<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial
information for insci-statements.com, corp. ("insci") consists of the Unaudited
Pro Forma Condensed Combined Statement of Operations for the year ended March
31, 2000 and the Unaudited Pro Forma Condensed Combined Balance Sheet as of
March 31, 2000.
On May 24, 2000, insci entered into an exchange agreement to acquire
100% of the outstanding common stock of Lognet 2000, Inc., ("Lognet"), in
exchange for 2,500,000 restricted shares of insci common stock. Lognet is
engaged in the manufacture of hardware and software products which are designed
for linkage between personal computers and central computers. The unaudited pro
forma condensed combined financial statements give effect to the Lognet
acquisition as if the companies had combined as of April 1, 1999.
For pro forma purposes, (i) insci's audited consolidated balance sheet
at March 31, 2000 has been combined with Lognet's audited consolidated balance
sheet at December 31, 1999, and (ii) insci's audited consolidated statement of
operations for the year ended March 31, 2000 has been combined with Lognet's
audited consolidated statement of operations for the year ended December 31,
1999. The pro forma financial information is presented for illustrative purposes
only and therefore is not necessarily indicative of what the actual financial
results would have been had the transaction taken place on April 1, 1999 and
does not purport to indicate the results of future operations.
The unaudited pro forma condensed combined financial information has
been prepared using the purchase method of accounting, whereby the total cost of
the acquisition has been allocated to the tangible and intangible assets
acquired and liabilities assumed based on their respective fair values at the
effective date of the acquisition. The allocations reflected in the unaudited
pro forma condensed combined financial information are preliminary and subject
to revision. It is not expected that the final allocation of purchase price will
produce materially different results from those presented herein.
The pro forma financial information should be read in conjunction with
the related notes included in this filing and the audited financial statements
and notes of insci, incorporated by reference herein and the audited financial
statements and notes of Lognet included elsewhere in this filing.
<PAGE>
<TABLE>
INSCI-STATEMENTS.COM, CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 2000
(in thousands)
<CAPTION>
INSCI LOGNET PRO FORMA
03/31/00 12/31/99 ADJUSTMENTS PRO-FORMA
-------- -------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,911 $ 68 $ $ 1,979
Accounts receivable, net 2,567 342 2,909
Inventory 4 102 106
Prepaid expenses and other current assets 35 27 62
------- ------- ------- --------
4,517 539 - 5,056
------- ------- ------- --------
Property and equipment, net 1,822 184 2,006
Deposits 255 255
Goodwill, net of accumulated amortization of $624 5,633 (A) 5,633
Other assets 591 133 724
------- ------- ------- --------
$ 7,185 $ 856 $ 5,633 $ 13,674
======= ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit $ 460 $ 386 $ $ 846
Accounts payable 1,082 370 1,452
Accrued expenses:
Compensation 126 126
Vacation 317 317
Incentive 344 344
Other 409 436 845
Other current liabilities 309 216 (C) 525
Current portion of capital lease obligations 384 384
Deferred revenue 1,146 1,146
------- ------- ------- --------
4,577 1,192 216 5,985
------- ------- ------- --------
Capital lease obligations, net of current portion 409 409
Other liabilities 220 220
Commitments and contingencies
Stockholders' equity:
Preferred Stock 9 451 (451)(B) 9
Common Stock 129 1 24 (B) 154
Additional paid-in capital 38,656 1,444 6,969 (B) 47,069
Deferred compensation (938) (938)
Accumulated deficit (35,657) (2,482) (1,095)(B) (39,234)
Accumulated other comprehensive income 30 (30)(B) -
------- ------- ------- --------
2,199 (556) 5,417 7,060
------- ------- ------- --------
$ 7,185 $ 856 $ 5,633 $ 13,674
======= ======= ======= ========
The accompanying notes are an integral part of this unaudited pro forma financial information.
