<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 12, 1999
SKYNET HOLDINGS, INC.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 0-25229 65-0861800
- --------------- --------------------- -------------------
(Commission File No.) (IRS Employer
(State or other Identification No.)
jurisdiction of
incorporation)
343 South Glasgow Avenue
Inglewood, CA 90301
---------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (310) 642-7776
--------------
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
GENERAL EXPLANATION
The purpose of this Report is to amend Skynet Holdings, Inc. (the
"Company") Current Report on Form 8-K dated April 12, 1999 relative to the
acquisition of Freight on Board International Limited ("FOB"), a corporation
organized under the laws of the United Kingdom. This report amends the
information provided under Item 7(a) and 7(b).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Acquired Business
See the index at Page F-1 of this report for the historical financial
statements of FOB for the two years ended October 31, 1998.
(b) Pro Forma Financial Information
See index at Page F-1 of this report for the pro forma financial
information of the Company for the year ended June 30, 1998 and the
nine months ended March 31, 1999.
(c) Exhibits
None
2
<PAGE>
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: June 4, 1999 SKYNET HOLDINGS, INC.
BY: /s/ Vjekoslav Nizic
---------------------
Vjekoslav Nizic
3
<PAGE>
SKYNET HOLDINGS, INC.
Index To Financial Statements
-----------------------------
<TABLE>
<CAPTION>
Pro Forma Condensed Combined Financial Statements of the Company
Skynet Holdings, Inc.
<S> <C>
Introduction........................................................... F-2
Pro Forma Condensed Combined Balance Sheet as of March 31, 1999........ F-3
Pro Forma Condensed Combined Statements of Operations for the
Year ended June 30, 1998 and the nine months ended March 31, 1999... F-4
Notes to Pro Forma Condensed Combined Financial Statements............. F-5
Financial Statements of Acquired Company
Freight On Board International Limited
Directors' Report...................................................... F-6
Independent Auditor's Report........................................... F-8
Profit and Loss Account................................................ F-9
Balance Sheet.......................................................... F-10
Notes to Financial Statements.......................................... F-11
</TABLE>
<PAGE>
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On April 12, 1999, the Company completed the first tier of a scheduled two-
tiered acquisition of Freight on Board International Limited, a corporation
organized under the laws of the United Kingdom ("FOB"). At the initial closing,
the Company purchased 51% of the issued and outstanding shares of FOB for cash
in the amount of approximately $680,000; 31,119 shares of Common Stock; and a
one (1) year cash earn-out payment in the amount of up to $144,000 based on
quarterly revenues of FOB for the one year period following the closing. The
Company is scheduled to purchase the remaining 49% during the third or fourth
quarter of 1999 for approximately $570,000. These funds have been placed in an
escrow account pending such acquisition. The acquisition was accounted using
the purchase method of accounting with the assets acquired and liabilities
assumed recorded at fair values, and the results of the acquired business will
be included in our consolidated financial statements from the closing date of
the acquisition.
On March 15, 1999, we acquired the operating assets of Nevada Fleet
Management, Inc., a Nevada corporation, dba Fleet Delivery Service ("Fleet"), a
courier delivery service in the states of Nevada, Arizona, California, Oregon
and Washington. We paid $3,059,000 (including approximately $100,000
acquisition costs) by issuing 1,479,415 shares of our Common Stock. The assets
acquired include; receivables, delivery vehicles, equipment, refundable
deposits, licenses, administrative material and equipment, records and
documents, and all personal property used in the operation of the business. We
accounted for the acquisition using the purchase method of accounting with the
assets acquired and liabilities assumed recorded at fair values, and the results
of the acquired business will be included in our consolidated financial
statements from the closing date of the acquisition.
During April 1999, we completed a private placement of 2,003,560 shares of
our Series A Convertible Preferred Stock, which generated net proceeds (after
offering costs of approximately $600,000) of approximately $4,000,000.
