<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------
FORM 8-K/A
--------------
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report October 29, 1997
(Date of earliest event reported): August 22, 1997
HARBINGER CORPORATION
(Exact name of Company specified in its charter)
GEORGIA 0-26298 58-1817306
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
1055 LENOX PARK BOULEVARD, ATLANTA, GEORGIA 30319
(Address of principal executive offices) (Zip Code)
(404) 467-3000
(Company's telephone number, including area code)
This Form 8-K/A amends Registrant's previously filed Form 8-K dated August
22, 1997, which was filed on or about September 2, 1997.
This document includes the financial statements and pro forma financial
information which had been omitted from the previously filed document as
permitted by Item 7(a)(4) of Form 8-K.
================================================================================
Page 1 of 33
Exhibit Index on Page 4
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired. The following financial
statements for Acquion, Inc. are attached hereto as Exhibit 99.2:
Audited:
- Independent Auditors' Report
- Balance Sheet as of October 31, 1996
- Statement of Operations for the year ended October 31, 1996
- Statement of Shareholder's Deficit for the year ended October 31, 1996
- Statement of Cash Flows for the year ended October 31, 1996
- Notes to Financial Statements for the year ended October 31, 1996
Unaudited:
- Balance Sheet as of August 22, 1997
- Statements of Operations for the periods ended August 22, 1996 and
1997
- Statements of Cash Flows for the periods ended August 22, 1996 and
1997
(b) Pro Forma Financial Information. Attached hereto as Exhibit 99.3 is the
unaudited pro forma consolidated statement of operations for the year
ended December 31, 1996, reflecting the pro forma adjustments for all
acquisitions prior to Acquion, including the notes to the unaudited pro
forma consolidated statement of operations. Attached hereto as Exhibit
99.4 is the unaudited pro forma consolidated statements of operations
for the year ended December 31, 1996 and the nine months ended
September 30, 1997, reflecting the acquisition of Acquion, including
the notes to the unaudited pro forma consolidated statements of
operations.
(c) Exhibits.
*2.1 Stock Purchase Agreement by and among Harbinger Corporation, Fluor
Corporation and FD Engineers and Constructors, Inc., dated August 22,
1997.
*99.1 Text of Press Release of Harbinger Corporation, dated August 25,
1997.
99.2 Audited Financial Statements of Acquion, Inc. as of and for the year
ended October 31, 1996 and unaudited financial statements as of
August 22, 1997 and for the periods from November 1 through August
22, 1996 and 1997.
99.3 Unaudited pro forma consolidated statement of operations for the year
ended December 31, 1996, reflecting the pro forma adjustments for all
acquisitions prior to Acquion, Inc., including the notes to the
unaudited pro forma consolidated statement of operations.
99.4 Unaudited pro forma consolidated statements of operations for the
year ended December 31, 1996 and for the nine months ended September
30, 1997, reflecting the acquisition of Acquion, Inc., including the
notes to the unaudited pro forma consolidated statements of
operations.
- -----------------
* Previously filed
Page 2 of 33
<PAGE> 3
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.
HARBINGER CORPORATION
/s/ Joel G. Katz
-------------------------------
JOEL G. KATZ
Chief Financial Officer
(Principal Financial Officer;
Principal Accounting Officer)
Date: October 29, 1997
Page 3 of 33
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page No.
- ------------- --------
<S> <C>
*2.1 Stock Purchase Agreement by and among
Harbinger Corporation, Fluor Corporation and
FD Engineers and Constructors, Inc., dated
August 22, 1997.
*99.1 Text of Press Release of Harbinger
Corporation, dated August 25, 1997.
99.2 Audited Financial Statements of Acquion, 5
Inc. as of and for the year ended October
31, 1996 and unaudited financial statements
as of August 22, 1997 and for the periods
from November 1 through August 22, 1996 and
1997.
99.3 Unaudited pro forma consolidated statement 21
of operations for the year ended December
31, 1996, reflecting the pro forma
adjustments for all acquisitions prior to
Acquion, including the notes to the
unaudited pro forma consolidated statement
of operations.
99.4 Unaudited pro forma consolidated statements 28
of operations for the year ended December
31, 1996 and for the nine months ended
September 30, 1997, reflecting the
acquisition of Acquion, including the notes
to the unaudited pro forma consolidated
statements of operations.
