SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
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): November 7, 1996
--------------------
DATAWATCH CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-19960 02-0405716
-------- ------- ----------
(State or other jurisdiction of (Commission file (I.R.S. Employer
incorporation or organization) number) Identification No.)
234 Ballardvale Street, Wilmington, MA 01887
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (508) 988-9700
------------------
No change since last report
--------------------------------------------------------------
(Former name or address, if changed since last report)
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
November 7, 1996 as set forth in the pages attached hereto:
(1) Item 7. Financial Statements and Exhibits
(2) Exhibit Index
(3) Filing of Additional Exhibits
Datawatch Corporation (the "Company") hereby amends its Current Report
on Form 8-K dated November 7, 1996 (the "Current Report") by deleting Item 7(a),
Item 7(b) and Item 7(c) of the Current Report and replacing it with the
following new Items 7(a), 7(b) and 7(c) so that as so amended said Items 7(a),
7(b) and 7(c) shall read in their entirety as follows:
(1) Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The following audited financial statements of Guildsoft
Holdings Limited ("Guildsoft Holdings"), together with the
manually signed Auditors' Report of Deloitte & Touche,
Chartered Accountants and Registered Auditors, are filed as
Exhibit 99.1 to this report and incorporated herein by
reference:
Profit and Loss Account for the year ended September 30,
1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September 30,
1996
The following audited financial statements of Guildsoft
Limited, a wholly owned subsidiary of Guildsoft Holdings,
together with the manually signed Auditors' Report of Deloitte
& Touche, Chartered Accountants and Registered Auditors, are
filed as Exhibit 99.2 to this report and incorporated herein
by reference:
Profit and Loss Account for the year ended September 30,
1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September 30,
1996
(b) Unaudited Pro Forma Combined Financial Information
On November 7, 1996, the Company acquired (the "Acquisition")
all of the outstanding capital stock of Guildsoft Holdings
Limited, a corporation organized under the laws of England and
Wales ("Guildsoft Holdings"), which in turn owns all of the
-2-
outstanding capital stock of Guildsoft Limited, a corporation
organized under the laws of England and Wales ("Guildsoft"),
in exchange for an aggregate of 125,000 shares of the
Company's Common Stock, $.01 par value per share. The
Acquisition has been accounted for as an asset purchase. The
unaudited pro forma combined balance sheet as of September 30,
1996 gives effect to the Acquisition as if it had been
consummated on September 30, 1996 and the unaudited pro forma
combined statements of operations for the year ended September
30, 1996 gives effect to the Acquisition as if it had been
consummated on October 1, 1995. The financial statements of
Guildsoft Holdings and Guildsoft have been translated in
accordance with Statement of Financial Accounting Standards
No. 52.
In the opinion of management, all adjustments necessary to
fairly present this pro forma information have been made.
The accompanying unaudited pro forma combined financial
statements, which are filed as Exhibit 99.3 to this report and
incorporated herein by reference, should be read in
conjunction with the audited statements included in the
Company's Annual Report on Form 10-K for the year ended
September 30, 1996, and with the financial statements of
Guildsoft Holdings and Guildsoft filed as Exhibits 99.1 and
99.2, respectively, to this report. The pro forma information
is not necessarily indicative of the results that would have
been reported had the Acquisition occurred on the dates
indicated, nor is it indicative of the Company's future
results.
(c) Exhibits.
*2.1 Share Sale and Purchase Agreement, dated November 7,
1996, among Datawatch Corporation and the individuals
named on Schedule 1 contained therein, who constitute
the holders of all of the outstanding shares of
capital stock of Guildsoft Holdings Limited.
23.1 Consent of Deloitte & Touche, Chartered Accountants
and Registered Auditors (Guildsoft Holdings Limited)
23.2 Consent of Deloitte & Touche, Chartered Accountants
and Registered Auditors (Guildsoft Limited)
99.1 The following audited financial statements of
Guildsoft Holdings Limited, together with the
manually signed Auditors' Report of Deloitte &
Touche, Chartered Accountants and Registered
Auditors:
Profit and Loss Account for the year ended
September 30, 1996
-3-
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September
30, 1996
99.2 The following audited financial statements of
Guildsoft Limited, together with the manually signed
Auditors' Report of Deloitte & Touche, Chartered
Accountants and Registered Auditors:
Profit and Loss Account for the year ended
September 30, 1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September
30, 1996
99.3 The following unaudited pro forma condensed combined
financial statements:
Unaudited Pro Forma Condensed Combined Balance
Sheet as of September 30, 1996
Unaudited Pro Forma Condensed Combined Statement
of Operations for the year ended September 30,
1996
Notes to Unaudited Pro Forma Condensed Combined
Balance Sheet
Notes to Unaudited Pro Forma Condensed Combined
Statement of Operations
-----------------------
* Previously filed with the Company's Current Report on Form
8-K dated November 7, 1996 filed on November 21, 1996.
-4-
(2) Exhibit Index.