The unaudited pro forma condensed combined statements of operations and
balance sheet presented below reflect the acquisition of FOB and completion of
the private placement of the Series A Convertible Preferred Stock described
above. The pro forma condensed combined statements of operations are presented
as if these transactions had taken place at July 1, 1998. The pro forma
condensed combined balance sheet is presented as if such transactions had taken
place on March 31, 1999. The pro forma condensed combined financial statements
should be read in conjunction with the Company's historical financial statements
and notes thereto for the year ended June 30, 1998 (not included herein) and the
historical financial statements of FOB and related notes. The unaudited pro
forma financial statements are not necessarily indicative of what the actual
results of operations would have been had such transactions occurred on July 1,
1998, or what our results of operations will be in the future.
F-2
<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
As of March 31, 1999
Skynet Pro Forma Pro Forma
Holdings FOB Adjustments(A) Combined
-------------- -------------- -------------------- -----------
<S> <C> <C> <C> <C>
Assets:
Current assets $ 9,440,298 $2,181,243 $ 4,000,000 (2)
(1,350,000) (1) $14,271,541
Property and equipment, net 1,036,371 141,767 1,178,138
Intangibles and other 758,838 (1)
2,060,696 67,022 570,000 (1) 3,456,556
----------- ---------- -----------
Totals $12,537,365 $2,390,032 $18,906,235
=========== ========== ===========
Liabilities:
Current Liabilities $ 7,427,181 $2,236,411 $ 9,663,592
Long-term debt 531,050 - 531,050
----------- ---------- -----------
Total Liabilities 7,958,231 2,236,411 10,194,642
Minority Interest - - 70,221 (1) 70,221
4,000,000 (2)
Stockholders' Equity 4,579,134 153,621 (91,383) (1) 8,641,372
----------- ---------- -----------
$12,537,365 $2,390,032 $18,906,235
Totals =========== ========== ===========
</TABLE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine Months Ended March 31, 1999
<TABLE>
<CAPTION>
Skynet Pro forma Pro forma
Holdings Fleet FOB Adjustments(B) Combined
------------ ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $25,609,176 $9,508,667 $7,424,646 $(64,787) (3) $42,477,702
(40,604) (3)
Costs and expenses 26,500,414 9,269,432 7,508,563 132,000 (4) 43,369,805
----------- ---------- ---------- -----------
Income (loss) from operations (891,238) 239,235 (83,917) (892,103)
Other expense, net (569,038) (12,893) - 12,893 (5) (569,038)
----------- ---------- ---------- -----------
Income before income taxes (1,460,276) 226,342 (83,917) (1,461,141)
Income taxes (4,800) - - (4,800)
----------- ---------- ---------- -----------
Net Income (loss) $(1,465,076) $ 226,342 $ (83,917) $(1,465,941)
=========== ========== ========== ===========
Basic net loss per share (6) $ (0.09) $ (0.08)
=========== ===========
Diluted net loss per share (6) $ (0.09) $ (0.08)
=========== ===========
Basic weighted average 16,352,761 18,935,034
Shares outstanding(6) =========== ===========
Diluted weighted average 16,352,761 18,935,034
Shares outstanding (6) =========== ===========
</TABLE>
F-3
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30, 1998
Skynet Pro forma Pro forma
Holdings Fleet FOB Adjustments(B) Combined
------------ ------------ ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $31,838,919 $13,406,567 $9,562,305 $(667,608) (3) $54,140,183
(927,656) (3)
Costs and expenses 31,257,942 14,195,444 9,576,859 186,000 (4) 54,288,589
----------- ----------- ---------- -----------
Income (loss) from operations 580,977 (788,877) (14,554) (148,406)
Other expense, net (229,523) (186,938) - 189,034 (5) (227,427)
----------- ----------- ---------- -----------
Income before income taxes 351,454 (975,815) (14,554) (375,833)
Income taxes (185,404) - - (185,404)
----------- ----------- ---------- -----------
Net Income (loss) $ 166,050 $ (975,815) $ (14,554) $ (561,237)
=========== =========== ========== ===========
Basic net loss per share (6) $ 0.02 $ (0.06)
=========== ===========
Diluted net loss per share (6) $ 0.02 $ (0.06)
=========== ===========
Basic weighted average 7,346,500 10,182,534
Shares outstanding(6) =========== ===========
Diluted weighted average 9,796,500 10,182,534
Shares outstanding (6) =========== ===========
</TABLE>
F-4
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note A - Pro forma adjustments to the condensed balance sheet are as follows:
(1) To record: the acquisition of FOB and the allocation of the purchase price
on the basis of the fair values of the assets acquired and liabilities
assumed. In addition $570,000 placed in an escrow account for the purchase
of the remaining 49% of FOB has been reclassified as a non-current asset.
