<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 4
TO
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): December 5, 1997
Omtool, Ltd.
-----------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-22871 02-0447481
-------------- ---------- ------------
(State or other jurisdiction (Commission File number) (IRS Employer
of Incorporation) Identification No.)
8 Industrial Way, Salem, NH 03079
-----------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 898-8900
<PAGE>
Omtool, Ltd. hereby amends and restates Item 7 of its Current Report on
Form 8-K dated December 5, 1997, so that previously omitted information is
included in said Item 7 and so that as so amended and restated said Item 7 shall
read in its entirety as set forth on the following pages.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
The following audited financial statements of CMA, together with the
report thereon manually signed by Arthur Andersen LLP, and unaudited financial
statements of CMA for the Six Months Ended September 30, 1997, are included as
Exhibit 99.1 to this report and incorporated herein by this reference:
Consolidated Balance Sheets as of March 31, 1996 and 1997
Consolidated Statements of Operations for the years ended
March 31, 1996 and 1997
Consolidated Statements of Stockholders' Equity for the years
ended March 31, 1996 and 1997
Consolidated Statements of Cash Flows for the years ended
March 31, 1996 and 1997
Notes to Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of September
30, 1997
Unaudited Condensed Consolidated Statement of Operations for
the Six Months Ended September 30, 1996 and 1997
Unaudited Condensed Consolidated Statement of Cash Flows for
the Six Months Ended September 30, 1996 and 1997
Notes to Unaudited Condensed Consolidated Financial
Statements
(b) Pro Forma Financial Information.
The following unaudited pro forma consolidated financial statements are
included as Exhibit 99.2 to this report and are incorporated herein by this
reference:
Unaudited Pro Forma Condensed Consolidated Balance Sheets as
of September 30, 1997
Unaudited Pro Forma Consolidated Statements of Operations for
the year ended December 31, 1996 and the nine months
ended September 30, 1997
<PAGE>
Notes to Unaudited Pro Forma Combined Financial Information
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1* Share Sale and Purchase Agreement dated as of December 5, 1997 among the Company, CMA and its
former stockholders (including Schedule 6 and Schedule 7 attached thereto).
99.1 The following audited financial statements of CMA, together with the report thereon manually
signed by Arthur Andersen LLP and unaudited financial statements of CMA for the Six
Months Ended September 30, 1997:
Consolidated Balance Sheets as of March 31,1996 and 1997
Consolidated Statements of Operations for the years ended March 31, 1996 and 1997
Consolidated Statements of Stockholders' Equity for the years ended March 31, 1996 and 1997
Consolidated Statements of Cash Flows for the years ended March 31, 1996 and 1997
Notes to Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of September 30, 1997
Unaudited Condensed Consolidated Statement of Operations for the Six Months Ended September
30, 1996 and 1997
Unaudited Condensed Consolidated Statement of Cash Flows for the Six Months Ended September
30, 1996 and 1997
Notes to Unaudited Condensed Consolidated Financial Statements
99.2** The following unaudited pro forma combined financial statements:
Unaudited Pro Forma Condensed Consolidated Balance Sheets as of September 30, 1997
Unaudited Pro Forma Consolidated Statements of Operations
for the year ended December 31, 1996 and the nine
months ended September 30, 1997
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Combined Financial Information
*Previously filed with the Company's Current Report on Form 8-K dated December
5, 1997 filed on December 19, 1997.
**Previously filed with the Company's Current Report on Form 8-K/A, Amendment
No.2 dated December 5, 1997 filed on February 18, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this amendment to be signed on its behalf by the
undersigned hereunto authorized.
OMTOOL, LTD.
Date: March 1, 1999
By: /S/ Darioush Mardan
-------------------------
Darioush Mardan
Chief Financial Officer,
Treasurer and Secretary
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1* Share Sale and Purchase Agreement dated as of December 5, 1997 among the Company, CMA and its
former stockholders (including Schedule 6 and Schedule 7 attached thereto).
