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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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March 14, 2000
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Date of Report (Date of earliest event reported)
NetSol International, Inc.
--------------------------
(Exact name of registrant as specified in its charter)
Nevada
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(State or other jurisdiction of incorporation)
333-28861 95-4627685
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(Commission File Number) (IRS Employer Identification No.)
5000 N. Parkway Calabasas, Suite 202, Calabasas, CA 91302
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(Address of principal executive offices)
Registrants telephone number, including area code: (818) 222-9195
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
On January 14, 2000, NetSol International, Inc. ("Registrant") filed Reports on
Form 8-K to report its acquisition of Abraxas Software Pty Ltd.,("Abraxas") a
Company organized under the laws of the country of Australia whereby the
Registrant acquired 100% of the outstanding capital stock of Abraxas in exchange
for 150,000 shares of restricted stock of the Registrant. Pursuant to Item 7 of
Form 8-K, Registrant indicated that it would file certain financial information
no later than the date required under Item 7 of Form 8-K. This Amendment is
filed to provide the required financial information.
(a) Financial statements of businesses acquired.
The financial statement of Abraxas is included in this Amended
Current Report, Form 8-K/A are as follows:
Financial Statement Description Page
--------------------------------------------------------- ---------
- Independent Auditors' Report.......................... 3
- Balance Sheet as of June 30, 1999..................... 9
- Notes to and Forming Part of the Financial Statements. 10
- Directors Declaration................................. 15
(b) Exhibits.
The following exhibits are filed with this Amended Current Report,
Form 8-K/A:
Exhibit
Number Exhibit Description
------ ------------------------------------------------------------------
2.0 Acquisition Agreement dated January 2, 2000
23.1 Consent of Independent Auditors
99.1 Abraxas Software Pty Ltd. Financial Statements
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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 thereunto duly authorized.
Dated: March 14, 2000 NetSol International, Inc.
By:/s/ Najeeb Ghauri
----------------------------
Najeeb Ghauri
Its: President
<PAGE>
STOCK ACQUISITION AGREEMENT
THIS STOCK ACQUISITION AGREEMENT ("Agreement"), dated for reference
purposes as of January 2, 2000, is by and among NETSOL INTERNATIONAL, INC., a
Nevada corporation (the "Company"), and the shareholders whose names appear on
the signature page hereto (each, a "Shareholder" and collectively, the
"Shareholders") of ABRAXAS SOFTWARE PTY, LTD. ("Abraxas").
R E C I T A L S
A. The Shareholders own certain shares of capital stock of Abraxas as
set forth in attached Schedule A (the "Abraxas Shares") which total 100% of the
total issued and outstanding shares of Abraxas.
B. Company desires to purchase 100% of the Abraxas Shares from
Shareholders and Shareholders desire to sell such shares to Company upon the
terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
ARTICLE 1
SALE AND ISSUANCE OF SHARES AND OTHER TERMS
Subject to the terms and conditions herein set forth, and on the basis
of the representations, warranties and agreements herein contained, at Closing
(as defined below):
1.1 CONVEYANCE OF ABRAXAS SHARES. Shareholders will sell, assign,
transfer and convey all of their respective right, title and interest in and to
the Abraxas Shares to Company, and Company shall acquire the Abraxas Shares from
the Shareholders.
1.2 ISSUANCE OF COMPANY SHARES. Company shall issue to Shareholders
shares of common stock of Company (collectively, the "Company Shares") as set
forth in Schedule B .
1.3 NO BROKERAGE COMMISSION. Shareholders have not employed any broker,
agent or finder in connection with any transaction contemplated by this
Agreement and hereby indemnifies Company against any liability for a brokerage
commission or finders fee of any description incurred by Company with respect to
any transaction contemplated by this Agreement. Company has not employed any
broker, agent or finder in connection with any transaction contemplated by this
Agreement and hereby indemnifies Shareholders against any liability for a
brokerage commission or finders fee of any description incurred by Shareholders
with respect to any transaction contemplated by this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each Shareholder
represents and warrants to Company with respect to only himself, herself, or
itself, as of the date hereof and as of the Closing, as follows:
2.1.1 ABRAXAS SHARES. Shareholder is the lawful beneficial and
record owner of the Abraxas Shares as set forth in attached Schedule A and has
not conveyed, pledged, assigned or otherwise transferred such shares or any
interest therein. All of the Abraxas Shares owned by such Shareholder will be
conveyed hereunder free and clear of all liens, security interests,
encumbrances, pledges, restrictions, charges, demands, and claims of any kind
and nature whatsoever, whether direct or indirect or contingent.
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2.1.2 EXPERIENCE. (i) Shareholder has a preexisting personal or
business relationship with Company or one or more of its officers, directors, or
control persons, or (ii) by reason of Shareholder's business or financial
experience, Shareholder is capable of evaluating the risks and merits of an
investment in the Company Shares and of protecting his, her or its own interests
in connection with this investment.