The components of the purchase price and its allocation to the assets and
liabilities acquired are as follows:
<TABLE>
<S> <C>
Components of purchase price:
Common Stock............................ $ 62,238
Cash.................................... 680,000
Acquisition costs....................... 100,000
-----------
Total purchase price.................. $ 842,238
===========
Allocation of purchase price:
Current assets acquired................. $ 2,181,243
Property and equipment.................. 141,767
Liabilities assumed..................... (2,236,411)
Minority share of net assets............ (70,221)
Cost in excess of net assets acquired... 825,860
-----------
Total purchase price.................. $ 842,238
===========
</TABLE>
(2) To record the net proceeds of $4,000,000 from the sale of 2,003,560 shares
of our Series A Convertible Preferred Stock at $2.25 per share.
Note B - Pro forma adjustments to the condensed statements of operations are as
follows:
(3) To eliminate operations of locations not acquired.
(4) To record additional depreciation expense based on the revised values of
the depreciable assets acquired and amortization of the excess of the fair
value over net assets acquired as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
June 30, 1998 March 31, 1999
------------------ -----------------
Fleet FOB Fleet FOB
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Depreciation based on acquisition cost...... $ 96,000 $62,740 $71,000 $31,370
Historical depreciation..................... 76,000 62,740 51,000 31,370
-------- ------- ------- -------
Increase in depreciation.................... 20,000 - 20,000 -
Amortization of excess of fair value
over net assets acquired.................. 116,000 50,000 75,000 37,000
-------- ------- ------- -------
Increase in depreciation and amortization... $136,000 $50,000 $95,000 $37,000
======== ======= ======= =======
</TABLE>
(5) To eliminate interest expense of acquired companies.
(6) The weighted average shares outstanding were adjusted on a pro forma basis
to include the Common Stock shares issued in connection with the FOB
acquisition plus 1,325,500 additional shares issued in the private
placement.
F-5
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
DIRECTORS REPORT
The directors present their report with the financial statements of the company
for the year ended 31 October 1998.
Principal Activities
The principal activities of the company are those of international freight
forwarding and international courier services.
Directors
The directors of the company during the year and their beneficial interests in
the issued share capital of the company at the beginning and end of the year
were as follows:-
<TABLE>
<CAPTION>
Ordinary Shares of (Pounds) 1 each
1998 1997
<S> <C> <C>
J W M Clark 5,539 5,539
D J Soame 695 695
C S Brooker 1,389 1,389
</TABLE>
Directors Responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
these financial statements the directors are required to:
(a) select suitable accounting policies and then apply them consistently;
(b) make judgements and estimates that are reasonable and prudent;
(c) follow applicable accounting standards, subject to any material departures
disclosed and explained in the financial statements;
(d) prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The report of the directors has been prepared in accordance with the special
provisions of Part VII of the Companies Act 1985 relating to small companies.
BY ORDER OF THE BOARD
/s/ D J Soame
D J Soame
Secretary Date: 25 March 1999
F-6
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
REPORT OF THE AUDITORS TO THE MEMBERS
We have audited the financial statements on pages 4 to 12 which have been
prepared under the historical cost convention and the accounting policies set
out on pages 6 and 7.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 1, the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those financial statements and to
report our opinion of you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgements by
the directors in the preparation of the financial statements and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 October 1998 and of its loss for the year then
ended and have been properly prepared in accordance with the provisions of the
Companies Act 1985.
/s/ Harben Barker
HARBEN BARKER
Registered Auditors
1 Coleshill Street
Sutton Coldfield
West Midlands
B72 1SD Date: 25 March 1999
F-7
<PAGE>
REPORT OF THE AUDITORS
TO THE DIRECTORS OF
FREIGHT ON BOARD INTERNATIONAL LIMITED
PURSUANT TO SECTION 248(3) OF THE COMPANIES ACT 1985
We have examined the financial statements of the company and its subsidiary for
the year ended 31 October 1998.
