EX-99.2 3 exhibit_99-2.htm EXHIBIT 99.2 exhibit_99-2.htm
Exhibit 99.2
 
UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
AS OF JUNE 30, 2011,
FOR THE SIX MONTHS ENDED JUNE 30, 2011, AND
FOR THE YEAR ENDED DECEMBER 31, 2010
 
Unaudited Pro Forma Financial Information
 
On September 7, 2011, Attunity Ltd. (“Attunity" or the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”)  with RepliWeb Inc., a privately owned Delaware corporation (“RepliWeb”), Attunity Inc., a Massachusetts corporation, and a wholly owned subsidiary of the Company (“Buyer”), Atlas Topaz Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Buyer (“Merger Sub”), certain stockholders of RepliWeb (the “Executing Stockholders”) and two of the Executing Stockholders, as stockholder representatives. Pursuant to the Merger Agreement, on September 19, 2011, the Company acquired all of the outstanding shares of RepliWeb by way of a reverse triangular merger, whereby Merger Sub merged with and into RepliWeb with RepliWeb continuing after the acquisition as the surviving corporation and an indirect wholly owned subsidiary of the Company (the "Acquisition").
 
Under the Merger Agreement, the total consideration is composed of cash and ordinary shares of the Company, as follows:
 
 
-
$3.3 million in cash, payable at closing of the Merger Agreement;
 
 
-
4,032,258 ordinary shares of the Company issuable at closing of the Merger Agreement.
 
 
-
$4.0 million in cash (subject to certain adjustments), payable to RepliWeb constituencies within 10 business days following the closing of the Merger Agreement; and
 
 
-
a milestone-based contingent cash payment of up to $2.0 million payable in April 2013.
 
In connection with the Acquisition, the Company secured a short-term loan in the principal amount of $3.0 million from an Israeli bank (the " Bridge Loan”), which is repayable in January 2012 and bears interest at the rate of LIBOR plus 6%. Also, the Company and Plenus Technologies Ltd. (including its affiliates, "Plenus") entered into an amendment to the Loan Agreement and the related security agreements, all dated as of January 31, 2007 (as amended on March 30, 2009, the “Plenus Loan”), whereby, among other things, (i) the period during which Plenus is entitled to compensation (in general, 15% of the proceeds payable in a Fundamental Transaction (which term is defined in the Loan Agreement to include a sale of the Company through a merger, selling all or substantially all of the Company's assets, or a transaction in which a person or entity acquires more than 50% of the Company's outstanding shares)) upon consummation of a Fundamental Transaction was extended until December 31, 2017, and (ii) during such extended period, Plenus may elect to receive $300,000 in cash in lieu of such compensation.
 
The holders of convertible promissory notes (the "Convertible Notes") that the Company issued pursuant to a Note and Warrant Purchase Agreement, dated March 22, 2004, as amended from time to time, provided their consent to the Bridge Loan. As a result of the closing of the Merger Agreement and in accordance with the terms of the Convertible Notes, the conversion price of the Convertible Notes was adjusted to $0.62 (from $1.25).
 
The following unaudited condensed combined pro forma balance sheet at June 30, 2011 gives effect to the Acquisition as if it had been completed as of June 30, 2011. The Acquisition was accounted for under the purchase method of accounting. Accordingly, the assets acquired and liabilities assumed have been recorded at their estimated fair values at the date of the Acquisition. The purchase price has been allocated to the assets acquired and the liabilities assumed based upon estimates of their respective fair values, which are subject to adjustment.
 
The following unaudited condensed combined pro forma Statements of Operations for the year ended December 31, 2010 and the six month period ended June 30, 2011 give effect to the Acquisition as if it had been completed on January 1, 2010. For the purposes of the pro forma Statements of Operations, the Company have assumed that, other than the related financings described above, the Company had sufficient cash to make the Acquisition.
 
 
 
 
 
The pro forma information has been prepared by our management and it may not be indicative of the results that actually would have occurred had the transaction been in effect on the dates indicated, nor does it purport to indicate the results that may be obtained in the future. The pro-forma information is based on provisional amounts allocated by management to various assets and liabilities acquired and may be eventually different than currently presented.
 
The pro forma information should be read in conjunction with the financial statements and notes thereto of RepliWeb enclosed herewith, and our financial statements and notes thereto enclosed herewith as well as with our Annual Report on Form 20-F for the year ended December 31, 2010.
 
The pro forma Statements of Operations do not give effect to planned synergies and/or cost savings related to the Acquisition.
 

