FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of April 2000
A.C.L.N. LIMITED
(Name of Registrant)
Mechelsesteenweg 166
B-2018 Antwerp, Belgium
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F |X| Form 40-F |_|
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes |_| No |X}
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): Not Applicable.
<PAGE>
Attached hereto are copies of the 1999 Annual Report to Stockholders,
A.C.L.N. Limited, a Cyprus corporation (the "Company"), which was distributed to
stockholders in connection with the Annual Meeting held on April 28, 2000.
- 2 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
A.C.L.N. LIMITED
Date: May 12, 2000 By: /s/ Joseph J. H. Bisschops
----------------------------
Name: Joseph J. H. Bisschops
Title: Chairman of the Board
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequential Page No.
- ------- -------------------
A 1999 Annual Report to Stockholders
<PAGE>
A.C.L.N. Limited
1999 Annual Report
to
Stockholders
April 17, 2000
<PAGE>
Summary Data
<TABLE>
<S> <C> <C>
Executive
Office: 166 Mechelse Steenweg
2018 Antwerp
Belgium
Officers: Joseph J.H. Bisschops Chairman of the Board and Managing
Director
Aldo Labiad President, Chief Executive Officer and Chief
Operating Officer
Alex de Ridder Vice President and Chief Financial Officer
Directors: Joseph J.H. Bisschops, Chairman Earl Gould
Aldo Labiad Charles L. Brock
Alex de Ridder Marina Savva
Michael S. Doherty
Auditors: BDO International, Cyprus
Counsel: Brock Silverstein LLC, New York, New York
Ordinary
Share Market: Nasdaq National Market ("ACLNF")
Transfer Agent
and Registrar: Continental Stock Transfer and Trust Company
</TABLE>
<PAGE>
ACLN Limited
================================================================================
Consolidated Financial Statements
Year ended December 31, 1999
1
<PAGE>
ACLN Limited
================================================================================
Independent auditors' report 3
Consolidated financial statements:
Balance sheets 4
Statements of income 5
Statements of shareholders' equity 6
Statements of cash flows 7
Notes to financial statements 8-12
2
<PAGE>
ACLN Limited
================================================================================
Independent Auditors' Report
The Board of Directors
ACLN Limited
We have audited the accompanying consolidated balance sheets of ACLN Limited and
subsidiary as of December 31, 1998 and 1999 and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing standards
in the United States and Cyprus. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ACLN Limited and
subsidiary as of December 31, 1998 and 1999, and the results of their operations
and cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting standards generally accepted in the United
States.
BDO International
Nicosia, Cyprus
April 7, 2000
3
<PAGE>
ACLN Limited
Consolidated Balance Sheets
================================================================================
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1999
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $11,264,950 $13,944,855
Cash restricted as to withdrawal 36,358,280 63,630,117
Accounts receivable, net of allowance for bad debts of
$345,483 and $nil 1,487,827 2,400,864
Deferred expenses -- 261,762
Furniture and fittings -- 5,474
Deposits 6,587 5,702
- -------------------------------------------------------------------------------------------------------------
$49,117,644 $80,248,774
=============================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accruals $ 516,311 $ 884,541
Amounts due to related parties 41,904 36,272
Income taxes payable 1,870,767 3,012,615
- -------------------------------------------------------------------------------------------------------------
2,428,982 3,933,428
- -------------------------------------------------------------------------------------------------------------
Commitments
Shareholders' equity:
Ordinary shares, stated value of C(pounds) 0,01 each,
8,832,692 (1998: 8,200,000) shares issued and
outstanding 158,470 170,112
Paid-in capital 13,391,955 20,763,972
Retained earnings 33,108,677 55,320,409
Accumulated other comprehensive income 29,560 60,853
- -------------------------------------------------------------------------------------------------------------
Total shareholders' equity 46,688,662 76,315,346
- -------------------------------------------------------------------------------------------------------------
$49,117,644 $80,248,774
=============================================================================================================
</TABLE>
4
<PAGE>
ACLN Limited
Consolidated Statements of Income