99.1 The following audited financial statements of CMA, together with the report thereon manually
signed by Arthur Andersen LLP and unaudited financial statements of CMA for the Six
Months Ended September 30, 1997:
Consolidated Balance Sheets as of March 31, 1996 and 1997
Consolidated Statements of Operations for the years ended March 31, 1996 and 1997
Consolidated Statements of Stockholders' Equity for the years ended March 31, 1996 and 1997
Consolidated Statements of Cash Flows for the years ended March 31, 1996 and 1997
Notes to Financial Statements
Unaudited Condensed Consolidated Balance Sheet as of September 30, 1997
Unaudited Condensed Consolidated Statement of Operations for the Six Months Ended September
30, 1996 and 1997
Unaudited Condensed Consolidated Statement of Cash Flows for the Six Months Ended September
30, 1996 and 1997
Notes to Unaudited Condensed Consolidated Financial Statements
99.2** The following unaudited pro forma combined financial statements:
Unaudited Pro Forma Condensed Consolidated Balance Sheets as of September 30, 1997
Unaudited Pro Forma Consolidated Statements of Operations
for the year ended December 31, 1996 and the nine
months ended September 30, 1997
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Combined Financial Information
*Previously filed with the Company's Current Report on Form 8-K dated December
5, 1997 filed on December 19, 1997.
**Previously filed with the Company's Current Report on Form 8-K/A, Amendment
No.2 dated December 5, 1997 filed on February 18, 1998.
<PAGE>
Exhibit 99.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To CMA ETTWORTH GROUP LIMITED:
We have audited the accompanying consolidated balance sheets of CMA Ettworth
Group Limited (a United Kingdom company) and subsidiaries as of March 31, 1996
and 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the two years in the period ended March 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CMA Ettworth Group Limited and
subsidiaries as of March 31, 1996 and 1997, and the results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 17, 1998
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
--------------------------------------------------
1996 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................... $ 482,289 $ 602,729
Accounts receivable .......................................... 1,579,883 1,691,964
Inventory .................................................... 101,741 90,868
Prepaid expenses ............................................. 124,858 202,520
----------- -----------
Total current assets .................................. 2,288,771 2,588,081
Property and equipment, net ......................................... 376,675 377,216
Other assets ........................................................ 51,216 50,763
----------- -----------
$2,716,662 $3,016,060
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ............................ $ 87,655 $ 58,821
Accounts payable ............................................. 229,556 346,668
Accrued liabilities .......................................... 932,556 956,923
Income taxes payable ......................................... 191,340 175,349
Deferred revenue ............................................. 661,579 678,864
----------- -----------
Total current liabilities ........................................... 2,102,686 2,216,625
Long-term debt, net of current portion .............................. 41,989 24,361
----------- -----------
Stockholders' equity:
Common Stock, $1.608 par value
Authorized, issued and outstanding 1,000 ..................... 1,608 1,608
Retained earnings ............................................ 610,310 789,658
Cumulative translation adjustment ............................ (39,931) (16,192)
------------ ------------
Total stockholders' equity .......................................... 571,987 775,074
----------- -----------
$2,716,662 $3,016,060
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------
1996 1997
---- ----
<S> <C> <C>
Revenues:
Software license ...................................... $1,030,732 $1,218,856
Hardware .............................................. 765,450 905,156
Service and other ..................................... 2,116,731 2,503,066
---------- ----------
Total revenues ............................................... 3,912,913 4,627,078
---------- ----------
Cost of revenues:
Software license ...................................... 77,767 120,273
Hardware .............................................. 485,224 548,149
Service and other ..................................... 1,000,316 1,121,964
--------- ---------
Total cost of revenues ....................................... 1,563,307 1,790,386
---------- ----------
Gross profit .......................................... 2,349,606 2,836,692
---------- ----------
Operating expenses:
Sales and marketing ................................... 1,163,792 1,352,473
Research and development .............................. 583,356 677,933