2.1.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. Shareholder agrees
that he, she or it is acquiring the Company Shares for investment purposes only
and not for sale or with a view to distribution of all or any part of such
Company Shares.
2.1.4 RESTRICTED SECURITIES. Shareholder understands that the
Company Shares are "restricted securities" under the Act (as defined below)
because they are being acquired from Company in a transaction not involving a
public offering, and that, under such laws and applicable regulations, such
securities may not be resold for a period of one year from the date of issuance
unless registered with the Securities and Exchange Commission under the Act and
qualified by appropriate state securities regulators, or unless Shareholder
obtains written consent from Company and otherwise complies with an exemption
from such registration and qualification (including, without limitation,
compliance with Rule 144).
2.1.5 LEGEND. Shareholder acknowledges that the certificates
delivered by Company representing the Company Shares shall provide as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF FOR A
PERIOD OF ONE YEAR FROM THE ISSUANCE THEREOF EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
LAWS OR (ii) UPON THE EXPRESS WRITTEN AGREEMENT OF COMPANY AND
COMPLIANCE, TO THE EXTENT APPLICABLE, WITH RULE 144 UNDER THE ACT (OR
ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES).
2.1.6 ADEQUATE MEANS. Shareholder has adequate means of
providing for current needs and contingencies, has no need for liquidity in the
investment, and is able to bear the economic risk of an investment in the
Company Shares offered by Company of the size contemplated. Each Shareholder
represents that he, she or it is able to bear the economic risk of the
investment and at the present time could afford a complete loss of such
investment.
2.1.7 INDEPENDENT INVESTIGATION. Shareholder acknowledges that,
in entering into this Agreement, Shareholder has relied on Shareholder's own
independent investigations and has not relied upon any representations or other
information (whether oral or written) from Company, or its officers, directors,
agents, employees or representatives.
2.1.8 NO REPRESENTATIONS. Neither the officers, directors, any
agent or employee of Company nor any other person has at any time expressly or
implicitly made any representation, warranty, or guaranty to Shareholder
concerning the Company Shares or Company except as expressly provided herein.
2.2 REPRESENTATIONS AND WARRANTIES OF COMPANY. Company represents and
warrants to each Shareholder, as of the date hereof and as of the Closing, as
follows:
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2.2.1 COMPANY SHARES. The Company Shares to be issued hereunder
shall be duly and validly issued, will be fully paid and nonassessable, and will
be conveyed hereunder free and clear of all liens, security interests,
encumbrances, pledges, restrictions, charges, demands, and claims of any kind
and nature whatsoever, whether direct or indirect or contingent, except for
restrictions on transfer imposed by applicable state and federal securities law.
2.2.2 INDEPENDENT INVESTIGATION. Company acknowledges that, in
entering into this Agreement, Company has relied on Company's own independent
investigations and has not relied upon any representations or other information
(whether oral or written) from any Shareholder, or their respective agents,
employees or representatives.
2.2.3 NO REPRESENTATIONS. Neither the Shareholders nor any of
their respective agents, employees, or representatives nor any other person has
at any time expressly or implicitly made any representation, warranty, or
guaranty to Company concerning the Abraxas Shares or Abraxas except as expressly
provided herein.
ARTICLE 3
CONDITIONS
3.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each party hereunder shall be subject to the satisfaction prior to or at the
Closing of the following conditions:
(a) NO RESTRAINTS. No statute, rule, regulation, order, decree
or injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental entity of competent jurisdiction which enjoins or
prohibits the consummation of this Agreement and shall be in effect.
(b) LEGAL ACTION. There shall not be pending or threatened in
writing any action, proceeding or other application before any court or
governmental entity challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking to
obtain any material damages.
3.2 CONDITIONS TO COMPANY'S OBLIGATIONS. The obligations of the Company
shall be subject to the satisfaction prior to or at the Closing of the following
conditions unless waived by Company:
(a) REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. The
representations and warranties of Shareholders set forth in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing as
though made on and as of the Closing, except: (i) as otherwise contemplated by
this Agreement, or (ii) in respects that do not have a material adverse effect
on Shareholders or on the benefits of the transactions provided for in this
Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF SHAREHOLDERS. Shareholders
shall have performed all agreements and covenants required to be performed by it
under this Agreement prior to the Closing, except for breaches that do not have
a material adverse effect on Shareholders or on the benefits of the transactions
provided for in this Agreement.
(c) NO MATERIAL CHANGES. Since the date hereof and through
Closing, there shall not have occurred any change, occurrence or circumstance in
the Shareholders having or reasonably likely to have, individually or in the
aggregate, in the reasonable judgment of Company, a material adverse effect on
the transaction contemplated herein.
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(d) DUE DILIGENCE. The Company and Abraxas have and the
opportunity to conduct due diligence and have investigated to their satisfaction
unless as otherwise stated on Schedule C.
