SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest event reported) December 3,
1997
ALEXANDER MARK INVESTMENTS (USA), INC.
(Exact Name of Registrant as Specified in its Charter)
Colorado 0-12122 84-0601802
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
17770 Preston Road, Dallas, Texas 75252
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (972) 733-
3005
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
On December 3, 1997, Meteor Technology, plc ("Meteor") owned 57%
by Alexander Mark Investments, Inc. ("AMI") conditionally sold
Meteor's wholly owned subsidiary, Digiphone International, Ltd.
("Digiphone") to Camelot Corporation ("Camelot"). Camelot owns
80% of AMI. Digiphone owns the marketing and distribution rights
to Third Planet Publishing, Inc. ("Third Planet") products which
will result in 100% of the rights to the products to Camelot.
Third Planet products include VideoTalk T the hardware and
software videoconferencing system for use over the Internet. In
return for the transfer of the shares to Camelot, 500,000 pound
1997-2007 5% loan stock (approximately $828,250) evidencing
indebtedness by Meteor to Camelot will be canceled. Both Meteor
and Camelot will be seeking shareholders' approval of the
transaction.
ITEM 7. Exhibits
(10) Material Contracts
a) DigiPhone International Stock Purchase Agreement.
(28) a) Meteor Technology plc audited financial
statements dated May 31, 1997.
b) DigiPhone International Ltd. audited financial statements
dated May 31, 1997.
c) Pro Forma Income Statement for the Period Ended April 30,
1997 prepared in accordance with Regulation S-X.
d) Pro Forma Balance Sheet for the Period Ended October 31,
1997 prepared in accordance with Regulation S-X.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ALEXANDER MARK INVESTMENTS (USA), INC.
By: /s/ Daniel Wettreich
Daniel Wettreich
President
Dated: December 11, 1997
EXHIBIT 10 (A)
<PAGE>
DIGIPHONE INTERNATIONAL LTD.
STOCK PURCHASE AGREEMENT
AGREEMENT made this 3rd day of December, 1997 by and between
METEOR TECHNOLOGY, PLC located at Watson House, 54 Baker Street,
London, England W1M1DJ (hereinafter referred to as "Seller"), and
CAMELOT CORPORATION, a Colorado corporation, located at 17770
Preston Road, Dallas, TX 75252 (hereinafter referred to as
"Purchaser" or "Camelot").
WHEREAS, Seller owns all of the outstanding shares of
capital in DigiPhone International Ltd. (hereinafter
collectively known as "DI");
WHEREAS, Seller is desirous of selling the shares of DI
(hereinafter "Shares");
WHEREAS, Purchaser is desirous of purchasing said Shares
from Seller;
WHEREAS, by a Loan Note Instrument Meteor issued to Camelot
500,000 British pounds 1997-2007 10% unsecured redeemable loan stock ("Loan
Stock").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements, the said parties hereby agree as follows:
I. CONSIDERATION
1.01 In consideration of the purchase of the Shares at the
Closing, Purchaser hereby agrees to accept these Shares in full
and final redemption of the Loan Stock and it is agreed between
the parties that terms of the Loan Note Instrument which created
the Loan Stock and the Loan Stock itself shall be deemed varied
to permit the redemption of the Loan Stock in this manner.
II. CLOSING
2.01 At the Closing set forth in paragraph 2.03 hereof,
Seller agrees to deliver the Stock Certificates representing 100%
of the outstanding share capital of DI, and duly executed stock
powers transferring the shares into the name of the Purchaser.
2.02 Purchaser shall deliver the certificates representing
the 500,000 British pounds loan stock to Seller for cancellation.
2.03 Closing shall take place within five (5) business days
of the obtaining of whichever shareholder approval comes last at
the offices of Purchaser or such other time and place as
Purchaser and Seller may agree.
III. SELLERS REPRESENTATIONS
3.01 Seller hereby warrants and represents the following
facts, the truth and accuracy of which are conditions precedent
to the Closing:
(a) Seller is the beneficial owner of the Shares and
has full and complete legal and equitable title thereto;
(b) There are no liens, pledges, chattel mortgages,
or other encumbrances of any kind against the Shares;
(c) There are no undisclosed interests, present or
future, in the Shares, nor does Seller know of any assertion of
such an interest;
(d) There are no outstanding or existing provisions
of any agreement Seller is a party to that would prevent, limit,
or condition the sale and transfer of the Shares to Purchaser;
(e) There are no provisions of any contract,
indenture, or other instrument to which Seller is a party or to
which the Shares are subject which would prevent, limit, or
condition the sale and transfer of the Shares to Purchaser;
(f) Seller agrees that the consideration paid to it
for its interest in the Shares represents no less than a fair
appraisal of said Shares;
(g) There are no options, or rights, or similar
instruments by Seller, affecting the assignment of the Shares;
(h) Seller is not aware of any threatened or pending
lawsuits against the Shares;
(i) Seller has had an opportunity to have this
Agreement reviewed by counsel of its choice;
(l) Seller warrants that there are no adverse
conditions are known which would materially affect the financial
condition of DI;
(o) Seller will seek shareholder's approval for the
sale of the shares as soon as reasonably possible.
(p) Seller understands that Purchaser cannot conclude
this transaction until it obtains shareholder approval.
IV. PURCHASER'S REPRESENTATIONS
4.01 Purchaser hereby warrants and represents the
following facts, the truth and accuracy of which are conditions
precedent to the Closing:
(a) Purchaser is not prevented by any federal, state,
or local law or regulation by any provision of any contract,
mortgage, indenture, or other instrument from purchasing the
Shares as contemplated by this Agreement;
V. SELLER'S COVENANTS
5.01 Seller hereby covenants as follows:
(a) At the Closing, Seller shall deliver to Purchaser
the stock certificates representing 100% of the outstanding and
issued share capital of DI and stock powers transferring the
shares to Purchaser.
(b) From the date hereof, Seller shall take no action
that would encumber or restrict the Shares or its sale, transfer,
or assignment;
(c) Seller will aid and assist Purchaser in filing
all required disclosure documents required by the Federal
Securities Laws upon the execution and consummation of this
agreement;
(d) Seller will provide the Purchaser with any and
all information requested by Purchaser prior to Closing;
VI. PURCHASER'S COVENANTS
6.01 Purchaser hereby covenants as follows:
(a) Purchaser will duly file all required disclosure
documents required of it by the Federal Securities Laws upon the
execution and consummation of this agreement.
(b) At the Closing, Purchaser shall deliver to Seller
certificates of the 500,000 British pounds 1997- 2007 10% unsecured redeemable
loan stock for cancellation.
VII. CONDITIONS OF CLOSING
7.01 Seller
(a) Seller shall deliver to Purchaser a certificate
dated as of the Closing Date that all the representations of
Seller remain true and correct without change and that Seller has
performed or complied with all covenants.
7.02 Purchaser
(a) Purchaser shall deliver to Seller a certificate
dated as of the Closing Date that all the representations of
Purchaser remain true and correct without change and that
Purchaser has performed or complied with all covenants.
VIII. INDEMNIFICATION
8.01 Seller shall indemnify and hold harmless Purchaser
and all present officers and directors of Purchaser (the
"Indemnified Parties") against any losses, claims, damages or
liabilities to which the Indemnified Parties may become subject
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
representations and/or actions of Seller which concern the Sale
of the Shares to Purchaser and Seller will, in addition, hold
harmless the Indemnified Parties for any legal or other expenses
reasonably incurred in connection with investigating or defending
any such action or claim; provided, however, that Seller shall
not be liable in any such cases to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue material statement or material omission made by Purchaser
to Seller in writing.
8.02 Purchaser shall indemnify and hold harmless Seller
(the "Indemnified Party") against any losses, claims, damages or
liabilities to which the Indemnified Party may become subject
insofar as such loses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon
representations and/or actions of Purchaser which concern the
Sale of the Shares from Seller and Purchaser will, in addition,
hold harmless the Indemnified Party for any legal or other
expenses reasonably incurred in connection with investigating or
defending any such action or claim; provided, however, that
Purchaser shall not be liable in any such cases to the extent
that any such loss, claim, damage or liability arises out of or
is based upon an untrue material statement or material omission
made by Seller to Purchaser in writing.
8.03 Procedure. Promptly after receipt by the Indemnified
Parties under Sections 8.01 above of notice of the commencement
of any action, the Indemnified Parties, shall, if a claim in
respect thereof is to be made against Seller under such
subsection, notify Seller in writing of the commencement thereof;
and the omission to so notify Seller shall relieve it from any
liability which it may have to the Indemnified Parties. In case
any such action shall be brought against any of the Indemnified
Parties and they shall notify the Seller of the commencement
thereof, Seller shall assume the defense thereof, with counsel
satisfactory to Purchaser (who shall not, except with the consent
of the Purchaser, be counsel to Seller).