BASIS OF OPINION
The scope of our work for the purpose of this report was limited to confirming
that the company is entitled to exemption from preparing group financial
statements.
OPINION
In our opinion the company is entitled to the exemption from preparing group
financial statements conferred by section 248 of the Companies Act 1985.
/s/ Harben Barker
- ---------------------
HARBEN BARKER
Registered Auditors
1 Coleshill Street
Sutton Coldfield
West Midlands
B72 1SD Date: 25 March 1999
F-8
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 1998
<TABLE>
<CAPTION>
1998 1997
Notes (Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C>
TURNOVER 2 6,087,444 4,655,145
Cost of sales 4,449,914 3,305,536
--------- ---------
GROSS PROFIT 1,637,530 1,349,609
Distribution costs 178,168 143,888
Administration expenses 1,543,350 1,173,013
--------- ---------
1,721,518 1,316,901
--------- ---------
OPERATING (LOSS)/PROFIT (83,988) 32,708
Other income 3 44,505 12,505
--------- ---------
(39,483) 45,213
Interest payable 3 50,805 37,775
--------- ---------
(LOSS)/PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION (90,288) 7,438
Tax on ordinary activities 4 - 10,862
--------- ---------
(LOSS) ON ORDINARY ACTIVITIES
AFTER TAXATION 13 (90,288) (3,424)
========= =========
Movements in reserves are shown in note 13.
The notes on pages 11 to 17 form part of these financial statements.
F-9
</TABLE>
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
BALANCE SHEET
AT 31 OCTOBER 1998
<TABLE>
<CAPTION>
1998 1997
Notes Pounds Pounds Pounds Pounds
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets 6 39,792 44,792
Tangible assets 7 86,443 113,012
Investments 8 1,075 1,075
--------- ---------
127,310 158,879
CURRENT ASSETS
Debtors 9 1,327,850 1,129,163
Cash at bank and in hand 2,176 8,470
--------- ---------
1,330,026 1,137,633
CREDITORS: Amounts falling
due within one year 10 1,363,655 1,112,553
--------- ---------
NET CURRENT (LIABILITIES)/ASSETS (33,639) 25,080
--------- ---------
TOTAL ASSETS LESS CURRENT
LIABILITIES 93,671 183,959
========= =========
CAPITAL AND RESERVES
Share capital 12 13,889 13,889
Share premium account 23,611 23,611
Profit and loss account 13 56,171 146,459
---------- ---------
Shareholders funds 93,671 183,959
========== =========
</TABLE>
The financial statements on pages 9 to 17 were approved by the board of
directors on 25 March 1999.
The financial statements have been prepared in accordance with the special
provisions on Part VII of the Companies Act 1985 relating to small companies and
in accordance with the Financial Reporting Standard for Smaller Entities.
On behalf of the Board
/s/ J W Clark
J W Clark
DIRECTOR
The notes on pages 11 to 17 form part of these financial statements.
F-10
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
1. ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the
financial statements are set out below and have remained unchanged from the
previous year and also have been consistently applied within the same
financial statements.
Basis of Preparation
The financial statements have been prepared under the historical cost
convention rules and in accordance with the Financial Reporting Standard for
Small Entities.
Consolidation
The company and its subsidiary comprise a small group. The company has
therefore not prepared group accounts having taken advantage of the
exemption provided by section 248 of the Companies Act 1985.
Intangible fixed asset
The intangible fixed asset comprises a franchise which is depreciated over a
period of ten years.
Tangible Fixed Assets
Depreciation is provided on tangible fixed assets in equal instalments over
their expected useful life as follows:-
<TABLE>
<S> <C> <C>
Short leasehold property - over the term of the lease
Property improvements - 5% - 10% per annum
Motor vehicles - 10% - 25% per annum
Fixtures, fittings and
equipment - 10% - 25% per annum
</TABLE>
Investments
Investments held as fixed assets are stated at cost less provision for
permanent diminution in value.
Foreign Currencies
Transactions denominated in foreign currencies are translated into sterling
at the dates of the transactions. Amounts receivable and payable in foreign
currencies at the balance sheet date are translated at the rates ruling at
that date. All translation differences are dealt with in the profit and
loss account.