The Company hereby amends its Current Report by adding the following
information to the Exhibit Index in the Current Report.
Exhibit Number Exhibit
-------------- -------
23.1 Consent of Deloitte & Touche, Chartered Accountants and
Registered Auditors (Guildsoft Holdings Limited)
23.2 Consent of Deloitte & Touche, Chartered Accountants and
Registered Auditors (Guildsoft Limited)
99.1 The following audited financial statements of Guildsoft
Holdings Limited, together with the manually signed
Auditors' Report of Deloitte & Touche, Chartered
Accountants and Registered Auditors:
Profit and Loss Account for the year ended
September 30, 1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September
30, 1996
99.2 The following audited financial statements of Guildsoft
Limited, together with the manually signed Auditors'
Report of Deloitte & Touche, Chartered Accountants and
Registered Auditors:
Profit and Loss Account for the year ended
September 30, 1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September
30, 1996
99.3 The following unaudited pro forma condensed combined
financial statements:
Unaudited Pro Forma Condensed Combined Balance
Sheet as of September 30, 1996
Unaudited Pro Forma Condensed Combined Statement
of Operations for the year ended September 30,1996
Notes to Unaudited Pro Forma Condensed Combined
Balance Sheet
Notes to Unaudited Pro Forma Condensed Combined
Statement of Operations
-5-
(3) Filing of Additional Exhibits.
The Company hereby amends its Current Report by filing the additional
exhibits attached hereto and as listed in (2) above.
-6-
SIGNATURE
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.
DATAWATCH CORPORATION
By: /s/ Bruce R. Gardner
--------------------------------
Bruce R. Gardner
Executive Vice President
Dated: January 21, 1997
-7-
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
*2.1 Share Sale and Purchase Agreement, dated November 7,
1996, among Datawatch Corporation and the individuals
named on Schedule 1 contained therein, who constitute the
holders of all of the outstanding shares of capital stock
of Guildsoft Holdings Limited.
23.1 Consent of Deloitte & Touche, Chartered Accountants and
Registered Auditors (Guildsoft Holdings Limited)
23.2 Consent of Deloitte & Touche, Chartered Accountants and
Registered Auditors (Guildsoft Limited)
99.1 The following audited financial statements of Guildsoft
Holdings Limited, together with the manually signed
Auditors' Report of Deloitte & Touche, Chartered
Accountants and Registered Auditors:
Profit and Loss Account for the year ended
September 30, 1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September
30, 1996
99.2 The following audited financial statements of Guildsoft
Limited, together with the manually signed Auditors'
Report of Deloitte & Touche, Chartered Accountants and
Registered Auditors:
Profit and Loss Account for the year ended
September 30, 1996
Balance Sheet dated as of September 30, 1996
Notes to the Accounts for the year ended September
30, 1996
99.3 The following unaudited pro forma condensed combined
financial statements:
Unaudited Pro Forma Condensed Combined Balance
Sheet as of September 30, 1996
Unaudited Pro Forma Condensed Combined Statement
of Operations for the year ended September 30,
1996
Notes to Unaudited Pro Forma Condensed Combined
Balance Sheet
Notes to Unaudited Pro Forma Condensed Combined
Statement of Operations
- -----------------------------
* Previously filed with the Company's Current Report on Form 8-K dated November
7, 1996 filed on November 21, 1996.
-8-
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-65786 of Datawatch Corporation on Form S-8 of our report on Guildsoft
Holdings Limited dated 17 December 1996, appearing in this Form 8-K/A Amendment
No. 1 to the Form 8-K Current Report dated January 21, 1997.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
January 20, 1997
-9-
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-65786 of Datawatch Corporation on Form S-8 of our report on Guildsoft Limited
dated 20 January 1997, appearing in this Form 8-K/A Amendment No. 1 to the Form
8-K Current Report dated January 21, 1997.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
January 20, 1997
-10-
EXHIBIT 99.1
Company Registration No. 2887429
GUILDSOFT HOLDINGS LIMITED
REPORT AND FINANCIAL STATEMENTS
30 SEPTEMBER 1996
Deloitte & Touche
Queen Anne House
69-71 Queen Square
Bristol
BS1 4JP
GUILDSOFT HOLDINGS LIMITED
REPORT AND FINANCIAL STATEMENTS 1996
CONTENTS
Page
Officers and professional advisers 1
Directors' report 2
Statement of directors' responsibilities 3
Auditors' report to the members 4
Profit and loss account 5
Balance sheet 6
Notes to the accounts 7
GUILDSOFT HOLDINGS LIMITED
REPORT AND FINANCIAL STATEMENTS 1996
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
J F Cave
S J Cave
M A Holman
SECRETARY
J F Cave
REGISTERED OFFICE
The Software Centre
East Way
Lee Mill Industrial Estate
Ivybridge
Nr Plymouth
PL21 9PE
BANKERS
Barclays Bank Plc
19 Princess Street
Plymouth
Devon
PL1 2HA
SOLICITORS
Foot and Bowden
70-76 North Hill
Plymouth
Devon
PL4 8HH
AUDITORS
Deloitte & Touche
Queen Anne House
69-71 Queen Square
Bristol
BS1 4JP
1
GUILDSOFT HOLDINGS LIMITED
DIRECTORS' REPORT
The directors present their annual report and the audited financial statements
for the year ended 30 September 1996.
