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Apex Investment - A

Harvard Business School Case #296-028


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Exhibit 6 Access Series A Term Sheet: June 4, 1994

Total Percentage
Name or Entity Class of Stock Number of Shares Ownership
Existing Investorsb Common (Class A and B) 7,931,060 61%
New Investors Series A Preferred 2,500,000
Warrants to Purchase 19%
Series A Preferred 375,000 3%
Reserved for Management and
Employeesc Common (Class A and B) 2,143,846 17%
Total 12,949,906 100%

a
While the term sheet was prepared assuming the sale of 2.5 million shares, 2.22 million shares were actually sold.
b
Includes 157,677 shares issued as part of the Fuller Research & Development Company merger, 389,820 shares issued pursuant to
restricted stock grants and 1,087,962 shares subject to options granted to Daniel R. Kranzler.
c
Excludes 643,600 shares reserved for future grant.
Exhibit 7 Historical Financial Performance and Projected Growth of
AccessLine Technologies, Inc.

Consolidated Statements of Operations, Year Ended December 31, 1993

1993
Revenue
Systems revenue $7,551,090
Licensing and maintenance 808,699
Total revenue $8,359,789

Cost of systems 2,815,292


Gross margin $5,544,497

Operating expenses
Sales, general and administrative 4,985,320
Engineering, research and development 1,421,099
Total operating expenses $6,406,419

Operating loss (861,922)

Other income, net 12,348

Net loss ($849,574)

Net loss per share ($0.10)

Weighted average common share outstanding 8,751,598

Consolidated Balance Sheet, December 31, 1993

Assets 1993
Current assets
Cash and cash equivalent $50,337
Accounts receivable 685,962
Inventory 823,181
Prepaid expenses and deposits 240,482
Total current assets 1,799,962
Property and equipment, net 638,503

Other assets, net 396,793

Total $2,835,258

Liabilities and Stockholders’ Equity 1993

Current liabilities
Accounts payable $1,946,739
Accrued wages, benefits, taxes 413,597
Other accrued liabilities 256,854
Deferred revenue 1,628,506
Total current liabilities $4,245,696

Note payable 1,888,139

Other liabilities 73,226

Total stockholders’ equity (deficiency in assets) (3,371,803)

Total $2,835,258

1995 1996 1997 1998 1999


U.S. Personal number market:
Cellular 244,350 839,700 2,208,150 3,861,000 5,798,250
PCS 0 59,200 296,000 621,600 1,184,000
Paging 182,650 576,933 1,667,000 2,648,333 4,232,667

Personal number market 427,000 1,475,833 4,171,150 7,130,933 11,214,917

Combined penetration (%) 0.75% 2.13% 5.13% 7.63% 10.61%

AccessLine U.S.subscribers:

Subscribers 29,890 118,067 417,115 1,069,640 2,242,983

Penetration of cellular, paging & PCS 0.05% 0.17% 0.51% 1.14% 2.12%

Penetration of personal number market 7.00% 8.00% 10.00% 15.00% 20.00%

Non U.S. subscribers:


Canada 12,000 18,000 40,000 75,000 150,000
Europe 20,000 30,000 100,000 600,000 1,300,000
Japan 0 40,000 150,000 350,000 800,000
Asia 0 25,000 100,000 275,000 600,000

Total non U.S. subscribers 32,000 113,000 390,000 1,300,000 2,850,000

Total AccessLine subscribers 61,890 231,067 807,115 2,369,640 5,092,983

Source: Corporate documents.


Exhibit 8 Comparable Public Companies

Recent Performance ($m) 1994 1993 1992

FY Revenues 827.0 617.2 408.4


FY Net Income 19.5 68.2 5.2
Market Capitalization at Calendar Year End 3,320 1,419 662
Beta 1.39

Recent Performance ($m) 1994 1993 1992

FY Revenues 70.3 49.5 36.4


FY Net Income 6.7 3.1 -2.4
Market Capitalization at Calendar Year End 364 199 180
Beta 2.03

Source: Compiled from corporate securities filings and public databases.


Exhibit 9 Series B Term Sheet Proposed by AccessLine Management

Securities: 2,000,000 shares of Series B Preferred Stock (“Shares”).

Investors: The Shares will be offered only to “accredited investors” as defined in


Regulation D under the Securities Act.

Aggregate Proceeds: $16,000,000

Price: $8.00 per Share (the “Sale Price”).

Placement Agent: Morgan Stanley & Co. Incorporated (the “Placement Agent”) on a “best
efforts” basis. The Company will pay in cash a placement fee equal to
5% of the aggregate offering proceeds.

The capitalization of the Company giving effect to the Financing will be as follows:

Total Percentage
Name or Entity Class of Stock Number of Shares Ownership

Existing Investorsa Common (Class A and B) 8,086,099 53%


Series A Preferred 2,220,726 15%
Warrants to Purchase
Series A Preferred 333,110 2%
New Investors Series B Preferred 2,000,000 13%
Reserved for Directors,
Management & Employees Common (Class A and B) 2,582,047 17%

Total 15,221,982 100%

a
Includes 1,087,962 shares subject to options granted to Daniel R. Kranzler.

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