General and administrative ............................ 279,570 324,897
--------- ---------
Total operating expenses .............................. 2,026,718 2,355,303
---------- ----------
Income from operations ................................ 322,888 481,389
Interest income .............................................. 7,736 11,845
Interest expense ............................................. (12,604) (16,374)
---------- ----------
Income before provision for income taxes .............. 318,020 476,860
Provision for income taxes ................................... 94,361 168,840
--------- ---------
Net income ............................................ $ 223,659 $ 308,020
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
$1.608 PAR VALUE
-----------------------
NUMBER CUMULATIVE TOTAL
OF RETAINED TRANSLATION STOCKHOLDERS'
SHARES AMOUNT EARNINGS ADJUSTMENT EQUITY
------ ------ -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1995 1,000 $1,608 $ 631,019 $ (5,745) $ 626,882
Net income 223,659 223,659
Dividends (244,368) (244,368)
Translation adjustment (34,186) (34,186)
------ ------ ---------- ----------- ------------
BALANCE, MARCH 31, 1996 1,000 1,608 610,310 (39,931) 571,987
Net income 308,020 308,020
Dividends (128,672) (128,672)
Translation adjustment 23,739 23,739
------ ------ ---------- ----------- ------------
BALANCE, MARCH 31, 1997 1,000 $ 1,608 $ 789,658 $ (16,192) $ 775,074
------ ------ ---------- ----------- ------------
------ ------ ---------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Cash Flow from Operating Activities:
Net income ........................................................ $ 223,659 $ 308,020
--------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization .............................. 121,267 123,276
Loss on disposal of fixed assets ........................... 27,912 28,295
Amortization of goodwill ................................... 5,876 453
Changes in assets and liabilities
Accounts receivable ................................. (41,589) (112,081)
Inventory ........................................... (14,004) 10,873
Prepaid expenses .................................... 18,398 (77,662)
Accounts payable .................................... (74,220) 117,112
Accrued liabilities ................................. 303,271 25,659
-------- --------
Net cash provided by operating activities ......................... 570,570 423,945
-------- --------
Cash Flows from Investing Activities:
Purchases of property and equipment ........................ 220,318 (132,641)
Proceeds from sale of property and equipment ............... 6,420
-------- --------
Net cash used in investing activities ............................. (213,898) (132,641)
-------- --------
Cash Flows from Financing Activities:
Payments on long-term debt ................................. (1,997) (46,462)
Dividends paid ............................................. (244,368) (128,672)
-------- --------
Net cash used in financing activities ............................. (246,365) (175,134)
-------- --------
Effect of exchange rates on cash .................................. (34,019) 4,270
-------- --------
Net increase in cash and cash equivalents ......................... 76,288 120,440
Cash and cash equivalents, beginning of period .................... 406,001 482,289
-------- --------
Cash and cash equivalents, end of period .......................... $ 482,289 $ 602,729
--------- ---------
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for -
Interest $ 12,604 $ 16,374
--------- ---------
--------- ---------
Income taxes $ 28,910 $ 184,831
--------- ---------
--------- ---------
</TABLE>
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) OPERATIONS
CMA Ettworth Group Limited (the Group) designs, develops, markets and supports
open client/server facsimile software, delivering solutions which automate and
integrate fax communication throughout the enterprise. The Group predominantly
does business in markets located within Europe.
The Group is subject to a number of risks associated with emerging,
technology-oriented companies with a limited operating history, including
continued market acceptance of the Group's products, competition from substitute
products and larger companies, and the continued ability to manage and finance
the Group's anticipated future growth.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements reflect the application of certain
accounting policies as described in this note and elsewhere in the notes to the
consolidated financial statements.
(a) Principles of Consolidation
These financial statements include the accounts of the Group and its
wholly-owned subsidiaries. All significant intercompany amounts have been
eliminated in consolidation.
(b) Revenue Recognition
The Group generates revenue from licensing the rights to use its software
products directly to end users and indirectly through resellers. The Group also
generates revenue from sales of support contracts and consulting services to
customers who license its products.