</TABLE>
- ----------------
* Previously filed
Page 4 of 33
<PAGE> 1
EXHIBIT 99.2
Page 5 of 33
<PAGE> 2
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ACQUION, INC. PAGE
----
<S> <C>
Audited:
Independent Auditors' Report........................................................ F-2
Balance Sheet as of October 31, 1996................................................ F-3
Statement of Operations for the year ended October 31, 1996......................... F-4
Statement of Shareholder's Deficit for the year ended October 31, 1996.............. F-5
Statement of Cash Flows for the year ended October 31, 1996......................... F-6
Notes to Financial Statements for the year ended October 31, 1996................... F-7
Unaudited:
Balance Sheet as of August 22, 1997................................................. F-12
Statements of Operations for the periods from November 1 through August 22,
1996 and 1997.................................................................. F-13
Statements of Cash Flows for the periods from November 1 through August 22,
1996 and 1997.................................................................. F-14
Notes to Unaudited Financial Statements............................................. F-15
HARBINGER CORPORATION AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1996, reflecting the pro forma adjustments for all acquisitions
prior to Acquion............................................................... F-17
Notes to Unaudited Pro Forma Consolidated Statements of Operations.................. F-19
Unaudited Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997, reflecting
the acquisition of Acquion..................................................... F-24
Notes to Unaudited Pro Forma Consolidated Statements of Operations.................. F-27
</TABLE>
F-1
Page 6 of 33
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Acquion, Inc.:
We have audited the accompanying balance sheet of Acquion, Inc. (a wholly owned
subsidiary of FD Engineers & Constructors, Inc.) as of October 31, 1996 and the
related statements of operations, shareholder's deficit, 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 audit provides 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 Acquion, Inc. as of October 31,
1996 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
Atlanta, Georgia
October 1, 1997
F-2
Page 7 of 33
<PAGE> 4
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
BALANCE SHEET
OCTOBER 31, 1996
ASSETS
<TABLE>
<S> <C>
Accounts receivable, net of allowance for doubtful
accounts of $36,000 $ 123,000
Prepaid expense 129,000
Other current assets 11,000
----------
Total current assets 263,000
Property and equipment, less accumulated
depreciation and amortization 354,000
----------
$ 617,000
==========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Accounts payable $ 315,000
Accrued expenses 196,000
Deferred revenue 48,000
Accrued contract costs and losses 1,093,000
----------
Total current liabilities 1,652,000
Shareholder's deficit:
Common stock, no par value; 10,000 shares
authorized, 1,000 shares issued and outstanding -
Additional paid-in capital 8,124,000
Accumulated deficit (9,159,000)
----------
Total shareholder's deficit (1,035,000)
Commitments and contingencies
----------
$ 617,000
==========
</TABLE>
See accompanying notes to financial statements.
F-3
Page 8 of 33
<PAGE> 5
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
Revenues:
Services $ 41,000
Software 82,000
------------
Total revenues 123,000
------------
Cost of revenues:
Services 1,074,000
Software 10,000
------------
Total cost of revenues 1,084,000
------------
Gross margin (961,000)
------------
Operating expenses:
Selling and marketing 1,467,000
General and administrative 1,297,000
Depreciation and amortization 98,000
Product development 1,251,000
------------
Total operating expenses 4,113,000
------------
Operating loss (5,074,000)
Income taxes -
------------
Net loss $ (5,074,000)
============
</TABLE>
See accompanying notes to financial statements.
F-4
Page 9 of 33
<PAGE> 6
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
STATEMENT OF SHAREHOLDER'S DEFICIT
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
Common stock Total
------------------- Additional Accumulated shareholder's
Shares Amount paid-in capital deficit deficit
------ ------ --------------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at October 31, 1995 1,000 $ - 3,268,000 (4,085,000) (817,000)
Capital contribution by Parent - - 4,856,000 - 4,856,000
Net loss - - - (5,074,000) (5,074,000)
----- ------ ---------- --------- ---------
Balance at October 31, 1996 1,000 $ - 8,124,000 (9,159,000) (1,035,000)
===== ====== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
Page 10 of 33
<PAGE> 7
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $(5,074,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 98,000
Provision for doubtful accounts 47,000
(Increase) decrease in:
Accounts receivable (170,000)
Prepaid expense 71,000
Other current assets 4,000
Increase (decrease) in:
Accounts payable 270,000
Accrued expenses 94,000
Deferred revenue 48,000
Accrued contract costs and losses (79,000)
-----------
Net cash used in operating activities (4,691,000)
-----------
Cash flows from investing activities - purchases of property
and equipment (165,000)
-----------
Cash flows from financing activities - capital contribution by Parent 4,856,000
-----------
Net increase in cash -
Cash at beginning of year -
-----------
Cash at end of year $ -
===========
</TABLE>
See accompanying notes to financial statements.
F-6
Page 11 of 33
<PAGE> 8
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1996
(1) Description of Business and Summary of Significant Accounting Policies
(a) Business and Basis of Presentation
Acquion, Inc. (the "Company") was organized as a wholly owned
subsidiary of FD Engineers & Constructors, Inc. (the "Parent") in
August 1994 and began operations in November 1994. The Company
develops, markets, and supports software products to enable
businesses to engage in electronic commerce using the Internet and
value-added networks (VAN).
The Company's operations have historically been funded by the Parent.
The funding of Company expenses by the Parent are recorded in an
intercompany payable account to the Parent. Cash receipts of the
Company are transferred to the Parent and are recorded as a reduction
of the intercompany payable account. At the end of each reporting
period, the net intercompany payable balance is treated as a capital
contribution by the Parent and recorded as additional paid-in
capital. Because of operating losses incurred since inception and
expected to continue, the Company's ability to continue operations is
dependent upon continued funding by the Parent.
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities as of the date of
the financial statements and revenues and expenses for the reporting
period to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates.
