<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 8-K/A
AMENDMENT NO. 2
TO
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): June 17, 1996
SHIVA CORPORATION
(Exact name of Registration as specified in its charter)
Massachusetts 0-24918 04-2889151
(State or other (Commission (IRS Employer
jurisdiction of File Identification
Incorporation) Number) No.)
28 Crosby Drive
Bedford, Massachusetts 01730
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 270-8300
Page 1 of 3 Pages
Exhibit Index appears on Page 4
<PAGE> 2
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
This item is amended to provide revised financial statements of
Airsoft, Incorporated ("Airsoft"), and as so amended this item shall
read in its entirety as follows:
"The following audited financial statements of Airsoft, together with
the report of Deloitte and Touche LLP, are included herein as Exhibit
99.1:
Statements of Operations for the years ended December 31, 1995, 1994,
and 1993.
Statements of Stockholders' Equity for the years ended December 31,
1995, 1994, and 1993.
Statements of Cash Flows for the years ended December 31, 1995, 1994,
and 1993.
(b) Pro Forma Financial Information
This item is amended to provide the following unaudited pro forma
consolidated financial statements, which are filed as Exhibit 99.3 to
this Current Report on Form 8-K and incorporated herein by this
reference.
Unaudited Pro Forma Combined Balance Sheet at March 30, 1996.
Unaudited Pro Forma Combined Statement of Operations for the years
ended December 31, 1995, December 31, 1994, and January 1, 1994 and the
three months ended March 30, 1996 and April 1, 1995.
(c) Exhibits
Exhibit No. Description
----------- -----------
23.1 Consent of Deloitte & Touche LLP
99.1 Balance Sheets as of December 31, 1995 and December
31, 1994.
Statements of Operations for the years ended December 31,
1995, 1994, and 1993.
Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994, and 1993.
Statements of Cash Flows for the years ended December 31,
1995, 1994, and 1993.
99.2 Unaudited interim Balance Sheet at March 30, 1996.
Unaudited interim Statement of Operations for the three months
ended March 31, 1996 and March 31, 1995.
Unaudited interim Statement of Cash Flows for the three months
ended March 31, 1996 and March 31, 1995.
99.3 Unaudited Pro Forma Combined Balance Sheet at March 30, 1996.
Unaudited Pro Forma Combined Statement of Operations for the
years ended December 30, 1995, December 31, 1994, and January
1, 1994, and the three months ended March 30, 1996 and April
1, 1995.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused the report to be signed on its behalf by the undersigned
authorized officer.
SHIVA CORPORATION
August 13, 1996 /s/ Cynthia M. Deysher
__________________________________
By: Cynthia M. Deysher
Senior Vice President, Finance and
Administration and Chief Financial
Officer
<PAGE> 4
Exhibit Index
Exhibit No. Description
----------- -----------
23.1 Consent of Deloitte & Touche LLP
99.1 Balance Sheets as of December 31, 1995 and December 31, 1994.
Statements of Operations for the years ended December 31,
1995, 1994, and 1993.
Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994, and 1993.
Statements of Cash Flows for the years ended December 31,
1995, 1994, and 1993.
99.2 Unaudited interim Balance Sheet at March 30,1996.
Unaudited interim Statement of Operations for the three
months ended March 31, 1996 and March 31, 1995.
Unaudited interim Statement of Cash Flows for the three
months ended March 31, 1996 and March 31, 1995.
99.3 Unaudited Pro Forma Combined Balance Sheet at March 30, 1996.
Unaudited Pro Forma Combined Statement of Operations for the
years ended December 30, 1995, December 31, 1994, and January
1, 1994, and the three months ended March 30, 1996 and April
1, 1995.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement
Nos. 33-86514, 333-04231 and 333-08561 on Form S-8 of Shiva Corporation of our
report dated March 28, 1996 (June 16, 1996 as to Note 8) relating to the
financial statements of AirSoft, Inc., appearing in Amendment No. 2 to the
Current Report in Form 8-K/A of Shiva Corporation dated August 13, 1996.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
August 9, 1996
<PAGE> 1
EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
AirSoft, Inc.:
We have audited the accompanying balance sheets of AirSoft, Inc. as of December
31, 1995 and 1994, and the related statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. 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 audits.