8.04 Procedure. Promptly after receipt by the Indemnified
Party under Sections 8.02 above of notice of the commencement of
any action, the Indemnified Party, shall if a claim in respect
thereof is to be made against Purchaser under such subsection,
notify Purchaser in writing of the commencement thereof; and the
omission to so notify Purchaser shall relieve it from any
liability which it may have to the Indemnified Party. In case
any such action shall be brought against any of the Indemnified
Party and they shall notify the Purchaser of the commencement
thereof, Purchaser shall assume the defense thereof, with counsel
satisfactory to Purchaser (who shall not, except with the consent
of the Seller, be counsel to Purchaser).
IX. MISCELLANEOUS
9.01 It is understood and agreed that Purchaser and their
representatives (including counsel and accountants) shall keep
confidential any information (unless readily ascertainable from
public or published information or trade sources) obtained from
Seller regarding the Shares. In the event of the termination of
this Agreement, Purchaser and their said representative shall
promptly return to Seller any statements, documents, and other
written information obtained from Seller in connection therewith
and without retaining copies thereof.
9.02 All covenants, representations and warranties by
Seller and Purchaser shall be true and correct as of the Closing,
shall survive the Closing, and shall bind the Purchaser and
Seller and their heirs and assigns as to any breach thereof not
disclosed in writing or known to the parties prior to the
closing.
9.03 No remedy conferred by any of the specific provisions
of this Agreement is intended to be exclusive of any other
remedy, and each remedy shall be cumulative and shall be in
addition to all other remedies given hereunder or now or
hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by Purchaser
or Seller shall not constitute a waiver of the right to pursue
other available remedies.
9.04 In the event that any part of this Agreement is
determined by a court of competent jurisdiction to be
unenforceable, the balance of the Agreement shall remain in full
force and effect.
9.05 This Agreement shall be construed according to the
laws of the State of Texas.
9.06 This Agreement accurately represents the entire
agreement of the parties and supersedes and terminates any prior
agreement between the parties. Any amendments to this Agreement
can only be made in writing signed by both parties.
9.07 No forbearance delay or indulgence by either party in
enforcing the provisions of this Agreement shall prejudice or
restrict the rights of that party nor shall any waiver of its
rights operate as a waiver of any subsequent breach and no rights
power or remedy herein conferred upon or reserved for either
party is exclusive of any other right power or remedy available
to that party and each such right power or remedy shall be
cumulative.
IN WITNESS WHEREOF this Agreement has been executed by the
parties as of the date first written above.
WITNESS: SELLER:
METEOR TECHNOLOGY, PLC
By: Jason Conway
WITNESS: PURCHASER:
CAMELOT CORPORATION
By: Daniel Wettreich
President
<PAGE>
Pursuant to Section 7.01 of the Stock Purchase Agreement, Meteor
Technology, Plc ("Seller") declares that all of the
representations made by Seller in the above mentioned agreement
are true and correct without change, and that Seller has
performed or complied with all covenants as of the closing date
of the above agreement, ____________________________, 1998.
METEOR TECHNOLOGY, PLC
By:__________________________
Jason Conway
<PAGE>
Pursuant to Section 7.02 of the Stock Purchase Agreement, Camelot
Corporation ("Purchaser") declares that all of the
representations made by Purchaser in the above mentioned
agreement are true and correct without change, and that Purchaser
has performed or complied with all covenants as to the closing
date of the above agreement, _______________________________,
1998.
CAMELOT CORPORATION
By:_______________________
Daniel Wettreich
President
<PAGE>
EXHIBIT A
Lawsuits Pending or Threatened
None
Exhibit (28) a <PAGE>
Company No: 3006387
Meteor Technology plc
(formerly Telecom Credit Europe PLC)
Report and Accounts
May 31, 1997
(in British Pounds)
REPORT OF THE AUDITORS TO THE MEMBERS OF METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
We have audited the accounts on pages l2 to 43, which have been
prepared under the historical cost convention and on the basis of
the accounting policies set out on pages 17 to l9.
Respective responsibilities of directors and auditors
As described on page 8 the company's directors are responsible
for the preparation of the accounts. It is our responsibility to
form an independent opinion, based on our audit, on those
accounts and to report our opinion to 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 accounts. It also includes an assessment
of the significant estimates and judgements made by the directors
in the preparation of the accounts, and of whether the accounting
policies are appropriate to the group'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 accounts 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 accounts.
Fundamental uncertainties
In the light of the group's results for the year, we draw your
attention to Note 1 which explains the circumstances and
considerations the directors have taken into account in preparing
the accounts. In view of the significance of the inherent
uncertainty surrounding the future level of trading and
profitability of the group, we consider it should be drawn to
your attention but our opinion is not qualified in this respect.
We also draw to your attention the uncertainty in connection with
the carrying value of investments in and amounts due from,
certain subsidiaries in the company's balance sheet. as explained
in Note 1. If these assets were to be written down, this would
reduce the company's profit for the year and its net assets by
up to 1,080,000 British pounds. We consider this uncertainty to be of such
significance to draw it to your attention, but our Opinion is not
qualified in this respect.
As shown in Note 12(a), the carrying value of the group's listed
investment exceeded their market value at the year end by
128,000 British pounds. Although it is not the directors' intention to dispose
of these shares, we consider the uncertainty surrounding their
carrying value should be brought to your attention. However, our
opinion is not qualified in this respect.
<PAGE>
REPORT OF THE AUDITORS
TO THE MEMBERS OF METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
(continued)
Opinion
In our opinion the accounts give a true and fair view of the
state of affairs of the company and of the group as at May 31,
1997 and of the loss of the group for the year then ended led and
have been properly prepared in accordance with the Companies Act
1985.
BDO Stoy Hayward
Chartered Accountants
Registered Auditors
London
October 30, 1997
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restated
Period
to
May 31,
Continui 1997 1996
ng
operatio
ns
Ongoing Total Total
Acquisit
ions
Notes '000 '000 '000 '000
Turnov 2 2,766 1,123 3,889 25
er
Cost 330 1,024 1,354 19
of
sales
Cost 4 1,379 - 1,379 207
of
sales
-
except
ional
items
-------- -------- ------- --------
-- -
Gross 1,057 99 1,156 (201)
profit
/(loss
)
-------- -------- ------- --------
- -
Distri 834 624 1,458 170
bution
and
admini
strati
ve
expens
es
Distri
bution
and
admini
strati
ve
expens
es
- 4 - - - 666
except
ional
items
-------- -------- ------- --------
-
834 624 1,458 836
-------- -------- ------- --------
-
Operat 3 223 (525) (302) (1,037)
ing
profit
/(loss
)
-------- --------
Intere 28 2
st
receiv
able
Intere 6 (48) (4)
st
payabl
e
------- --------
-
(20) (2)
------- --------
-
Loss (322) (1,039)
on
ordina
ry
activi
ties
before
taxati
on
Taxati 7 - -
on on
ordina
ry
activi
ties
------- --------
-
Loss (322) (1,039)
for
the
financ
ial
year
Loss 8 0.53 11.56
per pence pence
ordina
ry
share
</TABLE>
The notes on pages 17 to 43 form part of these accounts
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Restated
period
to
May 31,
1997 1996
'000 '000
Total 322 1,039
recogn
ised
loss
for
the
financ
ial
year
Prior 603
year
adjust
ment
as
explai
ned in
note
4(d)
--------
Total 925
loss
recogn
ised
since
last
annual
report
</TABLE>
The notes on pages 17 to 43 form part of these accounts
<PAGE>
METEOR TECHNOLOGY PLC
(formerly Telecom Credit Europe PLC)
GROUP BALANCE SHEET AT MAY 31, 1997
<TABLE>
<S> <C> <C> <C> <C>
Restated
Notes 19971996
'000 '000'000
Fixed assets
Tangible assets 11 238 30
Investments 12 500 -
------------
738 30
Current assets:
Stocks 13 69 80
Debtors 14 221 48
Cash at bank and in hand 829 153
-------- -----
- ---
1,119 281
Creditors: amounts falling
due within one year 15 (1,230) (242)
-------- -----
- ---
Net current
(liabilities)/assets (111) 39
----- --------
Total assets less current
liabilities 627 69
Creditors: amounts falling due after
more than one year 16 (535) (12)
----- -------
92
57
Capital and reserves:
Called up equity share ]
capital: 20
Issued 714
113
Committed but unissued -
18
Share premium account: 21
Issued 2,122 756
Committed but unissued - 837
Other reserves 21 (1,383) (628)
Profit and loss account 21 (1,361) (1,039)
-------
- - -------
Equity shareholders' funds 21