(b) Revenue and Cost Recognition
The Company's revenues are derived primarily from fixed-price
customer contracts which generally include licensing computer
software to customers and providing consulting services which provide
customers with a tailored software solution. Revenues from
fixed-price contracts are recognized on the percentage-of-completion
method, measured by the percentage of contract costs incurred to date
to estimated total contract costs for each contract. Contract costs
include all direct and indirect costs. Provisions for estimated
losses on uncompleted contracts are made in the period in which such
losses are determined. Revenues derived from contracts to provide
services on a time-and-materials basis are recognized as the related
services are performed.
F-7
Page 12 of 33
<PAGE> 9
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
NOTES TO FINANCIAL STATEMENTS
(c) Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation and amortization are
provided using the straight-line method over the estimated useful
lives of the assets as follows:
Furniture and fixtures 10 years
Purchased computer software 7 years
Computer and office equipment 3-7 years
(d) Product and Software Development Costs
Product development costs consist principally of compensation and
benefits paid to the Company's employees or contractors. All product
development costs not qualifying for capitalization as software
development costs are expensed as incurred.
The Company's policy is to expense all software development costs
associated with establishing technological feasibility. Historically,
development costs incurred after establishing technological
feasibility but before customer release have been insignificant.
(e) Income Taxes
The Company accounts for income taxes using the asset and liability
method of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109). Under SFAS No. 109,
deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred income tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred income tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date.
(f) Fair Value of Financial Instruments
The Company uses financial instruments in the normal course of its
business. The carrying values of accounts receivable, prepaid
expense, other current assets, accounts payable, accrued expenses,
deferred revenues, and accrued contract losses approximate fair value
due to the short-term maturities of these assets and liabilities.
F-8
Page 13 of 33
<PAGE> 10
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
NOTES TO FINANCIAL STATEMENTS
(2) Property and Equipment
Property and equipment as of October 31, 1996 consist of the following:
<TABLE>
<S> <C>
Computer and office equipment $365,000
Purchased computer software 140,000
Furniture and fixtures 22,000
--------
527,000
Less accumulated depreciation and amortization 173,000
--------
$354,000
========
(3) Accrued Expenses
Accrued expenses as of October 31, 1996 consist of the following:
Accrued vacation costs $128,000
Accrued travel costs 68,000
--------
$196,000
========
</TABLE>
(4) Shareholder's Deficit
The Company's initial capitalization was provided by FD Engineers &
Constructors, Inc. in August 1994 through the issuance of 1,000 shares of
the Company's common stock in exchange for $1,000.
The Company received $4,856,000 in capital contributions from the Parent
to fund operations for the fiscal year ended October 31, 1996.
(5) Income Taxes
The Company is included in the consolidated federal income tax return
filed by the Parent; however, the Company has provided for income taxes
as if it were filing a separate income tax return.
The Company has not recorded any income tax expense (benefit) during the
year ended October 31, 1996 because of operating losses incurred since
inception. As a result, the effective income tax rate is different from
amounts computed by applying the statutory U.S. Federal income tax rate
of 34% to loss before income taxes because of the Company's provision for
a valuation allowance on all deferred income tax assets.
F-9
Page 14 of 33
<PAGE> 11
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
NOTES TO FINANCIAL STATEMENTS
The income tax effects of the temporary differences that give rise to the
Company's deferred income tax assets and liabilities as of October 31,
1996 are as follows:
<TABLE>
<CAPTION>
Deferred income tax assets:
<S> <C>
Net operating loss carryforwards $ 2,873,000
Accrued contract costs and losses 475,000
Accrued expenses 75,000
Other 32,000
-----------
Gross deferred income tax assets 3,455,000
Valuation allowance 3,455,000
-----------
Deferred income tax assets, net of
valuation allowance $ -
===========
</TABLE>
The increase in the valuation allowance for the year ended October 31,
1996 was $1,916,000. Under SFAS No. 109, deferred income tax assets and
liabilities are recognized for differences between the financial
statement carrying amounts and the tax bases of assets and liabilities
which will result in future deductible or taxable amounts and for net
operating loss and tax credit carryforwards. A valuation allowance is
then established to reduce the deferred income tax assets to the level at
which it is "more likely than not" that the tax benefits will be
realized. Realization of tax benefits of deductible temporary differences
and operating loss and tax credit carryforwards depends on having
sufficient taxable income within the carryback and carryforward periods.
Sources of taxable income that may allow for the realization of tax
benefits include (1) taxable income in the current year or prior years
that is available through carryback, (2) future taxable income that will
result from the reversal of existing taxable temporary differences, and
(3) future taxable income generated by future operations. Because of
operating losses incurred since inception, the Company has provided a
valuation allowance against all deferred income tax assets.
At October 31, 1996, the Company has net operating loss carryforwards of
approximately $7,560,000. The net operating loss carryforwards will
expire at various times through 2011.
(6) Provision for Contract Losses
The Company entered into a software development contract with a customer
in August 1995 for which estimated costs to complete are greater than
total contract revenues. The Company has accrued an estimated loss of
$1,093,000 relating to this contract at October 31, 1996.
F-10
Page 15 of 33
<PAGE> 12
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
NOTES TO FINANCIAL STATEMENTS
(7) Related Party Transactions
The Company is allocated charges from the Parent for the Company's
estimated share of rent, computer leasing, marketing, and other shared
services. These charges were approximately $317,000 for the year ended
October 31, 1996 and are included in selling and marketing, general and
administrative, and product development costs in the accompanying
statement of operations. The Company believes that the charges for these
items are comparable to those that could have been obtained in
transactions with unaffiliated parties.
