<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 19, 1999
------------------------------------------------
Date of Report (date of earliest event reported)
e-MedSoft.com
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Nevada 33-8420-D 84-1037630
- - --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
20750 Ventura Boulevard, Suite 202
Woodland Hills, California 91364
----------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(818) 710-9813
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL INFORMATION OF BUSINESSES ACQUIRED. The following
financial statements for Palm Technology Holdings Limited for the years ended
March 31, 1998 and 1997, and for the nine months ended December 31, 1998 are
filed herewith:
INDEX
PAGE
1) AUDITED FINANCIAL STATEMENTS OF PALM TECHNOLOGY
HOLDINGS LIMITED
Report of the Directors for the year ended March 31, 1998........ F-1
Report of the Auditors to the Members of Palm Technology
Holdings Limited ............................................... F-3
Group Profit and Loss Account for the year ended 31 March 1998 .. F-4
Group Balance Sheet as at 31 March 1998 ......................... F-5
Company Balance Sheet as at 31 March 1998 ....................... F-6
Consolidated Cash Flow Statement for the year ended 31 March
1998 ........................................................... F-7
Notes to the Cash Flow Statement for the year ended 31 March
1998 ........................................................... F-8
Report of the Directors for the period ended March 31, 1997...... F-24
Report of the Auditors to the Members of Palm Technology
Holdings Limited ............................................... F-26
Consolidated Profit and Loss Account for the period ended
31 March 1997 .................................................. F-27
Group Balance Sheet as at 31 March 1997 ......................... F-28
Company Balance Sheet as at 31 March 1997 ....................... F-29
Consolidated Cash Flow Statement for the period ended 31 March
1997 ........................................................... F-30
Notes to the Consolidated Cash Flow Statement for the period
ended 31 March 1997 ............................................ F-31
Notes to the Accounts for the period ended 31 March 1997 ........ F-33
Reconciling Adjustment to U.S. Generally Accepted Accounting
Principles (GAAP) for the year ended March 31, 1998 and
the period ended March 31, 1997 ................................ F-48
2) UNAUDITED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND
1997
Unaudited Group Balance Sheet as at December 31, 1998 ........... F-51
Unaudited Group Profit and Loss Account for the nine months
ended December 31, 1998 and 1997 ............................... F-52
Unaudited Group Cash Flow Statement for the nine months ended
December 31, 1998 and 1997 ..................................... F-53
Notes to the Accounts - Unaudited ............................... F-54
Reconciling Adjustments to U.S. Generally Accepted
Accounting Principles (GAAP) for the nine months ended
December 31, 1998 and December 31, 1997 (unaudited) ............ F-55
2
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION. Unaudited Pro Forma Financial
Statements for e-MedSoft.com and Palm Technology Holdings Ltd. as of February
28, 1999, and for the year ended May 31, 1998 and the nine months ended
February 28, 1999 are filed herewith on pages F-57 to F-63.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
e-MedSoft.com
Dated: June 2, 1999 By:/s/ Margaret Harris
Margaret Harris, Chief Financial
Officer
3
<PAGE>
1)
Palm Technology Holdings Limited
Report of the Directors for the Year ended 31 March 1998
The directors present their report and accounts for the year ended 31
March 1998.
Principal Activity
The company's principal activity during the year continued to be that of
a holding company. The group's principal activity during the year continued
to be that of the supply of computer hardware and software.
Results & Dividends
The group profit before taxation amounted to Pounds 159,958 and after
taxation amounted to Pounds 115,961. The directors do not recommend the
payment of a dividend.
Business Review & Future Developments
The consolidated results include a full year of Relay Business Systems
Limited compared to less than two months in 1997. Turnover was at an
acceptable level of Pounds 10,717,736 and the directors believe that a gradual
upward trend will continue.
Year 2000
As Chairman of the South West branch of the Computer Software and
Services Association I have been advocating the implementation of programmes
to identify and correct Y2K problems. At Relay we embarked on this programme
in the early part of 1997 and a company-wide programme was carried out and
steps taken to re-write software and take any other actions necessary to
ensure that the company's software and hardware is Year 2000 Compliant. The
Risk Analysis undertaken also considered the impact on our business of Year
2000 related failures by our significant suppliers and customers. The
predominant supplier in our equation is Sun Microsystems Limited and we have
formal confirmation from Sun that they are fully Year 2000 Compliant. In the
case of other significant suppliers and customers we have been in
communication so as to ensure that any potential problems are rectified.
However, given the complexity of the problems we believe it is impossible for
any organisation to guarantee that no Year 2000 problems will remain because
at least some minimal level of failure may still occur.
The Board believes that it has already achieved an acceptable state of
readiness and it also has the appropriate resources available to deal promptly
with significant subsequent failures or issues that might arise.
The action plan involving Year 2000 Compliance covering the writing of
software and enhancement of hardware has been part of an ongoing process of
software and hardware updating and enhancement programme and as such has been
capitalised in accordance with the company's existing accounting policy
relating to such expenditure.
F-1
<PAGE>
Palm Technology Holdings Limited
Report of the Directors for the Year ended 31 March 1998 (continued)
Directors and their interests
The directors who held office during the year had the following interests
in the share capital of the company:
Pounds 1 Ordinary Shares
1998 1997
I McPherson 3,978 3,500
S P Oxenham 1,511 1,015
B F Hobbs 1,511 1,015
P Boyd McLaughlin (resigned 18 October 1997) - 840
N Kemp (resigned 10 May 1997) - 630
Pounds 1 "B" Ordinary Shares
1998 1997
I McPherson 160,000 160,000
S P Oxenham - -
B F Hobbs - -
P Boyd McLaughlin (resigned 18 October 1997) - -
N Kemp (resigned 10 May 1997) - -
Statement of Directors' Responsibilities
Company law requires the directors to prepare accounts for each financial
year which give a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period. In preparing those
accounts, 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 accounts 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 accounts 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.
By order of the Board
/s/ C L Coakley
C L Coakley - Secretary
30 April 1998
F-2
<PAGE>
Report of the Auditors to the Members of Palm Technology Holdings Limited
We have audited the accounts on pages 5 to 24 which have been prepared
under the historical cost convention and the accounting policies set out on
pages 12 and 13.
Respective Responsibilities of Directors and Auditors
As described on page 3, 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 mis-statement, 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
affairs of the company and the group as at 31 March 1998 and of its profit for
the year then ended and have been properly prepared in accordance with the
Companies Act 1985.
/s/ Rossiter Smith & Co.
Rossiter Smith & Co.
Chartered Accountants
Registered Auditors
Bank House
1 Burlington Road
BRISTOL BS6 6TJ
30 April 1998
F-3
<PAGE>
Palm Technology Holdings Limited
Group Profit and Loss Account for the Year ended 31 March 1998
1998 1997
Notes Pounds Pounds
Turnover 1,2 10,717,736 1,838,617
Cost of Sales (8,098,426) (1,475,276)
---------- ---------
Gross Profit 2,619,310 363,341
Administrative Expenses (2,353,824) (492,463)
---------- ---------
Operating Profit/(Loss) 3 265,486 (129,122)
Other Interest Receivable &
Similar Income 4,276 167
Interest Payable & Similar Charges 5 (109,804) (30,312)
---------- ---------
Profit/(Loss) on Ordinary Activities
before Taxation 159,958 (159,267)
Taxation on Profit/(Loss) on Ordinary
Activities 6 (43,997) 19,706
---------- ---------
Profit/(Loss) for the Financial
Year (1997-Period) 7,21 115,961 (139,561)
Dividends - -
---------- ---------
Retained Profit/(Loss) for the
Financial Year (1997-Period) 20 115,961 (139,561)
========== =========
Statement of Total Recognised Gains and Losses
The company made no recognised gains or losses in 1998 or 1997 other than the
profit/(loss) for the year (1997-period).
The notes on pages 12 to 24 form part of these accounts.
F-4
<PAGE>
Palm Technology Holdings Limited
Group Balance Sheet as at 31 March 1998
1998 1997
Notes Pounds Pounds
Fixed Assets
Intangible Assets 1,8 846,371 1,029,946
Tangible Assets 1,9 745,472 644,290
---------- ---------
1,591,843 1,674,236
---------- ---------
Current Assets
Stocks 12 344,934 224,355
Debtors 13 3,452,999 2,977,780
Cash at Bank & in Hand 800 600
---------- ---------
3,798,733 3,202,735
Creditors: Amounts falling due
within one year 14 (4,653,377) (4,110,093)
---------- ---------
Net Current Liabilities (854,644) (907,358)
Total Assets Less Current Liabilities 737,199 766,878
Creditors: Amounts falling due
after more than one year 15,16 (196,299) (341,939)
Provisions for Liabilities &
Charges 1,17 - -
---------- ---------
Net Assets 540,900 424,939
Capital & Reserves
Equity Interests
Called up Share Capital 18 252,180 252,180
Share Premium Account 19 312,320 312,320
Profit & Loss Account 20 (23,600) (139,561)
---------- ---------
540,900 424,939
========== =========
Equity Shareholders Funds 79,900 (36,061)
Non-Equity Shareholders Funds 461,000 461,000
---------- ---------
Total Shareholders' Funds 21 540,900 424,939
========== =========
Approved by the Board:
/s/ I McPherson
I McPherson - Director
/s/ B F Hobbs
B F Hobbs - Director
30 April 1998
The notes on pages 12 to 24 form part of these accounts.
F-5
<PAGE>
Palm Technology Holdings Limited
Company Balance Sheet as at 31 March 1998
1998 1997
Notes Pounds Pounds
Fixed Assets
Investments 10 728,107 728,107
---------- ---------
Current Assets
Debtors 13 85,642 82,120
Creditors: Amounts falling due
within one year 14 (162,734) (110,962)
---------- ---------
Net Current Liabilities (77,092) (28,842)
---------- ---------
Total Assets Less Current Liabilities 651,015 699,265
Creditors: Amounts falling due
after more than one year 15,16 (96,500) (144,750)
Provisions for Liabilities &
Charges 1,17 - -
---------- ---------
Net Assets 554,515 554,515
========== =========
Capital & Reserves
Called up Share Capital 18 252,180 252,180
Share Premium Account 19 312,320 312,320
Profit & Loss Account 20 (9,985) (9,985)
---------- ---------
554,515 554,515
========== =========
Equity Shareholders' Funds 93,515 93,515
Non-Equity Shareholders' Funds 27 461,000 461,000
---------- ---------
Total Shareholders' Funds 21 554,515 554,515
========== =========
Approved by the Board:
/s/ I McPherson
I McPherson - Director
/s/ B F Hobbs
B F Hobbs - Director
30 April 1998
The notes on pages 12 to 24 form part of these accounts.