92 57
</TABLE>
Approved by the Board on October 30, 1997
and signed on its behalf by
D Wettreich
Director
The notes on pages 17 to 43 form part of these accounts.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
<TABLE>
<S> <C> <C> <C> <C>
BALANCE SHEET AT MAY 31, 1997
Restated
Notes 19971996
'000 '000'000
Fixed assets:
Tangible assets 11 2 -
Investments 12 1,913 650
------------
1,915
650
Current assets:
Debtors 408 38
Cash at bank and in hand 14 816 152
-------- -----
- ---
1,224 190
Creditors: amounts falling
due within one year 15 (247)(138)
-------- --------
Net current (liabilities)/assets 977 52
------ ----
Total assets less current liabilities 2,892 702
Creditors: amounts falling
due after more than one year 16 (500) -
--
- --- --------
2,392
702
Capital and reserves:
Called up equity share
capital: 20
Issued 714 113
Committed but unissued - 18
Share premium account: 21
Issued 2,122 756
Committed but unissued - 837
Profit and loss account 21 (444) (1,022)
--------
- -------
Equity shareholders' funds 21
2,392 702
</TABLE>
Approved by the Board on October 30, 1997
and signed on its behalf by
D Wettreich
Director
The notes on pages 17 to 43 form part of these accounts
<PAGE>
METEOR TECHNOLOGY PLC plc
(formerly Telecom Credit Europe PLC)
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<S> <C> <C> <C>
Notes 1997 1996
'000 '000 '000
Net cash outflow for operating
activities 3(c) (1,687) (148)
Returns on investments and
servicing of finance:
Interest received 28 2
Interest paid 6 (5) (3)
Interest element of finance
lease rental payment 6 (2) (1)
--- --------
Net cash outflow for returns
on investments and servicing
of finance 21 (2)
Capital expenditure and
financial investment:
Purchase of current asset investment - (363)
Purchase of tangible fixed assets (106) -
Receipts from sale of tangible
fixed assets (4) -
Purchase of distribution agreement - (7)
-------- ---------
Net cash outflow for capital
expenditure and financial
investment (102) (370)
Acquisitions and disposals:
Purchase of subsidiary
undertakings 23(a) (220) -
Net cash balances acquired
with subsidiaries 23(a) 1,046 (17)
----- ----
Net cash outflow for acquisitions
and disposals 826 (17)
Financing
Issue of ordinary share capital 20(c) 155 669
Issue of loan stock 18(b) 1,500 -
Repayments of capital elements
of finance lease rentals 17(b) (9) -
Repayment of long term loan (6) -
------ ------
Net cash inflow from financing 1,640 669
------ ------
Increase in cash in the period 26 698 132
</TABLE>
The impact of the purchase of subsidiary undertakings on cash
flow, reconciliation to net funds and details of material
non-cash transactions are set out at notes 23, 26, and 27
respectively.
The notes on pages 17 to 43 form pan of these accounts
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31,1997
1. Accounting policies
Accounting convention
The accounts are prepared under the historical cost convention
and in accordance with applicable accounting standards.
Despite the losses sustained during the year, particularly in the
payphones business, the directors are confident that the new
DigiPhone products, together with the reorganization of the
payphones businesses so that their trading performance can be
improved will provide the group with an opportunity to
demonstrate its profitability. They consider the group has
sufficient cash resources to enable this stage to be reached,
and accordingly have prepared the accounts on a going concern
basis.
Accordingly, and despite the level of losses that certain
subsidiaries have sustained which has resulted in them having net
liabilities at May 31, 1997, the directors consider that any
reduction in the 700K British pound value of the investments in, and the
380K British pound due from, those subsidiaries in the company's balance
sheet is of a temporary nature, and that it is thus not appropriate for them
to be written down.
Basis of consolidation
The group accounts consolidate the accounts of Meteor Technology
plc and all its subsidiary undertakings drawn up to May 31. No
profit and loss account is presented for Meteor Technology plc as
permitted by section 230 of the Companies Act 1985.
The subsidiary undertakings acquired during the period have been
included in the group accounts using the acquisition method of
accounting. Accordingly, the group profit and loss account and
cash flow statement include the results and cash flow of
DigiPhone Europe Limited and Paragon Investment Holdings Limited
and its subsidiary undertakings from their acquisition on August
12, 1996 and August 15, 1996 respectively. The purchase
consideration has been allocated to assets and liabilities on the
basis of fair value at the date of the acquisition.
Advantage has been taken of the merger relief offered by section
131 of the Companies Act 1985 in respect of consideration
received in excess of the nominal value of the shares issued in
connection with the acquisition of DigiPhone Europe Limited and
Paragon Investment Holdings Limited.
Telecredit Telekommunications GmbH, a wholly owned subsidiary
undertaking incorporated in Germany has not been consolidated, as
it was held for resale and on July 10, 1996 it was sold in
exchange for a 10% shareholding in RC Telecom Limited, a company
incorporated in the Isle of Man.
Goodwill
Purchased and consolidation goodwill is charged directly against
reserves. This is a change in accounting policy for the group in
1997 to give a fairer presentation of the results and of the
financial position of the group.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
1.Accounting policies
(continued)
In the May 31, 1996 accounts, goodwill was capitalised and was
being amortised over 4 years. The impact of the change in
accounting policy is to reduce the loss for the period to May 31,
1996 by writing back 25K British pounds of amortisation to the profit and loss
account offset by the creation of another reserve (see note
4(d)). The impact of this change in accounting policy on the
accounts for the year to May 31, 1997, assuming an estimated
useful life of 20 years for the subsidiaries acquired, is to
reduce the loss by 1,047K British pounds.
If a subsidiary, associate or business is subsequently sold or
closed, any goodwill arising on acquisition that was written off
directly to reserves or that has not been amortised through the
profit and loss account is taken into account in determining the
profit or loss on sale or closure.
Depreciation
Depreciation is provided on all tangible fixed assets at rates
calculated to write off the cost, less estimated residual value,
of each asset evenly over its expected useful life, as follows:
Payphones - over length of contract, up to five
years
Computer equipment - 3 years straight line
Fixtures and fittings - 20% reducing balance
Motor vehicles - 25% reducing balance
Stocks
Stocks are stated at the lower of cost incurred in bringing each
product to its present location and condition and net realisable
value, as follows:
Goods for resale - purchase cost on a first-in,
first-out basis
Net realisable value is based on estimated selling price less any
further costs expected to be incurred to completion and disposal.
Recognition of profits on leased payphones
Certain subsidiary undertakings have entered into agreements with
finance houses in respect of payphones which are subleased by the
finance house to customers. Net income from the leasing
agreements is credited to the profit and loss account so as to
spread any profit arising equally over the period of the lease
between the customer and the finance house.
Deferred taxation
Deferred taxation is provided using the liability method on all
timing differences which are expected to reverse in the future
without being replaced, calculated at the rate at which it is
estimated that the timing differences will reverse. Advance
corporation tax which is expected to be recoverable in the future
is deducted from the deferred taxation balance.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
1. Accounting policies
(continued)
Software distribution rights
The values of software distribution rights purchased are reviewed
periodically. Provision is made where there has been a permanent
diminution in the value of these rights.
Foreign currencies
Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction or at the contracted rate
if the transaction is covered by a forward exchange contract.
Monetary assets and liabilities denominated in foreign currencies
are retranslated at the rate of exchange ruling at the balance
sheet date or if appropriate at the forward contract rate. All
differences are taken to the profit and loss account.
Leasing and hire purchase commitments
Assets held under finance leases and hire purchase contracts are
capitalised in the balance sheet and are depreciated over their
useful lives. The interest element of the rental obligations is
charged to the profit and loss account over the period of the
lease and represents a constant proportion of the balance of
capital repayments outstanding.
Rentals paid under operating leases are charged to income on a
straight line basis over the lease term.
2. Turnover
Turnover represents the amounts derived from the provision of
goods and services which fall within the group's ordinary
activities, all of which are continuing, stated net of value
added tax.