ACTIVITIES
The principal activity of the company continues to be the letting of a
commercial building. The principal activity of the subsidiary continues to be
the import and sale of computer software.
DIRECTORS AND THEIR INTERESTS
The present membership of the Board is set out on page 1
The directors' beneficial interests in the ordinary shares of the company at 1
October 1995 and at 30 September 1996 were:
1996 1995
J F Cave 1,000 1,000
S J Cave 1,000 1,000
M A Holman 1,000 1,000
AUDITORS
A resolution for the reappointment of Deloitte & Touche as auditors of the
company is to be proposed at the forthcoming Annual General Meeting.
Advantage has been taken in the preparation of this report of the special
exemptions applicable to small companies under Part II of Schedule 8 to the
Companies Act 1985.
Approved by the Board of Directors
and signed on behalf of the Board
/S/ J F Cave
J F Cave
Secretary
2
GUILDSOFT HOLDINGS LIMITED
STATEMENT OF 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 as at the end of the financial year and of the profit or loss of the
company for that period. In preparing those financial statements, the directors
are required to
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- 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 that the 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.
3
DELOITTE &
TOUCHE
- ---------- -----------------------------------------------------------
CHARTERED ACCOUNTANTS
Deloitte & Touche Telephone: National 0117 921 1622
Queen Anne House International +44 117 921 1622
69-71 Queen Square Fax (Gp.3): 0117 929 2801
Bristol BS1 4JP
AUDITORS' REPORT TO THE MEMBERS OF
GUILDSOFT HOLDINGS LIMITED
We have audited the financial statements on pages 5 to 9 which have been
prepared under the accounting policies set out on page 7.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 3 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 statements 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 financial statements. It
also includes an assessment of the significant estimates and judgements made 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 30 September 1996 and of its profit for the year
then ended and have been properly prepared in accordance with the provisions of
the Companies Act 1985 applicable to small companies.
/s/ Deloitte & Touche 17 December 1996
Chartered Accountants and
Registered Auditors
- --------------- Aberdeen, Bath, Belfast, Birmingham, Bodmemouth,
DELOITTE TOUCHE Bracknell, Bristol, Cambridge, Cardiff, Crawley,
TOHMATSTI Dartford, Edinburgh, Glasgow, Leeds, Leicaster,
INTERNATIONAL Liverpool, London, Manchester, Milton Keynes, Newcastle
- --------------- upon Tyne, Nottingham, St Albans and Southhampton.
Pricipal place of business at which a list of partners'
names is availible: Stonecutter Court, 1 Stonecutter
Street, London EC4A 4TR.
Authorized by the Institute of Chartered Accountants in
England and Wales to carry on investment business.
4
GUILDSOFT HOLDINGS LIMITED
PROFIT AND LOSS ACCOUNT
Year ended 30 September 1996
<TABLE>
<CAPTION>
Note 1996 1995
(pound) (pound)
<S> <C> <C> <C>
TURNOVER: continuing operations 43,666 49,203
Administrative expenses (13,128) (10,722)
------ ------
OPERATING PROFIT: continuing operations 30,538 38,481
Income from fixed asset investments 2 163,275 37,500
Interest payable and similar charges (30,190) (30,697)
------ ------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 3 163,623 45,284
Tax on profit on ordinary activities (33,567) (9,411)
------ ------
PROFIT FOR THE FINANCIAL YEAR 130,056 35,873
Dividends paid and proposed 4 (130,620) (30,000)
------- -------
Retained loss/profit for the financial year (564) 5,873
======= =======
</TABLE>
There are no recognised gains or losses in the current and previous year other
than those recognised in the profit and loss account and accordingly no
statement of recognised gains and losses is required.
5
GUILDSOFT HOLDINGS LIMITED
BALANCE SHEET
30 September 1996
<TABLE>
<CAPTION>
Note 1996 1995
(pound) (pound)
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets 5 319,550 322,775
Investments 6 2,998 2,998
------- -------
322,548 325,773
------- -------
CURRENT ASSETS
Debtors: Amounts due from subsidiary 115,620 -
Cash at bank and in hand 2,353 5,809
------- -----
117,973 5,809
------- -----
CREDITORS: amounts falling
due within one year
Bank loans 5,200 5,021
Other creditors 192,770 63,246
Amounts due to subsidiary - 15,000
------- ------
(197,970) (83,267)
------- ------
NET CURRENT LIABILITIES (79,997) (77,458)
-------- -------
TOTAL ASSETS LESS CURRENT
LIABILITIES 242,551 248,315
CREDITORS: amounts falling
due after more than one year 7,8 234,180 239,380
------- -------
8,371 8,935
======= =======
CAPITAL AND RESERVES
Called up share capital 9,10 3,000 3,000
Profit and loss account 5,371 5,935
----- -----
TOTAL EQUITY SHAREHOLDERS' FUNDS 10 8,371 8,935
===== =====
</TABLE>
Advantage has been taken in the preparation of these accounts of the special
exemptions available to small companies under Part 1 of schedule 8 to the
Companies Act 1985. In the opinion of the directors of the company is entitled
to these exemptions on the grounds that it has met the qualifications for a
small company specified in sections 246 and 247 of the Companies Act 1985.