Leased Assets
Where the assets are financed by leasing arrangements ("finance leases")
the assets are included in the balance sheet at cost less depreciation in
accordance with the company's normal accounting policies. The present value
of future rentals is shown as a liability. The interest element of rental
obligations is charged to the profit and loss account over the period of
the lease in proportion to the balance of capital payments outstanding.
Rentals payable under operating leases are charged to the profit and loss
account as incurred.
F-11
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
Pensions
The company operates a defined contribution scheme. Retirement benefits to
certain employees are funded by contributions, from the company, which are
paid to insurance companies and charged against profits of the period in
which they became payable.
2. TURNOVER
Turnover represents the amount derived from the provision of goods and
services which fall within the company's ordinary activities stated net of
value added tax.
3. OPERATING PROFIT
<TABLE>
<CAPTION>
The operating profit is stated after
charging/(crediting): 1998 1997
(Pounds) (Pounds)
<S> <C> <C>
Depreciation of tangible fixed assets:
- Owned assets 38,256 39,022
Amortisation of intangible fixed assets 5,000 5,875
Loss on disposal of fixed assets 4,146 -
Auditors remuneration 5,650 5,650
Rentals under operating leases 314,290 226,467
======= =======
<CAPTION>
OTHER INCOME 1998 1997
(Pounds) (Pounds)
<S> <C> <C>
Interest receivable 755 557
Rental income 33,750 11,948
Management charge 10,000 -
------- -------
44,505 12,505
======= =======
<CAPTION>
INTEREST PAYABLE 1998 1997
(Pounds) (Pounds)
<S> <C> <C>
Bank loans, overdrafts and other loans
repayable within five years 50,805 37,056
Finance charges - finance leases and
hire purchase obligations - 719
-------- -------
50,805 37,775
======== =======
</TABLE>
F-12
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
<TABLE>
<CAPTION>
4. TAXATION 1998 1997
(Pounds) (Pounds)
<S> <C> <C>
Tax on ordinary activities based on the
accounts for the year:
Corporation tax charged at current rates - 10,862
========= =========
<CAPTION>
5. DIRECTORS' EMOLUMENTS 1998 1997
(Pounds) (Pounds)
<S> <C> <C>
Directors' remuneration 219,165 171,805
Other benefits and expenses 81,094 56,902
---------- ---------
300,259 228,707
========= =========
<CAPTION>
6. INTANGIBLE FIXED ASSETS Franchise
(Pounds)
<S> <C>
COST
At 1 November 1997 60,500
Addition in the year -
---------
At 31 October 1998 60,500
---------
AMORTISATION
At 1 November 1997 15,708
Amortisation for the year 5,000
---------
At 31 October 1998 20,708
---------
NET BOOK VALUE
At 31 October 1997 44,792
=========
At 31 October 1998 39,792
=========
</TABLE>
F-13
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
7. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Improve-
ments to Equipment
Motor Leasehold Fixtures & Leasehold
Vehicles Property Fittings Property Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C> <C>
COST
At 1 November 1997 73,065 34,177 276,513 30,000 413,755
Additions in year - - 15,833 - 15,833
Disposals (350) - (5,516) - (5,866)
---------------------------------------------------
At 31 October 1998 72,715 34,177 286,830 30,000 423,722
---------------------------------------------------
DEPRECIATION
At 1 November 1997 60,540 19,438 206,476 14,289 300,743
Charge for the year 8,687 2,111 26,029 1,429 38,256
Elimination on disposals (226) - (1,494) - (1,720)
---------------------------------------------------
At 31 October 1998 69,000 21,549 231,011 15,718 377,279
---------------------------------------------------
NET BOOK VALUE
At 31 October 1997 12,525 14,739 70,037 15,711 113,012
===================================================
3,714 12,628 55,819 14,282 86,443
===================================================
</TABLE>
8. INVESTMENTS HELD AS FIXED ASSETS
<TABLE>
(Pounds)
<S> <C>
Other investments at cost:
At 31 October 1997 and 1998 1,075
=====
</TABLE>
Subsidiary Undertakings
The company's investment in its subsidiaries is as follows:
(1) Global Network Associates Limited
The company acquired 5,500 ordinary (Pounds) 1 shares at par
representing 55% of the issued share capital of Global Network
Associates Limited on 15 September 1998. The company was incorporated
on 11 December 1997. The cost of acquisition was (Pounds) 5,500. The
company provides distribution services.