The group operates in the telecommunications market and an
analysis of its turnover by geographical market is as follows:
<TABLE>
<S> <C> <C>
Restated
1997 1996
'000 '000
USA 2,500 -
UK 1,370 25
Rest of Europe 19 -
------- ------
3,889 25
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
3.Operating loss
</TABLE>
<TABLE>
<S> <C> <C>
(a)This is stated after charging: Restated
19971996
'000'000
Auditors' remuneration - audit services 402
Auditors' remuneration - non-audit services 6-
Directors' remuneration (see below) 16557
Depreciation of owned fixed assets 605
Depreciation of assets held under
finance leases and hire purchase
contracts 6 1
Operating lease rentals-plant and
machinery 184 1
-land and buildings 6511
</TABLE>
The auditors also received fees of 17K British pounds in respect
of the circular on the reversal of DigiPhone Europe Limited into
the company. These costs have been included as part of the
investment cost and not expensed to the profit and loss account.
b) Directors' remuneration
<TABLE>
<S> <C> <C>
Restated
1997 1996
'000 '000
Fees 78 57
Other emoluments 87 -
---- ----
165 57
</TABLE>
Full details of the share options held by the directors are set
out in the directors' report. No options were exercised by the
directors during the period.
There are no long term incentive schemes in place for directors.
The company has made no contributions to directors' pension
scheme.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
3.Operating loss
(continued)
(c) Reconciliation of operating loss and net cash outflow from
operating activities:
<TABLE>
<S> <C> <C>
Restated
1997 1996
'000 '000
Operating loss (302) (1,037)
Depreciation 66 6
Loss on disposal of tangible fixed assets 9 1
Exceptional write off (non-cash
transaction - see note 27(i)) 1,304 845
Sale of rights (non-cash transaction
- see note 27(ii)) (2,500) -
Decrease/(increase) in debtors 23 (11)
(Decrease)/increase in creditors (322) 46
Decrease in stocks 35 2
------- -----
Net cash outflow from operating activities (1,687) (148)
</TABLE>
4.Exceptional items
<TABLE>
<S> <C> <C>
Restated
1997 1996
'000 '000
Cost of sales:
Write off of distribution rights
purchased (see notes (a) and (b)) 1,379 207
------ -----
Distribution and administrative expenses:
Provision for diminution in value
of German subsidiary (see note (c)) - 63
Restatement for fundamental errors (see note (d)) - 603
----- -----
- 666
</TABLE>
(a) Exceptional item current year
During the year Meteor Technology plc acquired the rights to
distribute DigiPhone internet telephony software in the UK,
Ireland and the Rest of the World (i.e. excluding the USA, Canada
and Rest of Europe) for 1.379M British pounds. These costs have been written
off in full during the year as part of cost of sales.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
4. Exceptional items
(continued)
The rights to distribute this software in Europe were acquired by
DigiPhone Europe Limited prior to its acquisition by the company
and therefore the group now holds the distribution rights for the
software on a worldwide basis excluding the USA and Canada.
(b) Exceptional item prior year
In December 1995, 400,000 ordinary shares were allotted for 200,000 British
pounds at 5p per share, fully paid, upon the company entering
into a distribution agreement with Firecrest Group Plc. The costs
incurred in obtaining the distribution agreement have been
written off to the profit and loss account.
(c ) Exceptional item prior year
The company owned the whole of the issued share capital of
Telecredit Telekommunications GmbH, a company incorporated in
Germany. A provision of 63K British pounds was made for diminution in value
at May 31, 1996.
(d) Prior year adjustments - restatement for fundamental errors
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Profit Other
and
loss reserv
account es
'000 '000
Provision for
further diminution in (i) (300) -
value of
German subsidiary
Provision
for rent
guarantee
omitted
in error (ii) (70) -
Provis (iii) (205) -
ion for
professional fees
omitted in error
Other (53) -
Change (iv) 25 (628)
in accounting
policy for goodwill
-------- ------
-
(603) (628)
</TABLE>
(i) As referred to in (c) above the company owned the whose of
the issued share capital of Telecredit Telekommunications
GmbH. This investment was exchanged for 100,004 ordinary
shares in RC Telecom Limited on July 10, 1996. Following
enquiry by the new directors it became apparent that this
investment, which represents 10 per cent of that company's
share capital, was worthless at the date or acquisition.
Accordingly a further provision for diminution in value of
300K British pounds has been included in the restated figures.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
4. Exceptional items
(continued)
(ii) The company provided a rent guarantee to the landlord
of the premises occupied by Telecredit Telekommunications GmbH.
These premises were vacated in early 1996 leaving rent arrears
and therefore the landlord called the tent guarantee. No
provision for these costs was accrued at May 31, 1996. A
settlement of 70K British pounds has been reached with the landlord and a
provision for this amount has been included in the restated
figures.
(iii) A fee of 205K British pounds was payable to Vivian Gray Nominees in
respect of a fee relating to Telecredit Telekommunications GmbH.
While shares in settlement of this fee had been committed but not
issued at May 31, 1996, this was not recorded in the company's
accounts.
(iv) The accounting policy for goodwill arising on
acquisition or on consolidation has been changed to a policy of
charging it against reserves. Accordingly amortisation, 25K British pounds
expensed in the period to May 31, 1996 has been written back to
the profit and loss account for that period and 628K British pounds
charged to reserves.
5.Staff costs
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996
'000 '000
Wages and 287 73
salaries
Social security 28 1
costs
Other pension 2 1
costs
------ ------
- -
317 75
The average
number of employees,
including executive
directors, during the
year was as
follow s:
1997 1996
No. No.
Sales 10 2
and
marketing
Management 10 6
and administration
------ ------
- -
20 8
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
6.Interest payable
<TABLE>
<S> <C> <C>
1997 1996
'000 '000
Bank loans and overdrafts and other loans 5 3
Loan stock interest 41 -
Finance charges payable under finance
leases and hire purchase contracts 2 1
--- --
48 4
</TABLE>
7. Taxation on ordinary activities
Subject to agreement with the Inspector of Taxes, losses of
approximately 4m British pounds were available as at May 31, 1997 to carry
forward against future profits.
8. Loss per ordinary shares
The loss per share of 0.53 pence has been calculated by dividing
the loss after tax of 322K British pounds by 60,394,391 shares being the
weighted average number of shares in issue during the year.
The restated 1996 loss per share of 11.56 pence has been
calculated by dividing the restated loss after tax of 1,039K British pounds by
8,986,406 shares, being the weighted average number of shares in
issue during that year.
9.Profit/(loss) attributable to the members of the parent
company
The profit dealt with in the accounts of the parent company was
578K British pounds (restated 1996: loss 1,022K British pounds).
10. Dividends
No dividends were paid during the year nor have been recommend.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
11. Tangible fixed assets
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Fixtures
Motor Computer and
vehicles equipment Payphones fittings Total
'000 '000 '000 '000 '000
Cost:
At 24 10 125 22 181
June 1, 1996
- 27 141 36 204
Acquisition of
subsidiaries
13 29 63 44 149
Additions
(5) (11) (27) (22) (65)
Disposals
------ -------- -------- ------- ------
At May 31, 32 55 302 80 469
1997
------ -------- -------- ------- ------
Depreciation:
At June 1, 6 6 125 14 151
1996
- - 54 - 54
Acquisition
of subsidiaries
8 14 34 10 66
Additions
(4) (7) (14) (15) (40)
Disposals
------ -------- -------- ------- ------
At May 31, 10 13 199 9 231
1997
------ -------- -------- ------- ------
Net book
value:
At May 31, 22 42 103 71 238
1997
At June 1, 18 4 - 8 30
1996
</TABLE>
The net book value of tangible fixed assets includes 40K British
pounds (1996: 18K British Pounds) in respect of assets held under
finance leases and hire purchase contracts.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
11.Tangible fixed assets
(continued)
<TABLE>
<S> <C> <C>
Company
Computer
Equipment Total
'000 '000
Cost:
At June 1, 1996 - -
Additions 2 2
-------- -------
At May 31, 1997 2 2
------- -------
Depreciation
At June 1, 1996
and May 31, 1997 - -
-------- -------
Net book value:
At May 31, 1997 2 2
At June 1, 1996 - -
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
12. Investments
(a) Group
<TABLE>
<S> <C> <C> <C> <C> <C>
1997 1996
'000 '000
Fixed 500 -
asset
invest
ments
Listed
on the
US Unlist Total
NASDAQ ed
'000 '000 '000
Cost:
At - 363 363
June
1,
1996
500 - 500
Additi
ons
-------- ------ ------
At 500 363 863
May
31,
1997
-------- ------ ------
Amounts
provided:
At - 63 63
June
1,
1996
- 300 300
Restatement
-------- ------ ------
As - 363 363
restated
- - -
Provided
during the
year -------- ------ ------
At - 363 363
May
31,
1997
-------- ------ ------
Net
book
value:
At 500 - 500
May
31,
1997
At - - -
June 1,
1997 as
restated
</TABLE>
The market value of the listed investments at May 31, 1997 was
372,139 British pounds. If they had been sold at this value there would have
been no liability to corporation tax as there would be no capital
gain arising from the sale.