These financial statements were approved by the Directors
on 11 December 1996
Signed on behalf of the Board of Directors
/s/ J F Cave
J F Cave
Director
6
GUILDSOFT HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
1. ACCOUNTING POLICIES
The particular accounting policies adopted are described below.
Accounting convention
The financial statements are prepared under the historical cost
convention.
Consolidation
The company is exempt from preparing group accounts under section 248
of the Companies Act 1985 as the group qualifies as a small group.
Accordingly the financial statements present information about the
company not the group.
Tangible fixed assets
Depreciation is not provided on freehold land. On other assets it is
provided on cost in equal annual instalments over the estimated lives
of the assets. The rates of depreciation are as follows:
Freehold buildings 2% per annum
Fixtures and fittings 10% straight line
Investments
Investments held as fixed assets are stated at cost less provision for
permanent diminution in value.
Deferred taxation
Deferred taxation is provided at the anticipated tax rates on
differences arising from the inclusion of items of income and
expenditure in taxation computations in periods different from those in
which they are included in the financial statements to the extent that
it is probable that a liability or asset will crystallise in the
future.
2. INCOME FROM FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Income from unlisted fixed asset investments 163,275 37,500
======= ======
</TABLE>
3. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit on ordinary activities before taxation is after charging:
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Depreciation written off tangible fixed assets:
Own assets 7,573 7,515
Auditors' remuneration 587 587
===== =====
</TABLE>
4. DIVIDENDS
<TABLE>
<CAPTION>
1996 1995
Per share Total Per share Total
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Dividend paid and proposed 43.54 130,620 10 30,000
===== ======= == ======
</TABLE>
7
GUILDSOFT HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
5. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Land & Fixtures
buildings & fittings Total
(pound) (pound) (pound)
<S> <C> <C> <C>
Cost
At 1 October 1995 300,725 35,000 335,725
Additions 4,348 - 4,348
------- ------ -------
At 30 September 1996 305,073 35,000 340,073
------- ------ -------
Accumulated depreciation
At 1 October 1995 5,950 7,000 12,950
Charge in year 4,073 3,500 7,573
------ ------ ------
At 30 September 1996 10,023 10,500 20,523
------ ------ ------
Net book value
At 30 September 1996 295,050 24,500 319,550
======= ====== =======
At 30 September 1995 294,775 28,000 322,775
======= ====== =======
</TABLE>
6. INVESTMENTS
The company's investment in the subsidiary undertaking represents the
cost of acquisition of 100% of the ordinary share capital of Guildsoft
Limited of 3,000 shares of (pound)1 each, a company registered in
England and Wales which imports and sells computer software.
At 30 September 1996, the aggregate value of share capital and reserves
of the subsidiary undertaking was (pound)102,437 and its loss for the
year was (pound)148,054.
7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Bank loans 234,180 239,380
======= =======
</TABLE>
8. BORROWINGS
<TABLE>
<CAPTION>
1996 1995
(pound) (pound)
<S> <C> <C>
Bank loans 239,380 244,401
======= =======
Due within one year 5,200 5,021
Due after more than one year 234,180 239,380
------- -------
239,380 244,401
======= =======
</TABLE>
8
GUILDSOFT HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
<TABLE>
<CAPTION>
8. BORROWINGS (continued)
1996 1995
(pound) (pound)
<S> <C> <C>
Analysis of loan repayments:
Bank loans
Within one year or on demand 5,200 5,021
Between one and two years 5,200 5,927
Between two and five years 15,600 28,476
After five years 213,380 210,977
------- -------
239,380 244,401
======= =======
Amounts repayable by instalments some of
which fall due after five years:
Bank loans
Total amount 239,380 244,401
Instalments due after five years 213,380 210,977
======= =======
</TABLE>
Bank loans are secured on the freehold land and buildings.
