<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
AMENDMENT TO FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
AMENDMENT NO. 1
Date of Report (Date of earliest event reported): March 28, 1996
Dataware Technologies, Inc
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-21860 06-1232140
- - -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File number) Identification No.)
222 Third Street, Cambridge MA 02142
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 621-0820
-----------------------------
1
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or portions of its Current Report on Form 8-K (Date of
Report: January 10, 1996) as set forth in the pages attached hereto:
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
-----------------------------------------
This item is amended to include the following:
1. Report of Independent Accountants
2. Balance Sheets at March 28, 1996 (unaudited), March 31, 1995 and
January 31, 1994 and 1993
3. Statements of Operations for the period from April 1, 1995 to March
28, 1996 (unaudited), February 1, 1994 to March 31, 1995 and for the
years end January 31, 1994 and 1993
4. Statements of Stockholders' Equity for the period from April 1,
1995 to March 28, 1996 (unaudited), February 1, 1994 to March 31,
1995 and for the years ended January 31, 1994 and 1993
5. Statements of Cash Flow for the period from April 1, 1995 to March
28, 1996 (unaudited), February 1, 1994 to March 31, 1995 and for the
years ended January 31, 1994 and 1993
6. Notes to Financial Statements for the period from April 1, 1995 to
March 28, 1996 (unaudited), February 1, 1994 to March 31, 1995 and
for the years ended January 31, 1994 and 1993
(b) Pro Forma Financial Information
-------------------------------
1. Introductory Information
2. Unaudited Pro Forma Consolidated Balance Sheet as of December 31,
1995
3. Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 1995
4. Notes to Unaudited Pro Forma Consolidated Financial Statements
(c) Exhibits: None
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Annual report
for the year ended 31 January 1994
Pages
Directors and advisers 1
Directors' report 2
Report of the auditors 5
Profit and loss account 6
Balance sheet 7
Cash flow statement 8
Notes to the financial statements 10
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Directors and advisers
Directors Registered auditors
C T Edge (Chairman) Coopers & Lybrand
A R Lowrey 9 Greyfriars Road
J Tuck Reading
Berkshire RG1 1JG
Secretary and registered office Bankers
R J Rosedale Barclays Bank plc
Sutton House Marcham Road
174 Milton Park Abingdon
Abingdon Oxon OX14 1UB
OX14 4SE
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Directors' report
for the year ended 31 January 1994
The directors present their report and the audited financial statements for the
year ended 31 January 1994.
Change of name
On 1 February 1994 the company changed its name from Harwell Computer Power
Limited to Status/IQ Limited.
Principal activities
The principal activity of the company is unchanged from last year, and is the
marketing and technical support of computer software and computer technology in
the field of information management, or text retrieval, and the development of
new products and related consultancy services.
Review of business and future developments
The company made an operating profit of (POUNDS)73,000 before research and
development costs which gave rise to an overall loss of (POUNDS)406,000 for the
year. These overall losses continued for the first half of the new financial
year.
However, following the appointment of a new Chairman and management team, the
company has undergone a thorough reappraisal. Further significant investment
funds have been raised enabling the company to further exploit its products
strengths and market position. This was completed in early November.
The company continues to develop its product base. UK sales growth is being
maintained and overseas sales are particularly strong since the release of
foreign language versions of the company's products.
The company is trading profitably and has good prospects for continuing to do
so.
The company will continue to capitalise on its commercial strengths and to
invest in a new generation of information retrieval software.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Directors
The directors who served during the year were as follows:
P B Plant (Chairman) (appointed 16 September 1993)
J M T Dawson
P I Groves (Mrs)(resigned 5 November 1993)
D J Kendall (resigned 30 July 1993)
K A B Payne (resigned 18 May 1993)
R G Sowden (resigned 30 September 1993)
Since the year end the following changes have taken place:
On 23 June 1994 Ms M Towner was appointed a director and resigned on
12 August 1994
On 6 July 1994 Mr C T Edge was appointed Chairman and Mr P B Plant
resigned as a director
On 22 July 1994 Mr A R Lowrey was appointed a director
On 13 September 1994 Mr J M T Dawson resigned as a director
On 6 December 1994 Mr J Tuck was appointed a director
Directors' interests
None of the directors serving at 31 January 1994 had any interest in the share
capital of the company at that date.
Insurance of directors
The company maintains insurance for the directors in respect of their duties as
directors.
Directors' responsibilities
The directors are required by UK company law to prepare financial statements for
each financial year that give a true and fair view of the state of affairs of
the company as at the end of the financial year and of the profit or loss for
that period.
The directors confirm that suitable accounting policies have been used and
applied consistently and reasonable and prudent judgements and estimates have
been made in the preparation of the financial statements for the year ended 31
January 1994. The directors also confirm that applicable accounting standards
have been followed and that the financial statements have been prepared on the
going concern basis for the reasons set out in note 20.
The directors are responsible for keeping proper accounting records, for taking
reasonable steps to safeguard the assets of the company and to prevent and
detect fraud and other irregularities.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Auditors
A resolution to reappoint the auditors, Coopers & Lybrand, will be proposed at
the annual general meeting.
By order of the board
R J ROSEDALE
Secretary
31 January 1995
<PAGE>
Report of the auditors to the members of
Status IQ Limited
(formerly Harwell Computer Power Limited)
We have audited the financial statements on pages 6 to 21.
Respective responsibilities of directors and auditors
As described on page 3 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Basis of preparation of financial statements
The financial statements have been prepared on a going concern basis. In forming
our opinion we have considered the adequacy of disclosures made in note 20 to
the financial statements regarding financing. In view of the significance of
the uncertainty referred to therein we consider that note 20 should be drawn to
your attention but our opinion is not qualified in this respect.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs at 31 January 1994 and of its loss and cash flows for
the year then ended and have been properly prepared in accordance with the
Companies Act 1985.
