VirnetX Holding Corp — Capital/Financing Update 2000

Sep 13, 2000

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 31, 2000 PASW, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 333-75137 77-0390628 (State or other (Commission (IRS Employer jurisdiction of File Number) identification No.) incorporation) 703 Rancho Conejo Boulevard, Newbury Park, CA 91320 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (805) 499-7722 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 31, 2000 PASW, Inc. ("PASW") and NETsilicon, Inc. ("NSIL") entered into an agreement whereby PASW sold the assets of its PSI Softworks Technology subsidiary to NSIL. The assets primarily consist of PSI's Internet and Web software. The purchase price for the assets was 90,000 shares of NSIL's common stock. In addition NSIL has agreed to grant a non-exclusive, royalty-free license for the acquired technology, to PASW and its affiliates, subject to certain limitations. NSIL is expected to retain substantially all of PSI's personnel as part of a newly formed operating group. The sale is being accounted for as discontinued operations for financial reporting purposes. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. PAGE NO. (a) Not Applicable. (b) Unaudited Proforma Consolidated Condensed Financial Information Headnote to Unaudited Proforma Consolidated Condensed Financial Statements F-1 Unaudited Proforma Consolidated Condensed Balance Sheet as of June 30, 2000 F-2 Footnotes to Unaudited Proforma Consolidated Condensed Balance Sheet F-3 Unaudited Consolidated Statement of Operations for the Six Months ended June 30, 2000 F-4 Unaudited Proforma Consolidated Condensed Statement of Operations for the Year Ended December 31, 1999 F-5 Exhibits. 1.1 Asset Purchase Agreement dated August 31, 2000 NETsilicon, Inc., PASW, Inc., and PSI Softworks Technology, Inc. PASW, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The following Unaudited Proforma Consolidated Condensed Balance Sheet as of June 30, 2000 and Unaudited Proforma Consolidated Statements of Operations for the Six Months ended June 30, 2000 and 1999 and the Year Ended December 31, 1999, give effect to the sale of the assets of PASW's PSI Softworks Technology subsidiary. The Unaudited Proforma Consolidated Condensed Balance sheet of PASW hasbeen prepared based on its historical unaudited consolidated balance sheet as of June 30, 2000. The adjustments shown reflect the sale of substantially all of the assets as if the sale had been completed prior to June 30, 2000. The proforma statements of operations may not be indicative of the results that would have actually occurred if the sale of assets had been discontinued effective as of the beginning of the respective periods shown. The proforma financial statements should be read in conjunction with the Company's: 1)audited consolidated financial statements and notes thereto included in the Form 10-KSB and Annual Report for the fiscal year ended December 31, 1999; 2) Form 10-QSB for the quarters ended March 31, 2000 and June 30, 2000; and 3) Schedule 14A - Preliminary Proxy Statement dated April 15, 2000. F-1 PASW, INC. AND SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED CONDENSED BALANCE SHEET AS OF JUNE 30, 2000 Historical Proforma Consolidated Proforma Consolidated June 30, 2000 Adjustments June 30, 000 Current assets Cash and cash equivalents $ 717,156 $ $ 717,156 Accounts receivable, net of allowance for bad debts 102,301 (91,497)(1) 10,804 Prepaid expenses 53,688 ___ 53,688 Total current assets 873,145 (91,497) 781,648 Fixed assets, net of depreciation 318,032 (129,042)(1) 188,990 Investments 1,000,000 1,000,000 Marketable securities 2,328,750 (2) 2,328,750 Other assets 19,038 __ 19,038 Total assets $2,210,215 $2,108,211 $4,318,426 Current liabilities Accounts payable and accrued expenses $ 310,758 $ 377,500(3)$ 688,258 Total current liabilities 310,758 377,500 688,258 Deferred revenues 143,164 (143,164)(4) Minority interest 1,400 1,400 Stockholders' equity Common stock 4,501 4,501 Additional paid in capital 5,939,750 5,939,750 Accumulated deficit (4,293,866) 1,873,875 (2,419,991) Cumulative adjustment for currency translation 104,508 _ 104,508 Total stockholders' equity 1,754,893 1,873,875 3,628,768 $2,210,215 $2,108,211 $4,318,426 F-2 PASW, INC. AND SUBSIDIARIES NOTES TO UNAUDITED PROFORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. To record the sale of accounts receivable and fixed assets of the PSI Softworks, Inc. subsidiary. 2. To record the receipt of 90,000 shares of NSIL common stock at $25 7/8 the closing price of the stock on August 31, 2000. 3. To record additional accrued expenses related to vacations, options and other expenses associated with the sale. 4. To record the elimination of deferred revenue resulting from the inclusion of service and maintenance plans in the sale. F-3 PASW INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 The following unaudited Statement of Operations for the Six Months Ended June 30, 2000 is shown as reported in the Company's Form 10-QSB for the quarter then ended. Six Months Ended June 30, 2000 Historical Proforma Proforma Consolidated Adjustments Consolidated Net revenue Sales $ 927,920 $ 829,468 $ 98,452 Royalties and others 235,000 31,231 203,769 Total 1,162,920 860,699 302,221 Cost of revenue Purchases and royalty fees 48,648 10,738 37,910 Gross profit 1,114,272 849,961 264,311 Expenses Selling, general and administrative 1,759,660 581,205 1,178,455 Research and development 1,155,153 775,566 379,587 Depreciation and amortization 47,710 44,337 3,373 Total 2,962,523 1,401,108 1,561,415 Net loss $(1,848,251) $ (551,147) $(1,297,104) Net loss per common share Basic and diluted $ (0.40) $ (0.28) Weighted average common stock shares outstanding Basic and diluted 4,606,345 4,606,345 F-4 PASW, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 The following unaudited Statement of Operations for the Twelve Months Ended December 31, 1999 is shown as reported in the Company's Form 10-KSB for the fiscal year then ended. Twelve Months Ended December 31, 1999 Historical Proforma Proforma Consolidated Adjustments Consolidated Net revenue Sales $ 1,817,654 $ 1,372,024 $ 445,631 Royalties and others 424,890 189,601 235,288 Total 2,242,544 1,561,625 680,919 Cost of revenue Purchases and royalty fees 167,486 91,490 75,996 Gross profit 2,075,058 1,470,135 604,923 Expenses Selling, general and administrative 2,578,555 1,848,703 729,852 Research and development 1,625,599 1,253,168 372,401 Depreciation and amortization 77,828 58,000 19,828 Former officers consulting and administrative expense 257,143 0 257,143 Total 4,539,125 3,159,871 1,379,224 Net loss $(2,464,067) $(1,689,736) $ (774,301) Net loss per common share Basic and diluted $ (0.62) $ (0.20) Weighted average common stock shares outstanding Basic and diluted 3,946,392 3,946,392 F-5 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 officer. Date: September 13, 2000 PASW, INC. By: /s/ William E. Sliney William E. Sliney President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)