We conducted our audits 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
statements presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of AirSoft, Inc. as of December 31, 1995 and
1994, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche, LLP
March 28, 1996
(June 16, 1996 as to Note 8)
<PAGE> 2
AIRSOFT, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................................... $ 849,767 $ 2,638,010
Accounts receivable (no allowance for
doubtful accounts in 1995 and 1994) .............................. 2,308,883 31,189
Prepaid expenses and other current assets ........................... 14,713 22,030
----------- -----------
Total current assets ........................................... 3,173,363 2,691,229
Property and equipment, net .......................................... 111,169 80,595
Other assets ......................................................... -- 23,453
----------- -----------
Total ................................................................ $ 3,284,532 $ 2,795,277
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................... $ 80,774 $ 118,268
Accrued expenses ................................................... 232,067 43,045
Deferred revenue ................................................... 2,305,328 --
----------- -----------
Total current liabilities .................................... 2,618,169 161,313
----------- -----------
Stockholders' equity:
Convertible preferred stock - $.001 par value;
authorized, 7,000,000 shares; 6,739,514 shares
outstanding, liquidation value of $4,544,050 ...................... 4,486,127 4,486,127
Common stock - $.001 par value; authorized,
23,000,000 shares; 5,012,500 and 5,000,000
shares outstanding in 1995 and 1994, respectively ................ 486,667 481,667
Accumulated deficit ................................................ (4,306,431) (2,333,830)
----------- -----------
Total stockholders' equity ................................... 666,363 2,633,964
----------- -----------
Total ................................................................ $ 3,284,532 $ 2,795,277
=========== ===========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 3
AIRSOFT, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Product sales.......................... $ 859,736 $ 86,720 $ 3,361
---------- ---------- ---------
Costs and expenses:
Cost of sales....................... 35,327 15,632 -
Research and development............ 1,176,450 773,406 280,989
Sales and marketing................. 1,050,930 873,172 85,634
General and administrative.......... 635,922 301,569 129,681
---------- ---------- ---------
Total costs and expenses...... 2,898,629 1,963,779 496,304
---------- ---------- ---------
Operating loss......................... (2,038,893) (1,877,059) (492,943)
Other income........................... 66,292 36,172 -
---------- ---------- ---------
Net loss............................... ($1,972,601) ($1,840,887) ($492,943)
========== ========== =========
Net loss per common share.............. $ (0.39) $ (0.37) $ (0.12)
========== ========== =========
Shares used in computation............. 5,012,500 5,000,000 4,265,753
---------- ---------- ---------
</TABLE>
See notes to financial statements.
-3-
<PAGE> 4
AIRSOFT, INC.
- -------------------------------------------------------------------------------
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Convertible
Preferred Stock Common Stock
-------------------------- ---------------------------
Shares Amount Shares Amount
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Issuance of common stock at $.01 per share
for technology and notes................................. 3,166,667 $ 31,667
Issuance of common stock at $.15 to $.40
per share for cash and notes............................. 1,833,333 450,000
Notes receivable, exchanged for consulting services........
Net loss...................................................
---------- ----------- --------- ---------
BALANCES, December 31, 1993................................ -- -- 5,000,000 481,667
Issuance of Series A convertible
preferred stock at $.5286 per share for
cash, net of issuance costs of $23,033................... 2,885,000 $1,501,978
Issuance of Series B convertible
preferred stock at $.7822 per share for
cash, net of issuance costs of $30,853................... 3,854,514 2,984,149
Collection of notes receivable.............................
Net loss...................................................
---------- ----------- --------- ---------
BALANCES, December 31, 1994................................ 6,739,514 4,486,127 5,000,000 481,667
Issuance of common stock at $.40 per share for cash........ 12,500 5,000
Net loss...................................................
---------- ----------- --------- ---------
BALANCES, December 31, 1995................................ 6,739,514 $4,486,127 5,012,500 $486,667
========== =========== ========= =========
Notes
Receivable
from Accumulated
Stockholders Deficit Total
------------ ------------ -----
<S> <C> <C> <C>
Issuance of common stock at $.01 per share
for technology and notes................................. $ (7,619) $ 24,048
Issuance of common stock at $.15 to $.40
per share for cash and notes............................. (62,272) 125,000
Notes receivable, exchanged for consulting services........ 6,352 6,352
Net loss................................................... $ (492,943) (492,943)
--------- ----------- -----------
BALANCES, December 31, 1993................................ (63,539) (492,943) (74,815)
Issuance of Series A convertible
preferred stock at $.5286 per share for
cash, net of issuance costs of $23,033................... 1,501,978
Issuance of Series B convertible
preferred stock at $.7822 per share for
cash, net of issuance costs of $30,853................... 2,984,149
Collection of notes receivable............................. 63,539 63,539
Net loss................................................... (1,840,887) (1,840,887)
--------- ----------- -----------
BALANCES, December 31, 1994................................ -- (2,333,830) 2,633,964
Issuance of common stock at $.40 per share for cash........ 5,000
Net loss................................................... (1,972,601) (1,972,601)
--------- ----------- -----------
BALANCES, December 31, 1995................................ $ -- $(4,306,431) $ 666,363
========= =========== ===========
</TABLE>
See notes to financial statements.