================================================================================
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------------------
1997 1998 1999
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 52,902,964 $ 81,882,368 $ 97,538,520
Cost of sales 39,835,082 59,698,461 69,325,373
- -------------------------------------------------------------------------------------------------------------
Gross profit 13,067,882 22,183,907 28,213,147
Selling, general and administrative expenses 2,104,857 4,006,888 4,685,127
- -------------------------------------------------------------------------------------------------------------
Income from operations 10,963,025 18,177,019 23,528,020
- -------------------------------------------------------------------------------------------------------------
Other income (expense)
Interest income 2,003 100,118 46,260
Interest expense (10) (15) --
- -------------------------------------------------------------------------------------------------------------
1,993 100,103 46,260
- -------------------------------------------------------------------------------------------------------------
Income before income taxes 10,965,018 18,277,122 23,574,280
Income taxes 498,044 862,124 1,362,548
- -------------------------------------------------------------------------------------------------------------
Net income 10,466,974 17,414,998 22,211,732
- -------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss):
Foreign currency translation adjustments (171,222) 73,682 31,293
- -------------------------------------------------------------------------------------------------------------
Comprehensive Income $ 10,295,752 $ 17,488,680 $ 22,243,025
=============================================================================================================
Net income per share--basic $ 1.50 $ 2.29 $ 2.66
=============================================================================================================
Net income per share--diluted $ 1.50 $ 2.29 $ 2.62
=============================================================================================================
Weighted average shares outstanding--basic 7,000,000 7,600,000 8,357,737
=============================================================================================================
Weighted average shares outstanding--diluted 7,000,000 7,614,728 8,486,128
=============================================================================================================
</TABLE>
5
<PAGE>
ACLN Limited
Consolidated Statements of Shareholders' Equity
================================================================================
<TABLE>
<CAPTION>
Capital Stock Paid-in Retained Accumulated Total
Capital Earnings Other
Comprehensive
income
Number Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996 1,000,000 $ 2,000 $ 1,646,425 $ 5,569,514 $ 127,100 $ 7,345,039
Net income -- -- 10,466,974 -- 10,466,974
7 for 1 stock split/recapitalization issue 6,000,000 133,790 63,210 -- -- 197,000
Capital contribution -- 1,000,000 -- -- 1,000,000
Cumulative translation adjustment -- -- -- (171,222) (171,222)
Dividend -- -- (342,809) -- (342,809)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1997 7,000,000 $ 135,790 $ 2,709,635 $ 15,693,679 $ (44,122) $ 18,494,982
Net income -- -- 17,414,998 -- 17,4l4,998
Net proceeds from the public offering of
shares (net of offering expenses of
$1,445,000) 1,200,000 22,680 10,532,320 -- -- 10,555,000
Stock options issued for services -- 150,000 -- -- 150,000
Cumulative translation adjustment -- -- -- 73,682 73,682
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1998 8,200,000 $ 158,470 $ 13,391,955 $ 33,108,677 $ 29,560 $ 46,688,662
Net income 22,211,732 22,211,732
Net proceeds from a private placement of
shares (net of offering expenses of
$861,539) 632,692 11,642 7,292,017 7,303,659
Stock options issued for services 80,000 80,000
Cumulative translation adjustment 31,293 31,293
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1999 8,832,692 $ 170,112 $ 20,763,972 $ 55,320,409 $ 60,853 $ 76,315,346
====================================================================================================================================
</TABLE>
6
<PAGE>
ACLN Limited
Consolidated Statement of Cash Flows
================================================================================
<TABLE>
<CAPTION>
Years ended December 31,
1997 1998 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 10,466,974 $ 17,414,998 $ 22,211,732
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 2,462 -- 672
Stock issued for services -- 150,000 80,000
Changes in assets and liabilities:
Cash restricted as to withdrawal (13,036,468) (17,972,001) (27,271,837)
Accounts receivable 1,744,293 243,192 (880,859)