Revenues from software license agreements are recognized upon shipment of the
software, if there are no significant post-delivery obligations and if payment
is due within one year, less an allowance for estimated future returns. If an
acceptance period is required, revenues are recognized upon the earlier of the
customer's acceptance or the expiration of the acceptance period.
Revenue from support contracts is recognized ratably over the term of the
support period, which is generally one year. Service and other revenue is
primarily related to implementation services performed on a time-and-material
basis under separate service agreements related to the installation of the
Group's software products.
<PAGE>
Service and other revenues are recognized as services are performed. If a
transaction includes both license and service elements, license fee revenue is
recognized upon shipment of the software, provided services do not include
significant customization or modification of the base product and the payment
terms for licenses are not subject to acceptance criteria. In cases where
license fee payment is contingent upon the acceptance of services, revenues from
both the license and the service elements are deferred until the acceptance
criteria are met.
Cost of license revenue consists of the cost of media on which the product is
delivered and any related royalties. Cost of service revenue consists primarily
of salaries and benefits related to consulting personnel and the customer
support group.
<PAGE>
CMA ETTWORTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(c) Research and Development and Software Development Costs
Software development costs are considered for capitalization when technological
feasibility is established in accordance with Statement of Financial Accounting
Standards (SFAS) No. 86, Accounting for the Costs of Computer Software To Be
Sold, Leased or Otherwise Marketed. The Group sells software in a market that is
subject to rapid technological change, new product introductions and changing
customer needs. Accordingly, the Group has determined that it cannot determine
technological feasibility until the development state of the product is nearly
complete. The time period during which cost could be capitalized from the point
of reaching technological feasibility until the time of general product release
is very short and, consequently, the amounts that could be capitalized are not
material to the Group's financial position or results of operations. Therefore,
the Group charges all research and development expenses to operations in the
period incurred.
(d) Inventory
Inventory consists of hardware purchased for resale and is valued at the lower
of cost or net realizable value.
(e) Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and
amortization. Depreciation is calculated using accelerated and straight-line
methods over the following useful lives:
<TABLE>
<CAPTION>
<S> <C>
Computer equipment 1 - 4 Years
Equipment fixtures and fittings 4 - 6 Years
Motor vehicles 4 Years
</TABLE>
The Group capitalizes expenditures that materially increase asset lives and
charges ordinary repairs and maintenance to operations as incurred.
(f) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
<PAGE>
CMA ETTWORTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(g) Concentration of Credit Risk
SFAS No. 105, Disclosure of Information About Financial Instruments with
Concentrations of Credit Risk, requires disclosure of any significant
off-balance sheet and credit risk concentration. Financial instruments that
potentially expose the Group to concentrations of credit risk consist primarily
of cash and cash equivalents and trade accounts receivable. The Group places its
temporary cash investments in financial institutions. The Group has not
experienced significant losses related to receivables from individual customers
or groups of customers in any specific industry or by geographic area. Due to
these factors, no additional credit risk beyond amounts provided for collection
losses is believed by management to be inherent in the Group's accounts
receivable.
For the years ended March 31, 1996 and 1997 no single customer accounted for
greater than 10% of the Group's revenues.
Revenues earned for the years ended March 31, 1996 and 1997, were as follows:
<TABLE>
<CAPTION>
MARCH 31,
------------------------------------------------------------------
1996 1997
---- ----
<S> <C> <C>
United Kingdom ........................................... $ 1,991,899 $ 2,073,623
Europe, Middle East & Africa ............................. 681,215 1,243,736
America .................................................. 1,239,799 1,309,719
---------- ----------
$ 3,912,913 $ 4,627,078
------------ ------------
------------ ------------
</TABLE>
(h) Foreign Currency Translation
The accompanying financial statements have been translated into U.S. dollars in
accordance with Statement of Financial Accounting Standards No. 52.