- 4 -
<PAGE> 5
AIRSOFT, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
----------- ----------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................ $(1,972,601) $(1,840,887) $(492,943)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation................................. 51,290 21,533 5,233
Loss on disposal of property................. 28,785 -- --
Technology acquired through issuance of
common stock expensed..................... -- -- 24,048
Notes receivable exchanged for consulting
services.................................. -- -- 6,352
Changes in assets and liabilities:
Accounts receivable....................... (2,277,694) (31,189) --
Prepaid expenses and other assets......... 30,770 (32,015) (13,468)
Accounts payable.......................... (37,494) 66,160 52,108
Accrued expenses.......................... 189,022 (38,892) 81,937
Deferred revenue.......................... 2,305,328 -- --
----------- ------------ ---------
Net cash used in operating activities.. (1,682,594) (1,855,290) (336,733)
----------- ------------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES --
Purchases of property and equipment............. (110,649) (71,541) (35,820)
----------- ------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.......... 5,000 -- 387,728
Proceeds from issuance of preferred stock....... -- 4,486,127 --
Collection of notes receivable.................. -- 63,539 --
----------- ------------ ---------
Net cash provided by financing
activities.......................... 5,000 4,549,666 387,728
----------- ------------ ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... (1,788,243) 2,622,835 15,175
CASH AND CASH EQUIVALENTS:
Beginning of year............................... 2,638,010 15,175 --
----------- ----------- ---------
End of year..................................... $ 849,767 $ 2,638,010 $ 15,175
=========== =========== =========
NONCASH FINANCING ACTIVITIES --
Issuance of common stock for notes receivable... $ -- $ -- $ 69,891
=========== =========== =========
</TABLE>
See notes to financial statements.
-5-
<PAGE> 6
AIRSOFT, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. FORMATION AND BUSINESS AND NATURE OF OPERATIONS
The Company was incorporated on January 5, 1993. The Company develops,
markets, sells and supports remote access acceleration software
(Powerburst) for dial-in computer system networks. Powerburst,
accounting for the majority of the Company's revenue to date,
accelerates a wide range of applications, including e-mail products,
file-system-based databases, spreadsheets and word processors, over
remote node servers to help customers increase productivity and lower
telecommunication and remote node equipment costs. The principal market
for Powerburst has been North America.
2. SIGNIFICANT ACCOUNTING POLICIES
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect reported amounts of assets,
liabilities, revenues and expenses as of the dates and for the periods
presented. Actual results could differ from those estimates.
Concentrations of Credit Risk - Financial instruments which potentially
subject the Company to concentration of credit risk consist of cash and
cash equivalents and accounts receivable. Cash and cash equivalent
balances consist of deposits and money market funds held with local U.S.
commercial banks.
The Company performs credit evaluations of its customers and generally
does not require collateral on accounts receivable as the majority of
the Company's customers are large, well established U.S. companies. One
customer accounted for 97% and 61% of the accounts receivable balance
and product sales, respectively, at December 31, 1995. Additionally, one
other customer accounted for approximately 21% of product sales at
December 31, 1995. At December 31, 1994, another customer represented
55% and 20% of accounts receivable and product sales, respectively.
Property and Equipment - Property and equipment are stated at cost and
depreciated on a straight-line basis over the estimated useful lives of
the related assets, generally three years.
Revenue Recognition - The Company recognizes product sales upon shipment
provided that any remaining obligations are insignificant and collection
is probable. Insignificant vendor obligations are accrued and charged to
cost of product sales. Revenue from customer support contracts and from
contracts with customer support bundled with the software license is
recognized ratably over the contract period, which is typically one
year. Unearned amounts are recorded as deferred revenue.
Research and Development - Development costs incurred for the research
and development of new software products and enhancements to existing
software products are expensed as incurred until technological
feasibility is established. After technological feasibility is
established, any additional costs are capitalized. Such costs are stated
at the lower of cost or net realizable value. Since net realizable value
and economic life of the Company's products are not currently
determinable, all development costs have been expensed as incurred to
date.
