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EXHIBIT 99.2
STARBASE CORPORATION
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On April 13, 2000, the Company, through a wholly owned subsidiary, acquired all
of the outstanding shares of common stock of ObjectShare, Inc. ("ObjectShare"),
in exchange for 1,211,983 shares of the Company's common stock valued at
$8,850,000, transaction costs of $1,012,000 (payable in 100,000 shares of
StarBase common stock valued at $506,000 and cash of $506,000) and the
assumption of net liabilities of $954,000. The net liabilities assumed include a
write-down of $279,000 of property to its estimated fair market value and the
assumption of $253,000 of severance liabilities which were settled by the
issuance of 49,985 shares of common stock. The acquisition will be accounted for
as a purchase.
On March 8, 2000, the Company acquired all of the outstanding capital stock and
stock options of Premia Corporation ("Premia") in exchange for 1,869,159 shares
of StarBase common stock valued at $23,832,000 and cash transaction costs of
$250,000. The acquisition will be accounted for as a purchase.
The following unaudited pro forma balance sheet as of December 31, 1999 assumes
that the acquisitions of ObjectShare and Premia occurred on December 31, 1999.
The unaudited pro forma statement of operations for the nine months ended
December 31, 1999 assumes the acquisitions of ObjectShare and Premia had
occurred on April 1, 1999. The unaudited pro forma statement of operations for
the year ended March 31, 1999 assumes the acquisitions of ObjectShare and Premia
had occurred on April 1, 1998. The pro forma combined results of operations is
presented for information purposes only, is based on historical information, and
does not necessarily reflect the actual results that would have occurred nor is
it necessarily indicative of future results of the combined enterprise.
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STARBASE CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
Combined
StarBase ObjectShare Premia Pro Forma
December 31, December 31, December 31, Pro Forma December 31,
1999 1999 1999 Adjustments 1999
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 9,240 $ 780 $ 567 $ (1,060)(1) $ 9,527
Restricted cash 39 -- -- -- 39
Marketable securities 22 -- -- -- 22
Accounts receivable, net 4,273 500 900 -- 5,673
Prepaid expense and other assets 345 24 106 -- 475
-------- -------- ------ -------- --------
Total current assets 13,919 1,304 1,573 (1,060) 15,736
Investment securities available for sale -- -- 895 -- 895
Property and equipment, net 1,061 279 399 (279)(1) 1,460
Developed technology, net 823 -- -- 6,086 (1) 6,909
Goodwill and other intangibles -- -- -- 25,399 (1) 25,399
Note receivable from officer 98 -- -- -- 98
Long-term restricted cash 39 -- -- -- 39
Other non-current assets 368 59 14 -- 441
-------- -------- ------ -------- --------
Total assets $ 16,308 $ 1,642 $2,881 $ 30,146 $ 50,977
======== ======== ====== ======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 394 $ 778 $ 69 $ -- $ 1,241
Accrued compensation 712 122 460 -- 1,294
Other accrued liabilities 547 385 18 -- 950
Deferred revenue 2,332 -- 818 -- 3,150
Current portion of long-term obligations 132 49 -- -- 181
-------- -------- ------ -------- --------
Total current liabilities 4,117 1,334 1,365 -- 6,816
Long-term liabilities:
Long-term obligations, less current portion 73 74 -- -- 147
Long-term deferred revenue 638 -- -- -- 638
-------- -------- ------ -------- --------
Total long-term liabilities 711 74 -- -- 785
Commitments and contingencies
Stockholders' equity:
Preferred stock 1 -- -- -- 1
Common stock 410 12 100 86 (1) 608
Additional paid-in capital 69,274 50,239 -- (16,411)(1) 103,102
Retained earnings (deficit) (58,106) (50,017) 1,192 46,695 (1) (60,236)
Accumulated other comprehensive
income (loss) (99) -- 224 (224)(1) (99)
-------- -------- ------ -------- --------
Net stockholders' equity 11,480 234 1,516 30,146 43,376
-------- -------- ------ -------- --------
Total liabilities and stockholders' equity $ 16,308 $ 1,642 $2,881 $ 30,146 $ 50,977
======== ======== ====== ======== ========
</TABLE>
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STARBASE CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Nine months ended December 31, 1999
------------------------------------------------------------------------
Pro Forma Combined
StarBase ObjectShare Premia(2) Adjustments Pro Forma
-------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
License $ 9,491 $ 1,464 $3,458 $ -- $ 14,413
Service 1,848 4,897 900 -- 7,645
-------- ------- ------ ------- --------
Total revenues 11,339 6,361 4,358 -- 22,058
Cost of Revenues:
License 930 543 327 1,141(3) 2,941
Service 915 3,040 -- -- 3,955
-------- ------- ------ ------- --------
Total cost of revenues 1,845 3,583 327 1,141 6,896
-------- ------- ------ ------- --------
Gross margin 9,494 2,778 4,031 (1,141) 15,162
Operating Expenses:
Research and development 3,075 824 516 -- 4,415
Sales and marketing 5,790 2,794 1,700 -- 10,284