Coopers & Lybrand
Chartered Accountants and Registered Auditors
Reading
22 February 1995
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Profit and loss account
for the year ended 31 January 1994
<TABLE>
Notes 1994 1993
(pounds) (pounds)
<S> <C> <C> <C>
Continuing operations
Turnover 2 1,874,299 1,610,155
Exceptional income 3 -- 151,000
Operating expenses 4 (2,270,190) (1,807,008)
----------- -----------
Operating loss (395,891) (45,853)
Interest (expense)/income 5 (10,522) 6,666
---------- -----------
Loss on ordinary activities
before taxation 6 (406,413) (39,187)
Tax on ordinary activities 9 -- 6,888
----------- -----------
Loss for the financial year 16 (406,413) (32,299)
=========== ===========
</TABLE>
The company has no recognised gains and losses other than the losses shown above
and therefore no separate statement of total recognised gains and losses had
been presented.
There is no difference between the loss on ordinary activities before taxation
and the retained loss for the year stated above, and their historical cost
equivalents.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Balance sheet at 31 January 1994
<TABLE>
1994 1993
Notes (pounds) (pounds)
<S> <C> <C> <C>
Fixed assets
Tangible assets 10 194,473 217,420
Investment in subsidiary 11 2 2
--------- ---------
194,475 217,422
--------- ---------
Current assets
Debtors 12 603,441 671,289
Cash at bank and in hand 300,109 141,420
--------- ---------
903,550 812,709
--------- ---------
Creditors: amounts falling due
within one year 13 (928,839) (582,979)
--------- ---------
Net current (liabilities)/assets (25,289) 229,730
--------- ---------
Total assets less current liabilities 169,186 447,152
--------- --------
Creditors: amounts falling due after
more than one year 14 (133,751) (5,304)
--------- ---------
Net assets 35,435 441,848
========= =========
Capital and reserves
Called up share capital 15 1,550,000 1,550,000
Profit and loss account (deficit) 16 (1,514,565) (1,108,152)
---------- ----------
Shareholders' funds 35,435 441,848
========== ==========
</TABLE>
The financial statements on pages 6 to 21 were approved by the board of
directors on 31 January 1995 and were signed on its behalf by:
A R LOWREY C T EDGE
Director Director
<PAGE>
Status/IQ Limited 8
(formerly Harwell Computer Power Limited)
Cash flow statement
for the year ended 31 January 1994
<TABLE>
<CAPTION>
Note 1994 1993
(Pounds) (Pounds)
<S> <C> <C> <C>
Net cash outflow from operating activities (187,067) (20,149)
--------- --------
Returns on investments and servicing of finance
Interest received 1,199 16,738
Interest paid (10,726) (8,502)
Interest paid on finance leases (995) (1,570)
--------- --------
Net cash (outflow)/inflow from returns on
investments and servicing of finance (10,522) 6,666
--------- ---------
Taxation
Corporation tax recovered/(paid) 6,888 (6,888)
-------- --------
Investing activities
Purchase of tangible fixed assets (60,881) (52,693)
Sale of tangible fixed assets 2,168 3,500
---------- --------
Net cash outflow from investing activities (58,713) (49,193)
---------- ---------
Net cash outflow before financing (249,414) (69,564)
--------- ---------
Financing
Issue of debentures 175,000 -
Other loans 204,286 -
Repayment of loan - (50,000)
Payment of principal under finance leases (4,872) (4,243)
-------- ----------
Net cash inflow/(outflow) from financing 374,414 (54,243)
-------- ----------
Increase/(decrease) in cash and cash equivalents 18 125,000 (123,807)
======= =======
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Reconciliation of operating loss to net cash outflow
from operating activities
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Operating loss (395,891) (45,853)
Depreciation of tangible fixed assets 82,050 83,693
(Profit)/loss on sale of fixed assets (390) 2,245
Decrease/(increase) in debtors 60,960 (7,851)
Increase/(decrease) in creditors 66,204 (52,383)
------- ------
Net cash outflow from operating activities (187,067) (20,149)
------- ------
------- ------
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Notes to the financial statements
for the year ended 31 January 1994
1 Principal accounting policies
The financial statements have been prepared in accordance with applicable
Accounting Standards in the United Kingdom. A summary of the more important
accounting policies which have been applied consistently, is set out below.
Basis of accounting and consolidation
The financial statements are prepared in accordance with the historical cost
convention. The financial statements of the subsidiary have not been
consolidated because the amounts involved are not material, and to do so would
be of no real value to shareholders.
Research and development
Research and development expenditure is written off in the period it is incurred
where it does not meet the accepted criteria for deferral to future periods.
Tangible fixed assets
Tangible fixed assets are stated at their purchase cost, and are depreciated
over their estimated useful lives at the following annual rates of depreciation
provided on a straight line basis:
Office equipment and furniture 10%-33%
Computer hardware 20%
Computer software 33%
Finance and operating leases
Costs in respect of operating leases are charged on a straight line basis over
the lease term. Leasing agreements which transfer to the company substantially
all the benefits and risks of ownership of an asset, are treated as if the asset
had been purchased outright. The assets are included in 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 in proportion to the reducing
capital element outstanding. Assets held under finance leases depreciated over
the shorter of the lease terms and the useful lives of equivalent owned assets.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
Foreign currency amounts
Transactions denominated in foreign currencies are translated into sterling at
exchange rates ruling at the date of the transactions. Foreign currency assets
and liabilities are translated into sterling at the rates ruling at the date of
the balance sheet. All exchange differences are taken to the profit and loss
account in the year in which they arise.
Turnover
Income (exclusive of value added tax) is recognised on the following bases:
Direct software sales are recognised when a program is delivered and
invoiced, a licence agreement has been signed where appropriate and,
where applicable, the program has been accepted by the customer.