9. SHARE CAPITAL
<TABLE>
<CAPTION>
No (pound)
<S> <C> <C>
Authorised
Ordinary shares of(pound)1 3,000 3,000
----- -----
Allotted and fully paid
Ordinary shares of(pound)1 3,000 3,000
----- -----
</TABLE>
10. COMBINED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS AND
STATEMENT OF MOVEMENTS ON RESERVES
<TABLE>
<CAPTION>
Called Profit
up share and loss Total Total
capital account 1996 1995
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
At the beginning of the year 3,000 5,935 8,935 3,062
Profit attributable to members
of the company - 130,056 130,056 35,873
Dividends - (130,620) (130,620) (30,000)
------ ------- ------- ------
At the end of the year 3,000 5,371 8,371 8,935
====== ======= ======= ======
</TABLE>
11. EVENT OCCURRING AFTER THE END OF YEAR
The land, building, fixtures and fittings were all sold on 7 November
1996 realising a small profit and the loan secured on the property was
discharged at book value. The ordinary shares of the company were acquired on 7
November 1996 by the Datawatch Corporation.
9
EXHIBIT 99.2
Company Registration No. 2567531
GUILDSOFT LIMITED
Report and Financial Statements
30 September 1996
Deloitte & Touche
Queen Anne House
69-71 Queen Square
Bristol
BS1 4JP
GUILDSOFT LIMITED
REPORT AND FINANCIAL STATEMENTS 1996
CONTENTS
Page
Officers and professional advisers 1
Directors' report 2
Statement of directors' responsibilities 3
Auditors' report 4
Profit and loss account 5
Balance sheet 6
Notes to the accounts 7
Additional information 11
GUILDSOFT LIMITED
REPORT AND FINANCIAL STATEMENTS 1996
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
J F Cave
S J Cave (resigned 7 November 1996)
M A Holman (resigned 7 November 1996)
B Gardner (appointed 7 November 1996)
SECRETARY
J F Cave
REGISTERED OFFICE
The Software Centre
East Way
Lee Mill Industrial Estate
Ivybridge
Nr Plymouth
PL21 9PE
BANKERS
Barclays Bank Plc
19 Princess Street
Plymouth
Devon
PL1 2HA
AUDITORS
Deloitte & Touche
Queen Anne House
69-71 Queen Square
Bristol
BS1 4JP
GUILDSOFT LIMITED
DIRECTORS REPORT
The directors present their annual report and the audited financial statements
for the year ended 30 September 1996.
ACTIVITIES
The principal activity of the company continues to be the import and sale of
computer software.
DIRECTORS AND THEIR INTERESTS
The present membership of the Board is set out on page 1.
The directors held no beneficial interests in the company during the year. Their
interest in the ultimate parent company, Guildsoft Holdings Limited, are shown
in the financial statements of that company.
None of the directors had an interest in any material contract during the year
relating to the business of the company.
AUDITORS
A resolution for the reappointment of Deloitte & Touche as auditors of the
company is to be proposed at the forthcoming Annual General Meeting.
Advantage has been taken in the preparation of this report of the special
exemptions applicable to small companies under Part II of Schedule 8 to the
Companies Act 1985.
Approved by the Board of Directors
and signed on behalf of the Board
/s/ J F Cave
- ------------
J F Cave
Secretary
GUILDSOFT LIMITED
STATEMENT OF 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 as at the end of the financial year and of the profit or loss of the
company for that period. In preparing those financial statements, the directors
are required to
__ select suitable accounting policies and then apply them consistently;
__ make judgements and estimates that are reasonable and prudent;
__ 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 that the 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.
--------------------------------------------------------------
Chartered Accountants
Deloitte & Touche Telephone: National 0117 921 1622
Queen Anne House International + 44 117 921 1622
69-71 Queen Square Fax (Gp.3): 0117 929 2801
Bristol BS1 4JP
AUDITORS' REPORT TO THE MEMBERS OF
GUILDSOFT LIMITED
We have audited the financial statements on pages 5 to 10 which have been
prepared under the accounting policies set out on page 7.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 3 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 statements 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 financial statements. It
also includes an assessment of the significant estimates and judgements made 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 30 September 1996 and of its loss for the year
then ended and have been properly prepared in accordance with the provisions of
the Companies Act 1985 applicable to small companies.
/s/ Deloitte & Touche 20 January 1997
Chartered Accountants and
Registered Auditors
PROFIT AND LOSS ACCOUNT
YEAR ENDED 30 SEPTEMBER 1996 GUILDSOFT LIMITED
<TABLE>
<CAPTION>
Note 1996 1995
(pound) (pound)
<S> <C> <C> <C>
TURNOVER: continuing operations 2 1,223,948 1,204,523
Cost of sales (633,413) (502,874)
-------- --------
Gross profit 590,535 701,649
Distribution costs (47,574) (49,915)
Administrative expenses (585,815) (501,870)
-------- --------
OPERATING (LOSS)/PROFIT: continuing operations (42,854) 149,864
Interest receivable and similar income 2,456 1,582
Interest payable (21) (11)
--------- --------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES 3 (40,419) 151,435
BEFORE TAXATION
Tax on (loss)/profit on ordinary activities 4 380 (42,160)
-------- --------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR (40,039) 109,275
Dividends paid and proposed 5 (130,620) (30,000)
-------- --------
Retained (loss)/profit for the financial year 10 (170,659) 79,275
-------- --------
</TABLE>
There are no recognized gains and losses for the current financial year and
preceding financial year, other than as stated in the profit and loss account.