(8) Segment Information and Major Customer
The Company operates in a single industry segment: the development,
marketing, and supporting of software products and the providing of
consulting services to enable businesses to engage in Electronic
Commerce.
Revenues from one customer represented approximately 18% of the Company's
revenues for the year ended October 31, 1996. No other single customer
comprised 10% or greater of the Company's revenues in 1996.
(9) Commitments and Contingencies
(a) Contractual Commitments
In the normal course of its business, the Company has entered into
service contracts with its customers. These contracts contain
commitments, including, but not limited to, minimum standards and
time frames against which the Company's performance is measured. In
the event the Company does not meet its contractual commitments with
its customers, the Company may incur penalties and/or certain
customers may have the right to terminate their contracts with the
Company. The Company does not believe it will fail to meet its
contractual commitments to an extent that will result in a material
adverse effect on its financial condition or results of operations.
(b) Contingencies
The Company is subject to lawsuits, claims, and other complaints
arising out of the ordinary conduct of its business. In the opinion
of management, based in part upon the advice of legal counsel, all
matters are adequately covered by insurance or, if not covered, are
without merit or are of such kind or involve such amounts as would
not have a material effect on the financial condition or results of
operations of the Company if disposed of unfavorably.
(10) Subsequent Event (Unaudited)
On August 22, 1997, Harbinger Corporation (Harbinger) acquired all of the
common stock of the Company for $12.0 million in cash and the assumption
of $1.6 million in liabilities including transaction costs.
F-11
Page 16 of 33
<PAGE> 13
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
UNAUDITED BALANCE SHEET
AUGUST 22, 1997
ASSETS
<TABLE>
<CAPTION>
AUGUST 22, 1997
---------------
<S> <C>
Accounts receivable, net of allowance for doubtful accounts of
$0 $ 503,000
Property and equipment, less accumulated depreciation and
amortization 342,000
------------
$ 845,000
============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Accounts payable $ 111,000
Accrued expenses 335,000
Deferred revenue 323,000
Accrued contract costs and losses 305,000
------------
Total current liabilities 1,074,000
------------
Shareholder's deficit:
Common stock, no par value; 10,000 shares authorized, 1,000
shares issued and outstanding -
Additional paid-in capital 14,395,000
Accumulated deficit (14,625,000)
------------
Total shareholder's deficit (229,000)
------------
Commitments and contingencies
$ 845,000
============
</TABLE>
See accompanying notes to unaudited financial statements.
F-12
Page 17 of 33
<PAGE> 14
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
UNAUDITED STATEMENTS OF OPERATIONS
PERIODS FROM NOVEMBER 1 THROUGH AUGUST 22, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Revenues:
Services .............................. $ 34,000 $ 575,000
Software - 30,000
----------- -----------
Total revenues.................... 34,000 605,000
----------- -----------
Cost of revenues:
Services .............................. 895,000 1,810,000
Software - -
----------- -----------
Total cost of revenues............ 895,000 1,810,000
----------- -----------
Gross margin.................. (861,000) (1,205,000)
----------- -----------
Operating expenses:
Selling and marketing.................. 1,262,000 1,921,000
General and administrative............. 1,042,000 811,000
Depreciation and amortization.......... 82,000 98,000
Product development.................... 1,043,000 1,431,000
----------- -----------
Total operating expenses.......... 3,428,000 4,261,000
----------- -----------
Operating loss................ (4,288,000) (5,466,000)
Income taxes .............................. - -
----------- -----------
Net loss...................... $(4,288,000) $(5,466,000)
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
F-13
Page 18 of 33
<PAGE> 15
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
UNAUDITED STATEMENTS OF CASH FLOWS
PERIODS FROM NOVEMBER 1 THROUGH AUGUST 22, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(4,288,000) $(5,466,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................... 82,000 98,000
(Increase) decrease in:
Accounts receivable............................. (82,000) (380,000)
Prepaid expense................................. 47,000 129,000
Other current assets............................ 3,000 11,000
Increase (decrease) in:
Accounts payable................................ 180,000 (204,000)
Accrued expenses................................ 63,000 139,000
Deferred revenue................................ 32,000 275,000
Accrued contract costs and losses............... (53,000) (788,000)
----------- -----------
Net cash used in operating activities........ (4,016,000) (6,186,000)
----------- -----------
Cash flows from investing activities--purchases of property
and equipment (127,000) (85,000)
----------- -----------
Cash flows from financing activities--capital contribution
by Parent ................................................ 4,143,000 6,271,000
----------- -----------
Net increase in cash................................ - -
Cash at beginning of period................................... - -
----------- -----------
Cash at end of period......................................... $ - $ -
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
F-14
Page 19 of 33
<PAGE> 16
ACQUION, INC.
(A WHOLLY OWNED SUBSIDIARY OF FD ENGINEERS & CONSTRUCTORS, INC.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1) Basis of Presentation
These unaudited financial statements include the financial position as
of August 22, 1997 and results of operations of Acquion, Inc. for the
periods from November 1 through August 22, 1996 and 1997. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for the fair presentation of the
unaudited financial statements of Acquion, Inc. as of August 22, 1997
and for the periods from November 1 through August 22, 1996 and 1997
have been included.