F-6
<PAGE>
Palm Technology Holdings Limited
Consolidated Cash Flow Statement for the Year ended 31 March 1998
1998 1997
Notes Pounds Pounds
Net Cash Inflow from Operating
Activities 1 208,792 1,690,714
Returns on Investments and
Servicing of Finance 2 (100,740) (25,643)
Taxation 27,868 -
Capital Expenditure 2 (234,447) (167,399)
---------- ---------
(98,527) 1,497,672
Acquisitions & Disposals 2 (6,270) (2,422,980)
---------- ---------
(104,797) (925,308)
Financing 2 (174,996) 720,105
---------- ---------
Decrease in Cash in the Year (279,793) (205,203)
========== =========
Reconciliation of Net Cash Flow to
Movement in Net Debt 3
Decrease in Cash in the Year (279,793) (205,203)
Capital Element of Finance Lease
Rental Payments and Settlement 174,996 37,395
New Bank Loans - (193,000)
---------- ---------
(104,797) (360,808)
New Finance Leases (136,905) -
Finance Leases Acquired on Acquisition - (339,993)
---------- ---------
Movement in Net Debt in the Year (241,702) (700,801)
Net Debt at 1 April 1997 (700,801) -
---------- ---------
Net Debt at 31 March 1998 (942,503) (700,801)
========== =========
F-7
<PAGE>
Palm Technology Holdings Limited
Notes to the Cash Flow Statement for the Year ended 31 March 1998
1998 1997
Pounds Pounds
1. Reconciliation of Operating Profit to Net
Cash Inflow from Operating Activities
Operating Profit 265,486 (129,122)
Depreciation Charges, Loss on Disposal
& Amortisation 366,151 71,972
(Increase)/Decrease in Stocks (120,579) 335,443
(Increase)/Decrease in Debtors (503,851) 102,895
Increase/(Decrease) in Creditors 201,585 1,309,526
---------- ---------
Net Cash Inflow from Operating Activities 208,792 1,690,714
========== =========
2. Analysis of Cash Flows for Headings
shown net in the Cash Flow Statement
Returns on Investments and Servicing of
Finance
1998 1997
Pounds Pounds
Interest Received 4,276 167
Interest Paid (72,456) (19,816)
Interest Element of Finance Lease
Rental Payments (32,560) (5,994)
---------- ---------
(100,740) (25,643)
========== =========
Capital Expenditure 1998 1997
Pounds Pounds
Payments to Acquire Tangible Fixed Assets (308,279) (167,399)
Receipts from Sales of Tangible Fixed
Assets 73,832 -
---------- ---------
(234,447) (167,399)
========== =========
F-8
<PAGE>
Palm Technology Holdings Limited
Notes to the Cash Flow Statement for the Year ended 31 March 1998 (continued)
2. Analysis of Cash Flows for Headings shown net in
the Cash Flow Statement (continued)
Acquisitions and Disposals
1998 1997
Pounds Pounds
Purchase of a subsidiary undertaking (6,270) (728,107)
Net overdrafts acquired with subsidiary - (1,461,873)
Payment of deferred consideration in
respect of acquisition of subsidiary - (233,000)
---------- ----------
(6,270) (2,422,980)
The above represents additional costs incurred following the acquisition of a
subsidiary undertaking.
Financing
1998 1997
Pounds Pounds
Issue of Ordinary Share Capital - 346,500
New debenture loan - 193,000
Capital Element of Hire Purchase and
Finance Lease Payments (174,996) (37,395)
Issue of Preference Shares - 218,000
---------- ----------
(174,996) 720,105
========== ==========
3. Analysis of Movement in Net Debt
<TABLE>
<CAPTION>
Other
At Cash Non-Cash At
1 April 1997 Flows Changes 31 March 1998
Pounds Pounds Pounds Pounds
<S> <C> <C> <C> <C>
Cash at Bank & in Hand 600 200 - 800
Overdrafts (205,803) (279,993) - (485,796)
Obligations under Hire Purchase
& Finance Leases (302,598) 174,996 (136,905) (264,507)
Debenture Loan (193,000) - - (193,000)
-------- -------- -------- --------
Total (700,801) (104,797) (136,905) (942,503)
======== ======== ======== ========
</TABLE>
F-9
<PAGE>
Palm Technology Holdings Limited
Notes to the Cash Flow Statement for the Year ended 31 March 1998 (continued)
4. Purchase of Subsidiary Undertakings
1998 1997
Pounds Pounds
Net Assets Acquired
Tangible Fixed Assets - 531,406
Fixed Asset Investments - 1,174,065
Stocks - 559,798
Debtors - 3,036,266
Tax Recoverable - 24,303
---------- ----------
- 5,325,838
Creditors - (2,207,093)
Hire Purchase & Finance Leases - (339,993)
Bank Overdrafts - (1,461,873)
Tax Payable - (900)
Deferred Consideration - (461,610)
---------- ----------
- 854,369
Goodwill - 1,047,403
---------- ----------
- 1,901,772
========== ==========
F-10
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
1. Accounting Policies
The following principal accounting policies, which have been consistently
applied, are set out below:-
a) Basis of Preparation
The accounts are prepared in accordance with the historical cost
convention and in accordance with applicable accounting standards.
b) Basis of Consolidation
The consolidated financial statements include the company and its
subsidiary undertakings. The results of subsidiaries acquired during the
period are included in the consolidated profit and loss account from the date
of their acquisition. Intra-group sales and profit are eliminated fully on
consolidation.
c) Turnover
Turnover represents amounts invoiced in respect of goods and services
provided, excluding Value Added Tax and Trade Discounts.
d) Subscriptions Income
Income in respect of annual subscriptions for internet services invoiced
in advance is taken as profit in full at the date the invoice is issued on the
basis that the income is non-refundable.
e) Goodwill
Goodwill arising on consolidation represents the excess of the fair value
of the consideration given over the fair value of the identifiable net assets
acquired. Goodwill arising on acquisitions is amortised through the profit
and loss account over its estimated useful life, which is a period of ten
years.
f) Fixed Assets and Depreciation
The cost of fixed assets is their purchase cost, together with any
incidental expenses of acquisition.
Depreciation is calculated so as to write off the cost of tangible fixed
assets on a straight line basis over the expected useful economic lives of the
assets concerned.
The rates used, which are consistent with those of last year, are:-
%
Plant & Equipment 16-2/3 - 25
Motor Vehicles 25 - 33-1/3
Computer Equipment 25 - 33-1/3
F-11
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
g) Finance and Operating Leases
Operating lease rentals are charged to the Profit & Loss Account as they
are incurred. Where fixed assets are financed by entering into leasing
agreements, which transfer to the lessee substantially all benefits and risks
of ownership, the assets are treated as if they had been purchased and
included in tangible fixed assets and the capital element of the leasing
commitments is shown as obligations under finance leases. The lease rentals
are treated as consisting of capital and interest elements; the capital
element is applied to reduce the outstanding obligations and the interest
element is charged against profit for the period. Assets held under finance
leases are depreciated over the shorter of the lease term and the useful life
of the asset concerned.
h) Stocks
Stocks are stated at the lower of cost and net realisable value. In
general, cost is determined on a first in first out basis and includes
transport and handling costs. Net realisable value is the price at which
stocks can be sold in the normal course of business after allowing for the
costs of realisation and, where appropriate, the cost of conversion from their
existing state to a finished condition. Provision is made where necessary for
obsolescent, slow moving and defective stocks.
i) Deferred Taxation
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment
of certain items for taxation and accounting purposes.
Deferred taxation is provided on all timing differences, using the
liability method, except to the extent that these differences are not expected
to reverse in the foreseeable future.
j) Pension Schemes
The company operates a number of defined contribution pension schemes.
The assets of the schemes are held separately from those of the company, being
invested with insurance companies and in an independently administered fund.
Contributions to the schemes are charged to the Profit and Loss Account in the
period in which they are payable.
k) Marketing Support
Marketing support received from major suppliers is accounted for in the
Profit and Loss Account when receivable.
2. Turnover
All of the group's turnover is attributable to the principal activity of
the company and consists entirely of sales made in the United Kingdom.
F-12
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
3. Operating Profit/(Loss)
Operating Profit/(Loss) is stated after charging:
1998 1997
Pounds Pounds
Auditors' Remuneration 45,278 1,500
Depreciation 258,105 54,515
Adjustment on Realisation of Fixed Assets 12,066 -
Amortisation of Goodwill 95,980 17,457
Operating Lease Rentals - Plant & Machinery 25,281 3,590
- Land & Buildings 104,302 16,513
Directors
Aggregate Emoluments 195,127 44,673
Company pension contributions to defined
contribution schemes 9,952 1,394
========= =======
Retirement benefits are accruing to three directors under a defined
contributions pension scheme.
Details of Highest Paid Director
1998 1997
Pounds Pounds
Aggregate Emoluments 81,115 11,424
Company Pension Contributions to
Defined Contribution Scheme 5,675 946
========= =======
4. Staff Numbers & Costs
The average number of persons including directors employed by the group
during the year (1997-period) were as follows:
1998 1997
Pounds Pounds
Administration 14 17
Sales 29 33
--------- -------
43 50
========= =======
The aggregate payroll costs of these persons were as follows:
1998 1997
Pounds Pounds
Wages and Salaries 1,195,560 221,079
Social Security Costs 116,092 21,103
Other Pension Costs (Note 23) 23,787 2,214
--------- -------
1,335,439 244,396
========= =======
F-13
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
5. Interest Payable and Similar Charges
1998 1997
Pounds Pounds
Interest payable on bank loans and overdrafts 49,046 16,617
Other Loan Interest 23,320 3,199
Lease and Hire Purchase finance charges 32,650 5,994
National Interest on Deferred Consideration 4,788 4,502
------- -------
109,804 30,312
======= =======
6. Tax on Profit/(Loss) on Ordinary Activities
1998 1997
Pounds Pounds
The tax charge on profit/(loss) on
ordinary activities is as follows:
U.K. Corporation Tax at 21% on the profits
of the year (1997-period) 44,133 (12,821)
Adjustment in respect of prior years (136) (6,885)
------- -------
43,997 (19,706)
======= =======
7. Profit/(Loss) for the Financial Year (1997-Period)
As permitted by Section 230 of the Companies Act 1985, the parent
company's profit and loss account has not been included in these financial
statements. The profit for the year (1997-period) is made up as follows:
1998 1997
Pounds Pounds
Loss dealt with in the accounts of the
parent company - (9,985)
Profit/(Loss) dealt with in the accounts
of the subsidiaries 211,941 (112,119)
Amortisation of goodwill on consolidation (95,980) (17,457)
------- -------
115,961 (139,561)
======= =======
F-14
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
8. Intangible Fixed Assets - Group
Goodwill
on
Consolidation
(Pounds)
Cost
At 1 April 1997 1,047,403
Adjustment in respect of prior year (87,595)
---------
At 31 March 1998 959,808
---------
Amortisation
At 1 April 1997 17,457
Charge for the year 95,980 *
---------
At 31 March 1998 113,437
---------
Net Book Value
At 31 March 1998 Pounds 846,371
=========
At 31 March 1997 Pounds 1,029,946
=========
* Goodwill arose during the year upon the acquisition of Palm Technology
Limited and its subsidiary Relay Business Systems Limited.