The unlisted investment is in respect of an investment in 10 per
cent of the issued share capital of RC Telecom Limited.
<PAGE>
METEOR TECHNOLOCY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
12. Investments
(continued)
(b) Company
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Other Other
Subsidiary investments invest-
ments
undertak (listed) (unlist Total
ings ed)
'000 '000 '000 '000
Cost:
At 650 - 363 1,013
June
1,
1996
763 500 - 1,263
Additions
-------- -------- ------- ------
At 1,413 500 - 2,276
May 31, 1997
-------- -------- ------- ------
Amounts
provided:
At - - 363 363
June 1, 1996
and May 31, 1997
-------- ------- ------- ------
Net Book value
At May 31, 1,413 500 - 1,913
1997
At June 1, 650 - - 650
1997
as restated
</TABLE>
See further details of the listed and unlisted other investments
in the group investment note.
(b) Subsidiary undertakings acquired in the period
On August 12, 1996 DigiPhone Europe Limited ("DigiPhone") was
acquired in exchange for consideration of 21,626,326 British
pounds payable by way of issuing 52,285,714 ordinary 1 pence
shares at a fully paid price of 41 pence each and cash of 189K
British pounds(See not 23(a)).
On August 15, 1996 Paragon Investment Holdings Limited
("Paragon") was acquired in exchange for consideration of 790,334
British pounds payable by way of issuing 2,000,000 ordinary 1
pence shares at a fully paid price of 38 pence each and cash of
30K British pounds. (See note 23(a)).
During the year the company invested in 4 new subsidiary
companies for cash of 1K British pounds. These companies were
dormant throughout the year.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
12. Investments
(continued)
(c) Details of the principal operating subsidiaries are:
<TABLE>
<S> <C> <C> <C> <C>
Propor-
tion
Country of of
voting
Name of registration rights Nature of
and
company and Holding share business
operation held
- -----------------------------------------------------------
DigiPhone England Ordinary 100% Software
International
Limited
and Wales shares distribution
DigiPhone England Ordinary 100% Software
Europe Limited
and Wales shares distribution
The Public England Ordinary 100% Software
Telephone
Company and Wales shares distribution
Limited
Paragon England Ordinary 100% Software
Investments
Holdings
Limited and Wales shares distribution
Paragon England Ordinary 100% Software
Payphones
Limited
and Wales shares distribution
+
Paragon Leasing England Ordinary 100% Software
Limited
and Wales shares distribution
+
Meteor England Ordinary 100% Software
Payphones
Limited
and Wales shares distribution
+ Held by a subsidiary undertaking
</TABLE>
13. Stocks
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Group Company
Restated Restated
1997 1996 1997 1996
'000 '000 '000 '000
Goods 69 80 - -
for
resale
</TABLE>
The difference between the purchase price of stocks and their
replacement cost is not material.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
14. Debtors
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Group Company
Restated Restated
1997 1996 1997 1996
'000 '000 '000 '000
Trade 42 18 - -
debtors
Amounts - - 380 20
due from
subsidiary
undertakings
Other 81 24 9 13
debtors
Prepayments 98 6 19 5
and accrued
income
------- ------ ------ ------
221 48 408 38
</TABLE>
Included within debtors are amounts of 60K British pounds in the group accounts
and 380K British pounds in the company accounts due after one year. The amount
in the group accounts includes an amount of 39K British pounds over which a
charge exists.
15. Creditors amounts falling due within one year
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Group Company
Restated Restated
1997 1996 1997 1996
'000 '000 '000 '000
Bank - 22 - -
overdraft
Other loans 10 - - -
Trade 376 60 - -
creditors
Corporation - - - -
tax
Amounts - - 123 -
due to
subsidiary
undertakings
Other 80 7 36 -
taxes and social
security costs
Obligations
under finance
leases and 14 5 - -
hire purchase
contracts
(note 17)
Other 117 - - -
creditors
Accruals 633 148 88 138
and deferred
income
------- ------ ----- ------
1,230 242 247 138
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
16. Creditors: amounts falling due after more than one year
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Group Company
Restated Restated
1997 1996 1997 1996
'000 '000 '000 '000
Other 10 - - -
loans
Obligations
under finance
leases and 25 12 - -
hire purchase
contract (note 17)
10% 500 - 500 -
unsecured
loan stock
1997-2007
(note 18)
------- ------ ------ ------
535 12 500 -
</TABLE>
17. Obligations under finance leases and hire purchase contracts
(a) The maturity of these amounts is as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Group Company
Restated Restated
1997 1996 1997 1996
'000 '000 '000 '000
Amounts
payable:
18 7 - -
within one
year 27 14 - -
between two
to five
years
------ ------ ----- ------
45 21 - -
Less:
Finance
charges
allocated to (6) (4) - -
future periods
------ ------ ------ ------
39 17 - -
Finance
leases are
analysed as
follow s:
14 5 - -
Current obligations
(note 15)
Non- 25 12 - -
current obligations
(note 16)
----- ----- ---- -----
39 17 - -
</TABLE>
The outstanding lease and hire purchase obligations are secured
on the assets the financing relates.<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
17. Obligations under finance leases and hire purchase contracts
(b) Analysis of changes in finance leases and hire purchase
contracts during the current and previous years:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Group Company
Restated Restated
1997 1996 1997 1996
'000 '000 '000 '000
At 17 - - -
June 1
Inception of 31 17 - -
finance
lease contracts
Capital (9) - - -
element of
finance
lease contracts
-------- -------- ------- -------
39 17 -
</TABLE>
18. Unsecured loan stock
(a) 500,000 British pounds of unsecured loan stock was issued
for cash on May 20, 1997. It bears interest at 10 per cent per
annum accruing on a day to day basis but payable annually in
arrears. The principal sum will be redeemed by or on May 21,
2007.
The loan stock is unsecured; however, it becomes immediately
repayable on the appointment of a receiver, a winding up
resolution or if the company becomes unable to pay its debts as
they fall due.
(b) Details of loan stock and convertible loan stock issued and
redeemed during the year are as follows:
c
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Loan Convertible
stock loan Total
stock
'000 '000 '000
Issued - 1,304 1,304
in exchange for
distribution
rights Issued 500 1,000 1,500
in exchange for
cash
Cancelled as - (2,000) (2,000)
part consideration for
sale of software
rights (see note 27 (ii))
Converted to - (304) (304)
share capital (see
note 27 (iii))
-------- -------- -------
Outstanding 500 - 500
at May 31, 1997
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
19. Provisions for liabilities and charges
There was no requirement for a provision for deferred taxation in
the accounts for 1997 or 1996 and there were no amounts not provided for.
20. Called up share capital
(a)
<TABLE>
<S> <C> <C> <C> <C>
Rest
ated
1997 1996 1997 1996
No. No. 000 000
Authorised
100,000,000 20,000,000 1,000 200
Ordinary
shares of
1p each
Allotted,
called up and
fully paid:
71,426,223 11,317,612 714 113
Ordinary
shares of 1p
each Committed
but unissued
share capital:
- 1,800,000 - 18
Ordinary
shares of 1p
each 714 131
</TABLE>
On August 5, 1996, the authorised share capital of the company
was increased from 20 million 1 pence shares to 100 million 1
pence shares.
During the year the following issues of share capital took place:
(i) In July 1996 the committed but unissued shares at May 31,
1996 were issued as follows
*500,000 committed but unissued ordinary 1 pence shares were
issued at 41 pence per share as deferred consideration for the
purchase of Telecredit Telekommunications GmbH
*1,300,000 committed but unissued ordinary 1 pence shares were
issued at 50 pence per share to Global Telecom Overseas
Incorporated, 500,000 a the initial purchase consideration and
800,000 as the deferred consideration for the purchase of The
Public Telephone Company Limited.
(ii) In July 1996, 1,374,440 warrants were exercised, 1,374,440
or ordinary 1 pence shares were
issued for cash at 4.929 pence each.
(iii) In August 1996, 52,285,714 ordinary 1 pence shares were
issued at 41 pence per share on the acquisition of DigiPhone Europe
Limited (see notes 11 (b) and23(a)).
