchased software over five years.
3) To reflect the charge to operations of in-process technology and
related costs of the acquisition.
4) To reflect the decrease in interest income as a result of the
acquisition purchase price paid from the Company's existing cash
balances.
5) To adjust income taxes to Artisoft's combined effective tax rate.
B.) Pro Forma Condensed Combined Statement of Operations for the Six-Month
Period Ended December 31, 1995:
1) The unaudited pro forma condensed combined statement of operations
gives effect to the acquisition of Triton as if such transaction had
taken place on July 1, 1994.
2) To reverse income and expenses from December 21, 1995 (date of
acquisition) to December 31, 1995, that is included in the Artisoft,
Inc. historical column.
3) To adjust operating expenses for compensation to certain
officers/shareholders which will not continue subsequent to the
acquisition.
4) To reflect the amortization of purchased software over five years.
5) To reverse the charge to operations of in-process technology and
related costs of the acquisition that was recognized in the pro forma
condensed combined statement of operations for the fiscal year ended
June 30, 1995.
6) To reflect the reduction in interest income as a result of the
acquisition purchase price paid from the Company's existing cash
balances.
7) To adjust income taxes to Artisoft's combined effective tax rate.
C.) Pro Forma Condensed Combined Balance Sheet as of December 31, 1995:
1) The Artisoft, Inc. unaudited historical condensed balance sheet as of
December 31, 1995, represents the balance sheet filed with the
Company's Form 10-Q and includes historical amounts for Triton since
the acquisition of Triton was completed on December 21, 1995.
Accordingly, there are no amounts in the Triton historical or pro
forma adjustments columns.
<PAGE>
Artisoft, Inc and Subsidiaries
NOTES TO PRO FORMA
STYLUS INNOVATION INCORPORATED
(Unaudited)
CONDENSED COMBINED FINANCIAL STATEMENTS
(in thousands)
D.) Pro Forma Condensed Combined Statement of Operations for the Year Ended June
30, 1995:
1) The unaudited pro forma condensed combined statement of operations
gives effect to the acquisition of Stylus Innovation Incorporated
("Stylus") as if such transaction had taken place on July 1, 1994.
2) To reflect redemption of outstanding Performance Units under the
Stylus Performance Unit Plan.
3) To reflect the amortization of purchased software over five years.
4) To reflect the charge to operations of purchased in-process technology
and the related costs of acquisition.
5) To reflect the decrease in interest income as a result of the
acquisition purchase price paid and the related costs of acquisition
from the Company's existing cash balances.
6) To adjust income taxes to Artisoft's combined effective tax rate.
E.) Pro Forma Condensed Combined Statement of Operations for the Six-Month
Period Ended December 31, 1995:
1) The unaudited pro forma condensed combined statement of operations
gives effect to the acquisition of Stylus as if such transaction had
taken place on July 1, 1994.
2) To reflect the amortization of purchased software over five years.
3) To adjust operating expenses for compensation to certain
officers/shareholders which will not continue subsequent to the
acquisition.
4) To reflect the reduction in interest income as a result of the
acquisition purchase price paid from the Company's existing cash
balances.
5) To adjust income taxes to Artisoft's combined effective tax rate.
F.) Pro Forma Condensed Combined Balance Sheet as of December 31, 1995:
1) The unaudited pro forma condensed combined balance sheet as of
December 31, 1995 gives effect to the acquisition of Stylus Innovation
Incorporated as though such transaction had taken place on December
31, 1995.
2) To reflect the acquisition of Stylus for $12,800 cash at closing.
3) To reflect the fair market value of assets purchased and liabilities
assumed.
4) To reflect the accrual of direct transaction costs associated with the
acquisition. These costs consist of fees for financial, legal and
accounting services and are included in the allocation of the
acquisition costs based on their respective fair value on the date of
the acquisition.
5) To reflect the fair market value of purchased technology.
6) To reflect the charge to operations of purchased in-process
technology.
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