Royalty income from distributors is recognised on the basis of returns
made by distributors for the grant of sub-licences within the relevant
financial period.
Maintenance income is recognised by reference to the period over which
it is earned, future income being carried forward as deferred revenue.
Consultancy and other income is recognised over the period over which it
is earned in a manner appropriate to the risk and stage of completion of
each contract.
Deferred taxation
Deferred taxation, computed under the liability method, is provided for to the
extent that it is probable that a liability will crystallise.
Contributions to pension funds
Charges to the profit and loss account in respect of contributions are made in
accordance with the recommendations of actuaries.
2 Turnover
The analysis of turnover by geographical area has not been given.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
3 Exceptional income
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Communication of future
royalty income -- 90,000
Compensation for cancellation of
a trading agreement -- 61,000
---------- ---------
-- 151,000
========== =========
</TABLE>
4 Operating expenses
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Distribution and marketing costs 830,495 699,005
Administrative expenses 960,255 656,003
Research and development costs 479,440 452,000
---------- ----------
2,270,190 1,807,008
========== ==========
</TABLE>
5 Interest (expense)/income
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Bank interest receivable 1,199 16,738
Less: Interest payable
On bank overdraft repayable within
5 years not by installments (4,684) (1,210)
On medium term loan repayable within
5 years by installments (1,250) (7,292)
On loan stock (4,792) --
On finance leases (995) (1,570)
---------- ----------
Interest/(expense) income (10,522) 6,666
========== ==========
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
6 Loss on ordinary activities before taxation
Loss on ordinary activities before taxation is stated after charging:
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Depreciation of tangible fixed assets 82,050 83,693
Auditors' remuneration - for audit 13,750 10,750
- for other services 4,763 18,189
Hire of plant and machinery -
operating leases 116,036 97,142
Hire of other assets - operating leases 77,233 88,400
</TABLE>
7 Directors' emoluments
The remuneration of the directors (including pension contributions) comprises:
<TABLE>
<CAPTION> 1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Fees 22,500 12,035
Other emoluments 132,962 156,388
Compensation for loss of office 7,500 --
-------- --------
162,962 168,423
======== ========
</TABLE>
Remuneration includes amounts paid to shareholder representatives and third
parties for making available the services of persons as directors.
Fees and other emoluments (excluding pension contributions) include amounts paid
to:
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
The chairmen 35,000 9,805
======== ========
The highest-paid director 45,317 56,503
======== ========
</TABLE>
<PAGE>
Status /IQ Limited
(formerly Harwell Computer Power Limited)
7 Directors' emoluments - continued
The number of directors (including the chairmen and highest paid director) who
received fees and emoluments (excluding pension contributions) in the following
ranges was:
<TABLE>
<CAPTION>
1994 1993
Number Number
<S> <C> <C>
(pounds)0 to (pounds)5,000 -- 3
(pounds)5,001 to (pounds)10,000 2 2
(pounds)15,001 to (pounds)20,000 1 --
(pounds)20,001 to (pounds)25,000 1 --
(pounds)25,001 to (pounds)30,000 1
(pounds)40,001 to (pounds)45,000 2
(pounds)45,001 to (pounds)50,000 1 --
(pounds)55,001 to (pounds)60,000 1
</TABLE>
8 Employee information
<TABLE>
<CAPTION>
1994 1993
Number Number
<S> <C> <C>
Average weekly number of persons (including
executive directors) employed during the year 30 34
== ==
</TABLE>
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Staff costs (for the above persons):
Wages and salaries 762,772 752,925
Social security costs 76,022 89,788
Other pension costs (see note 23) 42,501 45,931
-------- --------
881,295 888,644
======== ========
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
9 Tax on ordinary activities
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
United Kingdom corporation tax at 33%
(1993: 33%)
Current -- 6,888
-------- --------
Credit for the year -- 6,888
======== ========
</TABLE>
At 31 January 1994 unabsorbed tax losses (which are subject to agreement with
the Inland Revenue) estimated to amount to (pounds)825,000 (1993:
(pounds)445,000) are carried forward for future relief against profits from the
same trade. There is no actual or potential liability for deferred taxation at
31 January 1994 or 1993, timing differences at those dates resulting in
unrecognised assets.
10 Tangible fixed assets
<TABLE>
<CAPTION>
Office
equipment Computer
and furniture equipment Total
(pounds) (pounds) (pounds)
<S> <C> <C> <C>
Cost
At 1 February 1993 182,695 434,327 617,022
Additions 10,302 50,579 60,881
Disposals (50,455) (50,455)
------- ------- -------
At 31 January 1994 192,997 434,451 627,448
------- ------- -------
Depreciation
At 1 February 1993 93,560 306,042 399,602
Charge for year 23,322 58,728 82,050
Disposals -- (48,677) (48,677)
------- ------- -------
At 31 January 1994 116,882 316,093 432,975
------- ------- -------
Net book value
At 31 January 1994 76,115 118,358 194,473
======= ======= =======
At 31 January 1993 89,135 128,285 217,420
======= ======= =======
</TABLE>
The net book value of tangible fixed assets includes an amount of (pounds)5,433
(1993: (pounds)11,744) in respect of assets held under finance leases.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
11 Investment in subsidiary company
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Shares at cost 2 2
======== ========
</TABLE>
The company owns the whole of the issued share capital of Harwell Computer
Research Limited, which is incorporated in the United Kingdom. The subsidiary
is not consolidated because it is dormant, and its net assets only amount to
(Pounds)2.