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
20. Called up share capital
(continued)
(iv) In August 1996, 2,000,000 ordinary 1 pence shares were issue at
38 pence per share on the acquisition of Paragon Investments Holdings
Limited (see notes 11 (b) and 23(a)).
(v) In November 1996, 800,000 ordinary 1 pence shares were issued at 38
pence per share in exchange for the conversion of loan stock issued to
Camelot ( Corporation (see note 27(iii)).
(vi) In March 1997, 1,498,457 ordinary 1 pence shares were issued at
8.5 pence per share in payment of interest and other expenses amounting in
total to 127K British pounds due to Camelot Corporation.
(vii) In March 1997, 350,000 ordinary 1 pence shares were issued 20
pence per share in settlement of a provision for rent arrears and an
ongoing premises obligation claim by the landlords of the property
previously occupied by Telecredit Telekommunications GmbH.
All share issues took place at the market value of the shares on the day of
issue of the share accept for (ii) and (vii). The market value per share on
the date that he warrants were issued was 51 pence and the market value on
the date that the shares were issue in settlement of the rent arrears was
8.5 pence.
After the year end, on June 25, 1997, the issued share capital of 71,
26,223 ordinary share of 1 pence each was consolidated into 7,142,622
ordinary shares of 10 pence each.
(b) Options
At May 31, 1997, options granted over ordinary shares outside any approved
or unapproved schemes were outstanding as shown below:
Number of shares Price per share Exercise period
British pounds
362,500 0.20 Between April 1, 1995 and March 31, 1998
571,428 0.2625 Between May 23, 1998 and April 23, 2003
150,000 0.21 Between November 12, 1998 and
November 11, 2003
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
20. Called up share capital
(continued)
(c) Analysis of changes in share capital (including share premium) during
the current and previous years:
<TABLE>
<S> <C> <C>
Restated
1997 1996
'000 '000
At 1,724 -
June 1
155 669
Net cash
inflow from
financing
957 200
Shares issued
for non- cash
consideration
- 855
Shares committed
but unissued
-------- -------
At May 2,836 1,724
31, 1997
</TABLE>
(d) Warrants
During the year 1,374,440 warrants were exercised leaving 1,930,060
warrants in issue. Each warrant entitles the holder to subscribe for one
ordinary share at a price of 4.929p per ordinary share at any time from
July 1 to July 31 in any of the years 1996 to 2001 inclusive.
Since the year end, the warrants have been revised to reflect the
consolidation of the shares. 193,006 warrants are in issue with a share
price of 49.2 pence per ordinary share.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
21. Reconciliation of equity shareholders' funds and movements on reserves
Company
<TABLE>
<S> <C> <C> <C> <C> <C>
Profit Total
Share Share Other and shareholders'
capital premium reserve account funds
000 000 000 000 000
At 126 1,393 - (436) 1,083
previously
reported
Prior year
restatement
5 200 (628) (603) (1,026)
adjustments
(see note 4(d))
------ ----- ------ ------ -------
Restated 131 1,593 (628) (1,039) 57
balance
at May 31,
1996
Profit
attributable
to members
of the
company - - - (322) (322)
Exercise 14 54 - - 68
of warrants
Shares 543 - 21,654 - 22,197
issued on
acquisition
Less merger - - (22,409) - (22,409)
relief
Arising on 18 179 - - 197
share issues
Loan stock 8 296 - - 304
converted
------ ----- -------- ------ --------
Balance 714 2,122 (1,383) (1,361) 92
at May 31,
1997
</TABLE>
Included in the movement on other reserves is goodwill written off during
the year of 22,409K British pounds(Restated 1996: 628K British pounds).
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
21. Reconciliation of shareholders' funds and movements on reserves
(continued)
Company
<TABLE>
<S> <C> <C> <C> <C> <C>
Profit Total
Share Share Other and sharehol
loss ders'
capital premium reserve account funds
000 000 000 000 000
As 126 1,393 - (394) 1,125
previously
reported
Prior
year restatement
5 200 - (628) (423)
adjustments
(see note 4(d))
------ -------- ------- ------- -------
Restated
balance
at May 31,
1996
Profit
attributable
to members of - - - 578 578
the company
Exercise 14 54 - - 68
of warrants
Shares issued 543 - 21,654 - 22,197
on acquisition
Less - - (21,654) - (21,654)
merger relief
Arising 18 179 - - 197
on share
issues
Loan 8 296 - - 304
stock converted
------ -------- -------- ------- --------
Balance 714 2,122
at May - (444) 2,392
31, 1997
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
22. Share premium account
Company
<TABLE>
<S> <C> <C>
Restated
1997 1996
000 000
At 1,593 -
June 1
Premium 529 883
on shares
issued
Premium - 637
on shares
committed
but unissued
Share - (127)
issue costs
Restatement - 200
adjustments
------ ------
At May 31 2,122 1,593
</TABLE>
23. Acquisition of subsidiary undertakings
(a) Fair value of assets acquired
The net assets of DigiPhone at the date of acquisition
were as follows:
<TABLE>
<S> <C> <C> <C>
Fair
value
Book adjustments Fair
value nts value
`000 `000 `000
Fixed 63 - 63
assets
Debtors 52 - 52
Cash 1,041 - 1,041
------- -------- ------
1,156 - 1,156
Creditors (144) - (144)
due within
one year
------- -------- ------
Net 1,012 - 1,012
assets on
acquisition
Goodwill 20,614
arising
Less (20,914)
merger relief
---------
712
Satisfied by:
523
Shares
allotted -
at nominal value
189
Cash
---------
712
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
23. Acquisition of subsidiary undertakings
(continued)
<TABLE>
The net assets of Paragon at the date of acquisition
were as follows:
<S> <C> <C> <C>
Fair
value
Book adjustme Fair
value nts value
`000 `000 `000
Fixed 142 (55) 87
assets
Stock 24 - 24
Debtors 144 - 144
Cash 5 - 5
------- -------- -------
315 (55) 260
Creditors (986) (263) (1,249)
due within
one year
Creditors due in more than (16) - (16)
one year
------- -------- -------
Net (687) (318) (1,005)
assets
on acquisition
Goodwill 1,795
arising
Less (740)
merger
relief
------
50
Satisfied by:
20
Shares
allotted -
at nominal value
30
Cash
------
50
</TABLE>
The fair value adjustments arose due to adjustments to the carrying value
of fixed assets and a change in accounting policy for the recognition of
profit on the sale of payphones to finance houses, which is now spread
evenly over the period to which the finance contract relates.
Details of the consideration given are shown in note 12(a).
(b) Cash flow impact
The subsidiary undertaking acquired during the year
utilised 826K British pounds of the group's net operating cash flows, contri-
buted 9K British pounds in respect of net returns on investments and
servicing of finance, utilised 96K British pounds in respect of capital
expenditure and financial investment and utilised 9K British pounds in
respect of financing.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
23. Acquisition of subsidiary undertakings
(continued)
( c) Profitability of acquired subsidiaries
DigiPhone made a net loss for the 14 month period May 31, 1997 of 5,614K British
pounds (period to March 31, 1996: dormant) of which 5,200K British pounds
arose in the period from April 1, 1996 to August 12, 1996. The
summarised profit and loss account for the period from April 1, 1996 to the
date of acquisition is as follows:
'000
Turnover -
Operating loss 5,200
Loss before and after taxation 5,200
There were no recognised gains or losses in the period ended August 12,
1996 other than the net loss of 5,200K British pounds.
Paragon made a net loss for the 14 month period ended May 31, 1997 of 556K
British pounds (year to March 31, 1996 restated loss 360K British pounds) of
which 501K British pounds arose in the period from April 1, 1996 to August
15, 1996. The summarised profit and loss account for the period from
April 1, 1996 to the date of acquisition is as follows:
'000
Turnover 412
Operating loss (535)
Loss before and after taxation (501)
There were no recognised gains or losses in the period ended August 15,
1996 other than the net loss of 501K British pounds.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
24. Other financial commitments
At May 31, 1997 annual commitments under non-cancellable operating leases
were as set out below:
Group
<TABLE>
<S> <C> <C> <C> <C>
Land and
buildings Other
1997 1996 1997 1996
`000 `000 `000 `000
Operating
leases which
expire:
- - 90 -
within one
year in 83 - 149 -
the second
to fifth years
inclusive
18 - - -
after five
years
------- ------- ------ ------
101 - 239 -
</TABLE>
Company
<TABLE>
<S> <C> <C> <C> <C>
Land and
building Other
1997 1996 1997 1996
`000 `000 `000 `000
Operating
leases which
expire:
- - 1 -
within one
year
- - 14 -
in the second
to
fifth years
inclusive
19 - - -
after five
years
------- -------- ------ ------
19 - 15 -
</TABLE>
25. Contingent liabilities
Company
There is a group VAT registration in place covering the company, Paragon
Payphones Limited and The Public Telephone Company Limited.