-6-
<PAGE> 7
Income Taxes - Deferred taxes are accounted for using the asset and
liability approach. Deferred income taxes reflect the tax effects of
temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes, as well as tax credit carryforwards, net of
valuation allowance to reduce deferred tax assets to amounts that are
more likely than not to be realizable.
Fair Value of Financial Instruments - Statement of Financial Accounting
Standards (SFAS) No. 107, "Disclosures about Fair Value of Financial
Instruments," requires the disclosure of fair value information about
both on and off balance sheet financial instruments where it is
practicable to estimate the value. The Company believes that the
carrying amount reported in the balance sheet for financial instruments
at December 31, 1995 approximates fair value.
Recently Issued Accounting Pronouncements - The Company is required to
adopt SFAS No. 123, "Accounting for Stock-Based Compensation," in fiscal
1996. SFAS No. 123 establishes accounting and disclosure requirements
using a fair value method of accounting for stock-based employee
compensation plans. Under SFAS No. 123, the Company may either adopt the
new fair value based accounting method or continue the intrinsic value
based method and provide pro forma disclosures of net income as if the
accounting provisions requirements of SFAS No. 123 had been adopted. The
Company plans to adopt only the disclosure requirements of SFAS No. 123;
therefore, such adoption will have no effect on the Company's
consolidated operations or cash flows.
Reclassifications - Certain reclassifications have been made to the 1994
and 1993 amounts to conform with the 1995 presentation.
Net loss per common share is computed using the weighted average number
of common shares outstanding. Because there was a net loss in each year
presented, common stock equivalents (none in 1993, 3,684,022 in 1994 and
6,854,514 in 1995) were not included in the calculation of net loss per
share as their impact would be anti-dilutive.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Furniture and fixtures......................... $ 31,899 $ 13,289
Office equipment............................... 157,326 94,072
-------- --------
189,225 107,361
Accumulated depreciation....................... (78,056) (26,766)
-------- --------
Property and equipment, net.................... $111,169 $ 80,595
======== ========
</TABLE>
-7-
<PAGE> 8
4. STOCKHOLDERS' EQUITY
Convertible Preferred Stock
Convertible preferred stock consists of the following:
<TABLE>
<CAPTION>
Shares
---------------------------
Designated Outstanding Amount
---------- ----------- ----------
<S> <C> <C> <C>
Series A 2,885,000 2,885,000 $1,501,978
Series B 4,115,000 3,854,514 2,984,149
---------- ----------- ----------
Total 7,000,000 6,739,514 $4,486,127
========== =========== ==========
</TABLE>
Significant terms of the convertible preferred stock are as follows:
* Each share is convertible into one share of common stock. Such
shares will be converted automatically upon an underwritten
public offering of the Company's common stock meeting certain
criteria.
* Each share has the right to one vote for each share of common stock
into which such stock is convertible. Preferred shareholders are
entitled to elect one member of the Company's directors.
* In the event of liquidation, dissolution or winding up of the Company,
shareholders are entitled to receive $.5286 per share for Series A
and $.7822 per share for Series B (subject to adjustment for events
of dilution) plus all declared but unpaid dividends, prior to any
distribution to the common shareholders (no dividends have been
declared through December 31, 1995).
* Dividends may be declared at the discretion of the Board of Directors
and are noncumulative. Dividends of $.04 per share for Series A
and $.055 per share for Series B must be declared and paid prior
to any dividends on common stock.
Common Stock
The Company has the right to repurchase 782,807 shares of common stock,
at the original purchase price, previously sold to employees and directors
under stock purchase agreements. This right expires over a four-year period.
At December 31, 1995, the Company had reserved shares of common stock for
issuance as follows:
<TABLE>
<S> <C>
Conversion of outstanding preferred stock.............. 6,739,514
Issuance under stock option plan....................... 2,030,063
---------
Total.................................................. 8,769,577
=========
</TABLE>
-8-
<PAGE> 9
Stock Option Plan
The Company's stock option plan authorized the issuance of incentive stock
options (ISO) and nonstatutory stock options (NSO) to purchase up to 1,692,563
shares of common stock. ISO's may be granted at prices not less than the fair
market value at the date of grant (85% of fair market value for an NSO), or,
110% in the case of a shareholder owning ten percent or more of the Company's
outstanding stock. Options become exercisable in installments (generally
ratably over four years) and expire ten years from the date of grant.