F-15
Page 20 of 33
<PAGE> 1
EXHIBIT 99.3
F-16
Page 21 of 33
<PAGE> 2
HARBINGER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
The following unaudited pro forma consolidated statement of operations
of Harbinger Corporation (the "Company") set forth below for the year ended
December 31, 1996 give effect to the Company's acquisitions of (i) Harbinger Net
Services, LLC ("HNS") effective January 1, 1997, (ii) Harbinger N.V. ("HNV")
effective March 31, 1996, (iii) INOVIS GmbH & Co. ("INOVIS") effective March 31,
1996, and (iv) NTEX Holding B.V. ("NTEX") effective March 31, 1996, which have
all been accounted for using the purchase method of accounting.
The unaudited pro forma consolidated statement of operations should be
read in conjunction with the historical financial statements and notes thereto
of the Company, HNS, HNV, INOVIS and NTEX. The unaudited pro forma consolidated
statement of operations does not necessarily represent results which would have
occurred if the transactions had taken place on the dates indicated nor are they
necessarily indicative of the results of future operations.
F-17
Page 22 of 33
<PAGE> 3
HARBINGER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
Adjusted
Historical Pro Forma Company
Company HNS HNV NTEX INOVIS Adjustments Subtotal (*)
---------- ------- ------- ------- ------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Services $ 37,822 $ 117 $ 13 $ 607 $ 609 $ 39,168
Software 21,441 2,036 - 32 131 (1,199)(2) 22,441
-------- ------- ------- ------- ------- ---------
Total revenues 59,263 2,153 13 639 740 61,609
-------- ------- ------- ------- ------- ---------
Direct costs:
Services 13,625 644 23 184 227 14,703
Software 2,912 1,617 - 2 9 (1,199)(2) 3,341
-------- ------- ------- ------- ------- ---------
Total direct costs 16,537 2,261 23 186 236 18,044
-------- ------- ------- ------- ------- ---------
Gross margin 42,726 (108) (10) 453 504 43,565
-------- ------- ------- ------- ------- ---------
Operating costs:
Selling and marketing 15,057 926 12 121 178 16,294
General and administrative 12,664 1,614 354 289 147 15,068
Depreciation and amortization 2,966 621 7 10 45 172 (3) 3,981
8 (5)
78 (7)
74 (9)
Product development 9,000 4,303 6 109 109 13,527
Charge for purchased in-process
product development and
acquisition-related charges 8,775 - - - - (8,149)(11) 626
-------- ------- ------- ------- ------- ---------
Total operating costs 48,462 7,464 379 529 479 49,496
-------- ------- ------- ------- ------- ---------
Operating income (loss) (5,736) (7,572) (389) (76) 25 (5,931)
Interest expense (income), net (7) (130) (8) 25 8 (186)(1) 50
245 (4)
64 (8)
39 (10)
Foreign currency exchange loss - - 18 - - 18
Equity in loss of joint ventures 7,192 - - - - (7,004)(2) 119
(69)(6)
-------- ------- ------- ------- ------- ---------
Loss before income tax expense (12,921) (7,442) (399) (101) 17 (6,118)
Income tax expense 146 - - - 22 168
-------- ------- ------- ------- ------- ---------
Net loss (13,067) (7,442) (399) (101) (5) (6,286)
Preferred stock dividends (28) - - - - (28)
======== ======= ======= ======= ======= =========
Net loss applicable to common
shareholders $(13,095) $(7,442) $ (399) $ (101) $ (5) $ (6,314)
======== ======= ======= ======= ======= =========
Net loss per common share $ (0.71) (0.34)
======== =========
Weighted average common shares
outstanding 18,465 242 (12) 18,707
======== =========
</TABLE>
* Adjusted Company subtotal is prior to the purchase of Acquion, Inc. See page
F-24 for unaudited pro forma consolidated statement of operations reflecting the
purchase of Acquion, Inc.
See Notes to Unaudited Pro Forma Consolidated Statements of Operations.
F-18
Page 23 of 33
<PAGE> 4
HARBINGER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
On January 1, 1997, because of the expiration of restrictions on the
Harbinger Corporation's (the "Company") ability to appoint a majority of the
Harbinger Net Services, LLC ("HNS") Board of Managers, the Company exercised its
rights as majority shareholder of HNS by appointing a majority of the members of
the HNS Board of Managers. As a result, effective January 1, 1997, the Company
began accounting for its investment in HNS by consolidating the statements of
financial position and results of operations of HNS with those of the Company.
Also on January 1, 1997, the Company entered into a debenture purchase
agreement with the holder of the Debenture whereby the Company acquired the
Debenture in exchange for $1.5 million in cash and 242,288 shares of the
Company's common stock valued at $4.2 million. The Company recorded an
extraordinary loss on debt extinguishment of $2.4 million in the first quarter
of 1997 related to this transaction which represents the amount paid in excess
of the face amount of the Debenture of $3.0 million plus accrued interest of
$280,000.