12 Debtors
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Amounts falling due within one year
Trade debtors 497,110 573,498
Prepayments and accrued income 106,331 90,903
Corporation tax recoverable -- 6,888
-------- --------
603,441 671,289
======== ========
</TABLE>
13 Creditors: amounts falling due within one year
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Bank overdraft (secured) 33,689 --
Debenture loans (secured) 175,000 --
Other loans 95,535 25,000
Obligations under finance leases 5,049 4,617
Trade creditors 124,540 202,087
Other taxation and social security payable 137,491 67,622
Other creditors 151,795 97,580
Deferred revenue 205,740 186,073
-------- --------
928,839 582,979
======== ========
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
13 Creditors: amounts falling due within one year-continued
The bank overdraft and debenture loans are secured by fixed and floating charges
over the assets of the company.
Debenture loans were redeemable at par on 31 August 1994 and bore interest at
10% per annum. Since the year end the debenture holders have confirmed to the
company that it is not their intention to enforce repayment of the principal
(including a further (Pounds)75,000 taken up after the year end) up to 31
December 1995 and that payment of interest will only be requested subject to
there being sufficient liquid cash flow. However, they expressly reserve their
rights under the Trust Deed to make immediate demand in respect of all monies
and liabilities owing upon the happening of any other specified event of default
under the Trust Deed and additionally reserve these rights in the event of a
sale of 30% or more of the issued share capital.
Other loans, including those that fall due after more than one year (see also
note 14), which were owed to a former shareholder, were repayable in twelve
equal monthly instalments of (Pounds)19,107 commencing on 7 September 1994 and
bore interest at 2% above National Westminster Bank plc's base rate. Since the
year end these loans have been waived.
14 Creditors: amounts falling past due after more than one year
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Other loans owed to a former shareholder (repayable between one
and two years) 133,751 -
Obligations under finance losses - 5,304
------- -----
133,751 5,304
======= =====
<CAPTION>
The net finance lease obligations to which the company is committed are:
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
In one year or less 5,049 4,617
Between one and two years - 5,304
----- -----
5,049 9,921
===== =====
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
15 Called-up share capital
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
<S> <C> <C>
Authorised
Ordinary shares of (pounds)1 each 900,000 900,000
Cumulative redeemable
preference shares of (pounds)1 each 1,100,000 1,100,000
--------- ---------
2,000,000 2,000,000
========= =========
Alloted, called up and fully paid
Ordinary shares of (Pounds)1 each 450,000 450,000
Cumulative redeemable preference shares
of (Pounds)1 each 1,100,000 1,100,000
--------- ---------
1,550,000 1,550,000
========= =========
</TABLE>
The company shall be entitled to redeem at par all or any of the preference
shares. The preference shares in issue of (pounds)1,100,000 were due for
redemption on 31 December 1993 but have been carried forward for redemption at
an appropriate time without affecting the adequacy of working capital.
In each year commencing 1 August 1989 the holders of preference shares shall be
entitled to be paid out of the profits of the company available for dividend a
fixed preferential dividend of 10% per annum in priority to any other
shareholders, such dividend being paid half yearly, the first payment falling
due on 31 January 1990. Due to insufficiency of profits available for dividend
these could not be paid, and therefore the cumulative arrears of dividend at 31
January 1994 amounted to (pound)605,428 (1993:(pound)446,873).
16 Profit and loss account (deficit)
<TABLE>
<CAPTION>
(pounds)
<S> <C>
At 1 February 1993 (1,108,152)
Loss for the year (406,413)
----------
At 31 January 1994 (1,514,565)
=========
</TABLE>
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
17 Reconciliation of movements in shareholders' funds
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Opening shareholders' funds 441,848 474,147
Loss for the financial year (406,413) (32,299)
------- -------
Closing shareholders' funds 35,435 441,848
======= =======
</TABLE>
18 Cash at bank and in hand
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Changes during the year:
At 1 February 1993 141,420 265,227
Net cash inflow/(outflow) 125,000 (123,807)
------- -------
At 31 January 1994 266,420 141,420
------- -------
</TABLE>
19 Analysis of changes in financing during the year
<TABLE>
<CAPTION>
1994 1993
Loans and Loans and
finance lease finance lease
obligations obligations
(pounds) (pounds)
<S> <C> <C>
At 1 February 1993 34,921 89,164
Repayments of principal on finance leases (4,872) (4,243)
Loan repayments - (50,000)
Loans advanced 379,286 -
------- -------
At 31 January 1994 409,335 34,921
======= ======
</TABLE>
20 Financing
As set out in Note 13, since the year end the debenture holders have confirmed
their intention not to seek repayment of the principal of (pounds)250,000 up to
31 December 1995 and to defer requests for payment of interest. Both principal
and interest are repayable on demand only in certain circumstances. Other loans
amounting to (pounds)229,286 have been waived. A new (pounds)190,000 20% 1996
debenture stock facility has been taken up to provide additional working
capital, of which (pounds)120,000 has been drawn to date.
The company meets its day to day working capital requirements through debenture
stock and an overdraft facility (which is repayable on demand) which has been
agreed through to 31 January 1996.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
20 Financing-continued
The company is operating within these agreed overall facilities and the
directors, on the basis of cashflow projections, expect it to be able to
continue doing so for the next twelve months.
However, the margin of facilities over requirements in the short term is not
large. Whilst the directors recognise this, based on the company's plans and
continued deferment of debenture repayments, they consider it appropriate to
prepare the financial statements on the going concern basis. The financial
statements do not include any adjustments that would result from a withdrawal of
the overdraft facility by the company's bankers or a demand for immediate
repayment of the debenture loan of (pounds)250,000 and accrued interest.
21 Capital commitments
<TABLE>
<CAPTION>
1994 1993
(pounds) (pounds)
<S> <C> <C>
Capital expenditure that has been contracted for but has not been
provided for in the financial statements 15,000 -
======== =======
Capital expenditure that has been authorised by the directors but
has not yet been contracted for 248,000 -
======= =======
</TABLE>
22 Pension commitments
The company operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the company in an independently
administered fund. The pension scheme charge represents contributions payable by
the company to the scheme and amounted to (pounds)42,501(1993:(pounds)45,931).