3.3 CONDITIONS TO SHAREHOLDER'S OBLIGATIONS. The obligations of
Shareholders shall be subject to the satisfaction prior to or at the Closing of
the following conditions unless waived by Shareholders:
(a) PERFORMANCE OF OBLIGATIONS OF COMPANY. Company shall have
performed all agreements and covenants required to be performed by it under this
Agreement prior to the Closing, except for breaches that do not have a material
adverse effect on Company or on the benefits of the transactions provided for in
this Agreement.
(b) NO MATERIAL CHANGES. Since the date hereof and through
Closing, there shall not have occurred any change, occurrence or circumstance in
Company having or reasonably likely to have, individually or in the aggregate,
in the reasonable judgment of Shareholders, a material adverse effect on
Company.
ARTICLE 4
COVENANTS
4.1 CONFIDENTIALITY. Each party hereto will hold and will cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other party furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the party to which it was furnished, (ii) in the public domain through no fault
of such party, or (iii) later lawfully acquired from other sources by the party
to which it was furnished), and each party will not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in connection with this
Agreement.
4.2 FURTHER ASSURANCES. Each party agrees that upon the request of any
other they will, from time to time, without further consideration, execute and
deliver to such other all such instruments and documents of further assurance or
otherwise, and will do any and all such acts and things as may be reasonably
required, to carry out the obligations of such party hereunder and to consummate
the transactions contemplated hereby.
ARTICLE 5
THE CLOSING
5.1 TIME AND PLACE. The consummation of the purchase and sale of shares
contemplated herein (the "Closing") shall take place at Abraxas' headquarters,
on or before January 2,2000, or at such other time and place as the parties
mutually agree upon in writing (which time and place are hereinafter referred to
as the "Closing Date").
5.2 SHAREHOLDERS' DELIVERIES AT CLOSING. On or before the Closing Date,
each Shareholder shall deliver to Company the following:
(a) A certificate or certificates of representing the Abraxas
Shares owned by such Shareholder as set forth in attached Schedule A, together
with a duly executed Stock Power in the form of attached Exhibit "A"; and
(b) Such other documents and instruments reasonably required to
carry out the transactions contemplated herein.
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5.3 COMPANY'S DELIVERIES AT CLOSING. On or before the Closing Date,
Company shall deliver or cause to be delivered to each Shareholder the
following:
(a) A certificate representing the Company Shares pursuant to
Section 1.2 above; and
(b) Such other documents and instruments reasonably required
to carry out the transactions contemplated herein.
ARTICLE 6
DEFAULT, AMENDMENT AND WAIVER
6.1 TERMINATION. Notwithstanding anything to the contrary contained in
this Agreement, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
6.1.1 By the mutual consent of all of the parties;
6.1.2 By Company at any time in the event of a breach or
default by Shareholders in the observance or in the timely performance of any of
its obligations hereunder which is not waived by Company and which remains
uncured for fifteen (15) days after receipt of notice in writing of such breach
or default;
6.1.3 By Shareholders at any time in the event of a breach or
default by Company in the observance or in the timely performance of any of its
obligations hereunder which is not waived by Shareholders and which remains
uncured for fifteen (15) days after receipt of notice in writing of such breach
or default;
No termination under this section shall be effective unless and until
the terminating party gives written notice of such termination to the other
party. Upon a termination of this Agreement due to a breach or default under
this Agreement by any of the parties (following the cure period provided
herein), the non-defaulting party shall have all rights and remedies given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
6.2 WAIVER AND AMENDMENT. Any term, provision, covenant,
representation, warranty or condition of this Agreement may be waived, but only
by a written instrument signed by the party entitled to the benefits thereof.
The failure or delay of any party at any time or times to require performance of
any provision hereof or to exercise its rights with respect to any provision
hereof shall in no manner operate as a waiver of or affect such party's right at
a later time to enforce the same. No waiver by any party of any condition, or of
the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition or of the breach of any other term, provision,
covenant, representation or warranty. No modification or amendment of this
Agreement shall be valid and binding unless it be in writing and signed by all
parties hereto.
ARTICLE 7
MISCELLANEOUS
7.1 DESTRUCTION OF PROPERTY. If any property being sold hereunder shall
be substantially damaged or destroyed by fire or other cause prior to the time
of Closing, Shareholders shall immediately notify Company and furnish to Company
a written statement of the amount of insurance, if any, payable on account
thereof. In the event of such damage or destruction, Company may elect (i) to
require that Shareholders restore the property to its condition on the date of
this Agreement or (ii) to declare this Agreement null and void.
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7.2 NOTICES. Any notice, request, instruction or other document
required by the terms of this Agreement, or deemed by any of the parties hereto
to be desirable, to be given to any other party hereto shall be in writing and
shall be given by prepaid telegram or delivered or mailed by registered or
certified mail, postage prepaid, with return receipt requested, to the following
addresses:
To Company:
NetSol International, Inc.