General and administrative 3,312 2,634 1,603 -- 7,549
Write-off of in-process research
and development -- -- -- 2,130(3) 2,130
Amortization of intangibles -- -- -- 3,812(3) 3,812
-------- ------- ------ ------- --------
Total operating expenses 12,177 6,252 3,819 5,942 28,190
-------- ------- ------ ------- --------
Operating income (loss) (2,683) (3,474) 212 (7,083) (13,028)
Interest and other income (loss) 88 3,229 59 -- 3,376
Equity in loss of investee (250) -- -- -- (250)
-------- ------- ------ ------- --------
Income (loss) before income taxes (2,845) (245) 271 (7,083) (9,902)
Provision for income taxes 1 -- -- -- 1
-------- ------- ------ ------- --------
Net income (loss) (2,846) (245) 271 (7,083) (9,903)
Non-cash dividend and accretion
of beneficial conversion feature 549 -- -- -- 549
-------- ------- ------ ------- --------
Net income (loss) applicable to
common stockholders $ (3,395) $ (245) $ 271 $(7,083) $(10,452)
======== ======= ====== ======= ========
Per share data:
Basic and diluted net income (loss)
per common share $ (0.11) $ (0.02) $ (0.31)
======== ======= =========
Basic and diluted weighted average
common shares outstanding 30,859 12,451 (9,505)(4) 33,805
======== ======= ======= =========
</TABLE>
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STARBASE CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Year ended March 31, 1999
---------------------------------------------------------------------------
Pro Forma Combined
StarBase ObjectShare Premia(2) Adjustments Pro Forma
-------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
License $ 5,964 $ 5,380 $ 4,014 $ -- $ 15,358
Service 868 10,426 884 -- 12,178
-------- -------- ------- ------- --------
Total revenues 6,832 15,806 4,898 -- 27,536
Cost of Revenues:
License 508 1,737 615 1,521(3) 4,381
Service -- 5,705 -- -- 5,705
-------- -------- ------- ------- --------
Total cost of revenues 508 7,442 615 1,521 10,086
-------- -------- ------- ------- --------
Gross margin 6,324 8,364 4,283 (1,521) 17,450
Operating Expenses:
Research and development 4,437 3,542 514 -- 8,493
Sales and marketing 7,638 6,719 1,885 -- 16,242
General and administrative 2,963 3,115 1,951 -- 8,029
Write-off of in-process research
and development -- -- -- 2,130(3) 2,130
Amortization of intangibles -- -- -- 5,083(3) 5,083
-------- -------- ------- ------- --------
Total operating expenses 15,038 13,376 4,350 7,213 39,977
-------- -------- ------- ------- --------
Operating loss (8,714) (5,012) (67) (8,734) (22,527)
Interest and other income (loss) 32 160 103 -- 295
-------- -------- ------- ------- --------
Income (loss) before income taxes (8,682) (4,852) 36 (8,734) (22,232)
Provision (benefit) for income taxes 1 (13) -- -- (12)
-------- -------- ------- ------- --------
Net income (loss) (8,683) (4,839) 36 (8,734) (20,220)
Non-cash dividend and accretion
of beneficial conversion feature 1,277 -- -- -- 1,277
-------- -------- ------- ------- --------
Net income (loss) applicable to
common stockholders $ (9,960) $ (4,839) $ 36 $(8,734) $(23,497)
======== ======== ======= ======= ========
Per share data:
Basic and diluted net income (loss)
per common share $ (0.49) $ (0.39) $ (1.00)
======== ======== ========
Basic and diluted weighted average
common shares outstanding 20,526 12,308 (9,362)(4) 23,472
======== ======== ======= ========
</TABLE>
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NOTES TO PRO FORMA FINANCIAL STATEMENTS
(1) To reflect the elimination of ObjectShare's and Premia's equity accounts
and the allocation of purchase price of $10,799,000 for the ObjectShare
acquisition and $24,332,000 for the Premia acquisition, $24,870,000 to
goodwill, $6,086,000 to developed technology, $161,000 to customer list,
$368,000 to assembled workforce, $2,130,000 to in-process research and
development, and $1,516,000 to Premia's net assets.
Also reflects the write-down of ObjectShare's property and equipment to an
estimated fair market value of zero, estimated cash transaction costs of
$1,060,000 and the issuance of 44,622 shares of StarBase common stock in
settlement of certain ObjectShare severance agreements valued at $415,000.
The allocation may change once the audit of ObjectShare's closing balance
sheets is completed and other valuation information is received.
(2) To reflect the statement of operations data of Premia as if their year-end
was March 31.
(3) To reflect the write-off of in-process research and development of
$2,130,000, the amortization of goodwill of $24,870,000 over five years on
a straight-line basis, the amortization of assembled workforce of $368,000
over five years on a straight-line basis, the amortization of customer
list of $161,000 over four and one-half years on a straight-line basis and
the amortization of developed technology of $6,086,000 over four years on
a straight-line basis.
(4) To adjust for the 1,097,094 and 1,869,159 shares of StarBase common stock
issued in the acquisitions of ObjectShare and Premia, respectively, in the
basic and diluted net loss per share calculation.
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