Activity under this plan is as follows:
<TABLE>
<CAPTION>
Outstanding Stock Options
Outstanding
Stock Options
------------------------
Shares Number Price
Available of Shares Per Share
--------- --------- ----------
<S> <C> <C> <C>
Reserved for issuance .............................. 851,311
Granted ............................................ (120,000) 120,000 $.30
-------- ---------
Balances, December 31, 1993 ........................ 731,311 120,000 .30
Additional shares reserved for issuance ............ 841,252
Granted ............................................ (638,500) 638,500 .40
Canceled ........................................... 60,000 (60,000) .40
-------- ---------
Balances, December 31, 1994 ........................ 994,063 698,500 .30 - .40
-------- ---------
Granted ............................................ (845,872) 845,872 .40
Exercised .......................................... -- (12,500) .40
Canceled ........................................... 180,000 (180,000) .40
-------- ---------
Balances, December 31, 1995 ........................ 328,191 1,351,872 $.30 - .40
======== ========= ==========
</TABLE>
At December 31, 1995, options to purchase 176,073 shares of common stock were
exercisable.
Other Stock Options
During 1993, the Company granted to certain key employees options to purchase
650,000 shares of common stock at an exercise price of $.30 per share. Such
options vest over a period of four years. During 1994, 300,000 options were
canceled. Of the remaining 350,000 options outstanding 298,958 were vested at
December 31, 1995.
-9-
<PAGE> 10
5. OPERATING LEASES
The Company leases its facility under an operating lease which expires
in June 1996. The Company also leases various equipment under operating
leases with terms expiring through March 1998. Following is a schedule
of future minimum rental payments under noncancelable operating leases
at December 31, 1995.
<TABLE>
<CAPTION>
Years Ending
December 31,
------------
<S> <C>
1996...................................... $44,305
1997...................................... 1,880
1998...................................... 184
-------
Total......................................... $46,369
=======
</TABLE>
Rent expense under operating leases was $85,222, $75,942 and $22,192 for
the years ended December 31, 1995, 1994 and 1993, respectively.
6. INCOME TAXES
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes, and (b) operating losses and tax credit carryforwards.
The tax effects of significant items consisting of the Company's
deferred taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.... $ 1,482,000 $ 836,000
Capitalized research and
development expenses............. 88,000 42,000
Research and development credits.... 110,000 80,000
Other............................... 17,000 9,000
----------- ---------
$ 1,697,000 967,000
Valuation allowance................... (1,697,000) (967,000)
----------- ---------
Total................................. $ -- $ --
=========== =========
</TABLE>
The Company provided a valuation allowance in full against the net
deferred income tax assets at December 31, 1995 and 1994 due to
uncertainties regarding the Company's ability to generate sufficient
taxable income to utilize the deferred tax assets. The net increase in
the total valuation allowance for the years ended December 31, 1995 and
1994 was $730,000 and $797,000, respectively.
At December 31, 1995, the Company had federal net operating loss
carryforwards of approximately $4,075,000 which expire through 2010. In
addition, the Company had California net operating loss carryforwards
of approximately $1,600,000 which expire through 2000. The extent to
which the loss carryforwards can be used to offset future taxable income
may be limited in the event of an "ownership change" as defined by the
Internal Revenue Code.
-10-
<PAGE> 11
7. BENEFIT PLAN
Effective January 1, 1995, the Company adopted a 401(k) plan (the
"Plan") to provide retirement benefits for substantially all of its
employees. Each participant in the Plan may elect to contribute up to
15% of their annual compensation to the Plan, subject to statutory
limits. The Company, at its discretion, may make annual contributions to
the Plan. The Company has made no contributions to the Plan through
December 31, 1995.
8. SUBSEQUENT EVENT
On June 17, 1996, all shares of common and preferred stock of the
Company were acquired by Shiva Corporation (Shiva) in exchange for
691,587 shares of Shiva common stock. Subsequent to this date, the
Company is a wholly-owned subsidiary of Shiva.