<PAGE>
CMA ETTWORTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(3) PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
MARCH 31,
-----------------------------------------------------
1996 1997
---- ----
<S> <C> <C>
Computer equipment, fixtures and fittings ........................... $552,431 $567,270
Motor vehicles ...................................................... 250,630 263,938
-------- --------
803,061 831,208
Less--accumulated depreciation and amortization ..................... 426,386 453,992
-------- --------
$376,675 $377,216
-------- --------
-------- --------
</TABLE>
<PAGE>
CMA ETTWORTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(4) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31,
-----------------------------------------------------
1996 1997
---- ----
<S> <C> <C>
Bank loan .................................................. $ 16,177 $ 13,948
Capital lease
obligations ................................................ 113,467 69,234
-------- --------
129,644 83,182
Less--current maturities ................................... 87,655 58,821
-------- --------
-------- --------
$41,989 $24,361
</TABLE>
Maturities of long-term debt at March 31, 1997 are as follows:
<TABLE>
<CAPTION>
BANK CAPITAL LEASE
LOAN OBLIGATIONS
---- -------------
<S> <C> <C>
Years ended March 31,
1998 ....................................................... $ 13,948 $ 48,425
1999 ....................................................... - 26,289
---------- ---------
$ 13,948 74,714
---------- ---------
---------- ---------
Less - amounts representing interest ....................... 5,480
---------
Present value of minimum lease payments .................... $ 69,234
---------
---------
</TABLE>
(5) INCOME TAXES
The Group accounts for income taxes in accordance with SFAS No. 109, Accounting
for Income Taxes, the objective of which is to recognize the amount of current
and deferred income taxes at the date of the financial statements as a result of
all differences in the tax basis and financial statement carrying amounts of
assets and liabilities as measured by enacted tax laws.
Under SFAS No. 109, the Group recognizes a deferred tax asset for the future
benefit of its temporary differences if it concludes that it is more likely than
not that the deferred tax asset will be realized.
<PAGE>
CMA ETTWORTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(6) LEASE COMMITMENTS
The Group leases certain equipment and its office facility under operating
leases that expire before March 31, 1998.
Future minimum lease payments under these leases at March 31, 1997 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Period ending March 31, 1998 $42,165
-------
-------
</TABLE>
Rent expense included in the accompanying statements of operations was
approximately $77,344, and $60,363 for the years ended March 31, 1996 and 1997,
respectively.
(7) SUBSEQUENT EVENTS
(a) Acquisition
On December 5, 1997, Omtool, Ltd., a United States Corporation, ("Omtool")
acquired all of the outstanding share capital of the Group pursuant to a Share
Sale and Purchase Agreement dated December 5, 1997 by and among the Group and
its shareholders and Omtool. The purchase price was paid in a combination of
363,637 newly issued shares of common stock, $.01 par value, of Omtool and
$4,000,000 in cash.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
September 30,
1997
-------------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 705,467
Accounts receivable, net ............................ 914,117
Inventory ........................................... 106,878
Prepaid expenses .................................... 300,634
-------
Total current assets .......................... 2,027,096
PROPERTY AND EQUIPMENT, NET ............................ 401,788
OTHER ASSETS ........................................... 50,537
-----------
$ 2,479,421
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt .................... 23,469
Accounts payable ..................................... 320,758
Accrued liabilities .................................. 309,398
Income taxes payable ................................. 203,406
Deferred revenue ..................................... 705,645
-----------
Total current liabilities ...................... 1,562,676
-----------
LONG-TERM DEBT, NET OF CURRENT PORTION .................. 16,300
-----------
STOCKHOLDERS' EQUITY:
Common stock, $1.608 par value-
Authorized, issued and outstanding-1,000 shares .... 1,608
Retained earnings .................................... 940,531
Cumulative translation adjustment..................... (41,694)
-----------
Total stockholders' equity ..................... 900,445
-----------
$ 2,479,421
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 and 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
----------------
1996 1997
---- ----
<S> <C> <C>
REVENUES:
Software licenses ..................................... $ 526,843 $ 388,375
Hardware .............................................. 418,551 298,750
Service and other ..................................... 968,276 806,624
---------- ----------