Accordingly, no statement of total recognized gains and losses has been given.
GUILDSOFT LIMITED
BALANCE SHEET
30 SEPTEMBER 1996
<TABLE>
<CAPTION>
Note 1996 1995
(pound) (pound)
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets 6 54,631 49,532
-------- --------
CURRENT ASSETS
Stocks 142,785 93,317
Debtors 7 327,118 254,584
Cash at bank and in hand 88,672 94,498
-------- --------
558,575 442,399
-------- --------
CREDITORS: amounts falling
due within one year
Trade creditors 317,501 127,220
Other creditors including
taxation and social security 8 188,080 85,330
Accruals and deferred income 27,793 28,890
-------- --------
(533,374) (241,440)
-------- --------
NET CURRENT ASSETS 25,201 200,959
-------- --------
NET ASSETS 79,832 250,491
-------- --------
CAPITAL AND RESERVES
Called up share capital 9 3,000 3,000
Profit and loss account 76,832 247,491
-------- --------
TOTAL EQUITY SHAREHOLDERS' FUNDS 10 79,832 250,491
-------- --------
</TABLE>
Advantage has been taken in the preparation of these accounts of the special
exemptions available to small companies under Part 1 of Schedule 8 to the
Companies Act 1985. In the opinion of the directors of the company is entitled
to these exemptions on the grounds that it has met the qualifications for a
small company specified in sections 246 and 247 of the Companies Act 1985.
These financial statements were approved by the Directors on 20 January, 1997.
Signed on behalf of the Board of Directors
/s/ J F Cave
- -------------
J F Cave
Director
GUILDSOFT LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
1. ACCOUNTING POLICIES
The financial statements are prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are
described below.
Accounting convention
The financial statements are prepared under the historical cost
convention.
Tangible fixed assets
Depreciation is provided on cost in equal annual installments over the
estimated lives of the assets. The rates of depreciation are as
follows:
Equipment 25% straight line
Fixtures and fittings 20% straight line
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost
represents materials, direct labour and appropriate production
overheads.
Deferred taxation
Deferred taxation is provided at the anticipated tax rates on
differences arising from the inclusion of items of income and
expenditure in taxation computations in periods different from those in
which they are included in the financial statements to the extent that
it is probable that a liability will crystallise in the future.
Foreign exchange
Transactions denominated in foreign currencies are translated into
sterling at the rates ruling at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the balance
sheet date are translated at the rates ruling at that date. These
translation differences are dealt with in the profit and loss account.
GUILDSOFT LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
2. TURNOVER
Turnover comprises the invoiced value of goods and services supplied by
the company to third parties net of value added tax.
3. (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
(Loss)/profit on ordinary activities before taxation is after charging:
1996 1995
(pound) (pound)
Depreciation written off tangible fixed assets:
Own assets 27,686 27,176
Directors' remuneration 88,455 74,250
Auditors' remuneration 5,400 4,750
Loss on disposal of fixed assets 788 843
-------- --------
4. TAX ON (LOSS)/PROFIT ON ORDINARY ACTIVITIES
1996 1995
(pound) (pound)
United Kingdom corporation tax at 24.5% (1995 - 25%) (380) 42,160
based on the (loss)/profit for the year -------- --------
<TABLE>
<CAPTION>
5. DIVIDENDS 1996 1995
Per share Total Per share Total
(pound) (pound) (pound) (pound)
<S> <C> <C> <C>
Dividends paid and proposed 43.54 130,620 10 30,000
--------- ------- --------- -------
</TABLE>
6. TANGIBLE FIXED ASSETS Fixtures
Equipment & fittings Total
(pound) (pound) (pound)
Cost
at 1 October 1995 75,289 30,102 105,391
Additions 33,563 -- 33,563
Disposals (3,622) (1,877) (5,499)
--------- --------- ---------
at 30 September 1996 105,230 28,225 133,455
--------- --------- ---------
Accumulated depreciation
at 1 October 1995 44,182 11,677 55,859
Charge in year 22,041 5,645 27,686
Disposals (3,622) (1,099) (4,721)
--------- -------- --------
at 30 September 1996 62,601 16,223 78,824
--------- -------- --------
Net book value
at 30 September 1996 42,629 12,002 54,631
--------- -------- --------
at 30 September 1995 31,107 18,425 49,532
--------- -------- --------
GUILDSOFT LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
7. DEBTORS 1996 1995
(pound) (pound)
Due within one year:
Trade debtors 231,856 228,368
Other debtors 12,291 --
Prepayments and accrued income 49,963 11,216
Due from holding company -- 15,000
ACT recoverable 25,155 --
Corporation tax recoverable 7,853 --
-------- --------
327,118 254,584
-------- --------
8. OTHER CREDITORS INCLUDING TAXATION AND SOCIAL SECURITY
1996 1995
(pound) (pound)