5000 N. Pkwy Calabasas, Suite # 202
Calabasas, CA 91302
Phone: 818-222-9195
Fax: 818-222-9197
Attn: Mr. Najeeb Ghauri, President
To Shareholders:
c/o Abraxas Software Pty Ltd.
Attn.: Fred Firth
The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by delivery in accordance with the
provisions of this Section, said notice shall be conclusively deemed given at
the time of such delivery. If notice is given by mail in accordance with the
provisions of this Section, such notice shall be conclusively deemed given
forty-eight (48) hours after deposit thereof in the United States mail. If
notice is given by telegraph in accordance with the provisions of this Section,
such notice shall be conclusively deemed given at the time that the telegraphic
agency shall confirm delivery thereof to the addressee.
7.3 ENTIRE AGREEMENT. This Agreement, together with the schedules and
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof.
7.4 SURVIVAL OF REPRESENTATIONS. All representation, warranties
agreements and covenants hereunder shall survive the Closing and remain
effective. Consummation of the transactions contemplated hereby shall not be
deemed or construed to be a waiver of any right or remedy possessed by any party
hereto, notwithstanding that such party knew or should have known at the time of
Closing that such right or remedy existed.
7.5 INCORPORATED BY REFERENCE. The schedules, exhibits and all
documents delivered as part hereof or incident hereto are incorporated as a part
of this Agreement by reference.
7.6 SEVERABILITY. If any provision hereof is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable.
7.7 GOVERNING LAW. This Agreement has been negotiated and executed in
the State of California and shall be construed and enforced in accordance with
the laws of such state.
7.8 ARBITRATION. If a dispute or claim shall arise with respect to any
of the terms or provisions of this Agreement, then either party may, by notice
as herein provided, require that the dispute be submitted under the Commercial
Arbitration Rules of the American Arbitration Association to an arbitrator in
good standing with the American Arbitration Association within fifteen (15) days
after such notice is given. Any such arbitrator so selected is to be mutually
acceptable to both parties. If both parties are unable to agree upon a
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single arbitrator, each party shall appoint one (1) arbitrator. If either party
does not appoint an arbitrator within five (5) days after the other party has
given notice of the name of its arbitrator, the single arbitrator appointed by
the party giving notice shall be the sole arbitrator and such arbitrator's
decision shall be binding upon both parties. If two (2) arbitrators are
appointed, these two (2) arbitrators shall appoint a third arbitrator who shall
proceed to resolve the question. The written decision of the single arbitrator
ultimately appointed by or for both parties shall be binding and conclusive on
the parties. Judgment may be entered on such written decision by the single
arbitrator in any court having jurisdiction and the parties consent to the
jurisdiction of the Municipal and Superior Court of Orange County, California
for this purpose. Any arbitration undertaken pursuant to the terms of this
section shall occur in Orange County, California.
7.9 ATTORNEYS' FEES. In the event of any legal, equitable or
administrative action or proceeding brought by any party against another party
under this Agreement, the prevailing party shall be entitled to recover the
reasonable fees of its attorneys and any costs incurred in such action or
proceeding including costs of appeal, if any, in such amount that the court or
administrative body having jurisdiction over such action may award.
7.10 BINDING EFFECT AND ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, legal representatives and assigns; provided, however,
that neither party may assign any of its rights under this Agreement without the
prior written consent of the other party, which consent may be withheld in such
party's sole discretion.
7.11 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
SHAREHOLDERS: (Percent of Shares Owned) COMPANY:
NETSOL INTERNATIONAL INC.,
a Nevada corporation
/s/ Fred Firth (44%) /s/ Salim Ghauri
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FRED FIRTH By: Salim Ghauri
/s/ John Giddons (12%) Its: CEO
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JOHN GIDDONS
/s/ Ian Crawford (44%)
- ----------------------------------
IAN CRAWFORD
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[LETTERHEAD]
25th JANUARY 2000
THE DIRECTORS
ABRAXAS SOFTWARE PTY. LTD.
INNOVATION HOUSE
TECHNOLOGY PARK
SA 5095.
DEAR SIR/MADAM,
CONSENT TO ACT AS AUDITOR
As required under Section 327(8) of The Corporations Law we hereby give our
consent to act as auditor of Abraxas Software Pty. Ltd. for the financial year
ended 30th June 1999.
This consent is to remain in force unless revoked by us in writing.