Immediately after this transaction, the Company acquired the minority
interest in HNS, consisting of 585,335 shares of HNS common stock and stock
options to acquire 564,727 shares of HNS common stock at exercise prices ranging
from $0.70 per share to $1.65 per share, by exchanging cash of $1.6 million and
stock options to acquire 355,317 shares of the Company's common stock at
exercise prices ranging from $15.22 per share to $16.53 per share which were
valued by the Company at $2.2 million. Including transaction and other costs of
$350,000, the Company paid $4.1 million for the acquisition of the HNS minority
interest which was accounted for using the purchase method of accounting with
$2.7 million of the purchase price allocated to in-process product development
and charged to the consolidated statement of operations on January 1, 1997, and
$1.4 million allocated to goodwill and purchased technology. The Company
incurred integration costs related to these transactions of $1.6 million during
the first quarter of 1997.
The Company recorded a net deferred income tax asset of approximately
$840,000 as a result of these transactions and provided a valuation allowance
against such net deferred tax asset to reduce it to zero.
Effective March 31, 1996, the Company acquired all of the common stock
of Harbinger N.V. ("HNV"), a Dutch corporation based in Hoofddorp, The
Netherlands for the issuance of 58,065 shares of the Company's common stock at a
price of $11.50 per share. The Company recorded the acquisition, which was
completed on April 20, 1996, using the purchase method of accounting with
$300,000 of the purchase price allocated to in-process product development and
charged to the consolidated statement of operations on March 31, 1996, $518,000
allocated to tangible assets and $447,000 allocated to goodwill and other
intangibles.
Effective March 31, 1996, the Company acquired all of the common stock
of NTEX Holding, B.V. ("NTEX"), a Dutch corporation based in Rotterdam, The
Netherlands for $3,195,000 in cash, the issuance of 107,728 shares of the
Company's common stock at a price of $11.12 per share and warrants to purchase
up to 18,750 shares of the Company's common stock. The Company recorded the
acquisition, which was completed on April 4, 1996, using the purchase method of
accounting with $4,449,000 of the purchase price allocated to in-process product
development and charged to the consolidated statement of operations on March 31,
1996, $204,000 allocated to purchased technology, $621,000 allocated to tangible
assets and $2.8 million allocated to goodwill.
Effective March 31, 1996, the Company acquired all of the shares of
INOVIS GmbH & Co. ("INOVIS"), a German partnership based in Karlsruhe, Germany
for $1,409,000 in cash, $557,000 note payable, the issuance of 210,276 shares of
the Company's common stock at a price of $11.50 per share and warrants to
purchase up to 30,000 shares of the Company's common stock. The Company recorded
the acquisition, which was completed on April 19, 1996, using the purchase
method of accounting with $3,400,000 of the purchase price allocated to
in-process product development and charged to the consolidated statement of
operations on March 31, 1996, $600,000 allocated to purchased technology,
$1,077,000 allocated to tangible assets and $1.1 million allocated to goodwill.
F-19
Page 24 of 33
<PAGE> 5
HARBINGER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
The accompanying unaudited pro forma consolidated statement of
operations illustrates the estimated effects of the transactions described above
as if they had occurred as of January 1, 1996.
The historical statements of operations of the Company and HNS are
derived from the audited financial statements of the Company and HNS for the
year ended December 31, 1996. The historical statements of operations of HNV,
INOVIS, and NTEX for the three months ended March 31, 1996 are estimated based
on the audited statements of HNV, INOVIS, and NTEX for the year ended December
31, 1995. The operating results of HNV, INOVIS, and NTEX for the period from
April 1, 1996 to December 31, 1996 are included in the historical results of the
Company.
The unaudited pro forma consolidated statement of operations does not
purport to represent what the results of operations of the Company would
actually have been if the transactions had occurred on January 1, 1996 or to
project the results of operations of the Company for any future date or period.
The unaudited pro forma consolidated statement of operations should be read
together with the audited financial statements and notes of the Company, HNS,
HNV, NTEX, and INOVIS.
HNS
1) Reflects adjustment to record the elimination of the interest
expense recorded with respect to the HNS Debenture.
2) Reflects the elimination of intercompany revenues and expenses
between HNS and the Company and the elimination of the
Company's equity in losses of HNS.
3) Reflects an increase in amortization expense as a result of
the acquisition of HNS. Amortization of goodwill arising from
the acquisition is provided using the straight-line method
over ten years. Purchased technology is amortized using the
straight-line method over the remaining estimated economic
life of the product or enhancement, which was determined to be
five years.
4) Reflects interest expense on the cash payment of $3,057,000 to
fund the HNS transactions on January 1, 1996 at a rate of 8%
for the year.
The Company incurred integration costs related to the HNS
transactions of $1.6 million during the first quarter of 1997.
The unaudited pro forma consolidated statement of operations
for the year ended December 31, 1996 does not reflect the $1.6
million of integration costs, the $2.4 million loss on
extinguishment of the Debenture or the $2.7 million charge for
in-process product development related to the acquisition of
the minority interest of HNS.
F-20
Page 25 of 33
<PAGE> 6
HARBINGER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
HNV
5) Reflects an increase in amortization expense as a result of
the acquisition of HNV. Amortization of goodwill arising from
the acquisition is provided using the straight-line method
over ten years. Purchased technology is amortized using the
straight-line method over the remaining estimated economic
life of the product or enhancement, which was determined to be
five years.