 
 
 

 
Unaudited Combined  Pro-Forma Balance Sheet As of June 30, 2011
U.S. dollars in thousands
 
      Attunity (A)       RepliWeb (B)      Pro-forma adjustments      Pro-forma combined  
ASSETS
                                    
                                     
CURRENT ASSETS:
                                    
Cash and cash equivalents
   $ 1,894     $ 4,105     $ (4,300 )  C   $     $       $ 1,699  
Short-term Deposit
     -       500                             500  
Restricted cash
     396       24                             420  
Trade receivables, net
     1,000       1,046                             2,046  
Other accounts receivable and prepaid expenses
     249       298                             547  
                                               
Total current assets
     3,539       5,973       (4,300 )                   5,212  
                                               
LONG-TERM ASSETS:
                                              
Long-term prepaid expenses
     61       -                             61  
Severance pay fund
     1,497       1,284                             2,781  
Property and equipment, net
     229       132                             361  
Deferred tax asset, net
     -       130                             130  
Software development costs, net
     304       -                             304  
Goodwill
     6,315       -       4,857 D                   11,172  
Intengible assets, net
     -       621       2,987 E                   3,608  
Total long-term assets
     8,406       2,167       7,844             0       18,417  
Total assets
     11,945       8,140       3,544             -       23,629  
                                               
LIABILITIES AND SHAREHOLDERS EQUITY
                                              
CURRENT LIABILITIES:
                                              
Current maturities of long-term convertible debt
     939       -                             939  
Current maturities of long-term debt
     627       -                             627  
Short-term loan
     -       -       3,000 F     (50 )   I             2,950  
Trade payables
     145       102                               247  
Deferred revenues
     2,590       2,372       (297 )  G                     4,665  
Employees and payroll accruals
     1,052       713                               1,765  
Accrued expenses and other current liabilities
     949       365       650 H                     1,964  
Short-term liability to related party regarding purchase of other asset
     -       171                               171  
Total current liabilities
     6,302       3,723       3,353       (50 )     -       13,328  
                                                 
LONG-TERM LIABILITIES:
                                                
Long-term convertible debt
     755       -                               755  
Long-term debt
     12       -                               12  
Long  term liability to related party regarding purchase of other asset
     -       214                               214  
Warrants and bifurcated conversion feature, presented at fair value
     209       -                               209  
Other long term liabilities
     -       -       1,582 J     300 K             1,882  
Accrued severance pay
     2,201       1,347                               3,548  
Total long-term liabilities
     3,177       1,561       1,582       300       -       6,620  
                                                 
Convertible preferred A shares
     -       2,153       (2,153 )    L                     -  
                                                 
SHAREHOLDERS' EQUITY:
                                                
Share capital
     965       10       (10 )   M     110 N             1,075  
Additional paid-in capital
     103,574       418       (418 )   M     2,390 N             105,964  
Accumulated other comprehensive loss
     (405 )     -                       50 I     (355 )
Accumulated deficit
     (101,668 )     275       (275 )   M             (1,335 )  W     (103,003 )
Total shareholders' equity
     2,466       703       (703 )    -     2,500 -     (1,285 )   -     3,681  
Total liabilities and shareholders' equity
   $ 11,945     $ 8,140     $ 2,079     $ 2,750     $ (1,285 )   $ 23,629  
 
 
 
 
 
 
Unaudited combined  Statement of Income for the six months
Ended June 30, 2011
U.S. dollars in thousands
 
   
Attunity (T)
    
RepliWeb (U)
    
Pro forma adjustments
    
Pro forma combined
  
                         
Software licenses
   $ 3,205     $ 1,679    
$
     $ 4,884  
Maintenance and services
     2,802       2,210             5,012  
Total Revenues
     6,007       3,889       -       9,896  
Operating expenses:
                                
Cost of revenues
     612       597       305 R     1,514  
Research and development, net
     1,581       1,972               3,553  
Selling and marketing
     2,238       564       125 S     2,927  
General and administrative
     1,106       444               1,550  
Total operating expenses
     5,537       3,577       430       9,544  
Operating Income
     470       312       (430 )     352  
                                 
Financial expenses, net
     47       (3 )     132 V     176  
Income before income taxes
     423       315       (562 )     176  
Taxes on income
     66       40               106  
Net  Income
   $ 357     $ 275     $ (562 )   $ 70  
 
 
 
 
 
 
Unaudited combined  Statement of Operations for the Year
Ended December  31, 2010
U.S. dollars in thousands
 
   
Attunity (O)
    
Repliweb (P)
    
Pro forma adjustments
    
Pro forma combined
  
                         
Software licenses
   $ 4,645     $ 3,924     $     $ 8,569  
Maintenance and services
     5,430       4,050       (297 )   G     9,183  
Total Revenues
     10,075       7,974       (297 )     17,752  
Operating expenses:
                                
