BIVIO SOFTWARE BUSINESS

 

(Carve-Out of Certain Operations of Bivio Networks, Inc.)

 

 

 

 

(Carve-Out of Certain Operations of Bivio Networks, Inc.)

 

	Page
Unaudited Combined Financial Statements
Combined Balance Sheets	F-1
Combined Statements of Operations	F-2
Combined Statements of Cash Flows	F-3
Notes to Combined Financial Statements	F-4

 

 

(Carve-Out of Certain Operations of Bivio Networks, Inc.)

 

 

		September 30, 2012 (Unaudited)				January 31, 2012
Assets
Current assets:
Cash and cash equivalents		$	22,200			$	95,800
Accounts receivable, net of allowance for doubtful accounts of $0, and $53,500, respectively			-				959,200
Prepaid expenses and other current assets			125,200				121,800
Total current assets			147,400				1,176,800
Property and equipment, net			49,500				79,400
Intangible assets, net			126,700				180,000
Goodwill			207,000				207,000
Other assets			50,200				50,600
Total assets		$	580,800			$	1,693,800
Liabilities and Net Bivio Networks, Inc. Investment
Accounts payable		$	267,300			$	129,100
Accrued expenses			436,800				280,500
Deferred revenue			1,174,900				1,647,100
Total liabilities			1,879,000				2,056,700
Commitments and contingencies (Note 4)
Net Bivio Networks, Inc. investment			(1,298,200	)			(362,900	)
Total liabilities and net Bivio Networks, Inc. investment		$	580,800			$	1,693,800

 

 

 

		Eight Months Ended September 30,
		2012				2011
Revenues
Product sales		$	-			$	1,442,600
Software sales			341,400				331,400
Service revenue			29,200				123,500
Support services			337,800				326,200
Total revenues			708,400				2,223,700
Cost of revenues
Cost of product sales			-				569,900
Cost of software sales			25,200				11,200
Cost of service revenue			14,600				61,800
Cost of support services			73,500				43,400
Total cost of revenues			113,300				686,300
Gross margin			595,100				1,537,400
Operating expenses
General and administrative expense			2,221,400				2,462,100
Research and development expense			1,541,700				1,950,500
Total operating expenses			3,763,100				4,412,600
Loss from operations			(3,168,000	)			(2,875,200	)
Provision for income taxes			-				-
Net loss		$	(3,168,000	)		$	(2,875,200	)

 

 

(Carve-Out of Certain Operations of Bivio Networks, Inc.)

 

		Eight Months Ended September 30,
		2012				2011
Cash flows from operating activities:
Net loss	$	(3,168,000		)	$	(2,875,200		)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Depreciation and amortization			82,000				162,000
Loss on disposal of equipment			8,000				-
Decrease (increase) in accounts receivable			959,200				546,900
Decrease (increase) in inventory			-				518,100
Decrease (increase) in prepaid expenses and other current assets			(3,400	)			40,300
Decrease (increase) in other assets			400				(4,400	)
(Decrease) increase in accounts payable and accrued expenses			294,500				(21,200	)
(Decrease) increase in deferred revenue			(472,200	)			253,800
Total adjustments			868,500				1,495,500
Net cash used in operating activities			(2,299,500	)			(1,379,700	)
Cash flows from investing activities:
Property and equipment expenditures			(6,800	)			(36,900	)
Net cash used in investing activities			(6,800	)			(36,900	)
Cash flows from financing activities:
Net distributions from Bivio Networks, Inc.			2,232,700				1,477,400
Net cash provided by financing activities			2,232,700				1,477,400
Net increase (decrease) in cash and cash equivalents			(73,600	)			60,800
Cash and cash equivalents at beginning of period			95,800				109,900
Cash and cash equivalents at end of period	$		22,200		$		170,700

 

 

(Carve-Out of Certain Operations of Bivio Networks, Inc.)

 

 

Note 1 — Background and Nature of Operations

 

 

 

 

       For arrangements that include both software and non-software elements, we allocate revenue to the software deliverables as a group and non-software deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) VSOE, (ii) third-party evidence of selling price ("TPE") and (iii) best estimate of the selling price ("ESP").  When we are unable to establish a selling price using VSOE or TPE, we use ESP to allocate the arrangement fees to the deliverables.

·	The fee must be negotiated at the outset of an arrangement and generally be based on the specific volume of products to be delivered without being subject to change based on variable pricing mechanisms such as the number of units copied or distributed or the expected number of users.

·	Payment terms must not be considered extended. If a significant portion of the fee is due more than 12 months after delivery or after the expiration of the license, the fee is presumed not fixed or determinable.

·	the price is fixed or determinable;

·	the customer is obligated to pay and there are no contingencies surrounding the obligation or the payment;

·	the customer's obligation would not change in the event of theft or damage to the product;

·	the customer has economic substance;

·	the amount of returns can be reasonably estimated; and

·	Bivio Software does not have significant obligations for future performance in order to bring about resale of the product by the customer.

 

 

		September 30, 2012				January 31, 2012
Accounts receivable, gross		$	—			$	1,012,700
Allowance for doubtful accounts			—				(53,500	)
Accounts receivable, net		$	—			$	959,200

		September 30, 2012				January 31, 2012
Property and equipment:
Computer equipment		$	217,200			$	217,800
Lab and test equipment			1,573,200				1,566,400
Furniture and fixtures			73,400				80,800
			1,863,800				1,865,000
Less accumulated depreciation and amortization			(1,814,300	)			(1,785,600	)
		$	49,500			$	79,400

		September 30, 2012				January 31, 2012
Intangible assets, gross		$	400,000			$	400,000
Less accumulated amortization			(273,300	)			(220,000	)
Intangible assets, net		$	126,700			$	180,000

 

		September 30, 2012				January 31, 2012
Accrued expenses:
Compensation		$	168,800			$	155,000
Other accrued expenses			268,000				125,500
		$	436,800			$	280,500

		September 30, 2012				January 31, 2012
Maintenance		$	404,700			$	623,900
Undelivered software			770,200				1,023,200
Deferred revenue		$	1,174,900			$	1,647,100

Fiscal Year Ended January 31,		Operating Leases
Remaining 2013		$	30,100
2014			81,000
2015			44,000
2016			42,400
Future minimum lease payments		$	197,500