Deferred expenses 212,304 1,103,180 (261,762)
Accounts payable and accruals 890,575 (1,089,991) 368,230
Amounts due to related parties (1,361,093) (37,582) (5,632)
Income taxes payable 454,271 861,361 1,141,848
- ------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (626,682) 673,157 (4,617,608)
- ------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
- ------------------------------------------------------------------------------------------------------------
Purchase of fixed assets -- -- (6,146)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities -- -- (6,146)
- ------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Capital contribution (notes 4 and 7) l,000,000 l0,555,000 7,303,659
Distribution to shareholders (342,809) -- --
- ------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 657,191 10,555,000 7,303,659
- ------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 30,509 11,228,157 2,679,905
Cash and cash equivalents, beginning of period 6,284 36,793 11,264.950
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 36,793 $ 11,264,950 $ 13,944,855
============================================================================================================
Supplemental cash flow information:
Income taxes paid $ 39,432 $ -- $ 189,107
Interest paid $ 10 $ 15 $ --
Interest received $ 2,003 $ 100,118 $ 46,260
============================================================================================================
</TABLE>
7
<PAGE>
ACLN Limited
ACLN Limited Notes to Financial Statements
================================================================================
1 Inception and ACLN Limited was incorporated on February 16, 1993 in
Principal Activities Cyprus as Hemswell Holdings Co Limited and later changed
its name to ACLN Limited. It remained dormant until
January 1, 1995, when it acquired Compagnie Labiad de
Navigation S.A.M., a Company incorporated in Monaco. The
principal activity of the group is the operation of
liner services for the transport of cargo.
2 Significant Basis of Presentation
Accounting Policies
The accompanying consolidated financial statements
include the accounts of ACLN Limited and its
wholly-owned subsidiary, Compagnie Labiad de Navigation
S.A.M. (collectively the "Company"). All significant
intercompany transactions have been eliminated. The
financial statements have been prepared on the basis of
accounting principles generally accepted in the United
States.
Revenue Recognition
The Company is a facilitator of cargo transport and
sales are recorded at the time the shipment in
completed.
Concentrations of Credit Risk/Cash Restricted as to
Withdrawal
The Company's trade accounts receivable are collected on
its behalf by shipping agents in the port of destination
prior to the release of the automobile to the customer.
Accordingly, the credit risk from individual automobile
shippers is considered to be minimal. The shipping
agents deposit the proceeds for the benefit of the
Company with the local central banking system. These
amounts are classified as Cash Restricted as to
Withdrawal in the accompanying balance sheet. The funds
are transferred to the Company's bank accounts at the
completion of processing by the central banking system
in accordance with local currency exchange regulations.
Cash Restricted as to Withdrawal deposited with the
central banks on behalf of the Company by country are as
follows:
Country December 31, December 31,
1998 1999
--------------------------------------------------------
Angola $ 5,381,712 $ 7,608,132
Egypt 5,328,565 6,707,988
Guinea 6,576,064 13,536,832
Nigeria 5,688,089 8,708,277
Tunisia 13,383,850 25,474,021
Benin -- 1,594,867
--------------------------------------------------------
$36,358,280 $63,630,117
========================================================
8
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
The company assesses the credit worthiness of shipping
agents prior to entering into agency contracts. The
company also evaluates the reliability of the central
banking systems and the political stability of countries
in which it does business prior to arranging a voyage.
Allowance for Bad Debts
In the normal course of business, the Company rarely has
accounts receivable collectibility problems. The Company
has established an allowance for bad debts against
accounts receivable in connection with special
automobile transport contracts entered into in 1995 and
before for which the Company has not received payment. A
substantial part of these amounts has been collected
during 1999. The balance has been written-off as bad
debts.
Deferred Expenses
Direct costs of shipping revenue are deferred until
shipment is complete and revenue is recognized.