* * * * *
-11-
<PAGE> 1
EXHIBIT 99.2
AIRSOFT INCORPORATED
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE RELATED DATA)
<TABLE>
<CAPTION>
MARCH 30,
1996
---------
(UNAUDITED)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,286
Accounts receivable, net 1,159
Inventories 12
-------
Total current assets 2,457
Property, plant and equipment, net 136
Other assets 6
-------
Total assets $ 2,599
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 113
Accrued expenses 169
Deferred revenue 1,677
-------
Total liabilities 1,959
Stockholders' equity:
Preferred stock, $.001 par value; 7,000,000 shares
authorized, 6,739,514 shares oustanding 4,486
Common stock, $.001 par value; 23,000,000 shares
authorized, 5,012,500 shares outstanding 487
Accumulated deficit (4,333)
-------
Total stockholders' equity 640
-------
Total liabilities and stockholders' equity $ 2,599
=======
</TABLE>
The accompanying notes are an integral part
of the financial statements.
<PAGE> 2
AIRSOFT INCORPORATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
MARCH 30, MARCH 31,
1996 1995
--------- - --------
<S> <C> <C>
Revenues $ 796 $ 34
Cost of revenues - 11
------ ------
Gross profit 796 23
------ ------
Operating expenses:
Research and development 363 298
Selling, general and administrative 470 530
------ ------
Total operating expenses 833 828
------ ------
Loss from operations (37) (805)
Interest income 10 30
------ ------
Net loss $ (27) $ (775)
====== ======
Net loss per share $(0.01) $(0.15)
====== ======
Shares used in computing net loss per share 5,013 5,007
====== ======
</TABLE>
The accompanying notes are an integral part
of the financial statements.
<PAGE> 3
AIRSOFT INCORPORATED
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 30, MARCH 31,
1996 1995
---------------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (27) $ (775)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 15 13
Loss on disposal of property - 29
Changes in assets and liabilities:
Accounts receivable 1,150 (18)
Inventories (12)
Prepaid expenses and other current assets 15 15
Accounts payable 32 (1)
Accrued expenses (63) 42
Deferred revenue (628) -
------ ------
Net cash provided by (used in) operating activities 482 (695)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (40) (52)
------ ------
Change in other assets (6) -
------ ------
Net cash used by investing activities (46) (52)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options and warrants - 5
------ ------
Net increase (decrease) in cash and cash equivalents 436 (742)
Cash and cash equivalents, beginning of period 850 2,638
------ ------
Cash and cash equivalents, end of period $1,286 $1,896
====== ======
</TABLE>
The accompanying notes are an integral part
of the financial statements
<PAGE> 4
AIRSOFT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited financial statements include the accounts of
AirSoft, Inc., and have been prepared by AirSoft, Inc. in accordance
with generally accepted accounting principles. In the opinion of
management, these unaudited financial statements contain all
adjustments, consisting only of those of a normal recurring nature,
necessary for a fair presentation of the Company's financial position,
results of operations and cash flows at the dates and for the periods
indicated. The results of operations for the three-months ended
March 30, 1996 are not necessarily indicative of the results expected
for the full fiscal year. While the Company believes that the
disclosures presented are adequate to make these financial statements
not misleading, these financial statements should be read in
conjunction with the audited financial statements of AirSoft, Inc.
included elsewhere in this Form 8-K/A.
2. NET LOSS PER SHARE:
Net loss per share is calculated based on the weighted average number
of common shares and common equivalent shares assumed outstanding
during the period. Because there was a net loss in each period
presented, common stock equivalents were not included in the
calculation of net loss per share as their impact would be
anti-dilutive.
3. CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents, and
those with maturities of greater than three months as short-term
investments. At March 30, 1996 all of the Company's cash was invested
in bank and money market deposit accounts.
4. SUBSEQUENT EVENT:
On June 17, 1996, all shares of common and preferred stock of the
Company were acquired by Shiva Corporation in exchange for 691,587
shares of Shiva Corporation common stock. Subsequent to this date, the
Company is a wholly-owned subsidiary of Shiva Corporation.
<PAGE> 1
EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements assume
a business combination between Shiva and AirSoft, Inc. accounted for as a
pooling of interests and are based on the respective historical financial
statements and the notes thereto. The unaudited pro forma combined balance
sheet gives effect to the AirSoft Acquisition as if it had occurred on March
30, 1996, combining the balance sheets of Shiva and AirSoft at March 30, 1996.
The unaudited pro forma combined statements of operations give effect to the
AirSoft Acquisition as if it had occurred at the beginning of each of the
periods presented.
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 AirSoft Acquisition had been
consummated at the beginning of the earliest period presented, nor is it
necessarily indicative of future operating results or financial position.
These unaudited pro forma combined financial statements are based on,
and should be read in conjunction with, Shiva's Annual Report on Form 10-K for
the year ended December 30, 1995 and quarterly report on Form 10-Q for the
quarter ended March 30, 1996, incorporated herein by reference, and the
financial statements of AirSoft, Inc. included elsewhere in this Form 8-K/A.