This heading includes:
Taxation and social security 33,715 32,968
Corporation tax 32,655 42,187
Directors' current accounts 6,090 10,175
Due to holding company 115,620 --
-------- --------
188,080 85,330
-------- --------
9. SHARE CAPITAL 1996
No (pound)
Authorised
Ordinary shares of(pound)1 each 3,000 3,000
-------- --------
Allotted and fully paid
Ordinary shares of(pound)1 each 3,000 3,000
-------- --------
GUILDSOFT LIMITED
NOTES TO THE ACCOUNTS
Year ended 30 September 1996
10. COMBINED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS AND
STATEMENT OF MOVEMENTS ON RESERVES
<TABLE>
<CAPTION>
Called up share Profit and loss
capital account Total 1996 Total 1995(pound)
(pound) (pound) (pound)
<S> <C> <C> <C> <C>
At the beginning of the year 3,000 247,491 250,491 171,216
(Loss)/profit attributable to members - (40,039) (40,039) 109,275
of the company
Dividends paid and proposed - (130,620) (130,620) (30,000)
------------ --------- --------- ------------
At the end of the year 3,000 76,832 79,832 250,491
============ ========= ========= ============
</TABLE>
11. OPERATING LEASE COMMITMENTS
At 30 September 1996 the company was committed to making the following
payments during the next year in respect of operating leases:
Land and
buildings
1996 1995
(pound) (pound)
Leases which expire:
Within one year - -
Within two to five years - -
After five years 27,500 27,500
------ ------
27,500 27,500
The land and buildings are leased from Guildsoft Holdings Limited, the
ultimate parent company.
12. ULTIMATE PARENT COMPANY
The ultimate parent company is Guildsoft Holdings Limited, which is
registered in England and Wales. Copies of the financial statements of
Guildsoft Holdings Limited can be obtained from Companies House,
Cardiff.
13. EVENT OCCURRING AFTER THE END OF YEAR
The ordinary shares of the parent company Guildsoft Holdings Limited
were acquired on 7 November 1996 by the Datawatch Corporation.
GUILDSOFT LIMITED
ADDITIONAL INFORMATION
The additional information on pages 12 and 13 has been prepared from the
accounting records of the company. While it does not form part of the statutory
financial statements, it should be read in conjunction with them and the
auditors' report thereon.
GUILDSOFT LIMITED
DETAILED TRADING, PROFIT AND LOSS ACCOUNT
Year ended 30 September 1996
1996 1995
(pound) (pound)
Turnover 1,012,447 937,415
Less: Cost of sales
Opening stock 93,317 70,613
Purchases 682,881 525,578
------- -------
776,198 596,191
Less: Closing stock 142,785 93,317
------- ------
633,413 502,874
------- -------
Gross profit 379,034 434,541
Commission income 211,501 267,108
Interest received 2,456 1,582
------- -------
592,991 703,231
Less: Overheads
Selling and distribution costs 47,574 49,915
Administrative expenses 585,815 501,870
Interest payable 21 11
------- -------
633,410 551,796
Net (loss)/profit for the year (40,419) 151,435
======== =======
GUILDSOFT LIMITED
DETAILED TRADING, PROFIT AND LOSS ACCOUNT
Year ended 30 September 1996
1996 1995
(pound) (pound)
SELLING & DISTRIBUTION COSTS
Carriage and packaging costs 47,574 49,915
------ ------
ADMINISTRATIVE EXPENSES
Directors' remuneration 88,455 74,250
Directors' employers NIC 8,988 7,573
Office wages 172,180 160,854
Rent 27,500 27,500
Rates and water 3,163 6,852
Light and heat 3,942 4,962
Insurance 11,903 8,672
Telephone and fax 18,573 11,787
Repairs and renewals 8,138 6,462
Motor, travelling and subsistence 28,683 29,389
Postage and stationery 27,019 22,507
Advertising and marketing expenses 84,917 86,667
Training costs 2,167 3,961
Sundry expenses 7,955 7,030
Accountancy and audit 5,400 4,750
Professional fees 4,469 (28)
Bad debts 8,000 2,268
Provision against debtors 22,605 -
Keyman insurance 2,795 2,795
Credit card charges 16,720 3,743
Bank charges 3,779 1,837
Depreciation 27,686 27,196
Loss on sale of fixed assets 778 843
-------- --------
585,815 501,870
EXHIBIT 99.3
DATAWATCH CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
COMBINED COMPANY
COMPANY AS GUILDSOFT GUILDSOFT GUILDSOFT GUILDSOFT BEFORE PRO FORMA
REPORTED HOLDINGS LIMITED ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTMENTS COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and equivalents $ 1,696,349 $ 3,682 $ 138,772 $ 142,454 $ 1,838,803 ($75,547) 2 $ 1,763,256
Short-term investments 792,665 4,692 (4,692) 792,665 792,665
Accounts receivable-net 7,767,748 394,380 394,380 8,162,128 (128,808) 1 8,033,320
Due from subsidiary 180,945 (180,945)
Inventories 480,758 223,459 223,459 704,217 704,217
Prepaid advertising & other 1,264,798 117,560 117,560 1,382,358 (17,437) 2 1,364,921
----------------------------------------------------------------------------------------------------
Total current assets 12,002,318 189,319 874,171 (185,637) 877,853 12,880,171 (221,792) 12,658,379
----------------------------------------------------------------------------------------------------
Property & equipment 3,534,759 532,214 208,857 741,071 4,275,830 4,275,830
