Exhibit 99.2
Unaudited Pro Forma Combined Statements of Operations for the year
ended June 30, 2001 and for the nine-month period ended March 31, 2002.
On March 26, 2002, Neoware Systems, Inc., a Delaware corporation
("Neoware"), completed its acquisition of Network Computing Devices, Inc.'s
("NCD") ThinSTAR thin client appliance product line ("Product Line") in
accordance with an Asset Purchase Agreement, dated March 22, 2002, between
Neoware and NCD (the "Purchase Agreement"). The assets acquired consisted
principally of goodwill, an assembled workforce, the ThinSTAR trademark and
other intellectual property, and contract rights used in the business of
designing, developing, manufacturing, distributing and selling the Windows-based
thin client devices marketed under the ThinSTAR brand name. Neoware intends to
continue to use the assets for similar purposes.
Pursuant to the Purchase Agreement, the purchase price was $4.25
million, $300,000 of which is being held in an escrow account for a minimum of
120 days from the date of the closing to satisfy indemnification claims and
certain obligations of NCD, and $250,000 of which is payable in accordance with
an earn-out requiring NCD's satisfaction of certain sales targets in Europe, the
Middle East and Africa. The purchase price was paid with cash on hand. The
amount and type of consideration was determined on the basis of arm's length
negotiations between Neoware and NCD.
On December 4, 2001, Neoware completed its acquisition of substantially
all the assets and certain of the liabilities of Telcom Assistance Center
Corporation, a/k/a Activ-e Solutions, a Delaware corporation ("TACC"), in
accordance with the Asset Purchase Agreement, dated November 27, 2001, between
Neoware and TACC (the "Purchase Agreement"). The assets acquired consisted
principally of contract rights, accounts receivable and personal property used
in the business of providing managed and professional services, training and
products to create server-based computing solutions. Neoware intends to continue
to use the assets for similar purposes. Neoware also assumed liabilities which
consisted principally of bank debt, trade payables and accrued expenses.
Pursuant to the Purchase Agreement, Neoware paid $75,000 in cash, funded with
cash on hand, plus 569,727 shares of Neoware's common stock. The amount and type
of consideration was determined on the basis of arm's length negotiations
between Neoware and TACC.
The following presents certain unaudited pro forma combined financial
statements of Neoware which were prepared as if the acquisitions took place on
July 1, 2000. The financial statements give pro forma effect to the cash paid
and shares issued in connection with the acquisitions. No pro forma balance
sheet is included since a balance sheet reflecting the impact of the
acquisitions was filed by Neoware in its Form 10-Q for the quarter ended March
31, 2002.
The unaudited pro forma financial statements are provided for
illustrative purposes only, and are not necessarily indicative of the operating
results that would have occurred if these transactions had been consummated at
the beginning of the periods indicated, nor are they necessarily indicative of
any future operating results or financial position. The unaudited pro forma
financial statements do not include any adjustments related to any profit
improvements or potential costs savings which may result from the transaction.
The unaudited pro forma combined financial statements reflect
preliminary estimates of the allocation of the purchase price that may be
adjusted. Management does not expect such adjustments to be material.
NEOWARE SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Nine Months Ended March 31, 2002
(b) (c)
(a) ThinSTAR Pro Forma
Neoware ACTIV-e Solutions Product Line Adjustments Combined
Net Revenues $20,228,442 $2,222,490 $10,134,000 $ $32,584,932
Cost of revenues 11,862,736 1,613,079 9,155,000 22,630,815
----------- ---------- ----------- ------------ -----------
Gross profit 8,365,706 609,411 979,000 - 9,954,117
OPERATING EXPENSES:
Sales & marketing 4,072,802 325,538 3,417,000 7,815,340
Research and development 1,027,421 - 575,000 1,602,421
General and administrative 1,945,930 405,084 1,976,000 4,327,014
----------- ---------- ----------- ------------ -----------
Operating expenses 7,046,153 730,622 5,968,000 - 13,744,775
Operating income (loss) 1,319,553 (121,211) (4,989,000) - (3,790,658)
Interest income (expense), net 255,746 (49,681) (961,000) - 754,935
----------- ---------- ----------- ------------ -----------
Net Income (loss) $ 1,575,299 $ (170,892) $(5,950,000) $ - $(4,545,593)
=========== ========== =========== ============ ===========
Basic EPS $0.15 ($0.41)
=========== ===========
Diluted EPS $0.14 ($0.38)
=========== ===========
Weighted average number of
shares in basic earnings per
share computation 10,573,863 569,727 (d) 11,143,590
=========== ============ ===========
Weighted average number of
shares in diluted earnings per
share computation 11,326,706 569,727 (d) 11,896,433
=========== ============ ===========
(a) For the period July 1, 2001 through the acquisition date of December 4,
2001.
(b) For the period July 1, 2001 through the acquisition date of March 26, 2002.
(c) The excess purchase price over the net assets acquired has been allocated on
a preliminary basis to goodwill. In accordance with SFAS No. 142, "Goodwill
and Other Intangible Assets", goodwill is no longer amortized. As such, the
Company has not recorded a proforma adjustment for amortization of
intangible asets.
(d) Represents the effect of the issuance of shares in connection with the
acquisition.
NEOWARE SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Year Ended June 30, 2001
(a) (b)
(a) ThinSTAR Pro Forma
Neoware ACTIV-e Solutions Product Line Adjustments Combined
Net Revenues $17,654,825 $6,449,094 $17,771,000 $ $ 41,874,919
Cost of revenues 11,692,775 4,969,527 17,530,000 34,192,302
----------- ---------- ----------- ------------ ------------
Gross profit 5,962,050 1,479,567 241,000 - 7,682,617
OPERATING EXPENSES:
Sales & marketing 3,058,008 916,869 5,661,000 9,635,877
Research and development 955,386 - 1,063,000 2,018,386
General and administrative 2,171,280 1,091,790 2,056,000 5,319,070
Acquisition Costs 245,839 - 245,839
----------- ---------- ----------- ------------ ------------
Operating expenses 6,430,513 2,008,659 8,780,000 - 17,219,172
Operating income (loss) (468,463) (529,092) (8,539,000) - (9,536,555)
Loss on investment (812,000) - - (812,000)
Interest income (expense), net 771,695 (123,189) (333,000) - 315,506
----------- ---------- ----------- ------------ ------------
Net Income (loss) $ (508,768) $ (652,281) $(8,872,000) $ - $(10,033,049)
=========== ========== =========== ============ ============
Basic EPS ($0.05) ($0.93)
=========== ============
Diluted EPS ($0.05) ($0.93)
=========== ============
Weighted average number of
shares in basic earnings per
share computation 10,226,316 569,727 (c) 10,796,043
=========== ============ ============
Weighted average number of
shares in diluted earnings per
share computation 10,226,316 569,727 (c) 10,796,043
=========== ============ ============
(a) For the period July 1, 2000 through the June 30, 2001.
(b) The excess purchase price over the net assets acquired has been allocated on
a preliminary basis to goodwill. In accordance with SFAS No. 142, "Goodwill
and Other Intangible Assets", goodwill is no longer amortized. As such, the
Company has not recorded a proforma adjustment for amortization of
intangible asets.
(c) Represents the effect of the issuance of shares in connection with the
acquisition.