YOURS FAITHFULLY,
/s/ [ILLEGIBLE]
HLB MANN JUDD STEPHENS
CHARTERED ACCOUNTANTS
PHILIP PLUMMER
PARTNER
REGISTERED COMPANY AUDITOR
<PAGE>
ABRAXAS SOFTWARE PTY LTD
A.C.N. 008 030 420
FINANCIAL REPORT
FOR THE YEAR ENDED
30TH JUNE 1999
<PAGE>
ABRAXAS SOFTWARE PTY LTD
A.C.N. 008 030 420
CONTENTS
Profit and Loss Statement
Balance Sheet
Notes to and Forming Part of the Financial Statements
Directors' Declaration
Independent Audit Report
Detailed Profit and Loss Statement
2
<PAGE>
ABRAXAS SOFTWARE PTY LTD
A.C.N. 008 030 420
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
ABRAXAS SOFTWARE PTY LTD
SCOPE
We have audited the attached financial report, being a special purpose financial
report, of Abraxas Software Pty Ltd for the year ended 30 June 1999 as set out
on pages 1 to 10. The company's directors are responsible for the financial
report and have determined that the accounting policies used and described in
Note 1 to the financial statements, which form part of the financial report, are
appropriate to meet the needs of the members. We have conducted an independent
audit of the financial report in order to express an opinion on it to the
members of Abraxas Software Pty Ltd. No opinion is expressed as to whether or
not the accounting policies used, and described in Note 1, are appropriate to
the needs of the members.
The financial report has been prepared for distribution to members for the
purpose of providing financial information. We disclaim any assumption of
responsibility for any reliance on this audit report or on the financial
report to which it relates to any person other than the members, or for any
purpose other than that for which it was prepared.
Our audit has been conducted in accordance with Australian Auditing
Standards. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial report and the
evaluation of significant accounting estimates. These procedures have been
undertaken to form an opinion whether or not, in all material respects, the
financial report is presented fairly in accordance with the accounting
policies described in Note 1, so as to present a view which is consistent
with our understanding of the company's financial position, and performance
as represented by the results of its operations. These policies do not
require the application of all Accounting Standards and other mandatory
professional reporting requirements.
The audit opinion expressed in this report has been formed on the above basis.
QUALIFICATIONS
COMPARATIVES
The financial report for the year ended 30 June 1998 has not been audited.
Accordingly we are not in a position to and do not express an opinion on the
comparatives for 1998.
GOODWILL
As stated on Note 1 the financial report is a special purpose financial report
and the directors have determined that the company is not a reporting entity.
Consequently Australian Accounting Standard "AAS 18 Accounting For Goodwill" has
not been adopted for the purposes of the preparation of this financial report.
It should be noted however that Australian Accounting Standard AAS 18.4 does not
permit the recognition as an asset, of internally generated Goodwill.
Whilst the value of the company's Goodwill as stated on Note 1 is in accordance
with a directors' valuation made on 29 June 1987, we have been unable to obtain
sufficient appropriate audit evidence to substantiate its basis of valuation or
identify events or transactions which contribute to the overall goodwill of the
entity, or justify the extent to which they generate future economic benefits.
For these reasons we do not consider that the method of accounting used for
accounting for Goodwill and the subsequent allotment of shares out of Asset
Revaluation Reserve, appropriate.
(CONT./-)
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ABRAXAS SOFTWARE PTY LTD
A.C.N. 008 030 420
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
ABRAXAS SOFTWARE PTY LTD
QUALIFICATIONS (CONT./-)
INHERENT UNCERTAINTY - GOING CONCERN
The following issues affect the ability of the company to be able to continue as
a going concern.
The company made a profit of $80,935 for the current year while the loss for the
year ended 30th June 1998 amounted to $66,648. As the company had accumulated
losses brought forward of $22,370 at 30th June 1998 the accumulated losses
carried forward at 30th June 1999 still amounted to $8,083.
Current assets totalling $129,857.69 were deficient up to $115,398.82 when
matched with current liabilities of $245,256.51 (excluding Provision For Long
Service Leave of $32,659.52).
Had the principles of Australian Accounting Standard AAS 18 been applied and had
Goodwill not been brought to account, the balance sheet would have indicated a
net deficiency of $8,983.32.
The company had a cash injection of funds of $76,222 on 27th January 2000.
The directors have considered and deem appropriate that the financial report
should be prepared on a going concern basis. This is stated in Note 1(a) which
note also defines what the going concern basis means.
Apart from this there is no audit evidence of any other financial support in
place which would demonstrate that the company would be able to continue as a
going concern.
Should the company be unable to obtain financial support for its operations,
there is significant uncertainty whether it will be able to continue as a going
concern. If the company is unable to continue as a going concern, it may be
required to realise its assets and extinguish its liabilities other than in the
normal course of business and at amounts different from those stated in the
financial report. The financial report does not disclose this fact and does not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or to the amounts and re-classification of liabilities
that might be necessary should the company not continue as a going concern. In
our opinion, knowledge of the significant uncertainty affecting the company's
ability to continue as a going concern is necessary for a proper understanding
of the financial report.
AUDIT OPINION
In our opinion: -
(a) because of the significance of the matter discussed in our
qualification paragraph under the heading "Goodwill" and the effect of
such adjustments, if any, as might be determined to be necessary should the
company not be able to derive future economic benefits from Goodwill, the
financial report does not present fairly in accordance with Australian
Accounting Standard AAS 18 the financial position of Abraxas Software Pty.