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
26. Reconciliation of net cash flow to movement in net funds
<TABLE>
<S> <C> <C>
1997 1996
`000 `000
Increase 698 131
in cash
in the period
Cash 1485 -
inflow from
icrease in
debt and
lease financing
-------- ------
Change (787) 131
in net funds
resulting from
cash flows
Loans (26) (17)
and finance
leases acquired
with subsidiary
undertakings
New (31) -
finance leases
Loan 1,000 -
stock cancelled in
non- cash transaction
-------- ------
Movement in 156 114
net funds
in the period
Net 114 -
funds at
June 1
-------- ------
Net 270 114
funds at May 31
Analysis of
net funds:
At At
June Non-cash May
1, 31,
1996 Cash Acquisit transact 1997
flow ions* ions
`000 `000 `000 `000 `000
Cash 153 676 - - 829
at bank
Overdrafts (22) 22 - - -
------ ------- -------- -------- ------
131 698 - - 829
Debt due
after one - (1,494) (16) 1,000 (510)
year
Debt due in
one year - - (10) - (10)
Finance (17) 9 - (31) (39)
leases
------ ------- -------- -------- ------
114 (787) (26) 969 270
*excluding cash and overdraft
</TABLE>
<PAGE>
METEOR TECHNOLOGY plc
(formerly Telecom Credit Europe PLC)
NOTES TO THE ACCOUNTS AT MAY 31, 1997
(continued)
27. Major non-cash transactions
(i) During the year Meteor Technology plc acquired the rights to
distribute DigiPhone internet telephony software in the UK, Ireland and the
rest of the world (i.e. excluding the USA, Canada and the Rest of Europe)
from Camelot Corporation for 1.379 million British pounds. Of this consid-
eration, 75K British pounds was paid in cash, the remainder of 1,3041 British
pounds was settled by the issue of convertible loan stock.
(ii) During the year Meteor Technology plc sold the USA and Canadian
rights to its PCAMS and telephone software to Camelot Corporation for 2.5
British pounds million. The consideration for these rights was satis-
fied by the cancellation of 2 million British pounds of convertible loan
stock and 0.5 million British pounds by the issue to the company of
3,238,400 new common shares in Camelot Corporation.
(iii) During the year Meteor Technology plc converted 304K British
pounds of convertible loan stock held by Camelot Corporation into 800,000
ordinary 1 pence shares at a price of 38 pence each.
(iv) During the year Meteor Technology plc issued 300,000 ordinary 1
pence shares at a price of approximately 23 pence each in settlement of the
provision or the rent arrears and rent guarantee called by the landlord of
the premises previously occupied by Telecredit Telekommunications GmbH.
(v) Part of the consideration for the purchases of subsidiary undertakings
that occurred during the year comprised shares. (See notes 12(b) and
23(a)).
18. Related party transactions
The company's immediate parent undertaking is Alexander Mark Investments
(USA) Inc., which is incorporated and publicly listed in the United States
of America. It has included the company in its group accounts, copies of
which may be obtained from 17770 Preston Road, Dallas, Texas, United States
of America.
During the year the transactions set out in notes 18(a), 27(i), (ii) and
ii) took place with Camelot Corporation, which during the year became the
immediate parent of Alexander Mark Investment (USA) Inc..
In the directors' opinion the company's ultimate parent company and
Controlling party is Adina Inc., which is incorporated and publicly listed
in the United States of America. Copies of its group accounts, which
include the company, are available from 17770 Preston Road, Dallas, Texas,
United States of America. D Wettreich is the Chairman and a Director of
Adina Inc..
Exhibit (28) b
<PAGE>
Company No. 3250699
Digiphone International Limited
(formerly Shelfcorp 104 Limited)
Report and Accounts
May 31, 1997
<PAGE>
REPORT OF THE AUDITORS TO MEMBERS OF
DIGIPHONE INTERNATIONAL LIMITED
(formerly Shelfcorp 104 Limited)
We have audited the accounts on pages 4 to 5, which have
been prepared under the historical cost convention and on
the basis of the accounting policies set out on page 5.
Respective responsbilities of directors and auditors
As described on page 1 the company's directors are
responsible for the preparation of the accounts. It is our
responsibility to form an independent opinion, based on our
audit, on those accounts and to report our opinion to 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 accounts. It also includes
an assessment of the significant estimates and judgements
made by the directors in the preparation of the accounts,
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 accounts 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 accounts.
Opinion
In our opinion the accounts give a true and fair view of the
state of the company's affairs as at May 31, 1997 and have
been properly prepared in accordance with the Companies Act
of 1985.
Davison and Shingleton
Chartered Accountants
Registered Auditor
October 30, 1997
<PAGE>
DIGIPHONE INTERNATIONAL LIMITED
(formerly Shelfcorp 104 Limited)
BALANCE SHEET AT MAY 31, 1997
Notes 1997
pounds
Current assets:
Debtors 2 100
-------
Net current assets 100
-------
Total assets less current liabilities 100
__ __
Capital and reserves:
Called up equity share capital 3 100
-------
Equity shareholders' funds 4 100
__ __
The company was dormant throughout the financial period.
Approved by the Board on October 30, 1997
and signed on its behalf by
D Wettreich
Director
<PAGE>
NOTES TO THE ACCOUNTS AT MAY 31, 1997
1. Accounting Policies
Accounting convention
The accounts have been prepared under the historical
cost convention and in accordance with applicable
Accounting Standards.
Basis of preparation
The company had no transactions during the period and
has made neither a profit nor a loss.
No profit and loss account has therefore been prepared.
2. Debtors
1997
Amounts due from group companies
100(pounds)
____
3. Called up equity share capital
Allotted, called
Authorised up and
fully paid
1997 1997
No Pounds
Ordinary shares of 1 pound each 100 100
____ ____
4. Reconciliation of shareholders' funds
Share Capital
Balance at incorporation and May 31, 1997 100
____
5. Related party transactions and ultimate holding company
The immediate parent company is Meteor Technology plc.
As copies of Meteor Technology Plc's accounts are
publicly available, the directors are entitled to the
exemptions set out in FRS8 concerning the disclosure of
related party transactions.
In the directors' opinion the company's ultimate parent
company and controlling party is Adina, Inc., which is
incorporated and publicly listed in the United States
of America. Copies of its group accounts, which
include the company, are available from 17770 Preston
Road, Dallas, Texas, United State of America. D.
Wettreich is the Chairman and a director of Adina, Inc.
Exhibit (28) c<PAGE>
<TABLE>
Alexander Mark Investments USA,Inc.
Consolidated Statement of Operations
(in Thousands except EPS)
<S> <C> <C> <C> <C>
Meteor
AMI Technology
FY Ended FY Ended
Audited Audited/ Pro
Converted
30-Apr-97 31-May-97 Adjustments Forma
REVENUES
Sales $ $ $ $
- 6,283.0 - 6,283.0
Cost
of - 4,415.4 - 4,415.4
Sales
Gross
Profit - 1,867.6 - 1,867.6
Operating
Expenses:
Administrative - 2,355.5 - 2,355.5
Expenses
Interest - 32.3 - 32.3
Expense
Total
Operating - 2,387.8 - 2,387.8
Expenses
Discontinued - - - -
Operations
Net $ $ $ $
Loss - (520.2) - (520.2)
Net $
Loss (0.07)
per share
Weighted
Average
Shares Outstanding 7,542,220
</TABLE>
<PAGE>
Alexander Mark Investments (USA), Inc.
Notes to Pro Forma Financial Statements
(Unaudited)
NOTE 1: The respective financial statements were derived
from the following reports:
Alexander Mark Investments (USA), Inc.: audited
financial statements of Alexander Mark Investments
(USA), Inc. (AMI), formerly Danzar Investment
Group, Inc., for the fiscal period ended April 30,
1997 and unaudited interim financial statements for
the period ended October 31, 1997. Meteor
Technology plc: audited financial statements from
Meteor Technology plc (Meteor) for the fiscal year
ended May 31, 1997. Digiphone International
Limited: audited financial statements of Digiphone
International Limited ("Digiphone") for the period
end May 31, 1997.
