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Previous: NETSOL INTERNATIONAL INC, 8-K, EX-23.1, 2000-06-21 |
Next: GALILEO INTERNATIONAL INC, 3, 2000-06-21 |
<PAGE>
Exhibit 99.1
---------------------
TRANSLATION
---------------------
FINANCIAL STATEMENTS
as of January 1st to December 31st 1999
(according to U.S. GAAP)
of
SUPER NET AG
NEU-ISENBURG
<PAGE>
SUPERNET AKTIENGESELLSCHAFT
NEU-ISENBURG
COMMENTS TO THE FINANCIAL STATEMENTS
(in conformance with U.S. GAAP)
as per December 31st, 1999
<PAGE>
Page 2
I. NATURE OF THE BUSINESS
The company's activity comprises the development, the distribution, the
management and sale of any products and services related to internet,
particularly those concerning electronic commercial issues. Furthermore, the
company is licensed to establish, to distribute, to manage and to deal with
online services, telephone-services, software, hardware, data banks,
federal-ranging networks, infrastructures, any transfert-issues, trading-goods,
shopping-systems, call-enters and written information related to
internet-services. Besides, the company is allowed to introduce as well as to
follow up and to execute internet businesses.
II. ACCOUNTING AND VALUATION PRINCIPLES
The financial statements of SuperNet Aktiengesellschaft, Neu-Isenburg, as of
December 31st, 1999 have been established for the first time in accordance with
the United States Generally Accepted Accounting Principles (US GAAP).
TURNOVER
The sales have been realised in conformance with the Statement of Position 97-2
"Software Revenue Recognition" of the American Institute of Certified Public
Accountants. The requirements allowing turnover are the existence of a legally
confirmed contract, the successful delivery of software, a fixed license-fee,
respectively a licence-fee to be determined as well as probable payment. These
prior conditions are to be fulfilled.
Payments for maintenance are to be received in proportion during contract
duration.
Turnover related to consulting services of projects are to be realised in
accordance with SOP 97-2 and SOP 81-1.
LIQUID ASSETS AND SHORT-TERM SECURITY INVESTMENTS
Liquid assets are composed by cash on hand and cash in bank.
Short-term security investments are valued at current value, as far as they are
to be kept until maturity.
RECEIVABLES AND OTHER ASSETS
Receivables and other assets are valued at par value. Doubtful accounts of
customers receivables have been accrued for individually. Furthermore, there has
been provided a lump-sum accrual of 1 % upon the remaining liabilities
(excluding VAT) for general payment risks and claims.
<PAGE>
Page 3
INTANGIBLE ASSETS
The intangible assets comprise industrial property rights and EDP-software,
which is to be depreciated over a useful life of 2 to 4 years.
To start with the fiscal year 1999, the company takes in account the Statement
of Position ("SOP") 98-1 to deal with the costing of self-developed or acquired
software for internal use. In accordance with SOP 98-1, some costs related to
development or acquisition of internally used software are to be activated over
the useful life of the software and to be depreciated. According to the German
Commercial Law Act, the activation of self-developed software is not allowed.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are valued at acquisition costs. Maintenance
expenses, which do not increase the asset's value nor cause a prolongation of
their useful life, are to be classified as current expenses. Profits or losses
related to the disposition of assets are shown under other operating profits or
expenses.
Fixed assets are depreciated in the straight line and declining balance method
over their expected useful life.
The fixed useful lives are stated below:
<TABLE>
<CAPTION>
Assets Depreciation method Useful life
------ ------------------- -----------
<S> <C> <C>
INTANGIBLE ASSETS
- industrial property rights straight line 10 years
- EDP software straight line 2 - 4 years
PROPERTY, PLANT AND EQUIPMENT, NET
Computer network straight line 4 years
Vehicles declining 5 years
Environmental devices straight line 4 years
Fixtures, Furniture and office equipment straight line 5 years
PC, personal Notebooks etc. straight line 4 years
Office equipment straight line / declining 10 years
Communication devices straight line 4 years
Fittings declining 4 years
Server straight line 4 years
</TABLE>
<PAGE>
Page 4
DECLINE IN VALUE OF LONG LIFE ASSETS
The company checks the impairments of it's long life assets, whenever any
occurrence or circumstance suggest that the book value of those assets possibly
does not seem to be justified any more. The book-values of long life assets are
controlled by means of expected (discounted) cash-flows. Whenever this control
proves a insufficiency, the assets are depreciated on their market value. In
case of assets whose market value is difficult to state, they are depreciated to
the estimated market value by means of the expected (discounted) cash-flow.
ACCOUNTS PAYABLE
The accounts payable are fixed at their repayable amounts.
OTHER ACCRUALS
The other accruals take into account any recognisable risks and uncertain
commitments.