Ltd as at 30th June 1999 and the results of its operations for the year
then ended; and
(Cont./-)
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ABRAXAS SOFTWARE PTY LTD
A.C.N. 008 030 420
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
ABRAXAS SOFTWARE PTY LTD
QUALIFICATIONS (CONT./-)
(b) because of the significance of the effects of such adjustment, if any,
as might have been determined to be necessary should the company not be
able to continue as a going concern, for the reasons discussed in our
qualification paragraph under the heading "Inherent Uncertainty - Going
Concern", the financial report of Abraxas Software Pty Ltd does not present
fairly, in accordance with the accounting policies described in Note 1 to
the financial statements, the financial position of the company as at 30
June 1999 and its performance for the year ended on that date in accordance
with the accounting policies described in Note 1.
HLB MANN JUDD STEPHENS PHILIP PLUMMER
CHARTERED ACCOUNTANTS PARTNER
1 MARCH 2000
ADELAIDE
5
<PAGE>
ABRAXAS SOFTWARE PTY LTD
CAN 008 030 420
TRADING, PROFIT AND LOSS STATEMENT
FOR THE YEAR ENDED 30TH JUNE 1999
<TABLE>
<CAPTION>
-- 1998
$ $
<S> <C> <C>
SALES
Sales 866,189.86 637,701.00
LESS: COST OF GOODS SOLD
Purchases - 4,950.00
------------- -------------
- 4,950.00
------------- -------------
GROSS PROFIT FROM TRADING 866,189.86 632,751.00
------------- -------------
OTHER INCOME
Recoveries 7,713.06 9,854.00
Government Subsidies - 4,436.00
Profit on Sale of Non-current Assets 502.00 -
------------- -------------
8,215.06 14,290.00
------------- -------------
$ 874,404.92 $ 647,041.00
------------- -------------
</TABLE>
(CONT./-)
6
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
TRADING, PROFIT AND LOSS STATEMENT (CONT./-)
FOR THE YEAR ENDED 30TH JUNE 1999
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
EXPENDITURE
Advertising 2,236.80 1,354.00
Annual Leave 29,843.64 11,566.00
Amortisation 2,013.93 -
Bank Charges 2,149.87 4,223.00
Cleaning 1,250.00 1,500.00
Commission Paid - 2,540.00
Consultancy Fees 14,160.00 9,107.00
Conferences & Seminars 1,700.00 -
Depreciation 31,871.00 43,414.00
Donations 90.00 75.00
Entertainment Expenses 2,000.50 1,559.00
Export Outlays 4,094.55 -
Filing Fees 200.00 -
Fines 369.00 2,603.00
Formation Costs 700.00 -
Freight & Cartage 1,143.25 1,433.00
General Expenses - 35.00
Hire of Plant & Equipment 1,498.06 -
Insurance 5,092.22 4,740.00
Interest Paid 10,256.11 8,860.00
Legal Costs - 1,128.00
Long Service Leave (7,837.13) 7,889.00
Motor Vehicle Expenses 4,606.07 7,450.00
Postage 596.95 823.00
Printing & Stationery 7,032.66 11,408.00
Professional Fees 980.00 3,250.00
Rent 30,975.52 30,474.00
Repairs & Maintenance 5,440.20 4,943.00
Software 4,521.12 1,729.00
Staff Amenities 1,954.75 923.00
Staff Training & Welfare 245.00 250.00
Subscriptions 210.00 246.00
Superannuation Contributions 48,020.40 29,026.00
Telephone 16,182.45 17,174.00
Travelling Expenses 22,007.90 18,273.00
Wages & Salaries 545,254.66 484,322.00
Workcover 2,610.23 1,372.00
------------- -------------
793,469.71 713,689.00
------------- -------------
OPERATING PROFIT BEFORE INCOME TAX $ 80,935.21 $ (66,648.00)
============= ==============
</TABLE>
7
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
PROFIT AND LOSS STATEMENT
FOR THE YEAR ENDED 30TH JUNE 1999
<TABLE>
<CAPTION>
NOTE 1999 1998
$ $
<S> <C> <C>
OPERATING PROFIT (LOSS) BEFORE INCOME
TAX 80,935.21 (66,648.00)
Income tax expense attributable to
operating profit - -
----------- -----------
OPERATING PROFIT (LOSS) AFTER INCOME TAX 80,935.21 (66,648.00)
Retained profits (Accumulated losses)
at the beginning of the financial year (89,018.53) (22,370.00)
----------- -----------
TOTAL AVAILABLE FOR APPROPRIATION (8,083.32) (89,018.00)
----------- -----------
RETAINED PROFITS(ACCUMULATED LOSSES) AT
THE END OF THE FINANCIAL YEAR $(8,083.32) ($89,018.00)
=========== ============
</TABLE>
The accompanying notes form part of these financial statements.