At May 31, 1997 Digiphone was a wholly owned
subsidiary of Meteor and was consolidated with
Meteor's May 31, 1997 financial statements. All
intercompany transactions were eliminated for this
consolidation. Digiphone had no transactions
during the period and the minor expenses of the
company were met by Meteor. Digiphone's May 31,
1997 balance sheet consists of a receivable from
Meteor and an equal amount of issued share capital.
These amounts were eliminated as intercompany
transactions on Meteor's May 31, 1997 Balance
Sheet.
At May 31, 1997 a portion of Meteor's notes payable
balance included a note payable for $828,250 to
Camelot Corporation (Camelot). This note was
created when funds were received for Camelot for
subscription of additional Meteor Loan Stock. On
December 3, 1997 Camelot and Meteor entered into a
conditional agreement whereby Camelot would acquire
100% of the issued share capital of Digiphone in
exchange for the cancellation of the $828,250 note
due from Meteor.
NOTE 2: Adjustments:
A) Meteor's current liabilities were increased to
reflect the amount payable to Digiphone. The
offset to this adjustment was a decrease in
Meteor's stockholder's equity. The 100,000 pounds
owed translates to $166,800 in US dollars.
B) The notes payable in the amount of $828,250,
(500,000 pounds), was eliminated to reflect the
December 3, 1997 conditional agreement between
Camelot and Meteor. The offset was an increase to
Meteor's stockholder's equity.
C) The financial statements reflect the 43 per
cent minority interest in the outstanding voting
share capital of Meteor held by the minority
shareholders of Meteor and not owned by the
company. The minority interest is based on the
proportioned share of the consolidated net assets
of Meteor Technology on a historical basis. The
minority interest after the December 3rd
transaction was $350,500.
D) Meteor Technology financial presentation is
based on the accounting rules of the United
Kingdom. The Pro Forma balance sheet reflects
adjustments to present financial statements per US
GAAP accounting rules. The adjustments included
presenting current assets first on the balance
sheet, reclassing creditors payable due within one
year to the liability section from the current
asset section, reclassing creditors payable greater
than one year to notes payable, and combining
reserve amount and profit and loss account into
retained earnings. Total assets and liability
amounts were not changed except for as noted in "E"
below.
E) Meteor Technology's financial statements were
converted from British Pounds to US dollars based
on US accounting guidelines. The conversion rate
for the balance sheet was based on the published
exchange rate at October 31, 1997, one pound equals
$1.67. The conversion used for the statement of
operations was based on an average exchange rate
for the twelve months ended May 31, 1997. This
conversion rate was one pound equaled $1.62.
F) The stockholder's equity account were adjusted
to reflect the issuance of 6,787,998 no par value
common shares of AMI stock for the 40,727,988
shares, approximately 57%, of the outstanding stock
of Meteor Technology.
G) The pro forma weighted average shares
outstanding is based on the 100 for 1 reverse stock
split that Alexander Mark Investments (USA), Inc.
shareholders approved and on the new shares issued
in "F" above for the 57% interest in Meteor
Technology. AMI had 74,940,317 shares before the
reverse split. New shares issued were 6,787,998,
and the total shares now outstanding is 7,542,220.
Exhibit (28) d
<PAGE>
<TABLE>
Alexander Mark Investments(USA), Inc.
Consolidated Balance Sheet
(inThousands)
<S> <C> <C> <C> <C>
Meteor
AMI Technology
Unaudited Audited/ Pro
Converted
31-Oct-97 31-May-97 Adjustments Forma
ASSETS
Current Assets:
Cash $ $ $ $
0.0 1,383.3 - 1,383.3
Securities - 834.3 - 834.3
Held for Sale
Inventory - 115.1 - 115.1
Accounts & - 368.8 - 368.8
Notes Receivable
Total
Current 0.0 2,701.5 - 2,701.5
Assets
Property and
Equipment:
Net Equipment - 397.1 - 397.1
Other
- - - -
Total $ $ $ $
Assets 0.0 3,098.6 - 3,098.6
LIABILITIES
&STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts & $ $ $ $
2.9 2,052.4 166.8 2,222.1
notes payable
Total Current 2.9 2,052.4 166.8 2,222.1
Liabilities
Notes Payable - 892.7 (828.3) 64.4
Minority - - 350.5 350.5
Interest
Total Liabilities 2.9 2,945.1 (311.0) 2,637.0
Stockholder's Equity:
Common Stock 0.1 1,191.4 (1,191.4) 0.1
Additional 882.6 3,540.8 1,852.9 6,276.3
Paid-In Capital
Treasury (1.1) - - (1.1)
Stock
Retained (884.5) (4,578.6) (350.5) (5,813.6)
Earnings
(2.9) 153.5 311.0 461.6
$ $ $ $
0.0 3,098.6 - 3,098.6
</TABLE>
See notes to financial statements.
<PAGE>
Alexander Mark Investments (USA), Inc.
Notes to Pro Forma Financial Statements
(Unaudited)
NOTE 1: The respective financial statements were derived
from the following reports:
Alexander Mark Investments (USA), Inc.: audited
financial statements of Alexander Mark Investments
(USA), Inc. (AMI), formerly Danzar Investment
Group, Inc., for the fiscal period ended April 30,
1997 and unaudited interim financial statements for
the period ended October 31, 1997. Meteor
Technology plc: audited financial statements from
Meteor Technology plc (Meteor) for the fiscal year
ended May 31, 1997. Digiphone International
Limited: audited financial statements of Digiphone
International Limited ("Digiphone") for the period
end May 31, 1997.
At May 31, 1997 Digiphone was a wholly owned
subsidiary of Meteor and was consolidated with
Meteor's May 31, 1997 financial statements. All
intercompany transactions were eliminated for this
consolidation. Digiphone had no transactions
during the period and the minor expenses of the
company were met by Meteor. Digiphone's May 31,
1997 balance sheet consists of a receivable from
Meteor and an equal amount of issued share capital.
These amounts were eliminated as intercompany
transactions on Meteor's May 31, 1997 Balance
Sheet.
At May 31, 1997 a portion of Meteor's notes payable
balance included a note payable for $828,250 to
Camelot Corporation (Camelot). This note was
created when funds were received for Camelot for
subscription of additional Meteor Loan Stock. On
December 3, 1997 Camelot and Meteor entered into a
conditional agreement whereby Camelot would acquire
100% of the issued share capital of Digiphone in
exchange for the cancellation of the $828,250 note
due from Meteor.
NOTE 2: Adjustments:
A) Meteor's current liabilities were increased to
reflect the amount payable to Digiphone. The
offset to this adjustment was a decrease in
Meteor's stockholder's equity. The 100,000 pounds
owed translates to $166,800 in US dollars.
B) The notes payable in the amount of $828,250,
(500,000 pounds), was eliminated to reflect the
December 3, 1997 conditional agreement between
Camelot and Meteor. The offset was an increase to
Meteor's stockholder's equity.
C) The financial statements reflect the 43 per
cent minority interest in the outstanding voting
share capital of Meteor held by the minority
shareholders of Meteor and not owned by the
company. The minority interest is based on the
proportioned share of the consolidated net assets
of Meteor Technology on a historical basis. The
minority interest after the December 3rd
transaction was $350,500.
D) Meteor Technology financial presentation is
based on the accounting rules of the United
Kingdom. The Pro Forma balance sheet reflects
adjustments to present financial statements per US
GAAP accounting rules. The adjustments included
presenting current assets first on the balance
sheet, reclassing creditors payable due within one
year to the liability section from the current
asset section, reclassing creditors payable greater
than one year to notes payable, and combining
reserve amount and profit and loss account into
retained earnings. Total assets and liability
amounts were not changed except for as noted in "E"
below.
E) Meteor Technology's financial statements were
converted from British Pounds to US dollars based
on US accounting guidelines. The conversion rate
for the balance sheet was based on the published
exchange rate at October 31, 1997, one pound equals
$1.67. The conversion used for the statement of
operations was based on an average exchange rate
for the twelve months ended May 31, 1997. This
conversion rate was one pound equaled $1.62.
F) The stockholder's equity account were adjusted
to reflect the issuance of 6,787,998 no par value
common shares of AMI stock for the 40,727,988
shares, approximately 57%, of the outstanding stock
of Meteor Technology.
G) The pro forma weighted average shares
outstanding is based on the 100 for 1 reverse stock
split that Alexander Mark Investments (USA), Inc.
shareholders approved and on the new shares issued
in "F" above for the 57% interest in Meteor
Technology. AMI had 74,940,317 shares before the
reverse split. New shares issued were 6,787,998,
and the total shares now outstanding is 7,542,220.