No contributions were payable to the scheme at either year end.
<PAGE>
Status/IQ Limited
(formerly Harwell Computer Power Limited)
23 Financial commitments
<TABLE>
<CAPTION>
At 31 January 1994 the company had annual commitments under non-cancellable
operating leases as follows:
<CAPTION>
1994 1993
Land and Other Land and Other
buildings buildings
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Expiring within one year 12,500 27,276 88,400 25,000
Expiring between two and five
years inclusive -- 69,356 -- 69,353
--------- -------- --------- --------
12,500 96,632 88,400 94,353
========= ======== ========= ========
</TABLE>
24 Ultimate parent company
The holding company of Status/IQ Limited is Entrust Nominees Limited which holds
the shares in Status/IQ Limited on trust for and on behalf of the New Court
Ventures Fund. The New Court Ventures Fund is an unauthorised closed end unit
trust which is ultimately owned by a number of pension funds.
<PAGE>
STATUS/IQ LIMITED
-----------------
DIRECTORS' REPORT AND ACCOUNTS
------------------------------
FOR THE PERIOD ENDED
--------------------
31ST MARCH 1995
---------------
M. J. Ventham & Co.,
CHARTERED ACCOUNTANTS
-----------------------
63 Lincoln's Inn Fields,
London, WC2A 3JX
------------------------
<PAGE>
STATUS/IQ LIMITED
-----------------
<TABLE>
<S> <C> <C>
DIRECTORS: C.T. Edge - Chairman (Appointed 6.7.94)
- - --------- A.R. Lowrey - (Appointed 22.7.94)
J. Tuck - (Appointed 6.12.94)
M. Towner - (Appointed 23.6.94,
Resigned 12.8.94)
P.B. Plant - (Resigned 6.7.94)
J.M.T. Dawson - (Resigned 13.9.94)
SECRETARY: R.J. Rosedale
- - ---------
</TABLE>
REGISTERED OFFICE: Sutton House, 174 Milton Park, Abingdon, OX14 4JE.
- - -----------------
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
Directors' Report 1 - 2
Auditors' Report 3
Balance Sheet 4
Profit and Loss Account 5
Cash Flow Statement 6
Notes to the Accounts 7 - 21
</TABLE>
<PAGE>
STATUS/IQ LIMITED
-----------------
DIRECTORS' REPORT
-----------------
The directors have pleasure in submitting their annual report and the
audited accounts for the period ended 31st March, 1995.
DIRECTORS' RESPONSIBILITIES
- - ---------------------------
Company law requires the directors to prepare financial statements for
each financial year which give a true and fair view of the state of affairs of
the company and of the profit or loss of the company for that period. In
preparing those financial statements, the directors are required to:
. select suitable accounting policies and then apply them consistently;
. make judgements and estimates that are reasonable and prudent;
. comply with applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
. prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for maintaining proper accounting records
which disclose with reasonable accuracy at any time the financial position of
the company and enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
CHANGES IN PRESENTATION OF THE FINANCIAL STATEMENTS
- - ---------------------------------------------------
Following the introduction of Financial Reporting Standard No. 4,
"Capital Instruments", changes in the presentation of the financial statements
have been made to conform with the new requirements. Shareholders' funds have
been analysed between equity interests and non-equity interests, and dividends
on redeemable preference shares have been accrued for.
PRINCIPAL ACTIVITY
- - ------------------
The principal activity of the company continued to be that of marketing
and technical support of computer software and computer technology in the field
of information management, or text retrieval, and the development of new
products and related consultancy services.
REVIEW OF BUSINESS
- - ------------------
A summary of the results of the years trading is given on page 5 of the
accounts.
The directors are disappointed with the loss for the period. Turnover
has risen marginally but restructuring costs have inhibited the profits of the
company. There has been a clinical review of the procedures adopted throughout
the company with the implementation of measures to improve efficiency in all
areas. The last two years have been extremely difficult, but the foundations
which have been laid should enable the company to face the future with optimism.
-1-
<PAGE>
STATUS/IQ LIMITED
-----------------
DIRECTORS' REPORT
-----------------
(Continued)
-----------
RESULTS AND DIVIDENDS
- - ---------------------
The net loss for the period after taxation was (Pounds)586,785
(1994:Loss (Pounds)406,413). This has been taken to reserves.
FIXED ASSETS
- - ------------
Details of the movements in the company's fixed assets are set out in
note 2 of the accounts.
INSURANCE EFFECTED FOR OFFICERS
- - -------------------------------
The company has maintained professional indemnity insurance for the
directors during the period.
DIRECTORS' INTERESTS
- - --------------------
None of the directors serving at 31st March, 1995 had any interest in
the share capital of the company at that date.
AUDITORS
- - --------
The company's previous auditors, Messrs. Coopers & Lybrand, resigned
during the period. Messrs. M.J. Ventham & Co. were appointed to fill the
vacancy. They have signified their willingness to continue in office and a
resolution to re-appoint them will be proposed at the annual general meeting.
Signed on behalf of the board
R. J. Rosedale
27th March, 1996 Secretary
- - ---------------- ---------
-2-
<PAGE>
STATUS/IQ LIMITED
-----------------
AUDITORS' REPORT TO THE SHAREHOLDERS
------------------------------------
We have audited the financial statements on pages 4 to 21 which have
been prepared following the accounting policies set out on pages 7 and 8.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
- - -----------------------------------------------------
As described on page 1, the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on these statements and to report our
opinion to you.