F-15
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
9. Tangible Fixed Assets - Group
Computer Motor Plant &
Equipment Vehicles Equipment Total
(Pounds) (Pounds) (Pounds) (Pounds)
Cost
At 1 April 1997 410,557 414,082 113,892 938,531
Additions 265,999 120,500 107,574 494,073
Disposals (1,325) (180,850) - (182,175)
-------- ------- ------- ---------
At 31 March 1998 675,231 353,732 221,466 1,250,429
-------- ------- ------- ---------
Depreciation
At 1 April 1997 165,048 105,327 23,866 294,241
Charge for year 120,361 105,518 32,226 258,105
Disposals (193) (47,196) - (47,389)
-------- ------- ------- ---------
At 31 March 1998 285,216 163,649 56,092 504,957
-------- ------- ------- ---------
Net Book Value
At 31 March 1998 390,015 190,083 165,374 745,472
======== ======= ======= =========
At 31 March 1997 245,509 308,755 90,026 644,290
======== ======= ======= =========
Included in Fixed Assets above are assets included under Hire Purchase
Contracts and Finance Leases as follows:
1998 1997
Pounds Pounds
Motor Vehicles
Cost at 31 March 1998 352,732 414,082
Accumulated Depreciation at 31 March 1998 163,648 105,327
Depreciation for the Year 105,518 17,801
======= =======
1998 1997
Pounds Pounds
Computer Equipment
Cost at 31 March 1998 85,161 29,867
Accumulated Depreciation at 31 March 1998 25,117 17,984
Depreciation for the Year 7,133 3,006
======= =======
F-16
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
9. Tangible Fixed Assets - Group (continued)
1998 1997
Pounds Pounds
Plant and Equipment
Cost at 31 March 1998 23,000 -
Accumulated Depreciation at 31 March 1998 - -
Depreciation for the Year - -
======= =======
10. Investments
Company
Subsidiary
Undertakings
Cost
At 1 April 1997 and 31 March 1998 Pounds 728,107
=======
Group
The group has no external investments.
11. Subsidiary Undertakings
The company had the following subsidiary undertakings at 31 March 1998:
Proportion of
Country of Description of Issued Share
Registration Shares Held Capital Held
Palm Technology Limited England & Wales Pounds 1 Ordinary 100%
1p Preference
Relay Business Systems
Limited England & Wales Pounds 1 Ordinary 100% *
Network Wales Limited England & Wales Pounds 1 Ordinary 100% *
Palm Software Limited England & Wales Pounds 1 Ordinary 100% *
Palm Integration
Limited England & Wales Pounds 1 Ordinary 100% *
The principal activities of these subsidiaries are:
Palm Technology Limited Holding company
Relay Business Systems Limited Supply of computer hardware and software
*Network Wales Limited Dormant
*Palm Software Limited Dormant
*Palm Integration Limited Dormant
*These companies are in the process of being struck off the Company Register.
F-17
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
12. Stocks
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
The main category of Stock is:
Goods for Resale - - 344,934 224,355
==== ==== ======= =======
13. Debtors
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Trade Debtors - - 2,754,377 2,284,194
Amounts owed by Group
Undertakings 62,500 80,666 - -
Other Debtors 23,142 1,454 444,967 569,095
Prepayments & Accrued Income - - 253,655 124,491
------- ------ --------- ---------
85,642 82,120 3,452,999 2,977,780
======= ====== ========= =========
Included within other debtors are amounts totalling Pounds 23,142 which
represent payment of a dividend in contravention of Sections 263 and 277 of
the Companies Act 1985.
14. Creditors: Amounts falling due within one year
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Debenture Loan (Note 16) 96,500 48,250 96,500 48,250
Bank Loans & Overdrafts 37,971 36,412 485,796 205,803
Trade Creditors 1,028 - 3,381,024 3,342,602
Amounts owed to Group
Undertakings 21,645 26,300 - -
Other Creditors - - 144,033 257,191
Corporation Tax - - 44,133 900
Other Taxes & Social
Security - - 124,135 77,471
Obligations under Hire
Purchase Contracts and
Finance Leases - - 164,708 105,409
Accruals & Deferred Income 5,590 - 213,048 72,467
------- ------- --------- ---------
162,734 110,962 4,653,377 4,110,093
======= ======= ========= =========
The group bank overdraft is repayable on demand and is secured by a fixed
and floating charge over the assets of the group.
F-18
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
14. Creditors: Amounts falling due within one year (continued)
There is an unlimited cross guarantee between all group companies.
15. Creditors: Amounts falling due after more than one year
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Debenture Loan (Note 16) 96,500 144,750 96,500 144,750
Obligations under Hire
Purchase Contracts and
Finance Leases - - 99,799 197,189
------ ------- ------- -------
96,500 144,750 196,299 341,939
====== ======= ======= =======
16. Debenture Loan
The following is an analysis of the maturity of the Debenture Loan:
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Due within one year, or on demand 96,500 48,250 96,500 48,250
Due between one and two years 96,500 48,250 96,500 48,250
Due between two and five years - 96,500 - 96,500
------- ------- ------- -------
193,000 193,000 193,000 193,000
======= ======= ======= =======
Analysed as:
Creditors: Amounts falling due
within one year 96,500 48,250 96,500 48,250
Creditors: Amounts falling due
after more than one year 96,500 144,750 96,500 144,750
------- ------- ------- -------
193,000 193,000 193,000 193,000
======= ======= ======= =======
F-19
<PAGE>
alm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
17. Provisions for Liabilities & Charges - Group and Company
Deferred Taxation
There were no amounts of deferred taxation provided or unprovided at
either 31 March 1998 or 31 March 1997.
18. Share Capital - Company
1998 1997
Pounds Pounds
Authorised:
7,000 Ordinary Shares of Pounds 1 each 7,000 7,000
3,000 "A" Ordinary Shares of Pounds 1 each 3,000 3,000
240,000 "B" Ordinary Shares of Pounds 1 each 240,000 240,000
218,000 Preference Shares of 1p each 2,180 2,180
------- -------
252,180 252,180
======= =======
Allotted, Called Up and Fully Paid
7,000 Ordinary Shares of Pounds 1 each 7,000 7,000
3,000 "A" Ordinary Shares of Pounds 1 each 3,000 3,000
240,000 "B" Ordinary Shares of Pounds 1 each 240,000 240,000
218,000 Preference Shares of 1p each 2,180 2,180
------- -------
252,180 252,180
======= =======
The rights of holders of 1p Preference Shares are as follows:
a) Entitle holders, in priority to all other shareholders to a fixed
cumulative preferential net cash dividend at a rate of 9% of the
subscription price per annum payable six monthly in arrears.
b) Are to be redeemed in three instalments of Pounds 72,500 on 31
March 2001, Pounds 72,500 on 31 March 2002 and Pounds 73,000 on 31
March 2003. The company may redeem the shares earlier in amounts of
not less than 20,000 shares, with the prior consent of 75% of the
preference shareholders, or on the sale or floatation of the company.
c) On a return of capital on a winding up, or otherwise, will carry the
right to repayment of capital and a sum equal to any arrears or
deficiency of dividend; this right is in priority to the rights of
all other shareholders.
d) Carry the right to receive notice of General Meetings of the company
but not the right to attend such meetings.
F-20
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
18. Share Capital - Company (continued)
The rights of holders of Pounds 1 "A" Ordinary Shares are as follows:
a) Entitle holders, in priority to all other shareholders except
preference shareholders, to a fixed cumulative preferential net
cash dividend at a rate of 9 pence per share per annum payable six
monthly in arrears and a net cash participating dividend such that
when added to the aggregate fixed dividend payable in the relevant
financial year is equal to 6% of net profit. A compensatory
dividend is payable if excess benefits are paid to relevant
directors.
b) Entitle holders to convert at any time the whole of their "A"
ordinary shares into a like number of ordinary shares.
c) On a return of capital on a winding up, or otherwise, will carry
the right to repayment of capital together with a sum equal to any
arrears or accruals of the "A" ordinary dividends. This right is in
priority to the rights of "B" ordinary shareholders and ordinary
shareholders but not in priority to the rights of preference
shareholders.
d) Carry the right to attend and vote at General Meetings of the
company.
The rights of holders of Pounds 1 "B" Ordinary shares are as follows:
a) Shareholders receive no preference as regards the right to
dividends over the ordinary shareholders.
b) On a return of capital on a winding up, or otherwise will carry the
right to repayment of capital and a sum equal to any arrears or
accruals of the fixed ordinary dividend only after all the other
shareholders have been paid.
c) Carry the right to receive notice of General Meetings of the company
but not the right to attend or vote at such meetings.
19. Share Premium Account
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Brought forward and carried
forward 312,320 312,320 312,320 312,320
======= ======= ======= =======
20. Profit and Loss Account
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Balance brought forward (9,985) - (139,561) -
Retained Profit/(Loss)
for the Financial Year - (9,985) 115,961 (139,561)
------ ------ ------- --------
Balance carried forward (9,985) (9,985) (23,600) (139,561)
====== ====== ======= ========
F-21
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
21. Reconciliation of Shareholders' Funds
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Profit/(Loss) for the
Financial Year - (9,985) 115,961 (139,561)
New Share Capital Subscribed - 564,500 - 564,500
------- ------- ------- -------
Net addition to Share-
holders' Funds - 554,515 115,961 424,939
Opening Shareholders' Funds 554,515 - 424,939 -
------- ------- ------- -------
Closing Shareholders' Funds 554,515 554,515 540,900 424,939
======= ======= ======= =======
22. Contingent Liabilities & Financial Commitments
The company and group has financial commitments in respect of
non-cancellable operating leases. The rentals payable under these leases in
the next year are as follows:
Company Group
1998 1997 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds)
Land & Buildings
Date of Lease Termination:
Within One Year - - 24,725 -
In the second to fifth years
inclusive - - 36,200 16,100
After five years - - 75,000 65,000
------- ------- ------- -------
- - 135,925 81,100
======= ======= ======= =======
Other Operating Leases
Date of Lease Termination:
Within One Year - - 8,855 -
In the second to fifth years
inclusive - - 10,245 24,317
------- ------- ------- -------
- - 19,100 24,317
======= ======= ======= =======
All subsidiary companies have guaranteed all monies due by Palm Technology
Limited to 3i Plc.
F-22
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Year ended 31 March 1998 (continued)
23. Pension Costs - Group
The pension charge for the year was Pounds 23,787 (1997: Pounds 2,214).
The outstanding contributions at 31 March 1998 were Pounds nil (1997: Pounds
526).
24. Ultimate Controlling Party
There is no ultimate controlling party of the company or the group.
25. Income from Annual Subscriptions
The group's accounting policy in respect of income from annual
subscriptions to the group's internet services is to recognise such income at
the date of invoice and take the profit in full. The group considers the
marginal cost of providing such services to be negligible and as such these
subscriptions provide the group with income with no material additional costs
arising.