DEFERRED TAXES
With respect to the tax consequences and differences between assets and
liabilities valuations on the US-GAAP-balance sheet and the relevant fiscal
basis of assessment, deferred taxes are yearly accrued for; they are based on
tax rates and taxable earnings in the year that probably compensates these
variances. Besides, the existing deferred taxes from tax carry forward as per
US-GAAP are to be taken into account. Activated ? deferred taxes are to be, if
necessary, depreciated to the expected amount. Changes of the deferred taxes,
assets or liabilities, are booked at the relevant cut-off date with effect on
the result.
USE OF ESTIMATIONS
The establishment of the financial statements according to the US-GAAP has
required estimations and suppositions by the management, which are likely to
influence the amounts of the financial statements. The effective results may
differ from these suppositions.
<PAGE>
Page 5
III. COMMENTS OF THE BALANCE SHEET
LIQUID ASSETS AND SHORT-TERM SECURITIES
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
Cash on hand 9 1
Cash at banks 809 465
---------------- ---------------
Liquid assets 818 466
---------------- ---------------
Short term securities 1 9
---------------- ---------------
</TABLE>
The securities are common stock of Massa Aktiengesellschaft amounting to KDM 1.
RECEIVABLES AND OTHER ASSETS
a) TRADE RECEIVABLES
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
Trade receivables 283 0
---------------- ---------------
283 0
./.
Individual depreciations 55 0
Lump-sum depreciations 2 0
---------------- ---------------
Trade receivables net 226 0
---------------- ---------------
</TABLE>
b) OTHER ASSETS
The other assets essentially are VAT claims due to the tax administration.
<PAGE>
Page 6
TANGIBLE ASSETS
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
ACQUISITION COSTS:
Other plant, factory and office equipment 518 90
Prepayments on tangible assets and construction in progress 0 5
---------------- ---------------
518 95
./.
Accumulated depreciations 129 3
---------------- ---------------
Tangible assets, net 389 92
---------------- ---------------
</TABLE>
INTANGIBLE ASSETS
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
ACQUISITION COSTS:
Concessions, patents, licenses, trade marks and similar rights and assets 441 1
./.
Accumulated depreciation 134 0
---------------- ---------------
Concessions, patents, licenses, trade marks and similar rights and assets 307 1
---------------- ---------------
</TABLE>
LONG-TERM LIABILITIES
a) LIABILITIES DUE TO BANKS
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
Liabilities due to banks 37 41
./.
Discount 1 1
---------------- ---------------
Long-term liabilities due to banks 36 40
./.
Thereof due at short term 17 12
---------------- ---------------
19 28
---------------- ---------------
</TABLE>
<PAGE>
Page 7
b) ACCOUNTS PAYABLE, TRADE
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
Long term accounts payable 93 0
./.
Thereof due at short term 58 0
---------------- ---------------
35 0
---------------- ---------------
</TABLE>
c) MATURITY
The due dates of the long term accounts payable are listed on the table below:
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
1999 0 12
2000 75 14
2001 52 14
2002 3 1
---------------- ---------------
128 41
---------------- ---------------
</TABLE>
d) LOAN CONDITIONS
The long term accounts payable against banks are composed by several loans with
a duration up to 3 years. Amortizations are monthly done. The interest rates are
1,9%. All of the loans are guaranteed by the financed vehicles pledged as
security. The long term trade payables have a duration up to 2 years.
Amortizations are monthly done. The interest rate is of 7,9%.
e) CREDIT LINES
At present, the company has not been granted any credit line for its current
accounts nor any short term credits.
<PAGE>
Page 8
OTHER ACCRUALS
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
Accruals for year end closing and auditing fees 40 12
Accruals for vacation pay 21 0
Accruals for expected invoices 15 0
Other accruals 11 0
---------------- ---------------
Total amount 87 12
---------------- ---------------
</TABLE>
The other accruals essentially concern court and legal costs of KDM 10. During
the business year 1999, the SuperNet AG had filed a claim against a former
customer who filed a cross action. The management believe that there is no
utilisation threatening from this counterclaim.
OTHER LIABILITIES
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
<S> <C> <C>
Payable due to shareholders 6 2
Others 458 8
---------------- ---------------
464 10
---------------- ---------------
</TABLE>
The other liabilities essentially contain a short term loan of KDM 413.
SUBSCRIBED CAPITAL
The capital increase decided during the period from January 1st to December 31,
1999 and the evolution of the subscribed capital of the company are presented
below:
<TABLE>
<CAPTION>
31.12.1998
---------------
KDM
<S> <C>
As per January 1, 1999 100
Capital increase 400
---------------
As per December 31, 1999 500
---------------
</TABLE>
The subscribed capital had been fully paid in at balance date. At December 31,
1999, 100.000 shares at book-value of DM 5 had been subscribed for.