(2) FOB Distribution Services Inc.
The company owns the whole of the common share capital of FOB
Distribution Services Inc. a company incorporated in the United States
of America which provides freight and distribution services. At 31
October 1998 the aggregate of the share capital and reserves of FOB
Distribution Services Inc. amounted to (Pounds) (28,473) and profit
for the year was (Pounds) 313.
F-14
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
9. DEBTORS
1998 1997
Amounts due within one year: (pounds) (pounds)
Trade debtors 967,373 995,890
Other debtors 138,409 22,031
Amounts due from group undertakings 198,949 77,911
Prepayments 23,119 33,331
----------- ------------
1,327,890 1,129,163
=========== ============
10. CREDITORS
1998 1997
Amounts due within one year: (pounds) (pounds)
Amounts due to group undertakings 27,930 32,636
Loans and overdrafts (note 11) 178,711 128,342
Business development loan - 26,429
Trade creditors 699,694 556,883
Taxation - 10,862
Other taxes and social security costs 132,510 103,879
Accruals and deferred income 25,316 58,023
Advances from Lombard Discounting 299,504 195,499
----------- ------------
1,363,665 1,112,553
=========== ============
F-15
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
11. LOANS AND OVERDRAFTS
<TABLE>
<CAPTION>
1998 1997
(Pounds) (Pounds)
<S> <C> <C>
Bank loans and overdrafts (secured) 73,660 49,720
Other loans (secured) 65,000 65,000
Other loans (unsecured) 40,051 40,051
------- -------
178,711 154,771
======= =======
</TABLE>
The above loans and overdrafts are all repayable either within one year or on
demand.
The bank loans and overdrafts are secured by a first mortgage on the leasehold
premises of the company and a fixed and floating charge on other assets of the
company. Obligations under finance leases and hire purchase contracts are
secured by related lease assets. Other loans are subject to postponement
agreements with National Westminster Bank Plc and Lombard NatWest Discounting
Limited and where security has been given, this represents a second fixed and
floating charge over the assets of the company.
12. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1997
No No
<S> <C> <C>
Ordinary shares of (pounds)1 each:
Authorised 50,000 50,000
====== ======
Allotted, issued and fully paid 13,889 13,889
====== ======
<CAPTION>
13. PROFIT AND LOSS ACCOUNT 1998 1997
(Pounds) (Pounds)
<S> <C> <C>
At 31 October 1997 146,459 149,883
Loss for the year (90,288) (3,424)
------ -------
At 31 October 1998 56,171 146,459
====== =======
</TABLE>
F-16
<PAGE>
FREIGHT ON BOARD INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1998
14. OPERATING LEASE COMMITMENTS
At 31 October 1998 the company was committed to making the following
payments during the next year in respect of operating leases:
<TABLE>
<CAPTION>
1998 1997
Land and Land and
Buildings Others Buildings Others
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Leases which expire:
Within one year - 70,242 4,667 28,432
Within two to five years - 58,061 6,240 121,178
After five years 57,200 - 42,200 -
--------- --------- --------- ---------
57,200 128,303 53,107 149,610
========= ========= ========= =========
</TABLE>
15. RELATED PARTY TRANSACTIONS
During the year the company recharged costs incurred on behalf of FOB
Distribution Services Inc in furtherance of the subsidiary's activities.
These amounted to (pounds) 8,420 (1997: (pounds) 39,083).
The company also charged a management fee of (pounds) 10,000 (1997:
(pounds) Nil) in respect of work undertaken on behalf of the subsidiary.
FOB Distribution Services Inc also made sales to the company during the
year totalling (pounds) 116,282 (1997: (pounds) 116,778).
The company also made sales to Global Network Associates Limited totalling
(pounds) 5,297 (1997: (pounds) Nil).
All transactions were carried out on an arm's length market value basis.
F-17