26. Related Party Transactions
During the year, a subsidiary company of the group disposed of the
following motor vehicles to I McPherson, a director of the company:
Pounds
Mercedes 300 SL 25,000
Aston Martin 48,849
It was considered that both the above transactions were carried out on an
arms length basis and at market value.
27. Analysis of Non-Equity Shareholders Funds - Group and Company
1998 1997
(Pounds) (Pounds)
Pounds 1 "A" Ordinary Shares 3,000 3,000
Pounds 1 "B" Ordinary Shares 240,000 240,000
1p Preference Shares 218,000 218,000
------- -------
461,000 461,000
======= =======
F-23
<PAGE>
Palm Technology Holdings Limited
Report of the Directors for the Period ended 31 March 1997
The directors present their report and accounts for the period ended 31
March 1997.
Principal Activity
The company was incorporated on 15 November 1996 and acquired 100% of the
share capital of Palm Technology Limited on 5 February 1997. The principal
activity of the group during the period was the supply of computer hardware
and software.
Results & Dividends
The loss before taxation of the group for the period 5 February 1997 to
31 March 1997 amounted to Pounds 159,267 and after taxation amounted to Pounds
139,561. The directors do not recommend a dividend.
Business Review & Future Developments
The directors believe that turnover of the group will grow during the
current financial year.
Directors and their interests
The directors who held office during the period had the following
interests in the share capital of the company:
Pound 1 Ordinary Shares
31 March 1997 15 November 1996
(or subsequent date
of appointment)
St Andrews Company Services
Limited (appointed 15 November
1996, resigned 5 February 1997) - -
P Boyd-McLaughlin (appointed 5
February 1997) 840 840
N Kemp (appointed 5 February
1997) 630 630
B F Hobbs (appointed 5 February
1997) 1,015 1,015
S P Oxenham (appointed 5
February 1997) 1,015 1,015
I McPherson (appointed 5
February 1997) 3,500 3,500
Pound 1 "B" Ordinary Shares
31 March 1997 15 November 1996
(or subsequent date
of appointment)
St Andrews Company Services Limited - -
P Boyd-McLaughlin - -
N Kemp - -
B F Hobbs - -
S P Oxenham - -
I McPherson 160,000 160,000
F-24
<PAGE>
Palm Technology Holdings Limited
Report of the Directors for the Period ended 31 March 1997
(continued)
Statement of Directors' Responsibilities
Company law requires the directors to prepare accounts for each financial
year which give a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period. In preparing those
accounts, 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 accounts 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 accounts 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.
Auditors
In accordance with Section 385 of the Companies Act 1985, a resolution
proposing the re-appointment of Messrs. Rossiter Smith & Co., Chartered
Accountants as auditors of the company will be put to the Annual General
Meeting.
By order of the Board
C L Coakley - Secretary
8 December 1997
F-25
<PAGE>
Report of the Auditors to the Members of Palm Technology Holdings Limited
We have audited the accounts on pages 5 to 25 which have been prepared
under the historical cost convention and the accounting policies set out on
pages 11 and 12.
Respective Responsibilities of Directors and Auditors
As described on page 3, 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 mis-statement, 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 and group's affairs as at 31 March 1997 and of its loss for the
period then ended and have been properly prepared in accordance with the
Companies Act 1985.
/s/ Rossiter Smith & Co.
Rossiter Smith & Co.
Chartered Accountants
Registered Auditors
Bank House
1 Burlington Road
BRISTOL BS6 6TJ
8 December 1997
F-26
<PAGE>
Palm Technology Holdings Limited
Consolidated Profit and Loss Account for the Period ended 31 March 1997
Notes Pounds
Turnover 2 1,838,617
Cost of Sales (1,475,276)
----------
Gross Profit 363,341
Administrative Expenses (492,463)
----------
Operating Loss 3 (129,122)
Other Interest Receivable & Similar Income 167
Interest Payable & Similar Charges 5 (30,312)
----------
Loss on Ordinary Activities before Taxation (159,267)
Taxation on Profit on Ordinary Activities 6 19,706
----------
Loss for the Financial Period 7,21 (139,561)
Dividends -
----------
Retained Loss for the Financial Period 20 Pounds (139,561)
All of the group's activities were acquired during the period.
Statement of Total Recognised Gains and Losses
The company made no recognised gains or losses other than the loss for the
period.
The notes on pages 11 to 25 form part of these accounts.
F-27
<PAGE>
Palm Technology Holdings Limited
Group Balance Sheet as at 31 March 1997
Notes Pounds
Fixed Assets
Intangible Assets 8 1,029,946
Tangible Assets 9 644,290
----------
1,674,236
----------
Current Assets
Stocks 12 224,355
Debtors 13 2,977,780
Cash at Bank & in Hand 600
----------
3,202,735
Creditors: Amounts falling due within one year 14 (4,110,093)
----------
Net Current Liabilities (907,358)
----------
Total Assets Less Current Liabilities 766,878
Creditors: Amounts falling due after more
than one year 15 (341,939)
Provisions for Liabilities & Charges 17 -
----------
Net Assets Pounds 424,939
==========
Capital & Reserves
Called up Share Capital 18 252,180
Share Premium Account 19 312,320
Profit & Loss Account 20 (139,561)
----------
Pounds 424,939
==========
Equity Shareholders' Funds (36,061)
Non-Equity Shareholders' Funds 22 461,000
----------
Total Shareholders' Funds 21 Pounds 424,939
==========
Approved by the Board:
Ian McPherson - Director
BF Hobbs - Director
8 December 1997
The notes on pages 11 to 25 form part of these accounts.
F-28
<PAGE>
Palm Technology Holdings Limited
Company Balance Sheet as at 31 March 1997
Notes Pounds
Fixed Assets
Investments 10 728,107
----------
Current Assets
Debtors 13 82,120
Creditors: Amounts falling due within one year 14 (110,962)
----------
Net Current Liabilities (28,842)
----------
Total Assets Less Current Liabilities 699,265
Creditors: Amounts falling due after more
than one year 15 (144,750)
Provisions for Liabilities & Charges 17 -
----------
Net Assets Pounds 554,515
==========
Capital & Reserves
Called up Share Capital 18 252,180
Share Premium Account 19 312,320
Profit & Loss Account 20 (9,985)
----------
554,515
==========
Equity Shareholders' Funds 93,515
Non-Equity Shareholders' Funds 22 461,000
----------
Total Shareholders' Funds 21 Pounds 554,515
==========
Approved by the Board:
Ian McPherson - Director
B F Hobbs - Director
8 December 1997
The notes on pages 11 to 25 form part of these accounts.
F-29
<PAGE>
Palm Technology Holdings Limited
Consolidated Cash Flow Statement for the Period ended 31 March 1997
Notes Pounds
Net Cash Inflow from Operating Activities 1 1,690,714
Returns on Investments and Servicing of
Finance 2 (25,643)
Capital Expenditure 2 (167,399)
----------
1,497,672
Acquisitions & Disposals 2 (2,422,980)
----------
(925,308)
Financing 2 720,105
----------
Decrease in Cash in the Period Pounds (205,203)
==========
Reconciliation of Net Cash Flow to
Movement in Net Debt 3
Decrease in Cash in the Period (205,203)
Capital Element of Finance Lease Rental Payments 37,395
New Other Loan (193,000)
----------
(360,808)
Finance Leases Acquired on Acquisition (339,993)
----------
Movement in Net Debt in the Period and
Net Debt at 31 March 1997 Pounds (700,801)
==========
F-30
<PAGE>
Palm Technology Holdings Limited
Notes to the Consolidated Cash Flow Statement for the Period ended 31 March
1997
1. Reconciliation of Operating Profit to Net Cash Inflow/(Outflow)
from Operating Activities
Pounds
Operating Loss (129,122)
Depreciation & Amortisation Charges 71,972
Decrease in Stocks 335,443
Decrease in Debtors 102,895
Increase in Creditors 1,309,526
----------
Net Cash Inflow from Operating Activities Pounds 1,690,714
==========
2. Analysis of Cash Flows for Headings shown net
in the Cash Flow Statement
Returns on Investments and Servicing of Finance
Pounds
Interest Received 167
Interest Paid (19,816)
Interest Element of Finance Lease Rental Payments (5,994)
----------
Pounds (25,643)
==========
Capital Expenditure
Payments to Acquire Tangible Fixed Assets Pounds (167,399)
==========
Acquisitions and Disposals
Pounds
Purchase of subsidiary undertaking (728,107)
Net overdrafts acquired with subsidiary (1,461,873)
Payment of deferred consideration in respect
of acquisition of subsidiary (233,000)
----------
Pounds (2,422,980)
==========
Financing
Pounds
Issue of Ordinary Share Capital 346,500
New debenture loan 193,000
Capital Element of Hire Purchase and Finance
Lease Payments (37,395)
Issue of Preference Shares 218,000
----------
Pounds 720,105
==========
F-31
<PAGE>
Palm Technology Holdings Limited
Notes to the Consolidated Cash Flow Statement for the Period ended 31 March
1997 (continued)
3. Analysis of Movement in Net Funds/(Debt)
Cash At 31
Flows Acquisition March 1997
(Pounds) (Pounds) (Pounds)
Cash at Bank & in Hand 600 600
Overdrafts (205,803) (205,803)
Obligations under Hire
Purchase & Finance Leases 37,395 (339,993) (302,598)
Debenture Loan (193,000) (193,000)
-------- -------- --------
Total (360,808) (339,993) (700,801)
======== ======== ========
4. Purchase of Subsidiary Undertakings
Net Assets Acquired Pounds
Tangible Fixed Assets 531,406
Fixed Asset Investments 1,174,065
Stocks 559,798
Debtors 3,036,266
Tax Recoverable 24,303
---------
5,325,838
Creditors (2,207,093)
Hire Purchase & Finance Leases (339,993)
Bank Overdrafts (1,461,873)
Tax Payable (900)
Deferred Consideration (461,610)
---------
854,369
Goodwill 1,047,403
----------
Pounds 1,901,772
==========
F-32
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
1. Accounting Policies
The following principal accounting policies, which have been consistently
applied, are set out below:
a) Basis of Preparation
The accounts are prepared in accordance with the historical cost
convention and in accordance with applicable accounting standards.
b) Basis of Consolidation
The consolidated financial statements include the company and its
subsidiary undertakings. The results of subsidiaries acquired during the
period are included in the consolidated profit and loss account from the date
of their acquisition. Intra-group sales and profit are eliminated fully on
consolidation.
c) Turnover
Turnover represents amounts invoiced in respect of goods and services
provided, excluding Value Added Tax and Trade Discounts.
d) Subscriptions Income
Income in respect of annual subscriptions for internet services invoiced
in advance is taken as profit in full at the date the invoice is issued on the
basis that the income is non-refundable.
e) Goodwill
Goodwill arising on consolidation represents the excess of the fair value
of the consideration given over the fair value of the identifiable net assets
acquired. Goodwill arising on acquisitions is amortised through the profit
and loss account over its estimated useful life, which is a period of ten
years.
f) Fixed Assets and Depreciation
The cost of fixed assets is their purchase cost, together with any
incidental expenses of acquisition.