<PAGE>
Page 9
By shareholders' resolution dated 24.9.1999, the capital of [Euro] 255.645,94
had been increased by [Euro] 23.008,13 to [Euro] 278.654,07, divided into
109.000 shares issued at a price of [Euro] 102,26 (total amount of shares
[Euro] 920.340,00). The new shares are profitable to start from January 1,
2000. At balance date, the capital increase has not yet been registered at
the trade register. The payments received for the capital increase therefore
have been presented under the balance position "payments received for the
execution of the decided capital increase".
The capital stock of the company has been conditionally increased by
resolution of the shareholders' assembly of September 24, 1999 by up to [Euro]
13.932,70 issuing at up to 5.450 new shares. The conditioned increase is
meant to grant rights to employees and members of the management of SuperNet
AG, respectively the shareholder Pegasus Beteiligung AG, respectively it's
succession in title being entitled to hold certificates of participation, the
issuance of which the shareholders' assembly dated 24.09.1999 of SuperNet AG
has granted. The newly acquired shares take part at the benefices, which they
are entitled to receive by option. At closing date, no certificates of
participation have been attributed.
By additional resolution of the shareholders' assembly dated 10.12.1998, an
authorised capital of KDM 250 has been created up to 1.12.2003.
OTHER FINANCIAL COMMITMENTS AND LEGAL LIABILITY
At December 31, 1999, the company has the following commitments which are spread
as follows:
<TABLE>
<CAPTION>
maturity 2000 maturity 2001 maturity 2005
OPERATING LEASES to 2004 and later
-------------------- ------------------- ------------------
KDM KDM KDM
<S> <C> <C> <C>
Vehicle leasing 14 15 0
Soft- and Hardware Leasing 77 121 0
-------------------- ------------------- ------------------
91 136 0
-------------------- ------------------- ------------------
</TABLE>
<TABLE>
<CAPTION>
maturity 2000 maturity 2001 maturity 2005
CONTRACT OF PREMISES to 2004 and later
-------------------- ------------------- ------------------
KDM KDM KDM
<S> <C> <C> <C>
Building 139 427 0
-------------------- ------------------- ------------------
139 427 0
-------------------- ------------------- ------------------
</TABLE>
<PAGE>
Page 10
SALES REVENUES
The turnover of 1999 has developed as follows:
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
Turnover:
<S> <C> <C>
SuperConnect 359 0
Hardware 68 0
Web-Sites 134 0
Other sales 65 0
---------------- ---------------
Total amount 626 0
---------------- ---------------
</TABLE>
TAX ON INCOME
Due to the loss situation, no taxes on income have occurred. As a consequence, a
cut-off for taxes only has been operated for the loss carry forward of the year.
The deferred taxes to be activated upon the loss carry forward are as follows:
<TABLE>
<CAPTION>
31.12.1999 31.12.1998
---------------- ---------------
KDM KDM
:
<S> <C> <C>
Carry-forward of taxes 1.656 50
Deferred taxes 841 25
Depreciation 336 25
---------------- ---------------
505 0
---------------- ---------------
</TABLE>
Due to uncertainties regarding the future utilisation of the loss
carry-forwards, the position concerning deferred taxes has been depreciated at
40 %.
INCOME BY THE SHARE
The key number for the income by the share is computed as follows:
<TABLE>
<S> <C>
1.1. to
31.12.1999
DM
Income of the period after taxes -859.787
Weighed Average of the shares circulating during the period 80.000
Per Share -10,75
</TABLE>
<PAGE>
Page 11
STAFF NUMBER
During the business year 1999, 8 employees (except management) have been
employed. At the end of the business year 1999, a total of 9 employees have been
employed.
EVENTS OCCURRING AFTER CLOSING DATE
By resolution of the management and with the approval of the supervisory board
dated 22.02.2000, the authorised capital has been increased by DM 54.500, split
in 10.900 shares and with an issue price of DM 91,92 a share.
MANAGEMENT OF THE COMPANY
Members of the management board are:
Mr. Florian Zgunea, Neu-Isenburg (since December 1 1998)
According to par. 95 AktG (as well as to par. 6 of the corporate articles), the
company has a supervisory board, which consists of 6 members; they are:
Mr. Alexander Menche, Frankfurt,
Prof. Dr. Klaus Steiner, Heidelberg
Mr. Gerhard A. Koning, Kelkheim
Dr. Michael Pesch, Weisbaden (since 24.09.1999)
Mr. Volkmar Kruspig, Munich (since 24.09.1999)
Mr. Heinz Beldi, Genf/Switzerland (since 24.09.1999)
Neu-Isenburg, March 2000
..............
Florian Zgunea
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