6) Reflects the elimination of the Company's equity in losses of
HNV.
The unaudited pro forma consolidated statement of operations
does not reflect the $300,000 charge for in-process product
development related to the acquisition of HNV which was
directly attributable to the transaction.
NTEX
7) Reflects an increase in amortization expense as a result of
the acquisition of NTEX. Amortization of goodwill arising from
the acquisition is provided using the straight-line method
over ten years. Purchased technology is amortized using the
straight-line method over the remaining estimated economic
life of the product or enhancement, which was determined to be
five years.
8) Reflects interest expense on the cash payment of $3,195,000 to
fund the NTEX acquisition at a rate of 8% for the three months
ended March 31, 1996.
The unaudited pro forma consolidated statement of operations
does not reflect a $4,449,000 charge for in-process product
development related to the acquisition of NTEX which was
directly attributable to the transaction.
INOVIS
9) Reflects an increase in amortization expense as a result of
the acquisition of INOVIS. Amortization of goodwill arising
from the acquisition is provided using the straight-line
method over ten years. Purchased technology is amortized using
the straight-line method over the remaining estimated economic
life of the product or enhancement, which was determined to be
five years.
10) Reflects interest expense on the cash payment of $1,409,000
and the note payable in the amount of $557,000 to fund the
INOVIS acquisition at a rate of 8% for the three months ended
March 31, 1996.
The unaudited pro forma consolidated statement of operations
does not reflect a $3,400,000 charge for in-process product
development related to the acquisition of INOVIS which was
directly attributable to the transaction.
F-21
Page 26 of 33
<PAGE> 7
HARBINGER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
OTHER
11) Reflects reduction of non-recurring charges for in-process
product development related to the acquisitions of HNV, NTEX
and INOVIS that were included in the Company's historical
consolidated statement of operations.
12) Reflects the increase in weighted average common shares
outstanding for the shares issued in connection with the
acquisition of HNS. The shares issued in connection with the
acquisitions of HNV, NTEX, and INOVIS are included in the
historical weighted average common shares outstanding of the
Company.
F-22
Page 27 of 33
<PAGE> 1
EXHIBIT 99.4
F-23
Page 28 of 33
<PAGE> 2
HARBINGER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The following unaudited pro forma consolidated statements of operations
of Harbinger Corporation (the "Company") set forth below for the year ended
December 31, 1996 and for the nine months ended September 30, 1997 give effect
to the Company's acquisition of Acquion, Inc. ("Acquion") which has been
accounted for using the purchase method of accounting.
The unaudited pro forma consolidated statement of operations for the
nine months ended September 30, 1997 also reflects the elimination of the charge
of $2.7 million for acquired in-process product development costs and the $2.4
million loss on extinguishment of the Debenture related to the acquisition of
the minority interest of HNS since this purchase business combination occurred
on January 1, 1997 (see page F-19). The operations of HNS have been included in
the Company's historical operations since January 1, 1997.
The unaudited pro forma consolidated statements of operations should be
read in conjunction with the historical financial statements and notes thereto
of the Company and Acquion. The unaudited pro forma consolidated statements of
operations do not necessarily represent results which would have occurred if the
transactions had taken place on the dates indicated nor are they necessarily
indicative of the results of future operations.
F-24
Page 29 of 33
<PAGE> 3
HARBINGER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
Adjusted
Company Historical Pro Forma Pro Forma
Subtotal (1) Acquion (2) Adjustments Consolidated
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Services $ 39,168 $ 41 $ 39,209
Software 22,441 82 22,523
----------- ------- --------
Total revenues 61,609 123 61,732
----------- ------- --------
Direct costs:
Services 14,703 1,074 15,777
Software 3,341 10 3,351
----------- ------- --------
Total direct costs 18,044 1,084 19,128
----------- ------- --------
Gross margin 43,565 (961) 42,604
----------- ------- --------
Operating costs:
Selling and marketing 16,294 1,467 17,761
General and administrative 15,068 1,297 16,365
Depreciation and amortization 3,981 98 330 (3) 4,409
Product development 13,527 1,251 14,778
Charge for purchased in-process product
development and acquisition-related
charges 626 - 626
----------- ------- --------
Total operating costs 49,496 4,113 53,939
----------- ------- --------
Operating loss (5,931) (5,074) (11,335)
Interest expense (income), net 50 - 959 (4) 1,009
Foreign currency exchange loss 18 - 18
Equity in losses of joint ventures 119 - 119
----------- ------- --------
Loss before income tax (benefit) (6,118) (5,074) (12,481)
Income tax expense (benefit) 168 - 168
----------- ------- --------
Net loss (6,286) (5,074) (12,649)
Preferred stock dividends (28) - (28)
----------- ------- --------
Net loss applicable to common shareholders $ (6,314) (5,074) $(12,677)
=========== ======= ========
Net loss per common share $ (0.34) $ (0.68)
=========== ========
Weighted average common and common
equivalent shares outstanding 18,707 18,707
=========== ========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Operations.