Depreciation is calculated so as to write off the cost, less estimated
residual value, of tangible fixed assets on a straight line basis over the
expected useful economic lives of the assets concerned.
The rates used are:
%
Plant & Equipment 16-2/3 - 25
Motor Vehicles 25 - 33-1/3
Computer Equipment 25 - 33-1/3
F-33
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
g) Finance and Operating Leases
Operating lease rentals are charged to the Profit & Loss Account as they
are incurred. Where fixed assets are financed by entering into leasing
agreements, which transfer to the lessee substantially all benefits and risks
of ownership, the assets are treated as if they had been purchased and
included in tangible fixed assets and the capital element of the leasing
commitments is shown as obligations under finance leases. The lease rentals
are treated as consisting of capital and interest elements; the capital
element is applied to reduce the outstanding obligations and the interest
element is charged against profit for the period. Assets held under finance
leases are depreciated over the shorter of the lease term and the useful life
of the asset concerned.
h) Stocks
Stocks are stated at the lower of cost and net realisable value. In
general, cost is determined on a first in first out basis and includes
transport and handling costs. Net realisable value is the price at which
stocks can be sold in the normal course of business after allowing for the
costs of realisation and, where appropriate, the cost of conversion from their
existing state to a finished condition. Provision is made where necessary for
obsolescent, slow moving and defective stocks.
i) Deferred Taxation
The charge for taxation is based on the profit for the year and takes
into account taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes.
Deferred taxation is provided on all timing differences, using the
liability method, except to the extent that these differences are not expected
to reverse in the foreseeable future.
j) Pension Schemes
The company operates a number of defined contribution pension schemes.
The assets of the schemes are held separately from those of the company, being
invested with insurance companies in an independently administered fund.
Contributions to the schemes are charged to the Profit and Loss Account in the
period in which they are payable.
k) Marketing Support
Marketing support received from major suppliers is accounted for in the
Profit and Loss Account when receivable.
2. Turnover
All of the group's turnover is attributable to the principal activity of
the company and consists entirely of sales made in the United Kingdom.
F-34
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
3. Operating Loss
Operating Loss is stated after charging:
Pounds
Auditors' Remuneration 1,500
Depreciation 54,515
Goodwill Amortised 17,457
Operating Lease Rentals - Plant & Machinery 3,590
- Other 16,513
Directors
Aggregate Emoluments 44,673
Company pension contributions to defined
contribution schemes 1,394
---------
Retirement benefits are accruing to four directors under a defined
contributions pension scheme.
4. Staff Numbers & Costs
The average number of persons excluding
directors employed by the company during
the period were as follows:
Administration 17
Sales & Distribution 33
---------
50
=========
The aggregate payroll costs of these persons were as follows:
Pounds
Wages and Salaries 221,079
Social Security Costs 21,103
Other Pension Costs 2,214
---------
Pounds 244,396
=========
F-35
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
Pounds
5. Interest Payable and Similar Charges
Interest payable on bank overdrafts 16,617
Other Loan Interest 3,199
Lease and Hire Purchase finance charges 5,994
National Interest on Deferred Consideration 4,502
---------
Pounds 30,312
=========
6. Tax on Loss on Ordinary Activities
Pounds
The tax charge on loss on ordinary activities
is as follows:
U.K. Corporation Tax at 25% on the losses of the year (12,821)
Adjustment in respect of prior years (6,885)
---------
Pounds (19,706)
=========
7. Loss for the Financial Period
As permitted by Section 230 of the Companies Act 1985, the holding
company's profit and loss account has not been included in these financial
statements. The loss for the financial period is made up as follows:
Pounds
Loss dealt with in the account of the holding company (9,985)
Loss dealt with in the accounts of the subsidiaries (112,119)
Amortisation of goodwill on consolidation (17,457)
---------
Loss for the Financial Period Pounds (139,561)
=========
F-36
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
8. Intangible Fixed Assets - Group
Purchased
Goodwill
Pounds
Cost
Additions 1,047,403
---------
At 31 March 1997 Pounds 1,047,403
---------
Amortisation
Charge for period 17,457
---------
At 31 March 199 17,457
---------
Net Book Value
At 31 March 1997 Pounds 1,029,946
=========
Goodwill arose during the year upon acquisition of Palm Technology Limited and
its subsidiary company Relay Business Systems Limited.
F-37
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
9. Tangible Fixed Assets - Group
Computer Motor Plant &
Equipment Vehicles Equipment Total
(Pounds) (Pounds) (Pounds) (Pounds)
Cost
On acquisition 247,358 414,082 109,692 771,132
Additions 163,199 - 4,200 167,399
------- ------- ------- -------
At 31 March 1997 410,557 414,082 113,892 938,531
------- ------- ------- -------
Depreciation
On acquisition 131,897 87,526 20,303 239,726
Charge for period 33,151 17,801 3,563 54,515
------- ------- ------- -------
At 31 March 1997 165,048 105,327 23,866 294,241
------- ------- ------- -------
Net Book Value
At 31 March 1997 245,509 308,755 90,026 644,290
======= ======= ======= =======
Included in Fixed Assets above are assets included under Hire Purchase
ontracts and Finance Leases as follows:
Motor Computer
Vehicles Equipment
(Pounds) (Pounds)
Cost at 31 March 1997 414,082 29,867
Accumulated Depreciation at 31 March 1997 105,327 17,984
Depreciation for the Period 17,801 3,006
======= =======
10. Investments - Company
Subsidiary
Undertakings
(Pounds)
Cost
Additions 728,107
-------
At 31 March 1997 Pounds 728,107
=======
F-38
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
11. Subsidiary Undertakings
The company had the following subsidiary undertakings at 31 March 1997:
Proportion
of Issued
Country of Description of Share Capital
Registration Shares Held Held
Palm Technology Limited England & Wales Pounds 1 Ordinary 100%
1p Preference
Relay Business Systems
Limited England & Wales Pounds 1 Ordinary 100% *
Network Wales Limited England & Wales Pounds 1 Ordinary 100% *
Palm Software Limited England & Wales Pounds 1 Ordinary 100% *
Palm Integration Limited England & Wales Pounds 1 Ordinary 100% *
* Shares held by Palm Technology Limited.
On 5 February 1997, the company acquired the entire share capital of Palm
Technology Limited. Details are set out in note 25.
The principal activities of these subsidiaries are:
Palm Technology Limited Holding company
Relay Business Systems Limited Supply of computer hardware and software
Network Wales Limited Dormant
Palm Software Limited Dormant
Palm Integration Limited Dormant
12. Stocks - Group
The main category of Stock is:
Goods for Resale Pounds 224,355
=======
13. Debtors
Group Company
(Pounds) (Pounds)
Trade Debtors 2,284,194 -
Amounts owed by Group Undertakings - 80,666
Other Debtors 569,095 1,454
Prepayments & Accrued Income 124,491 -
--------- ------
2,977,780 82,120
========= ======
F-39
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
14. Creditors: Amounts falling due within one year
Group Company
(Pounds) (Pounds)
Bank Overdrafts 205,803 36,412
Debenture Loan (Note 16) 48,250 48,250
Trade Creditors 3,342,602 -
Amounts owed to Group Undertakings - 26,300
Other Creditors 257,191 -
Corporation Tax 900 -
Other Taxes & Social Security 77,471 -
Obligations under Hire Purchase Contracts
and Finance Leases 105,409 -
Accruals & Deferred Income 72,467 -
--------- -------
4,110,093 110,962
========= =======
The bank overdraft is repayable on demand and is secured by a fixed and
floating charge over the assets of the company.
There is an unlimited cross guarantee between all group companies.
The group meets its day to day working capital requirements through an
overdraft facility which is repayable on demand. The group expects to
operate within the facility currently agreed and within that expected to be
agreed on 31 January 1998, when the group's bankers are due to consider its
renewal for a further year. These views are based on the group's plans and
on the successful outcome of discussions with the group's bankers.
15. Creditors: Amounts falling due after more than one year
Group Company
(Pounds) (Pounds)
Debenture Loan (Note 16) 144,750 144,750
Obligations under Hire Purchase Contracts
and Finance Leases 197,189 -
------- -------
341,939 144,750
======= =======
F-40
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
16. Debenture Loan - Group and Company
The following is an analysis of the maturity
of Debenture Loans:
Pounds
Due within one year, or on demand 48,250
Due between one and two years 48,250
Due between two and five years 96,500
Due in five years or more -
-------
Pounds 193,000
=======
Analysed as:
Creditors: Amounts falling due within one year 48,250
Creditors: Amounts falling due after more than one year 144,750
-------
Pounds 193,000
=======
The debenture loan was issued on 5 February 1997 and is secured by a second
fixed and floating charge over the assets of the group.
17. Provisions for Liabilities & Charges - Group and Company
Deferred Taxation
There are no amounts of provided or unprovided deferred tax at 31 March
1997.
F-41
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
18. Share Capital - Company
Pounds
Authorised:
7,000 Ordinary Shares of Pounds 1 each 7,000
3,000 "A" Ordinary Shares of Pounds 1 each 3,000
240,000 "B" Ordinary Shares of Pounds 1 each 240,000
218,000 Preference Shares of 1p each 2,180
-------
Pounds 252,180
=======
Pounds
Allotted, Called Up and Fully Paid
7,000 Ordinary Shares of Pounds 1 each 7,000
3,000 "A" Ordinary Shares of Pounds 1 each 3,000
240,000 "B" Ordinary Shares of Pounds 1 each 240,000
218,000 Preference Shares of 1p each 2,180
-------
Pounds 252,180
=======
During the period, the company issued the following shares in order to raise
finance for the acquisition of Palm Technology Limited:
Aggregate
Nominal Consideration
Class of Share Number Value Received
Pounds 1 Ordinary 7,000 7,000 103,500
Pounds 1 "A" Ordinary 3,000 3,000 3,000
Pounds 1 "B" Ordinary 240,000 240,000 240,000
1p Preference 218,000 2,180 218,000
The rights of holders of 1p Preference Shares are as follows:
a) Entitle holders, in priority to all other shareholders to a fixed
cumulative preferential net cash dividend at a rate of 9% of the subscription
price per annum payable six monthly in arrears.
b) Are to be redeemed in three instalments of Pounds 72,500 on 31 March 2001,
Pounds 72,500 on 31 March 2002 and Pounds 73,000 on 31 March 2003. The
company may redeem the shares earlier in amounts of not less than 20,000
shares, with the prior consent of 75% of the preference shareholders, or on
the sale or floatation of the company.
c) On a return of capital on a winding up, or otherwise, will carry the right
to repayment of capital and a sum equal to any arrears or deficiency of
dividend; this right is in priority to the rights of all other shareholders.
d) Carry the right to receive notice of General Meetings of the company but
not the right to attend such meetings.