Taxation
The provision for income taxes is computed on pretax
income based on the current tax law of the relevant tax
jurisdiction. Deferred income taxes are recognized for
the tax consequences in future years of differences
between the tax basis of assets and liabilities and
their financial reporting amounts at each year-end based
on enacted tax laws and statutory tax rates.
Use of Estimates
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
disclosures of contingent assets and liabilities at the
date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Fair value of Financial Instruments
The fair value of financial instruments including cash
and cash equivalents, cash restricted as to withdrawal,
accounts receivable, accounts payable and income taxes
payable approximates the carrying value because of the
short term nature of these financial instruments. The
fair value of amounts due to related parties cannot be
determined because of the nature of the terms.
9
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
Stock Option Plan
The Company follows Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees"
("APB25") and related Interpretations in accounting for
its employee stock options. Under APB 25, for options
issued to employees, compensation expense is recorded
for the excess of market price of the Company's ordinary
shares over the exercise price as of the grant date.
Options granted to non-employees are recorded at fair
value.
Foreign Currency Translation
Transactions in foreign currencies are recorded using
the rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies
are translated at the rate of exchange ruling at the
balance sheet date. Gains and losses are recorded in the
statement of income.
For consolidation purposes, assets and liabilities of
subsidiaries denominated in foreign currencies are
translated into the reporting currency using the rate at
the balance sheet date. The statements of income are
translated using average rates in effect during the
year. Translation adjustments are recorded in a separate
component of stockholders' equity.
Cash and Cash Equivalents
For purposes of the consolidated balance sheets and the
statements of cash flows, the Company considers all
highly liquid investments having original maturities of
three months or less as cash equivalents.
Earnings per share
Net income per share is computed using net income and
the weighted average number of shares outstanding
considering the 7 for I stock split/capitalization issue
effected in December, 1997. All per share amounts have
been retroactively restated to reflect the effects of
this share transaction.
Basic earnings per share includes no dilution and is
computed by dividing income available to common
shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per
share reflect, in periods in which they have a dilutive
effect, the effect of common shares issuable upon
exercise of stock options and warrants. As required by
the Statement all periods presented have been restated
to comply with the provisions of SFAS No. 128.
10
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
A reconciliation of shares used in calculating basic and
diluted earnings per common share follows.
<TABLE>
<S> <C>
December 31, 1999
Basic 8,357,740
Effect of assumed conversion of stock options 128,388
---------
Diluted 8,486,128
=========
</TABLE>
Effect of recently issued accounting standards
In June 1998, the FASB issued SFAS No. 133, "Accounting
for Derivatives and Hedging Activities" ("SFAS No.
133"), which establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for
hedging activities. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15,
2000. The Company does not expect the adoption of this
statement to have a significant impact on the Company's
results of operations or financial position.
3 Taxation Current income tax expense is comprised of the
following:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1997 1998 1999
--------------------------------------------------------------------------
<S> <C> <C> <C>
Cyprus $ 496,351 $ 861,361 $1,362,548
Monaco 1,693 763 --
--------------------------------------------------------------------------
$ 498,044 $ 862,124 $1,362,548
==========================================================================
</TABLE>
The difference between the statutory tax rates and the
effective tax rates resulted from the following:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1997 1998 1999
--------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at statutory rate
(Monaco 33%; Cyprus
4.25%) $ 566,048 $ 783,818 $1,007,459
Penalties and other 45,123 78,306 355,089
Effect of tax free distribution
to shareholders (Note 4) (113,127) -- --
--------------------------------------------------------------------------
$ 498,044 $ 862,124 $1,362,548
==========================================================================
</TABLE>
11
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
4. Related Party Monaco tax law allows the imputation of a shareholder
Transactions charge against pre tax earnings. Such charges amounted
to approximately $342,808, nil and nil in 1997, 1998 and
1999, respectively, and have been accounted for as
dividends. Unpaid shareholder charges of $79,486,
$41,904 and $36,272 as of December 1997, 1998 and 1999
are included in amounts due to related parties.
In 1997, one of the Company's shareholders contributed
company shares held by it to a joint venture on the
Company's behalf in exchange for $1,000,000. The funds
received were contributed to the Company and is
presented as a capital contribution.