BASIS OF OPINION
- - ----------------
We conducted our audit in accordance with Auditing Standards issued by
the Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Fundamental Uncertainty-Going Concern
In forming our opinion, we have considered the adequacy of the
disclosures made in the financial statements concerning the going concern
position of the company. As stated in note 1A the validity of the company's
going concern position is dependent on the financial support and intentions of
the potential purchasers of the share capital and debenture stock. If the sale
should not proceed then the going concern assumption is dependent on the
continued support of the company's bankers and existing debenture holders,
together with the ongoing profitability of the company. In view of the
significance of these uncertainties we consider that note 1A should be drawn to
your attention but our opinion is not qualified in this respect.
OPINION
- - -------
In our opinion the financial statements give a true and fair view of the
state of the company's affairs as at 31st March, 1995 and of its loss for the
period then ended and have been properly prepared in accordance with the
Companies Act 1985.
27th March, 1996
- - ----------------
M. J. Ventham & Co.,
63 Lincoln's Inn Fields,
London, CHARTERED ACCOUNTANTS
WC2A 3JX. and Registered Auditors
- - ----------------------- -----------------------
-3-
<PAGE>
STATUS/IQ LIMITED
-----------------
BALANCE SHEET AS AT 31ST MARCH, 1995
------------------------------------
<TABLE>
<CAPTION>
Note 1995 1994
---- ---- ----
FIXED ASSETS
- - ------------
<S> <C> <C> <C>
Tangible Assets 1D & 2A 211,071 194,473
Investment in Subsidiary 2C 2 2
------- -------
211,073 194,475
CURRENT ASSETS
- - --------------
Debtors 3 366,576 603,441
Cash at Bank and in Hand 2,372 300,109
----- -------
368,948 903,550
CREDITORS:amounts falling 4 (761,371) (928,839)
- - --------- ------- -------
due within one year
NET CURRENT (LIABILITIES) (392,423) (25,289)
- - ------------------------- ------- ------
TOTAL ASSETS LESS CURRENT LIABILITIES (181,350) 169,186
- - -------------------------------------
CREDITORS: amounts falling due
- - ---------
after more than one year 5 (370,000) (133,751)
(pounds)(551,350) (pounds)35,435
======= ======
CAPITAL AND RESERVES
- - --------------------
Called Up Share Capital 9 1,550,000 1,550,000
Profit and Loss Account (2,101,350) (1,514,565)
--------- ---------
SHAREHOLDERS' FUNDS 19 (pounds)(551,350) (pounds) 35,435
- - ------------------- ------- -------
Analysed As:
Equity Interests (2,666,255) (1,669,993)
Non-Equity Interests 2,114,905 1,705,428
--------- ---------
(pounds)(551,350) (pounds) 35,435
========= =========
</TABLE>
Signed on behalf of the board
J. Tuck, Esq. )
) Directors
C. T. Edge, Esq. )
These accounts were approved by the board of directors on 27th March, 1996.
-4-
<PAGE>
STATUS/IQ LIMITED
-----------------
PROFIT AND LOSS ACCOUNT
-----------------------
FOR THE PERIOD ENDED 31ST MARCH, 1995
-------------------------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
Note 31.3.95 31.1.94
---- ------- -------
As Restated
<S> <C> <C> <C>
Turnover 1J & 10 1,941,713 1,874,299
Operating Expenses 11 (2,452,161) (2,270,190)
--------- ---------
Operating Loss 12 & 13 (510,448) (395,891)
Interest Receivable -- 1,199
Interest Payable and
Similar Charges 17 (76,337) (11,721)
--------- ---------
(76,337) (10,522)
--------- ---------
Loss on Ordinary Activities
before Taxation (586,785) (406,413)
Taxation 8 -- --
--------- ---------
Loss on Ordinary Activities
after Taxation (586,785) (406,413)
Dividends Attributable to
Non-Equity Interests 25 (209,477) (158,555)
-------- --------
Loss for the Financial Year 20 (Pounds)(796,262) (Pounds)(564,968)
======== ========
</TABLE>
CONTINUING OPERATIONS
- - ---------------------
None of the company's activities were acquired or discontinued during
the above two financial years.
TOTAL RECOGNISED GAINS AND LOSSES
- - ---------------------------------
The company has no recognised gains or losses other than the profit or
loss for the above two financial years.
5
<PAGE>
STATUS/IQ LIMITED
CASH FLOW STATEMENT FOR THE PERIOD ENDED 31ST MARCH 1995
--------------------------------------------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
Note 31.3.95 31.1.94
---- ------- -------
<S> <C> <C> <C>
NET CASH OUTFLOW FROM
- - ---------------------
OPERATING ACTIVITIES 21 (352,796) (187,067)
--------------------
RETURNS ON INVESTMENTS
- - ----------------------
AND SERVICING OF FINANCE
------------------------
Interest Received -- 1,199
Interest Paid (6,950) (10,726)
Interest Element of Finance
Lease Rental Payments (188) (995)
-------- --------
NET CASH OUTFLOW FROM
- - ---------------------
RETURNS ON INVESTMENTS
----------------------
AND SERVICING OF FINANCE (7,138) (10,522)
------------------------
TAXATION
- - --------
Corporation Tax Refunded -- 6,888
TAX REFUNDED -- 6,888
- - ------------
INVESTING ACTIVITIES
- - --------------------
Purchase of Tangible Fixed Assets (166,246) (60,881)
Sale of Tangible Fixed Assets 10,691 2,168
------- --------
NET CASH OUTFLOW FROM
- - ---------------------
INVESTING ACTIVITIES (155,555) (58,713)
-------------------- -------- --------
NET CASH OUTFLOW BEFORE FINANCING (515,489) (249,414)
- - ---------------------------------
FINANCING
- - ---------
Issue of Debentures 195,000 175,000
Other Loans -- 204,286
Finance Lease and Hire
Purchase Repayments (5,049) (4,872)
------- --------
NET CASH INFLOW
- - ---------------
FROM FINANCING 189,951 374,414
-------------- -------- --------
(DECREASE/INCREASE IN CASH
- - --------------------------
AND CASH EQUIVALENTS 22,23 (Pounds)(325,538) (Pounds)(125,000)
-------------------- ======== ========
</TABLE>
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
1. ACCOUNTING POLICIES
-------------------
(A) These accounts have been prepared under the historical cost convention
and in accordance with applicable accounting standards.