F-25
Page 30 of 33
<PAGE> 4
HARBINGER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Company Acquion (5) Adjustments Consolidated
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Services $ 37,892 460 $ 38,352
Software 20,307 24 20,331
---------- --------- --------
Total revenues 58,199 484 58,683
---------- --------- --------
Direct costs:
Services 12,921 1,448 14,369
Software 2,520 - 2,520
---------- --------- --------
Total direct costs 15,441 1,448 16,889
---------- --------- --------
Gross margin 42,758 (964) 41,794
---------- --------- --------
Operating costs:
Selling and marketing 11,614 1,537 13,151
General and administrative 10,999 649 11,648
Depreciation and amortization 5,700 78 248 (3) 6,026
Product development 3,033 1,145 4,178
Charge for purchased in-process product
development and acquisition-related
charges 31,185 - (10,917) (6) 17,568
(2,700) (7)
---------- --------- --------
Total operating costs 62,531 3,409 52,571
---------- --------- --------
Operating loss (19,773) (4,373) (10,777)
Interest expense (income), net (426) - 720 (4) 294
Foreign currency exchange loss - - -
Equity in losses of joint ventures 38 - 38
---------- --------- --------
Loss before income tax expense (19,385) (4,373) (11,109)
Income tax expense 1,419 - 1,419
---------- --------- --------
Net loss (20,804) (4,373) (12,528)
Extraordinary loss on debt extinguishment (2,419) - 2,419 (7) -
========== ========= ========
Net loss applicable to common shareholders $ (23,223) $ (4,373) $(12,528)
========== ========= ========
Net loss per share of common stock $ (1.19) $ (0.64)
========== =======
Weighted average common and common
equivalent shares outstanding 19,587 19,587
========== =======
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Operations.
F-26
Page 31 of 33
<PAGE> 5
HARBINGER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Effective August 22, 1997, Harbinger (the "Company") acquired all of
the outstanding shares of Acquion, Inc. ("Acquion"), a California corporation
based in Greenville, South Carolina for $13.6 million, consisting of $12.0
million in cash and the assumption of $1.6 million in liabilities including
transaction costs. The Company recorded the acquisition using the purchase
method of accounting with $10.9 million of the purchase price allocated to
in-process product development costs, $641,000 allocated to purchased
technology, and $2.0 million allocated to goodwill. The Company determined that
certain of the acquired technologies had not reached technological feasibility
and therefore expensed the portion of the purchase price allocable to such
in-process product development to the consolidated statement of operations on
August 22, 1997.
The unaudited pro forma consolidated statements of operations for the
year ended December 31, 1996 and the nine months ended September 30, 1997
illustrate the estimated effects on the Company's consolidated statements of
operations of the acquisition as if it had occurred as of the beginning of those
two periods.
The unaudited pro forma consolidated statements of operations have been
prepared using the purchase method of accounting, whereby the total cost of the
acquisition is allocated to the tangible and intangible assets acquired and
liabilities assumed based upon their respective fair values at the effective
date of the acquisition. For purposes of the unaudited pro forma consolidated
statements of operations, such allocations have been made based upon currently
available information and management's estimates.
The historical statements are derived from the audited consolidated
financial statements of the Company as of and for the year ended December 31,
1996, the audited statements of Acquion as of and for the year ended October 31,
1996 and the unaudited financial statements of the Company and Acquion for the
nine months ended September 30, 1997.
The unaudited pro forma consolidated statements of operations do not
purport to represent what the results of operations of the Company would
actually have been if the acquisition had occurred on such dates or to project
the results of operations of the Company for any future date or period. The
unaudited pro forma consolidated statements of operations should be read
together with the historical financial statements and notes thereto of the
Company and Acquion. The unaudited pro forma consolidated statements of
operations reflect the following pro forma adjustments:
1) Reflects the pro forma operating results of the Company for the year
ended December 31, 1996 as combined with HNS, HNV, NTEX and INOVIS.
2) Reflects the historical operating results of Acquion for the year ended
October 31, 1996.
3) Reflects the additional amortization of intangible assets recorded as a
result of the allocation of the purchase price. These intangible assets
and their lives are as follows:
<TABLE>
<S> <C> <C>
Goodwill $ 2,014,000 10 years
Acquired technology $ 641,000 5 years
</TABLE>
4) Reflects interest expense on the borrowings to fund the cash portion of
the purchase price of Acquion at the rate of 8% per annum.
F-27
Page 32 of 33
<PAGE> 6
HARBINGER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
5) Reflects the historical unaudited operating results of Acquion for the
period from January 1, 1997 through August 22, 1997. The operating results
of Acquion for the period from August 23, 1997 to September 30, 1997 are
included in the Company's unaudited operating results.
6) Reflects the elimination of the charge of $10.9 million for acquired
in-process product development costs resulting from the acquisition of
Acquion and the Company's purchase price allocation.
7) Reflects the elimination of the charge of $2.7 million for acquired
in-process product development costs and the $2.4 million loss on
extinguishment of the Debenture related to the acquisition of the minority
interest of HNS recorded in the first quarter of 1997.
The unaudited pro forma consolidated statements of operations do not
reflect the $10.9 million charge for in-process product development related
to the acquisition of Acquion, or the $2.7 million charge for the
in-process product development and $2.4 million loss on the extinguishment
of the Debenture related to the acquisition of the minority interest in
HNS, all of which were directly attributable to the transactions.
F-28
Page 33 of 33