<PAGE> 2
UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
MARCH 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1)
------------------- ---------------------
SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED
-------- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 93,398 $ 1,286 $ - $ 94,684
Short-term investments 7,065 - - 7,065
Accounts receivable, net 26,524 1,159 (2) (1,120) 26,563
Inventories 11,591 12 11,603
Prepaid expenses and other current assets 2,264 - 2,264
-------- ------- ------- --------
Total current assets 140,842 2,457 (1,120) 142,179
Property, plant and equipment, net 15,124 136 - 15,260
Deferred income taxes 548 - - 548
Other assets 1,388 6 - 1,394
-------- ------- ------- --------
Total assets $157,902 $ 2,599 $(1,120) $159,381
======== ======= ======= ========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt and capital lease
obligations $ 588 $ - $ - $ 588
Accounts payable 10,403 113 - 10,516
Accrued compensation and benefits 4,366 57 - 4,423
Accrued expenses 8,100 112 - 8,212
Deferred revenue 3,609 1,677 (2) (1,120) 4,166
-------- ------- ------- --------
Total current liabilities 27,066 1,959 (1,120) 27,905
Long-term debt and capital lease obligations 244 - - 244
Other long-term obligations 391 - - 391
Deferred income taxes 232 - - 232
-------- ------- ------- --------
Total liabilities 27,933 1,959 (1,120) 28,772
-------- ------- ------- --------
Stockholders' equity:
Convertible preferred stock - 4,486 (3) (4,486) -
Common stock 277 5 (3) 2 284
Additional paid-in capital 131,922 482 (3) 4,484 136,888
Unrealized gains on investments 87 - - 87
Cumulative translation adjustment (605) - - (605)
Accumulated deficit (1,712) (4,333) - (6,045)
-------- ------- ------- --------
Total stockholders' equity 129,969 640 - 130,609
-------- ------- ------- --------
Total liabilities and stockholders' equity $157,902 $ 2,599 $(1,120) $159,381
======== ======= ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial
Statements.
<PAGE> 3
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 30, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1)
------------------- ----------------------
SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED
------- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues $42,513 $ 796 $ - $43,309
Cost of revenues 17,385 - - 17,385
------- ------ ----- -------
Gross profit 25,128 796 - 25,924
------- ------ ----- -------
Operating expenses:
Research and development 4,831 363 5,194
Selling, general and administrative 14,236 470 14,706
------- ------ ----- -------
Total operating expenses 19,067 833 - 19,900
------- ------ ----- -------
Income (loss) from operations 6,061 (37) - 6,024
Interest income 1,334 10 - 1,344
Interest expense (117) - - (117)
------- ------ ----- -------
Income (loss) before income taxes 7,278 (27) - 7,251
Income tax provision 2,912 - - 2,912
------- ------ ----- -------
Net income (loss) $ 4,366 $ (27) $ - $ 4,339
======= ====== ===== =======
Net income (loss) per share $ 0.14 $(0.01) (4) $ 0.14
======= ====== =======
Shares used in computing net income (loss)
per share 30,230 5,013 30,525
======= ====== =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 4
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED APRIL 1, 1995
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1)
------------------- ----------------------
SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED
------- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues $25,703 $ 34 $- $25,737
Cost of revenues 11,067 11 - 11,078
------- ------ -- -------
Gross profit 14,636 23 - 14,659
------- ------ -- -------
Operating expenses:
Research and development 2,522 298 2,820
Selling, general and administrative 9,221 530 9,751
------- ------ -- -------
Total operating expenses 11,743 828 - 12,571
------- ------ -- -------
Income (loss) from operations 2,893 (805) - 2,088
Interest income 476 30 - 506
Interest expense (247) - - (247)
------- ------ -- -------
Income (loss) before income taxes 3,122 (775) - 2,347
Income tax provision 965 - - 965
------- ------ -- -------
Net income (loss) $ 2,157 $ (775) $- $ 1,382
======= ====== == =======
Net income (loss) per share $ 0.08 $(0.15) (4) $ 0.05
======= ====== =======
Shares used in computing net income
(loss) per share 26,766 5,007 27,061
======= ====== =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 5
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1)
-------------------- -----------------------
SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED
-------- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues $117,721 $ 860 $- $118,581
Cost of revenues 49,151 35 - 49,186