F-42
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
18. Share Capital - Company (continued)
The rights of holders of Pounds 1 "A" Ordinary Shares are as follows:
a) Entitle holders, in priority to all other shareholders except
preference shareholders, to a fixed cumulative preferential net
cash dividend at a rate of 9 pence per share per annum payable six
monthly in arrears and a net cash participating dividend such that
when added to the aggregate fixed dividend payable in the relevant
financial year is equal to 6% of net profit. A compensatory
dividend is payable if excess benefits are paid to relevant
directors.
b) Entitle holders to convert at any time the whole of their "A"
ordinary shares into a like number of ordinary shares.
c) On a return of capital on a winding up, or otherwise, will carry
the right to repayment of capital together with a sum equal to any
arrears or accruals of the `A' ordinary dividends. This right is in
priority to the rights of `B' ordinary shareholders and ordinary
shareholders but not in priority to the rights of preference
shareholders.
d) Carry the right to attend and vote at General Meetings of the
company.
The rights of holders of Pounds 1 "B" Ordinary shares are as follows:
a) Shareholders receive no preference as regards the right to
dividends over the ordinary shareholders.
b) On a return of capital on a winding up, or otherwise will carry the
right to repayment of capital and a sum equal to any arrears or
accruals of the fixed ordinary dividend only after all the other
shareholders have been paid.
c) Carry the right to receive notice of General Meetings of the company
but not the right to attend or vote at such meetings.
19. Share Premium Account
Group Company
(Pounds) (Pounds)
Premium on Share Issue 312,320 312,320
------- -------
Balance carried forward 312,320 312,320
======= =======
F-43
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
20. Profit and Loss Account
Group Company
(Pounds) (Pounds)
Retained Loss for the Financial Period (139,561) (9,985)
-------- -------
Balance carried forward (139,561) (9,985)
======== =======
21. Reconciliation of Shareholders' Funds
Group Company
(Pounds) (Pounds)
Loss for the Financial Period (139,561) (9,985)
New Share Capital Subscribed 564,500 564,500
------- -------
Closing Shareholders' Funds 424,939 554,515
======= =======
22. Analysis of Non-Equity Shareholders Funds - Group and Company
Pounds
Pounds 1 "A" Ordinary Shares 3,000
Pounds 1 "B" Ordinary Shares 240,000
1p Preference Shares 218,000
-------
Pounds 461,000
=======
F-44
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
23 Contingent Liabilities & Financial Commitments
The company has financial commitments in respect of non-cancellable
operating leases. The rentals payable under these leases in the next year are
as follows:
Pounds
Land & Buildings
Date of Lease Termination:
Within One Year -
In the second to fifth years inclusive 16,100
After five years 65,000
------
Pounds 81,100
======
Other Operating Leases
Date of Lease Termination:
In the second to fifth years inclusive Pounds 24,317
======
24. Pension Costs
The pension charge for the period was Pounds 2,214. The outstanding
contributions at 31 March 1997 were Pounds 576.
25. Acquisition of Palm Technology Limited
On 5 February 1997, the company acquired the entire share capital of Palm
Technology Limited. Acquisition accounting has been used in respect of this
transaction.
The fair value of the consideration was:
Pounds 400,000 cash for the preference shares.
Pounds 300,000 cash for the ordinary shares.
F-45
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
25. Acquisition of Palm Technology Limited (continued)
The assets and liabilities acquired with Palm Technology Limited and its
100% owned subsidiary Relay Business Systems Limited are set out below:
Book Value &
Fair Value
Pounds
Tangible Fixed Assets 531,406
Fixed Asset Investment 1,174,065
Stocks 559,798
Debtors 3,060,569
---------
5,325,838
Creditors Due within One Year (4,250,635)
Creditors Due after One Year (220,834)
---------
854,369
Goodwill 1,047,403
---------
Pounds 1,901,772
=========
Satisfied by:
Cash 700,000
Expenses on Acquisition 28,107
Cost of Acquisition of Relay Business
Systems Limited by Palm Technology
Limited in 1995 1,174,065
---------
Pounds 1,902,172
=========
In 1995 Palm Technology Limited acquired the entire share capital of Relay
Business Systems Limited. The consideration includes deferred contingent
consideration the final instalment of which is due next year and therefore the
goodwill arising on this acquisition is still only provisional.
The summarised consolidated trading results of Palm Technology Holdings
Limited from 1 April 1996 to the date of acquisition were as follows:
Turnover Pounds 11,635,954
==========
Loss after Tax Pounds (402,712)
==========
F-46
<PAGE>
Palm Technology Holdings Limited
Notes to the Accounts for the Period ended 31 March 1997
(continued)
25. Acquisition of Palm Technology Limited (continued)
For the year ended 31 March 1996 the loss after tax was Pounds 54,473,
including Syntech Computer Systems Limited.
26. Income from Annual Subscriptions
The group's accounting policy in respect of income from annual
subscriptions to the group's internet services is to recognise such income at
the date of invoice and take the profit in full. The group considers the
marginal cost of providing such services to be negligible and as such these
subscriptions provide the group with income with no material additional costs
arising.
27. Ultimate Controlling Party
There is no ultimate controlling party of the company or group.
F-47
<PAGE>
PALM TECHNOLOGY HOLDINGS LIMITED
RECONCILING ADJUSTMENTS TO U. S. GENRALLY ACCEPTED
ACCOUNTING PRINCIPALS (GAAP)
FOR THE YEAR ENDED MARCH 31, 1998 AND THE PERIOD ENDED MARCH 31, 1997
The following schedules and footnotes present the reconciliation of the
accounts for Palm Technology Holdings, Ltd. as presented in accordance with
U.K. Generally Accepted Accounting Practices to U.S. GAAP. These adjustments
and reconciliations only reflect material variations.
GROUP BALANCE SHEET RECONCILING ITEMS
Reconciliation of Total Assets and Equity
Shareholders Funds
<TABLE>
<CAPTION>
Total Assets Equity Shareholders Funds
31.3.98 31.3.97 31.3.98 31.3.97
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Total Assets/Equity
Shareholders Funds 5,390,576 4,876,971 79,900 (36,061)
Adjustment relating to
Contingent Consideration (229,226) (229,226)
--------- --------- ------ --------
Total Assets/Equity
Shareholders Funds as
prepared in accordance
with US Generally Accepted
Accounting Principles 5,390,576 4,647,745 79,900 (265,287)
========= ========= ====== ========
</TABLE>
Footnotes
(1) Adjustment relating to Contingent Consideration
As noted in note 25 in the Accounts of Palm Technology Holdings Limited for
the period ended 31 March 1997, the accounts include a creditor in respect of
contingent consideration payable relating to the purchase of Relay Business
Systems Limited by Palm Technology Limited in 1995, in the sum of 229,226
Pounds. The sum of 229,226 Pounds represents the discounted amount of 250,000
Pounds, being the anticipated amount of contingent consideration payable
during the year ended 31 March 1998. The sum actually payable is 144,033
Pounds, which is included within creditors due within one year as at 31 March
1998.
The reconciliation of the accounts prepared under UK Generally Accepted
Accounting Practices shows a reduction in Total Assets and in Equity
Shareholders Funds as at 31 March 1997 to reflect that this amount would not
be recognized in the Financial Statements prepared under US Generally Accepted
Accounting Principles until the amount became payable in the year ended 31
March 1998.
GROUP PROFIT AND LOSS RECONCILING ITEMS
There were no material reconciling items relating to the group profit and loss
accounts for the years ended March 31, 1998 or the period ended March 31,
1997.
F-48
<PAGE>
GROUP CASH FLOW RECONCILING ITEMS
The following is a presentation of the cash flow in accordance with U.S. GAAP,
and the reconciliation between U.K. GAAP and U.S. GAAP for the period ended
March 31, 1997. There were no material reconciling items for the year ended
March 31, 1998.
Cash Flow Statement Prepared in Accordance with
US Generally Accepted Accounting Principles (GAAP)
31.3.98 31.3.97
(Pounds) (Pounds)
Cash Flows from Operating Activities
Net Cash Inflow from Operating Activities 208,792 1,690,714
Taxation 27,868
Returns on Investments and Servicing of
Finance (100,740) (25,643)
-------- ---------
Net Cash Flows from Operating Activities
as prepared in accordance with US GAAP 135,920 1,665,071
Cash Flows from Investing Activities
Capital Expenditure (234,447) (167,399)
Acquisitions & Disposals (6,270) (961,107)
-------- ---------
Cash Flows from Investing Activities
as prepared in accordance with US GAAP (240,717) (1,128,506)
Cash Flows from Financing Activities
Financing (174,996) 720,105
Aquisisitions & Disposals - Overdrafts
Acquired with Subsidiary (1,461,873)
-------- ---------
Cash Flows from Financing Activities as
prepared in accordance with US GAAP (174,996) (741,768)
Net Increase in Cash and Cash Equivalents (279,793) (205,203)
Cash and Cash Equivalents at the
beginning of the year/period (205,203)
-------- ---------
Cash and Cash Equivalents at the end
of the year/period (484,996) (205,203)
======== =========
F-49
<PAGE>
Footnotes
(1) Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
See footnote 1 to the Audited Notes to the Cash Flow Statement for the year
ended March 31, 1998 and the period ended March 31, 1997 - Reconciliation of
Operating Profit to Net Cash Inflow from Operating Activities.