Cost of revenues
     1,951       1,140       708 R     3,799  
Research and development, net
     2,482       3,876               6,358  
Selling and marketing
     3,831       1,273       506 S     5,610  
General and administrative
     1,854       1,067               2,921  
Total operating expenses
     10,118       7,356       1,214       18,688  
Operating Income
     (43 )     618       (1,511 )     (936 )
                                 
Financial expenses, net
     1,388       97       415 Q     1,900  
Income/(loss) before income taxes
     (1,431 )     521       (1,926 )     (2,836 )
Taxes on income
     74       337       -       411  
Net  Income/(loss)
   $ (1,505 )   $ 184     $ (1,926 )   $ (3,247 )
 
 
 
 
 
 
A.
 Our unaudited consolidated balance sheet as of June 30, 2011
      
         
B.
The unaudited consolidated balance sheet of RepliWeb as of June 30, 2011
      
         
C.
To record the cash paid for the acquisition and the proceeds from short term loan
  
         
 
Cash paid for the acquisition
     (7,300 )
 
Proceeds from a short term loan
     3,000  
        (4,300 )
D.
To record the adjustment to goodwill
        
           
 
Purchase price:
        
 
Cash
     7,000  
 
Fair value of earn out obligation
     1,582  
 
Issuance of shares
     2,415  
        10,997  
 
Tangible assets acquired and liabilities assumed (net of adjustment to reflect fair value)
  
           
 
Cash, cash equivalents, short-term deposits and restricted cash acquired
     4,629  
 
Trade receivables
     1,046  
 
Prepaid expenses and other current  assets
     298  
 
other assets
     1,414  
 
Property and equipment
     132  
 
Deferred revenues
     (2,075 )
 
Accrued expenses and other current liabilities
     (1,351 )
 
Other long term liabilities
     (1,561 )
        2,532  
           
 
Excess of purchase price over net tangible and intangible assets
     8,465  
           
 
Less
        
 
Balance allocated to Customers relationships
     1,117  
 
Balance allocated to Developed Technology
     2,491  
 
Goodwill
     4,857  
           
E.
To record the fair value of the customer relationship acquired ($1,117) and developed technology
($2,491 net of $621 book value in RepliWeb financilas). The fair value of the intangible assets was
 determined by management, based on market participant approach to an initial valuation performed
by a third party valuation firm using an income approach and based on estimates and assumptions
 provided by management. The final valuation may eventually be different than currently presented
  
           
F.
To record borrowing related to the RepliWeb acquisition
        
           
G.
To record the fair value adjustment to RepliWeb deferred revenues
        
           
H.
To record the costs associated with the acquisition
        
           
I.
To record the fair value of the guarantee associated with the short term loan
        
           
J.
To record the fair value of the contingent payment  obligation
        
 
 
 
 
 
 
K.
To record the fair value of the liability to Plenus as agreed in the amended agreement that was entered into in connection with the acquisition
  
           
L.
To record elimination of the convertible preferred A shares
        
           
M.
To record the elimination of RepliWeb's equity
        
           
N.
To record effect of the acquisition on Shareholder's equity:
        
 
Share Capital
     110  
 
Additional paid-in capital
     2,390  
        2,500  
           
O.
Reflects Attunity's consolidated statement of operations for the year ended December 31, 2010
  
           
P.
Reflects RepliWeb's consolidated statement of operations for the year ended December 31, 2010
  
           
Q.
To record  interest expense for the following items:
        
 
Interest expense for the bridge loan
     100  
 
Accretion of the Contingent payment obligation
     265  
 
Amortization of fair value of the personal guarantee
     50  
        415  
           
R.
To record amortization of acquired customer relationships.Customer relationship are amortized over its estimated useful life of 5.3 years in proportion to the economic benefits realized (based on accelerated amortization schedule)
  
           
S.
To record amortization of acquired developed technology. Developed technology is amortized over its estimated useful life of 5.3 years in proportion to the economic benefits realized (based on accelerated amortization schedule)
  
           
T.
Reflects Attunity's unaudited consolidated statement of income for the six months ended June 30, 2011
  
           
U.
Reflects RepliWeb's unaudited consolidated statement of income of RepliWeb for the six months ended June 30, 2011
  
           
V
To record the accretion of the contingent payment obligation
        
           
W.
To record the effect of the following on the  retained earnings:
        
 
Cost associated with the acquisition
     650  Refer also to I above
 
To record the fair value of the liability to Pelnus
     300  Refer also to I above
 
Bonus to RepliWeb designated employees
     385  (1)
        1,335  
           
           
(1)
To record the liability to RepliWeb's designated employees as determined by RepliWeb's board of directors. RepliWeb's board of directors determined that 3.38% of the purchase price will be paid to designated employees