8
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
BALANCE SHEET
AS AT 30TH JUNE 1999
<TABLE>
<CAPTION>
NOTE 1999 1998
$ $
<S> <C> <C> <C>
CURRENT ASSETS
Cash 3.15 9.00
Receivables 2 129,854.54 71,541.00
Other 3 2,985.32 1,868.00
------------- -------------
TOTAL CURRENT ASSETS 132,843.01 73,418.00
------------- -------------
NON-CURRENT ASSETS
Receivables 2 55,901.88 48,526.00
Property, plant and equipment 4 149,623.28 100,087.00
Intangibles 1,7 500,000.00 500,700.00
------------- -------------
TOTAL NON-CURRENT ASSETS 705,525.16 649,313.00
------------- -------------
TOTAL ASSETS 838,368.17 722,731.00
------------- -------------
CURRENT LIABILITIES
Creditors and borrowings 5 108,266.11 77,278.00
Provisions 6 169,649.92 147,644.00
------------- -------------
TOTAL CURRENT LIABILITIES 277,916.03 224,922.00
------------- -------------
NON-CURRENT LIABILITIES
Creditors and borrowings 5 69,435.46 87,727.00
------------- -------------
TOTAL NON-CURRENT LIABILITIES 69,435.46 87,727.00
------------- -------------
TOTAL LIABILITIES 347,351.49 312,649.00
------------- -------------
NET ASSETS (LIABILITIES) $ 491,016.68 $ 410,082.00
============= =============
EQUITY
Issued Capital 7 500,000.00 500,000.00
Reserves (900.00) (900.00)
Accumulated losses 8,083.32 (89,018.00)
------------- -------------
TOTAL SHARE CAPITAL AND RESERVES $ 491,016.68 $ 410,082.00
============= =============
</TABLE>
The accompanying notes form part of these financial statements.
9
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 1999
1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
This financial report is a special purpose financial report prepared for use
by directors and members of the company. The directors have determined that
the company is not a reporting entity.
The financial report has been prepared in accordance with the requirements
of the following Australian Accounting Standards:
AAS 8 : Events Occurring after Reporting Date
AAS 17 : Accounting for Leases
AAS 1 : Profit and Loss Accounts
AAS 5 : Materiality
No other Australian Accounting Standards, Urgent Issues Group Consensus
View or other authoritative pronouncements of the Australian Accounting
Standards Board have been applied.
The financial report is prepared on an accruals basis and is based on
historic costs and does not take into account changing money values or,
except where specifically stated, current valuations of non-current assets.
The following specific accounting policies, which are consistent with the
previous period unless otherwise stated, have been adopted in the
preparation of this report:
(a) GOING CONCERN
The financial report has been prepared on a going concern basis which is
the accounting basis whereby in the preparation of the financial report
the entity is viewed as a going concern: that is, the entity is expected
to:
I. be able to pay its debts as and when they fall due; and
II. continue in operation without any intention or necessity to
liquidate or otherwise wind up its operations.
(b) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are included at cost. All assets are
depreciated over their useful lives to the company.
(c) INTANGIBLES
GOODWILL
The value of the company's Goodwill is in accordance with a directors'
valuation made on 29 June 1987. (Note 7)
Goodwill is reviewed annually and any balance representing future benefits
considered unlikely to be realised are written off.
No amortization has been provided on the goodwill in the accounts since the
amount was brought to account.
10
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 1999
(d) RESEARCH AND DEVELOPMENT EXPENDITURE
Research and development costs are charged to operating profit before income
tax as incurred or deferred where it is expected beyond any reasonable doubt
that sufficient future benefits will be derived so as to recover those
deferred costs.
Deferred research and development expenditure is amortised on a straight
line basis over the period during which the related benefits are expected to
be realised, once commercial production is commenced.
(e) LEASES
Leases of fixed assets, where substantially all the risks and benefits
incidental to the ownership of the asset, but not the legal ownership, are
transferred to the company are classified as finance leases. Finance leases
are capitalised recording an asset and a liability equal to the present
value of the minimum lease payments, including any guaranteed residual
value. Leased assets are amortised over their estimated useful lives. Lease
payments are allocated between the reduction of the lease liability and the
lease interest expense for the period.
Lease payments for operating leases, where substantially all the risks and
benefits remain with the lessor, are charged as expenses in the periods in
which they are incurred.
(f) EMPLOYEE ENTITLEMENTS
Provision is made for the liability for employee entitlements arising from
services rendered by employees to balance date. Employee entitlements
expected to be settled within one year together with entitlements arising
from wages and salaries, annual leave and sick leave which will be settled
after one year, have been measured at their nominal amount. Other employee
entitlements payable later than one year have also been measured at their
nominal amounts.
Contributions are made to an employee superannuation fund and are charged as
expenses when incurred.