(2) Reconciliation of Acquisitions and Disposals as shown in the Cash Flow
Statement for the period ended March 31, 1997
Reconciliation of Acquisitions and Disposals
as Shown in the Cash Flow Statement
Pounds
31.3.97
Cash Flows from Investing Activities
Purchase of a Subsidiary Undertaking (728,107)
Payment of Deferred Consideration in respect of
Acquisition of a Subsidiary (233,000)
----------
Acquisitions and Disposals as prepared in
accordance with US Generally Accepted Accounting
Practices (961,107)
Cash Flows from Financing Activities
Overdrafts Acquired with Subsidiary (1,461,873)
----------
Acquisitions and Disposals as prepared
in accordance with UK Generally Accepted
Accounting Practices (2,422,980)
==========
F-50
<PAGE>
2)
PALM TECHNOLOGY HOLDINGS, LTD
UNAUDITED GROUP BALANCE SHEET
AS AT DECEMBER 31, 1998
DECEMBER 31, MARCH 31,
1998 1998
Pounds Pounds
Fixed Assets
Intangible Assets 774,385 846,371
Tangible Assets 805,201 745,472
---------- ---------
1,579,586 1,591,843
Current Assets
Stocks 1,085,180 344,934
Debtors 2,334,219 3,452,999
Cash at Bank & in Hand 1,000 800
---------- ---------
3,420,399 3,798,733
Creditors: Amounts falling due
within one year (3,780,421) (4,653,377)
Net Current Liabilities (360,022) (854,644)
---------- ----------
Total Assets Less Current Liabilities 1,219,564 737,199
Creditors: Amounts falling due
after more than one year (334,879) (196,299)
Provisions for Liabilities & Charges - -
---------- ----------
Net Assets 884,685 540,900
========== ==========
Captial & Reserves
Equity Interests
Called up Share Capital 744,766 252,180
Share Premium Account 96,500 312,320
Profit & Loss Account 43,419 (23,600)
---------- -----------
884,685 540,900
========== ===========
F-51
<PAGE>
PALM TECHNOLOGY HOLDINGS, LTD
UNAUDITED GROUP PROFIT AND LOSS ACCOUNT
FOR THE NINE MONTHS ENDED DECEMBER 31
1998 1997
(Pounds) (Pounds)
Turnover 10,004,296 8,180,210
Cost of Sales 7,690,417 6,505,060
---------- ---------
Gross Profit 2,313,879 1,675,150
Administrative Expenses 2,131,832 1,670,047
---------- ---------
Operating Profit/(Loss) 182,047 5,103
Other Interest Receivable &
Similar Income - -
Interest Payable & Similar Charges (88,964) (81,730)
---------- ---------
Profit/(Loss) on Ordinary Activities
before Taxation 93,083 (76,627)
Taxation on Profit/(Loss) on Ordinary
Activities (26,063) 21,456
---------- ---------
Profit/(Loss) for the Period 67,020 (55,171)
========== =========
F-52
<PAGE>
PALM TECHNOLOGY HOLDINGS, LTD
UNAUDITED GROUP CASH FLOW STATEMENT
FOR THE NINE MONTHS ENDED DECEMBER 31
1998 1997
(Pounds) (Pounds)
Net Cash Inflow from Operating Activities
Operating Profit 182,047 5,103
Depreciation Charges & Loss on Disposals 310,111 255,765
(Increase)/Decrease in Stock/WIP (740,245) (359,266)
(Increase)/Decrease in Debtors 1,132,797 1,468,343
Increase/(Decrease) in Creditors (618,418) (1,309,259)
Other (56,706) (5,546)
--------- ----------
209,586 55,140
Servicing of Finance
Interest on Bank Account/Loan (50,349) (61,185)
Lease Interest (24,598) (20,546)
3i Loan Payment (193,000) -
Interest on Deferred Consideration (14,017) -
--------- ----------
(281,964) (81,731)
Taxation
Advanced Corporation Tax - (5,854)
Corporation Tax
--------- ----------
- (5,854)
Capital Expenditure
Payments to Acquire Tangible Fixed Assets (338,233) (248,269)
Receipts from Sales of Tangible Fixed Assets 40,378 125,265
--------- ----------
(297,855) (123,004)
Financing
Loan Settlements (36,413) (114,207)
New Finance 192,100 54,000
Dividend Payment (23,416)
Issue of New Shares 276,766
Capital Element of Lease Payments (85,316) (67,058)
--------- ----------
347,137 (150,681)
Decrease in Cash in the Period (23,096) (306,130)
========= ==========
Reconciliation of Net Cash Flow to Movement
in Net Debt
Decrease in Cash in the Period (23,096) (306,130)
Capital Element of Lease Payments 85,316 67,058
New Financing (192,100) (54,000)
Loan Settlements 229,413 114,207
--------- ----------
Movement in Debt in the Period 99,533 (178,865)
Net Debt at April 1, 1998 and 1997 (942,503) (700,801)
--------- ----------
Net Debt at December 31, 1998 and 1997 (842,970) (879,666)
========= ==========
F-53
<PAGE>
PALM TECHNOLOGY HOLDINGS, LTD.
NOTES TO THE ACCOUNTS
DECEMBER 31, 1998 (UNAUDITED)
1. ACCOUNTS FOR DECEMBER 31, 1998
The accounts included herein have been prepared by Palm Technology
Holdings without audit, in accordance with the historical cost convention and
in accordance with applicable accounting standards. The consolidated
financial statements include the company and its subsidiary undertakings.
Inra-group sales and profit are eliminated fully on consolidation. Certain
information and footnote disclosures normally included in the accounts and
report have been condensed or omitted as allowed by applicable accounting
standards, and management believes that the disclosures are adequate to make
the information presented not misleading. The operating results for the nine
months ended December 31, 1998 are not necessarily indicative of the results
that may be expected for the year ending March 31, 1999. The management of
Palm believes that the accompanying unaudited accounts contain all adjustments
(including normal recurring adjustments) necessary to present fairly the
operations and cash flows for the periods presented.
2. SALE OF PALM TECHNOLOGY HOLDINGS LTD.
In July 1998 Sanga International, Inc. entered into an acquisition
agreement with the shareholders of Palm Technology Holdings Ltd. to acquire
the whole of the issued share capital of Palm Technology Holdings Ltd. As a
result of the acquisition, the Debenture Loan and Preference shares held by
The 3I Group Plc were redeemed. As an integral part of the acquisition The 3I
Group Plc were paid their outstanding dividend and other shareholders were to
receive payment of their shares at a date to be agreed. Subsequent to this
agreement, e-MedSoft.com acquired Sanga International's rights and obligations
under the acquisition agreement to acquire the issued share capital of Palm
Technology Holdings Ltd. The final payment to the Palm shareholders to
complete the acquisition was made on March 19, 1999.
3. ISSUANCE OF ORDINARY SHARES
In July 1998, Palm Technology Holdings issued 441,794 Ordinary shares (1
Pound par) at face value. On 27 November 1998, Palm Technology Holdings
Limited issued 52,972 Ordinary shares at face value. The result of these
transactions was to receive approximately 494,766 Pounds. In addition, in
July 1998 Palm Technology Holdings redeemed 2,180 preference shares for a
total of 218,000 Pounds. The net proceeds of these transactions are reflected
in the unaudited cash flow statement.
4. LEASES
During the nine months ended December 31, 1998, the company entered into
192,100 Pounds of new car leases that have been capitalized in the accounts.
F-54
<PAGE>
PALM TECHNOLOGY HOLDINGS LIMITED
RECONCILING ADJUSTMENTS TO U. S. GENRALLY ACCEPTED
ACCOUNTING PRINCIPALS (GAAP)
FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
The following schedules and footnotes present the reconciliation of the
accounts for Palm Technology Holdings, Ltd. as presented in accordance with
U.K. Generally Accepted Accounting Practices to U.S. GAAP. These adjustments
and reconciliations only reflect material variations.
GROUP BALANCE SHEET RECONCILING ITEMS
There were no material reconciling items relating to the group balance sheet
at December 31, 1998 and March 31, 1998.
GROUP PROFIT AND LOSS RECONCILING ITEMS
There were no material reconciling items relating to the group profit and loss
accounts for the nine months ended December 31, 1998 and 1997.
GROUP CASH FLOW RECONCILING ITEMS
The following is a presentation of the cash flow in accordance with U.S. GAAP.
There were no material reconciling items for the nine months ended December
31, 1998 and 1997.
F-55
<PAGE>
UNAUDITED GROUP CASH FLOW STATEMENT
PREPARED IN ACCORDANCE WITH US GAAP
FOR THE NINE MONTHS ENDED DECEMBER 31
1998 1997
Pounds Pounds
Cash Flows from Operating Activities
Net Cash Inflow from Operating
Activities 209,586 55,140
Taxation 0 (5,854)
Returns on investments and Servicing
of Finance (281,964) (81,731)
-------- --------
Net Cash Flow from Operating Activities
as prepared in accordance with US GAAP (72,378) (32,445)
-------- --------
Cash Flows from Investing Activities
Capital Expenditure (297,855) (123,004)
-------- --------
Cash Flow from Investing Activities
as prepared in accordance with US GAAP (297,855) (123,004)
-------- --------
Cash Flows from Financing Activities
Financing 347,137 (150,681)
-------- --------
Cash Flow from Financing Activities
as prepared in accordance with US GAAP 347,137 (150,681)
-------- --------
Net Decrease in Cash and Cash
Equivalents (23,096) (306,130)
Cash and Cash Equivalents at beginning
of the period (484,996) -
-------- --------
Cash and Cash Equivalents at end of the
period (508,092) (306,130)
======== ========
Footnotes
(1) Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
See Palm Technology's Cash Flow Statement for the Nine Months ended
December 31, 1998 and 1997 included herein for the detail of Net Cash Inflow
from Operating Activities.
F-56
<PAGE>
(b) Pro Forma Financial Information
Unaudited Pro Forma Combined Financial Statements
The following unaudited pro forma combined financial statements are
derived from the historical financial statements of e-MedSoft.com and Palm
Technology Holdings, Ltd. and give effect to the acquisition of Palm
Technology Holding LTD (the "Palm Acquisition") by the registrant on March 19,
1999. The unaudited pro forma combined balance sheet as of February 28, 1999
and the unaudited pro forma combined statements of operations for the nine
months ended February 28, 1999 and the year ended May 31, 1998 reflect the
Palm Acquisition as if it had occurred on February 28, 1999 for the unaudited
pro forma combined balance sheet and at the beginning of each period for the
unaudited pro forma combined statements of operations. The unaudited pro
forma combined financial statements do not purport to be indicative of the
results that would actually have been obtained if the combination had been in
effect on the dates indicated, or that may be obtained in the future. The
unaudited pro forma combined financial statements should be read in
conjunction with the historical consolidated financial statements of
e-MedSoft.com and Palm Technology Holdings, Ltd., together with the related
notes thereto.
F-57
<PAGE>
E-MEDSOFT.COM
UNAUDITED PROFORMA COMBINED BALANCE SHEET
FEBRUARY 28, 1999
<TABLE>
<CAPTION>
Palm Technology Proforma
e-MedSoft Holdings LTD Adjustments (1) Proforma
(unaudited) (unaudited) DR. CR. Combined
----------- --------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 90,729 $ 1,630 $ 1,500,000 (9) $1,500,000 (4) $ 92,359
Stock and Work in Progress - 1,978,653 1,978,653
Accounts Receivable, net - 3,290,720 3,290,720
Receivables from Related
Parties 635,270 690,102 (4) (54,832)
Other Current Assets - 703,751 703,751
--------- ---------- ----------- ---------- ------------
725,999 5,974,754 1,500,000 2,190,102 6,010,651
--------- ---------- ----------- ---------- ------------
Property, Plant and
Fixtures, net - 1,286,943 1,286,943
Other Assets
Goodwill - 1,235,948 6,078,956 (6) 1,235,948 (7) 6,078,956
Investment in Subsidiary 2,190,102 (4) -
4,200,000 (5) 6,390,102 (8)
Deferred Financing Costs 1,444,932 (9) 1,444,932
Other Assets 6,965 - 6,965
--------- ---------- ----------- ---------- -----------
TOTAL ASSETS $ 732,964 $8,497,645 $15,413,990 $9,816,152 $14,828,447
========= ========== =========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 28,750 $5,429,463 $ 5,458,213
Accruals and Other
Liabilities - 617,076 617,076
Bank Credit Facility - 346,171 346,171
Acquisition Bridge Financing - - 1,750,000 (9) 1,750,000
Finance Costs Payable 262,500 (9) 262,500
--------- ---------- ----------- ---------- -----------
28,750 6,392,710 - 2,012,500 8,433,960
Long Term Liabilities &
Deferred Revenues
Capital Leases 557,841 557,841
Deferred Revenues 750,000 - 750,000
--------- ---------- ----------- ---------- -----------
750,000 557,841 - - 1,307,841
--------- ---------- ----------- ---------- -----------
Shareholders' Equity
Common Shares 51,771 - 51,771
Paid in Capital 36,414 1,535,285 1,535,285 (7) 4,200,000 (5) 5,168,846
932,432 (9)
Retained Earnings (Deficit) (133,971) 11,809 11,809 (7) (133,971)
--------- ---------- ----------- ---------- -----------
(45,786) 1,547,094 1,547,094 5,132,432 5,086,646
--------- ---------- ----------- ---------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 732,964 $8,497,645 $ 1,547,094 $7,144,932 $14,828,447
========= ========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited proforma
combined financial statements.