Less: accumulated depreciation (1,737,733) (32,119) (123,360) (155,479) (1,893,212) (1,893,212)
----------------------------------------------------------------------------------------------------
Property & equipment, net 1,797,026 500,095 85,497 585,592 2,382,618 2,382,618
----------------------------------------------------------------------------------------------------
Other assets 400,062 400,062 400,062
Excess if cost over net assets 1,041,165 1,041,165 865,889 2 1,907,054
----------------------------------------------------------------------------------------------------
Total assets $ 15,240,571 $689,414 $ 959,668 ($185,637) $1,463,445 $16,704,016 $ 644,097 $ 17,348,113
====================================================================================================
Accounts payable 2,914,952 301,685 496,889 798,574 3,713,526 3,713,526
Accrued expenses 1,063,129 156,896 156,896 1,220,025 (128,808) 1 1,091,217
Due to holding 180,945 (180,945)
Deferred revenue 1,946,473 1,946,473 1,946,473
Current portion of long-term
debt 867,307 8,138 8,138 875,445 875,445
----------------------------------------------------------------------------------------------------
Total current liabilities 6,791,861 309,823 834,730 (180,945) 963,608 7,755,469 (128,808) 7,626,661
----------------------------------------------------------------------------------------------------
Long-term obligations 209,824 366,492 366,492 576,316 576,316
----------------------------------------------------------------------------------------------------
Common stock 89,659 47 47 (47) 47 89,706 1,203 2 90,909
Additional paid-in capital 18,665,402 4,648 4,648 (4,648) 4,648 18,670,050 900,352 2 19,570,402
Accumulated earnings (deficit) (10,538,117) 10,013 119,747 129,760 (10,408,357) (129,760) 2 (10,538,117)
Cumulative translation
adjustment 21,942 (1,609) 496 3 (1,110) 20,832 1,110 2 21,942
----------------------------------------------------------------------------------------------------
Total equity 8,238,886 13,099 124,938 (4,692) 133,345 8,372,231 772,905 9,145,136
----------------------------------------------------------------------------------------------------
Total liabilities & shareholders
equity $15,240,571 $689,414 $959,668 ($185,637) $1,463,445 $ 16,704,016 $ 644,097 $17,348,113
====================================================================================================
</TABLE>
DATAWATCH CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
COMBINED COMPANY
COMPANY AS GUILDSOFT GUILDSOFT GUILDSOFT GUILDSOFT BEFORE PRO FORMA
REPORTED HOLDING LIMITED ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTMENTS COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $30,022,122 $ 326,419 $ 1,930,594 ($ 43,377)$ 2,213,636 $ 32,235,758 ($ 327,984) 1 $31,907,774
Cost of sales 4,516,456 999,114 999,114 5,515,570 5,515,570
Engineering & product
development 2,338,724 2,338,724 2,338,724
Selling, general & administrative 22,039,420 20,707 999,076 (43,377) 976,406 23,015,826 (204,286) 1,2 22,811,540
---------------------------------------------------------------------------------------------------
Income (loss) from operations 1,127,522 305,712 (67,596) 238,116 1,365,638 (123,698) 1,241,940
Interest expense (96,184) (47,620) (33) (47,653) (143,837) (143,837)
Other income-primarily interest 49,162 3,874 3,874 53,036 53,036
Foreign currency transaction
gain (loss) 11,860 11,860 11,860
---------------------------------------------------------------------------------------------------
Net income (loss) before tax 1,092,360 258,092 (63,755) 194,337 1,286,697 (123,698) 1,162,999
Income tax (benefit) provision (33,000) 52,947 (599) 52,348 19,348 19,348
===================================================================================================
Net income (loss) $ 1,125,360 $ 205,145 ($ 63,156) $ 141,989 $ 1,267,349 ($ 123,698) $ 1,143,651
===================================================================================================
Net income (loss) per share $ .13 $ 1.14 $ .14 $ .13
===================================================================================================
Weighted average shares 8,943,862 125,000 9,068,862 9,068,862
===================================================================================================
</TABLE>
DATAWATCH CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
1. To eliminate accounts receivable and accounts payable between Datawatch and
Guildsoft Limited.
2. To record the disbursement of cash and issuance of common stock to Guildsoft
Holdings Limited, had the purchase taken place on September 30, 1996.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
1. To eliminate commissions and management fee expense and revenue between
Datawatch and Guildsoft Limited.
2. To include the amortization, over a period of seven years, of the excess of
cost over fair value of net assets of Guildsoft Holdings Limited.