11
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 1999
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
2 RECEIVABLES
CURRENT:
Trade Debtors $ 129,854.54 $ 71,541.00
============= =============
NON-CURRENT:
Directors Loans $ 55,901.88 $ 48,526.00
============ =============
TOTAL $ 185,756.42 $ 120,067
============ =============
3 OTHER
Prepayments $ 2,985.32 $ 1,868.00
============ =============
4 PROPERTY, PLANT AND EQUIPMENT
Plant & Equipment - at cost 162,569.28 125,625.00
Less: Accumulated Depreciation 100,713.00 81,738.00
------------- -------------
61,856.28 43,887.00
------------- -------------
Motor Vehicles - at cost 65,024.00 93,581.00
Less: Accumulated Depreciation 33,689.00 43,620.00
------------- -------------
31,335.00 49,961.00
------------- -------------
Furniture & Fittings - at cost 11,223.00 11,223.00
Less: Accumulated Depreciation 7,455.00 6,567.00
------------- -------------
3,768.00 4,656.00
------------- -------------
Library - at cost - 1,583.00
------------- -------------
- 1,583.00
------------- -------------
Software - at cost 4,434.00 -
Less: Accumulated Depreciation 880.00 -
------------- -------------
3,554.00 -
------------- -------------
Plant and Equipment under Lease 49,500.00 -
Less: Accumulated Amortisation 390.00 -
------------- -------------
49,110.00 -
------------- -------------
TOTAL PROPERTY, PLANT AND EQUIPMENT $ 149,623.28 $ 100,087.00
============= =============
</TABLE>
12
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 1999
<TABLE>
<CAPTION>
1999 1998
$ $
<S> <C> <C>
5 CREDITORS AND BORROWINGS
CURRENT:
Trade Creditors $ 46,201.49 $ 43,208.00
Bank Overdraft 13,680.84 34.070.00
Hire Purchase Liabilities - current portion
42,773.78 -
Lease Liabilities - current portion
5,610.00 -
------------- -------------
$ 108,266.11 $ 77,278.00
============= =============
NON-CURRENT:
Hire Purchase Liabilities - non-current portion
29,464.46 87,727.00
Lease Liabilities - non-current portion
39,971.00 -
------------- -------------
TOTAL $ 69,435.46 $ 87,727.00
============= =============
6 PROVISIONS
Provision For Holiday Pay 136,990.40 107,147.00
Provision For Long Service Leave 32,659.52 40,497.00
------------- -------------
$ 169,649.92 $ 147,644.00
============= =============
</TABLE>
7 ISSUED CAPITAL
The Issued capital is made up of 500,000 (1998 500,000) fully paid shares
of $1.00 each. Further details are as follows: -
At a meeting of directors and shareholders on 29th June 1987 it was
resolved that the goodwill of the company should be reflected in the
financial statements. The Goodwill of the company was measured at
$500,000 in accordance with a directors' valuation. It was resolved
that this amount be brought to account in the company's books as
Goodwill and correspondingly as Asset Revaluation Reserve.
It was also resolved at the same meeting that the sum of $499,980 being
part of the profits arising from the revaluation of the company's
Goodwill carried to Assets Revaluation Reserve forming part of the
undivided profits of the company and available for dividend be
capitalised and be distributed by way of fully paid-up shares amongst
holders of the ordinary shares in the capital of the company
registered in the register of members on 29th June 1987.
13
<PAGE>
ABRAXAS SOFTWARE PTY LTD
ACN 008 030 420
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 1999
1999 1998
$ $
8 YEAR 2000 COMPLIANCE
The systems critical to Abraxas Software Pty Ltd ongoing operation and
preparation of financial information (including application systems,
operating systems, hardware and other devices that rely on computer
technology) have been reviewed to establish the impact, if any, which Year
2000 date change will have on the accuracy of calculations, processing and
reporting. This review extends to systems external to Abraxas Software Pty
Ltd, such as those of suppliers and service providers that may expose
Abraxas Software Pty Ltd to the risks associated with the Year 2000 systems
issue.
Plans are in place to modify systems, as required, before the impact of Year
2000 date change creates significant errors in accounting records or
adversely impacts on business operations or customers services.
The insurers of Abraxas Software Pty Ltd will not cover any adverse
financial effects resulting from the Year 2000 systems issue.
14
<PAGE>
ABRAXAS SOFTWARE PTY LTD
A.C.N. 008 030 420
DIRECTORS' DECLARATION
The directors have determined that the company is not a reporting entity.
The directors have determined that this special purpose financial report should
be prepared in accordance with the accounting policies outlined in Note 1 to the
financial statements.
The directors of the company declare that:
1. the financial statements and notes, presents fairly the company's financial
position as at 30th June 1999 and it's performance for the year ended on
that date in accordance with the accounting policies described in Note 1 to
the financial statements;
2. in the directors' opinion there are reasonable grounds to believe that the
company will be able to pay it's debts as and when they become due and
payable.
This declaration is made in accordance with a resolution of the Board of
Directors:
DIRECTOR .....................................
FREDERICK THOMAS FIRTH
DIRECTOR .....................................
ANGELA BERYL FIRTH
Dated this 1st day of March 2000
15