F-58
<PAGE>
E-MEDSOFT.COM
UNAUDITED PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 1999
<TABLE>
<CAPTION>
Palm Technology Proforma
e-MedSoft Holdings LTD Adjustments (1) Proforma
(unaudited) (unaudited) DR. CR. Combined
--------- --------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ - $16,807,217 $ - $ 16,807,217
Cost of Sales - 12,919,900 12,919,900
--------- ----------- ----------- ---------- ------------
Gross Profit - 3,887,317 - - 3,887,317
Operating Expenses
Personnel - 1,914,988 1,914,988
Premises - 280,906 280,906
Office Costs - 365,449 365,449
Depreciation - 397,444 397,444
Amortization of Goodwill 120,935 455,922 (12) 120,935 (13) 455,922
Other Operating Costs 45,884 501,756 547,640
--------- ----------- ----------- ---------- ------------
45,884 3,581,478 455,922 120,935 3,962,349
--------- ----------- ----------- ---------- ------------
Operating Profit (45,884) 305,839 (455,922) (120,935) (75,032)
Interest & Other expense 936 149,460 157,500 (14) - 307,896
--------- ----------- ----------- ---------- ------------
Pre tax income (loss) (46,820) 156,379 (613,422) (120,935) (382,928)
Provision for taxes - 58,236 - - 58,236
--------- ----------- ----------- ---------- ------------
Net income (loss) $(46,820) $ 98,143 $ (613,422) $ (120,935) $ (441,164)
======== =========== =========== ========== ============
Net income (loss) per
share $ (0.00) $ (0.03)
Average Weighted Shares
Outstanding 14,996,203 - - - 14,996,203
</TABLE>
The accompanying notes are an integral part of these unaudited proforma
combined financial statements
F-59
<PAGE>
E-MEDSOFT.COM
UNAUDITED PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MAY 31, 1998
<TABLE>
<CAPTION>
Palm Technology Proforma
e-MedSoft Holdings LTD Adjustments (1) Proforma
(10) (10) DR. CR. Combined
--------- --------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ - $18,005,797 $ - $ 18,005,797
Cost of Sales - 13,605,357 13,605,357
--------- ----------- ----------- ---------- ------------
Gross Profit - 4,400,440 - - 4,400,440
--------- ----------- ----------- ---------- ------------
Operating Expenses
Personnel - 2,461,874 2,461,874
Premises - 344,142 344,142
Office Costs - 540,469 540,469
Depreciation - 433,616 433,616
Amortization of Goodwill 161,246 607,896 (12) 161,246 (13) 607,896
Other Operating Costs 6,876 13,076 19,952
--------- ----------- ----------- ---------- ------------
6,876 3,954,423 607,896 161,246 4,407,949
Operating Profit (6,876) 446,017 (607,896) (161,246) (7,509)
Interest & Other expense 954 177,287 210,000 (14) - 388,241
Pre tax income (loss) (7,830) 268,730 (817,896) (161,246) (395,750)
Provision for taxes - 73,915 - - 73,915
Net income (loss) $ (7,830) $ 194,815 $ (817,896) $ (161,246) $ (469,665)
--------- ----------- ----------- ---------- ------------
Net income (loss) per
share $ (0.00) $ (0.03)
Average Weighted Shares
Outstanding 7,801,150 - - - 14,996,203
</TABLE>
The accompanying notes are an integral part of these unaudited proforma
combined financial statements
F-60
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
GENERAL
1. The adjustments included in the unaudited pro forma combined
financial statements are based upon currently available information and upon
certain assumptions that e-MedSoft.com's management believes are reasonable.
e-MedSoft.com accounted for the Palm Acquisition as a purchase of Palm by
e-MedSoft.com. Palm's assets and liabilities were recorded at their initial
estimated fair market values as of the date of the Palm Acquisition. There can
be no assurance that the actual adjustments will not differ significantly from
the pro forma adjustments reflected herein.
2. The following table details the allocation of the Palm purchase
price:
Palm purchase price $6,390,102
Acquisition costs 0
----------
Adjusted purchase price $6,390,102
Less: Palm historical net book
value excluding goodwill 311,146
----------
Goodwill $6,078,956
==========
The allocation of the purchase price of Palm is preliminary and will be
finalized upon completion of asset valuations. In addition, e-MedSoft.com is
still evaluating certain obligations of Palm prior to the acquisition and
further adjustments to the preliminary purchase price may result.
e-MedSoft.com is obtaining an independent valuation of the 3 million shares of
restricted common stock transferred to Sanga International in exchange for its
rights to acquire Palm. e-MedSoft.com is continuing to analyze the balance
sheet of Palm as of February 28, 1999. Certain adjustments may be recorded to
properly state the net assets acquired in the Palm Acquisition.
The goodwill will be amortized using the straight-line method over a
period of 10 years. Palm's historical goodwill at February 28, 1999 was
$1,235,948. Palm assigned a useful life of 10 years to its goodwill.
3. On March 19, 1999, the Company entered into loan agreements with two
private investors to partially fund the Palm Acquisition. These loans are
short-term in nature and therefore are considered bridge financing. In
conjunction with this financing the Company received $1,500,000 in return for
a) notes of $1,750,000, which included a $250,000 finders fee, b) 15%
origination fees, c) 2 million restricted shares of e-MedSoft.com's common
stock and d) 500,000 warrants to purchase the Company's common stock. The
shares, which were transferred from Sanga e-Health, the parent company, and
warrants were an inducement to lend. The Company is obtaining an independent
valuation of the shares transferred and warrants issued (see Note 2). Per the
original terms of the bridge financing, the interest rate on the outstanding
balance is 12% and the notes and accrued interest were required to be repaid
by May 19, 1999. Any delinquency in the repayment of the notes would require
a default interest to be paid of 24%. The Company is in the process of
negotiating and clarifying the payout of these obligations. The Company has
complied with all lender requests for payments of origination fees and
interest on these obligations. It is unknown at this time over what period
the repayment of debt will be made. For the purposes of this pro forma it is
assumed that the deferred finance costs related to this transaction are
nonrecurring charges that are not reflective of the Company's continuing
operations.
F-61
<PAGE>
NOTES TO THE PRO FORMA COMBINED BALANCE SHEET
4. Reflects the final payment of $2,190,102 in cash to the shareholders
of Palm for 100% of the outstanding shares of Palm Technology Holdings, Ltd.
As discussed in footnote 3 above, this payment was funded through a private
financing of $1,500,000 and working capital of $690,102.
5. Reflects the transfer of 3 million restricted shares of e-MedSoft.com
to Sanga International, Inc. for the assignment of all of its rights and
obligations under the original Acquisition Agreement entered into between Palm
Technology shareholders and Sanga International to e-MedSoft.com. Prior to
assigning its rights to the Company, Sanga International had paid
approximately $2,100,000 in cash to the shareholders of Palm as the initial
installments on the purchase price and had notes payable to the shareholders
for the remaining balance of the purchase price. The shares transferred were
contributed by Sanga e-Health, the Company's parent, and have been valued
using the market price of the shares at closing date, discounted 65% to
reflect the restricted nature and liquidity of the shares. e-MedSoft.com is
obtaining an independent valuation of these shares (see Note 2). Any
difference in valuation will be subsequently booked.
6. Reflects the allocation of purchase price to goodwill (see Note 2).
7. Reflects the elimination of Palm's historical stockholders' equity
balance and goodwill in connection with the purchase price allocation.
8. Reflects the elimination of e-MedSoft.com's investment in the Palm
subsidiary.
9. Reflects the issuance of debt, deferred finder's and origination fee
costs and transfer of 2 million restricted shares of e-MedSoft.com and the
issuance of 500,000 warrants to acquire 500,000 shares of e-MedSoft.com to
lenders of the bridge financing. As noted above, the shares transferred were
contributed by Sanga e-Health, the Company's parent, and have been valued
using the market price of the shares at closing date, discounted 65% to
reflect the restricted nature of the shares. The warrants issued have been
valued using the aggregate market price of the shares at closing date less the
aggregate warrant price. The Company is obtaining an independent valuation of
the shares transferred and warrants issued (see Note 2). Based on
management's preliminary valuation of the stock transferred and warrants
issued to the lenders for this financing, the $1,500,000 in cash received by
the Company has been allocated to debt and paid in capital. This allocation
is based on the total estimated value of notes, shares and warrants received
by the lenders. As a result $932,432 has been allocated to paid in capital
for the shares transferred and warrants issued and $567,566 has been allocated
to bridge financing debt. The difference between the amount allocated to debt
and the actual notes and fees payable resulting from this transaction is
$1,444,932. The $1,444,932 has been reflected as deferred financing costs
that accrete to the bridge financing debt of $1,750,000 and finance costs
payable of $262,500.
10. The deferred financing costs will be amortized over the life of the
bridge financing. For the purposes of this pro forma presentation, the
amortization of such costs have not been included in the pro forma combined
statement of operations. This expense, which is related to the acquisition
transaction, is a nonrecurring charge that will be reflected in the Company's
income statement over the amortization period subsequent to the date of this
transaction.
F-62
<PAGE>
<PAGE>
NOTES TO THE PRO FORMA COMBINED STATEMENTS OF OPERATIONS
11. The unaudited combined pro forma statement of operations include
e-MedSoft.com operations for the nine months ended February 28, 1999 and the
fiscal year ended May 31, 1998. The statement of operations for Palm
Technology Holdings, LTD included in the pro forma is for the nine months
ended December 31, 1998 and the fiscal year ended March 31, 1998.
12. Represents the amortization of goodwill using the straight-line
method over a period of 10 years.
13. Represents the elimination of Palm's historical goodwill amortization
expense which was amortized using the straight-line method over a period of 10
years.
14. Reflects interest expense on the bridge financing at a rate of 12% of
the original loan balance as if the purchase had taken place at the beginning
of the periods. For the purposes of this pro forma, it is assumed that the
bridge financing will be replaced with debt at similar rates of interest.
F-63