</TABLE>
<PAGE>
<TABLE>
INSCI-STATEMENTS.COM, CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2000
(in thousands, except per share amounts)
<CAPTION>
INSCI LOGNET PRO-FORMA
03/31/00 12/31/99 ADJUSTMENTS PRO FORMA
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue $ 11,020 $ 1,678 $ - $ 12,698
Cost of revenue 4,747 355 - 5,102
-------- ------- ------ --------
Gross margin 6,273 1,323 - 7,596
Expenses:
Sales and marketing 4,011 504 - 4,515
Product development 3,351 848 624 (D) 4,823
General and administrative 4,815 1,529 - 6,344
Non-recurring expenses:
Software capitalization write-down 2,758 - - 2,758
Acquisition-related expenses 712 - - 712
-------- ------- ------ --------
15,647 2,881 624 19,152
-------- ------- ------ --------
Loss from operations (9,374) (1,558) (624) (11,556)
Other income (expense) (92) (74) - (166)
-------- ------- ------ --------
Net loss (9,466) (1,632) (624) (11,722)
Preferred stock dividends (1,567) - - (1,567)
-------- ------- ------ --------
Net loss applicable to common shares $(11,033) $(1,632) $ (624) $(13,289)
======== ======= ====== ========
Net loss per common share - basic and diluted $ (1.11) $ (2.32) $ (1.07)
======== ======= ========
Pro forma weighted average common shares
outstanding - basic and diluted 9,967 702 1,798 (E) 12,467
======== ======= ====== ========
The accompanying notes are an integral part of this unaudited pro forma financial information.
</TABLE>
<PAGE>
INSCI-STATEMENTS.COM, CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
NOTE 1
The unaudited pro forma information gives effect to
insci-statements.com, corp.'s ("insci") acquisition of Lognet 2000, Inc.
("Lognet") through a merger and exchange of shares using the purchase method of
accounting. Under the terms of the acquisition agreement insci-statements.com,
corp. acquired all of the stock of Lognet in exchange for 2,500,000 restricted
shares of insci common stock. The unaudited pro forma combined financial
statements reflect this transaction as if it had taken place as of April 1,
1999.
The unaudited pro forma financial statements are presented for
illustrative purposes only and therefore are not necessarily indicative of the
operating results or financial position that might have been achieved had the
transaction occurred as of an earlier date, nor are they necessarily indicative
of operating results or financial position that may occur in the future.
These unaudited pro forma financial statements should be read in
conjunction with the historical consolidated financial statements and notes
thereto of insci, incorporated by reference herein and Lognet, included
elsewhere in this filing.
NOTE 2
The unaudited pro forma condensed combined statement of operations
reflects insci's audited consolidated statement of operations for the fiscal
year ended March 31, 2000 combined with Lognet's audited consolidated statement
of operations for the year ended December 31, 1999.
The unaudited pro forma condensed combined balance sheet reflects
insci's audited consolidated balance sheet at March 31, 2000 combined with
Lognet's audited consolidated balance sheet at December 31, 1999.
NOTE 3
The preliminary purchase price was allocated to the estimated fair
value of assets acquired and liabilities assumed. The preliminary purchase price
allocation is based on the Company's estimates of respective fair values. The
components of the purchase price and preliminary allocation are as follows:
2,500,000 restricted shares of insci common stock $8,438
Debt assumed 488
Acquisition costs 216
------
Total consideration & acquisition costs $9,142
======
Preliminary allocation of purchase price:
Current assets $3,319
Property & equipment 172
Other assets 140
Goodwill 6,257
Current liabilities (522)
Other liabilities (224)
------
Total $9,142
======
The unaudited pro forma financial information gives effect to the following pro
forma adjustments:
(A) Represents the remaining unamortized excess of consideration paid over the
fair market value of net assets (goodwill) that will be amortized over ten
years.
(B) Reflects the elimination of Lognet's historical equity accounts, the
issuance of 2,500,000 restricted shares of insci common stock in exchange
for 4,615,316 shares of Lognet common stock, the amortization of goodwill
as reflected in the unaudited pro forma statement of operations for the
fiscal year ended March 31, 2000, approximately $3.94 million in proceeds
received by Lognet for the issuance of Lognet shares, and an adjustment for
the results of Lognet's operations from January 1, 2000 through May 24,
2000.
(C) Represents an adjustment to accrue acquisition and transaction costs.
(D) Includes additional amortization related to goodwill in the amount of $624
for the fiscal year ended March 31,2000.
(E) Pro forma weighted average shares of insci includes all common shares
outstanding at March 31, 2000, giving effect to the issuance of 2,500,000
common shares to acquire Lognet and excluding the weighted average shares
of Lognet.