Total revenues .................................. 1,913,670 1,493,749
---------- ----------
COST OF REVENUES:
Software licenses ..................................... 59,023 37,776
Hardware .............................................. 232,606 163,695
Service and other ..................................... 432,465 339,981
---------- ---------
Total cost of revenues .......................... 724,094 541,452
---------- ---------
Gross profit .................................... 1,189,576 952,297
---------- ---------
OPERATING EXPENSES:
Sales and marketing ................................... 567,825 415,533
Research and development .............................. 284,706 201,470
General and administrative ............................ 141,354 100,735
---------- ---------
Total operating expenses ........................ 993,885 717,738
---------- ---------
Income from operations .......................... 195,691 234,559
INTEREST EXPENSE ......................................... (6,841) (2,447)
---------- ---------
Income before provision for income taxes ........ 188,850 232,112
PROVISION FOR INCOME TAXES ............................... 66,354 81,239
---------- ---------
Net income ...................................... $ 122,496 150,873
---------- ---------
---------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 and 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
----------------
1996 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................ $ 122,496 $ 150,873
Adjustments to reconcile net income to net cash provided
by operating activities -
Depreciation and amortization ....................... 84,240 13,803
Changes in assets and liabilities -
Accounts receivable ............................... 536,839 799,800
Inventory ......................................... (35,725) (14,831)
Prepaid expenses .................................. 20,132 (95,486)
Accounts payable .................................. 11,090 (30,408)
Accrued liabilities ............................... (670,075) (659,941)
Income taxes payable .............................. 2,392 25,782
Deferred revenue .................................. (65,408) 17,973
---------- ----------
Net cash provided by operating activities ....... 5,981 207,565
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ................... (153,060) (33,481)
Decrease in other assets .............................. - 885
---------- ----------
Net cash used in investing activities ........... (153,060) (32,596)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt ............................ (14,902) (44,492)
---------- ----------
EFFECT OF EXCHANGE RATES ON CASH ......................... (13,224) (27,739)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..... (175,205) 102,738
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ........... 482,289 602,729
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD ................. $ 307,084 $ 705,467
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CMA ETTWORTH GROUP LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by
CMA Ettworth Group Limited (the Group) pursuant to the rules and
regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements and should be read in
conjunction with the consolidated financial statements and notes
thereto for the year ended March 31, 1997 included in Omtool, Ltd.'s
current report on Form 8-K/A Amendment No. 2 filed on February 18,
1998. The accompanying condensed consolidated financial statements
reflect all adjustments (consisting of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
presentation of results for the interim period presented. The results
of operations for the six-month period ended September 30, 1997 are
not necessarily indicative of the results to be expected for the
full fiscal year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements reflect the application of
certain accounting policies as described in this note and elsewhere in
the notes to the consolidated financial statements.
(a) Principles of Consolidation
These financial statements include the accounts of the Group
and its wholly-owned subsidiaries. All significant
intercompany amounts have been eliminated in consolidation.
(b) Inventory
Inventory consists of hardware purchased for resale and is
valued at the lower of cost or net realizable value.
(c) Foreign Currency Translation
The accompanying financial statements have been translated
into U.S. dollars in accordance with Statement of Financial
Accounting Standards (SFAS) No. 52, Foreign Currency
Translation. Accordingly, assets and liabilities are
translated at exchange rates in effect at the end of the
period, and revenues and expenses are translated at the
average exchange rates during the period.
(3) SUBSEQUENT EVENT
On December 5, 1997, Omtool, Ltd., a United States Corporation
(Omtool), acquired all of the outstanding share capital of the Group
pursuant to a Share Sale and Purchase Agreement dated December 5, 1997
by and among the Group and its shareholders and Omtool. The purchase
price was paid in a combination of 363,637 newly issued shares of
common stock, $.01 par value, of Omtool and $4,000,000 in cash.