The financial statements have been prepared on the going concern basis
which assumes that the company will continue in operational existence
for the foreseeable future having adequate funds to meet its obligations
as they fall due.
The shareholders are presently in final negotiations with a third party
to sell the ordinary and preference share capital together with the
debenture stock. The completion is imminent and the company's continued
existence is dependent on the future financial support and intentions of
the potential purchaser.
If the sale should not proceed then the validity of the going concern
assumption is dependent on:
(i) The continued support of the company's principal bankers and
debenture holders, full details of which are shown in note 6.
(ii) The cessation of operating losses and a return to profitability.
If the company were unable to continue in operational existence,
adjustments would have to be made to reduce the balance sheet values of
assets to their recoverable amounts and to provide for further
liabilities which might arise. Additionally, further adjustments would
have to be made to reclassify fixed assets and long term liabilities as
current assets and current liabilities respectively.
Although the outcome of the matters set out above remains inherently
uncertain, the directors have considered the adequacy of working capital
facilities available to the company and are satisfied that it is
appropriate for the financial statements to be prepared on the going
concern basis at this time. Nonetheless, there can be no assurance that
the company will not be forced into liquidation.
(B) The company has adopted the provisions of FRS 4 "Capital Instruments".
Accordingly, the amount of shareholders' funds attributable to equity
and non-equity interests has been separately disclosed. A prior year
adjustment has been made for the accrued dividend payable on the
redeemable preference shares issued by the company and they have been
classified as non-equity interests.
The dividend payable on the preference shares has been charged to the
profit and loss account in accordance with this Standard; and credited
to the profit and loss reserve as it will not be paid in the foreseeable
future.
(C) Research and development expenditure is written off in the period it is
incurred where it does not meet the accepted criteria for deferral to
future periods.
- 7 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
1. ACCOUNTING POLICIES - Continued
-------------------------------
(D) Depreciation is calculated to write off the cost less estimated residual
value of fixed assets on a straight line basis over their estimated
useful lives using the following rates per annum:-
Office Equipment, Furniture,
Fixtures and Fittings 10% - 30%
Computer Hardware 20%
Computer Software 33%
(E) Deferred tax is provided in respect of the tax effect of all timing
differences, to the extent that it is probable that a liability or asset
will crystallise in the foreseeable future, at the rates of tax expected
to apply when the timing differences reverse.
(F) Assets obtained under finance leases are capitalised in the balance
sheet and are depreciated over the shorter of the lease terms and their
useful lives.
The capital element of future lease payments is included in creditors
and the interest element is charged to the profit and loss account over
the period of the leases in proportion to the balance of capital
repayments outstanding.
Rentals payable under operating leases are charged to the profit and
loss account on a straight line basis over the lease terms.
(G) Contributions to employees' personal pension schemes are charged to the
profit and loss account to the period in which they relate.
(H) Transactions denominated in foreign currencies are translated into
sterling at exchange rates ruling at the date of the transactions.
Foreign currency assets and liabilities are translated into sterling at
the date of the balance sheet. All exchange differences are taken to the
profit and loss account in the year in which they arise.
(I) The accounts present information about Status/IQ Limited as an
individual undertaking and not as the parent of a group. The company is
exempt under Section 229(2) of the Companies Act 1985 from the
requirement to prepare group accounts on the grounds that inclusion is
not material.
- 8 -
<PAGE>
STATUS/IO LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
1. ACCOUNTING POLICIES - Continued
-------------------------------
(J) Turnover (exclusive of value added tax and trade discounts) is
recognised on the following bases:
Direct software sales are recognised when a programme is delivered and
invoiced, a licence agreement has been signed where appropriate, and,
where applicable, the programme has been accepted by the customer.
Royalty income from distributors is recognised on the basis of returns
made by distributors for the grant of sub-licences within the relevant
financial period.
Maintenance income is recognised by reference to the period over which
it is earned, future income being carried forward as deferred revenue.
Consultancy and other income is recognised over the period over which
it is earned in a manner appropriate to the risk and stage of
completion of each contract.
2. FIXED ASSETS
------------
(A) TANGIBLE
<TABLE>
<CAPTION>
Office
Equipment
Furniture,
Fixtures & Computer
COST Fittings Equipment Total
---- --------------------------- -----
<S> <C> <C> <C>
At 1.2.94 192,997 434,451 627,448
Additions 25,978 140,268 166,246
Disposals (121,946) (168,824) (290,770)
-------------------------- -------
At 31.3.95 97,029 405,895 (Pounds)502,924
========================== =======
DEPRECIATION
------------
At 1.2.94 116,882 316,093 432,975
Provided in these Accounts 24,940 76,199 101,139
Provided on Disposals (90,918) (151,343) (242,261)
-------------------------- -------
At 31.3.95 50,904 240,949 (Pounds)291,853
========================== =======
NET BOOK VALUE
--------------
At 1.2.94 76,115 118,358 (Pounds)194,473
========================== =======
At 31.3.95 46,125 164,946 (Pounds)211,071
========================== =======
</TABLE>
-9-
<PAGE>
STATUS/IO LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
---------
2. FIXED ASSETS - Continued
------------------------
(A) TANGIBLE - Continued
--------------------
The net book value of tangible fixed assets includes items held under
finance leases and hire purchase contracts to the sum of (Pounds)Nil
(1994:(Pounds)5,433).
(B) DEPRECIATION
------------
The charge for the year has been adjusted in respect of the profit on
sale of fixed assets.