-------- ------- -- --------
Gross profit 68,570 825 - 69,395
-------- ------- -- --------
Operating expenses:
Research and development 13,610 1,177 14,787
Selling, general and administrative 42,975 1,687 44,662
Merger expenses 13,986 - 13,986
-------- ------- -- --------
Total operating expenses 70,571 2,864 - 73,435
-------- ------- -- --------
Loss from operations (2,001) (2,039) - (4,040)
Interest income 2,213 66 - 2,279
Interest expense (705) - - (705)
-------- ------- -- --------
Loss before income taxes (493) (1,973) - (2,466)
Income tax provision 2,386 - - 2,386
-------- ------- -- --------
Net loss $ (2,879) $(1,973) $- $ (4,852)
======== ======= == ========
Net loss per share $ (0.11) $ (0.39) (4) $ (0.18)
======== ======= ========
Shares used in computing net loss
per share 26,645 5,013 26,940
======== ======= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 6
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1)
-------------------- ----------------------
SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED
------- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues $80,971 $ 87 $ - $81,058
Cost of revenues 34,784 16 - 34,800
------- ------- ----- -------
Gross profit 46,187 71 - 46,258
------- ------- ----- -------
Operating expenses:
Research and development 9,199 773 9,972
Selling, general and administrative 31,252 1,175 32,427
------- ------- ----- -------
Total operating expenses 40,451 1,948 - 42,399
------- ------- ----- -------
Income (loss) from operations 5,736 (1,877) - 3,859
Interest income 188 36 - 224
Interest expense (1,122) - - (1,122)
------- ------- ----- -------
Income (loss) before income taxes 4,802 (1,841) - 2,961
Income tax provision 921 - - 921
------- ------- ----- -------
Net income (loss) $ 3,881 $(1,841) $ - $ 2,040
======= ======= ===== =======
Net income (loss) per share $ 0.17 $ (0.37) (4) $ 0.09
======= ======= =======
Shares used in computing net income
(loss) per share 22,254 5,000 22,548
======= ======= =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 7
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED JANUARY 1, 1994
HISTORICAL PRO FORMA (1)
-------------------- ----------------------
SHIVA AIRSOFT NOTES ADJUSTMENTS COMBINED
------- ------- ----- ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues $61,259 $ 3 $ - $61,262
Cost of revenues 27,969 - - 27,969
------- ------ ----- -------
Gross profit 33,290 3 - 33,293
------- ------ ----- -------
Operating expenses:
Research and development 7,881 281 8,162
Selling, general and administrative 23,152 215 23,367
------- ------ ----- -------
Total operating expenses 31,033 496 - 31,529
------- ------ ----- -------
Income (loss) from operations 2,257 (493) - 1,764
Interest expense (1,048) - - (1,048)
------- ------ ----- -------
Income (loss) before income taxes 1,209 (493) - 716
Income tax provision 300 - - 300
------- ------ ----- -------
Net income (loss) $ 909 $ (493) $ - $ 416
======= ====== ===== =======
Net income (loss) per share $ 0.05 $(0.12) (4) $ 0.02
======= ====== =======
Shares used in computing net income
(loss) per share 16,538 4,266 16,789
======= ====== =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 8
Notes to Unaudited Pro Forma Combined Financial Statements
1. The unaudited pro forma combined financial statements of Shiva (the
"Company") and AirSoft give retroactive effect to the acquisition of
AirSoft which is being accounted for as a pooling of interests, and as a
result, such statements are presented as if the combining companies had
been combined for all periods presented.
The pro forma financial data combines the Company's financial data for the
three months ended March 30, 1996 and April 1, 1995, and the three years
ended December 30, 1995, December 31, 1994 and January 1, 1994 with
AirSoft's financial data for the three months ended March 31, 1996 and
1995, and the three fiscal years ended December 31, 1995, 1994 and 1993,
respectively.
Certain amounts have been reclassified to conform to the pro forma
presentation.
2. These pro forma adjustments reflect the elimination of accounts receivable
and deferred revenue related to a contract for which the receivable is not
contractually due, in order to conform AirSoft's accounting policies to
those of the Company.
3. These pro forma adjustments reflect the exchange of AirSoft's capital
stock for an aggregate of approximately 691,587 shares of Shiva Common
Stock to effect the AirSoft Acquisition.
4. Pro forma per share amounts are based on weighted average shares
outstanding during each period, assuming each then outstanding share of
AirSoft stock is exchanged for .058848195 shares of Common Stock.