A Director of the Company, served as Senior Managing
Director and Director of the West Coast operations of
Spencer Trask Securities, Inc., which acted as the
placement agent during the Private Placement of the
Company's shares that took place in October 1999.
Notwithstanding this relationship, the Board of
Directors believes that the terms of the offering were
at least as favorable as could be obtained from an
unaffiliated third party
A Director of the Company, is a member of the United
States councel to the Company.
The Company contracts for the use of dock workers or
similar port personnel in Antwerp from a local port
company. The outstanding capital stock of this company
is beneficially owned by the Chairman of the Board of
Directors of the Company. This company also provides the
Company with office space in Antwerp as part of the per
vehicle fee paid by the Company. Notwithstanding this
relationship, the Company believes that the terms of
services provided by this company are at least as
favorable as could be obtained from an unaffiliated
third party.
5. Commitments The Company leases office space under operating leases
that expire within one year. Lease contracts are
expected to be renewed at comparable terms. Rent expense
amounted to $39,000, $27,000 and $10,000 during the
years ended December 31, 1997, 1998 and 1999.
The Company has entered into an employment agreement
with Joseph Bisschops pursuant to which Mr. Bisschops
has agreed to serve as Chairman of the Board of
Directors of the Company, through December 31, 2000. The
contract is cancellable by either party with three
month's notice. The agreement provides for a base salary
of $200,000 per annum through the termination of such
agreement.
12
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
The Company has entered into an employment agreement
with Alex de Ridder pursuant to which Mr. De Ridder has
agreed to serve as Vice President, Chief Financial
Officer and Director (Principal Financial and Accounting
Officer) of the Company, through December 31, 2002. The
contract is cancellable by either party with three
month's notice. The agreement provides for a base salary
of $130,000 per annum.
The Company has entered into an employment agreement
with Aldo Labiad pursuant to which Mr. Labiad has agreed
to serve as President, Chief Executive Officer and
Operating Officer, and a Managing Director of the
Company during the period from July 1, 1998 through
December 31, 2002. The agreement provides for a base
salary of $200,000 per annum.
The Company has entered into an employment agreement
with Christian Payne pursuant to which Mr. Payne has
agreed to serve as Vice President of Finance and
Investor Relations of the Company starting on April 20,
1999. The agreement provides for a base salary of
$100,000 per annum. Mr. Payne's services were terminated
on January 31, 2000.
Directors who are not officers of the Company are
entitled to receive annual fees of $15,000, and the
Chairman of the Audit Committee (currently Charles
Brock) is entitled to receive and additional fee of
$2,000 per month.
6. Geographical Substantially all the Company's revenues results from
Information the shipment of automobiles from Antwerp, Belgium billed
to shipping agents located in various destination ports.
Sales by region of destination are as follows:
Years ended December 31,
1997 1998 1999
--------------------------------------------------------
North Africa $18,400,000 $38,400,000 $51,400,000
Middle East 16,400,000 10,900,000 7,300,000
West Africa 18,100,000 32,600,000 38,800,000
--------------------------------------------------------
$52,900,000 $81,900,000 $97,500,000
========================================================
13
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
7. Private Placement On October 1 1999, the Company issued 632,692 shares in
a private placement in the United States with net
proceeds to the Company of $7,303,659.
In connection with the private placement the company
issued 61,025 warrants to purchase the company's common
stock at $13,38 per share and a further 61,025 warrants
to purchase the company's stock at $20,07 per share. The
total of 122,050 warrants is exercisable through
September 24, 2004. Also, in connection with the
company's initial public offering in July 1998, the
company issued 122,000 warrants to purchase Company
stock at $16,50 per share exercisable through June 26,
2003.
8. Stock Option Plan In March 1998, the Company adopted a stock option plan
(the "Plan") which provides for the grant of options to
purchase up to 700,000 ordinary shares to employees,
officers, directors and consultants of the Company.
Options may be either "incentive stock options" within
the meaning of the Internal Revenue Code, or
non-qualified options. Incentive stock options may be
granted only to employees of the Company, while
non-qualified options may be issued to non-employee
directors, consultants and others, as well as to
employees of the Company.
During 1998, the Company entered into an agreement with
a consultant to issue 48,000 options at $7.75, based on
the then current market price on the date of the
agreement, that vested over a period ending June, 1999.
As of December 31, 1999, 48,000 of these options were
exercisable. In connection with that agreement the
company recorded an expense of $150,000 and $80,000
based on the fair value of the options granted and
earned in 1998 and 1999 respectively. None of these
options have been exercised as at the date of these
financial statements.
During 1999, options exercisable for an aggregate of
280,000 ordinary shares have been granted under the Plan
to employees of the company, of which options
exercisable for an aggregate of 200,000 ordinary shares
were granted to Michael Doherty at an exercise price of
$6.00, options exercisable for an aggregate of 50,000
ordinary shares were granted to Christian Payne at an
exercise price of $ 10.375, and options exercisable for
an aggregate of 30,000 ordinary shares were granted to
Earl Gould at an exercise price of $l0.375. None of
these options have been exercised as at the date of
these financial statements.
The Company applies Accounting Principles Board ("APB")
Opinion 25, "Accounting for Stock Issued to Employees",
and related Interpretations in accounting for the Plan.
Under APB Opinion 25, no compensation cost is recognized
if the exercise price of the Company's employee stock
options is equal to or greater than the market price of
the underlying stock on the date of
14
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
the grant.
Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation",
requires the Company to provided pro forma information
regarding net income and earnings per share as if
compensation cost for the Company's stock option plan
had been determined in accordance with the fair value
method prescribed by SFAS 123. The company estimates the
fair value of each stock option at the grant date by
using the Black-Scholes options-pricing model with the
following weighted-average assumptions for options
granted in 1999: no dividends paid for the year;
expected volatility of 45,8%; risk-free interest rate of
5,01% and expected life of 9,5 years.
Under the provisions of SFAS No. 123, the Company's
income from continuing operations available to common
shareholders and its basic and diluted earning per share
would have decreased to the pro forma amounts indicated
below:
Year ended
December 31,
------------
1999
----
Income from continuing operations
Available to common shareholders:
As reported $ 22,211,732
Pro forma $ 21,438,530
Basic earnings per share:
As reported $ 2.66
Pro forma $ 2.57
Diluted earnings per share:
As reported $ 2.62
Pro forma $ 2.53
15
<PAGE>
ACLN Limited
Notes to Financial Statements
================================================================================
The following table contains information on stock
options for the year ended December 31, 1999.
<TABLE>
<CAPTION>
Weighted
--------
Option Exercise price average
------ -------------- -------
shares range per share exercise price
------ --------------- --------------
$ $
<S> <C> <C> <C>
Outstanding, December 31, 1998 48,000 7.75 7.75
Granted 280,000 6.00 to 10.375 7.25
Exercised -- -- --
-------
Outstanding, December 31, 1999 328,000 6.00 to 10.375 7.32
=======
</TABLE>
The following table summarises information about stock
options outstanding and exercisable at December 31,
1999:
<TABLE>
<CAPTION>
Weighted
--------
average Weighted Weighted
------- -------- --------
remaining average average
--------- ------- -------
Range of contractual exercise exercise
-------- ----------- -------- --------
exercise prices Outstanding life (years) price Exercisable price
--------------- ----------- ------------ ----- ----------- -----
$ $ $
<S> <C> <C> <C> <C> <C>
6.00 200,000 9.39 6.00 66,667 6.00
7.75 48,000 9.56 7.75 48,000 7.75
10.375 80,000 9.60 10.375 80,000 10.375
------- -------
6.00 to 10.375 328,000 194,667
======= =======
</TABLE>
There were remaining options available for issuance
under the Plan as of December 31 of 1999 equal to
372,000.
16