The amount involved is as follows:-
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Provided in these Accounts (Note 2A) 101,139 82,050
Loss on Disposal 37,818 (390)
------- ------
(Pounds)138,957 (Pounds)81,660
======= ======
</TABLE>
(C) INVESTMENT IN SUBSIDIARY COMPANY
--------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Shares at Cost (Pounds)2 (Pounds)2
= =
</TABLE>
The company owns the whole of the issued share capital of Harwell
Computer Power Limited, which is registered in England and Wales. The
subsidiary is not consolidated because it is dormant and its net
assets amount to (Pounds)2.
- 10 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
---------
3. DEBTORS
-------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Due within one year
Trade Debtors 310,603 497,110
Prepayments and Accrued Income 55,973 106,331
------- -------
(Pounds)366,576 (Pounds)603,441
======= =======
</TABLE>
4. CREDITORS: amounts falling due within one year
----------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Bank Loans and Overdrafts (Note 6) 61,490 33,689
Debenture Loans (Note 6) - 175,000
Other Loans - 95,535
Trade Creditors 229,097 124,540
Other Creditors including Taxation
and Social Security:-
Other Taxes and Social Security 52,174 137,491
Obligations under Finance Leases
and Hire Purchase Contracts (Note 7) - 5,049
Accruals and Deferred Income 418,610 357,535
------- -------
(Pounds)761,371 (Pounds)928,839
======= =======
</TABLE>
5. CREDITORS: amounts falling due after more than one year
-------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Other Loans owed to a Former Shareholder
(repayable between one and two years) - 133,751
Debenture Loans (Note 6) 370,000 -
------- -------
(Pounds)370,000 (Pounds)133,751
======= =======
</TABLE>
- 11 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
---------
6. BANK OVERDRAFT AND DEBENTURE LOANS
----------------------------------
The bank overdraft and debenture loans are secured by fixed and floating
charges over the assets of the company.
Debenture loans consist of:
(Pounds)250,000 10% Redeemable at par on 31st August, 1994
(Pounds)120,000 20% Redeemable at a premium of 16.66% on 9th November,
1996
During the year (Pounds)75,000 of 10% Redeemable debenture stock was issued
at par together with (Pounds)190,000 20% Redeemable debenture stock at par
of which only (Pounds)120,000 was subscribed to.
The holders of the debenture stocks have confirmed to the company that it
is not their intention to enforce repayment of the principal up to 31st
December, 1996 and that payment of interest will only be requested subject
to there being sufficient liquid cash flow. However, they expressly reserve
their rights under the Trust Deed to make immediate demand in respect of
all monies and liabilities owing upon the happening of any other specified
event or default under the Trust Deed, and additionally reserve these
rights in the event of a sale of 30% or more of the issued share capital.
The present shareholders are currently in discussions with potential buyers
and payment of the debenture stock may crystallise prior to 31st December,
1996. Under the draft sale agreement the new shareholders would purchase
the existing loan stock and it is considered that repayment would not be
sought until 31st December, 1996. As such they have been shown as payable
after 31st March, 1996.
The bank overdraft has been renewed until 31st January, 1997.
Analysis of debt maturity:
<TABLE>
<CAPTION>
1995 1994
---- ----
Bank Bank Debenture
Loans & Debenture Loans & & Other
Overdrafts Loans Total Overdrafts Loans Total
---------- ----- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Amounts payable:
In one year or less
or on demand 61,490 - 61,490 33,689 270,535 304,224
Between one and
two years - 370,000 370,000 - 133,751 133,751
------ ------- ------- ------ ------- -------
61,490 370,000 (Pounds)431,490 33,689 404,286 (Pounds)437,975
====== ======= ======= ====== ======= =======
</TABLE>
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
-----------
7. OBLIGATIONS UNDER LEASES AND HIRE PURCHASE CONTRACTS
----------------------------------------------------
(A) Obligations under finance leases and similar hire purchase contracts
are as follows:-
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Due within one year - 4,861
Less: Finance Charges allocated
----
to future periods - 188
------------- -------------
(Pounds) - (Pounds)5,049
============= =============
Hire Purchase Contracts and Finance Leases shown as:-
Current Obligations (Note 4) (Pounds) - (Pounds)5,049
============= =============
</TABLE>
(B) The company was committed to make lease payments under operating leases
during the twelve months following the period end as follows:-
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
Land and Land and
Buildings Other Buildings Other
--------- ----- --------- -----
<S> <C> <C> <C> <C>
On leases which expire:
Within one year - 41,571 12,500 27,276
In the second to fifth years
- - - inclusive 30,600 16,908 - 69,356
------ ------ ------ ------
30,600 58,479 (Pounds)12,500 (Pounds)96,632
====== ====== ====== ======
</TABLE>
<PAGE>
STATUS/TO LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
---------
8. TAXATION
--------
At 31st March, 1995 the company has substantial tax losses which can be
carried forward for future relief from the same trade.
There is no actual or potential liability for deferred taxation at 31st
March, 1995 or at 31st January, 1994, timing differences at these dates
resulting in unrecognised assets.
9. CALLED UP SHARE CAPITAL
-----------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Authorised
----------
Ordinary Shares of (Pounds)1 each 900,000 900,000
Cumulative Redeemable Preference
Shares of (Pounds)1 each 1,100,000 1,100,000
--------- ---------
(Pounds)2,000,000 (Pounds)2,000,000
========= =========
Issued and Fully Paid
---------------------
Ordinary Shares of (Pounds)1 each 450,000 450,000
Cumulative Redeemable Preference
Shares of (Pounds)1 each 1,100,000 1,100,000
--------- ---------
(Pounds)1,550,000 (Pounds)1,550,000
========= =========
</TABLE>
The company is entitled to redeem at par all or any of the preference shares
The preference shares in issue of (Pounds)1,100,000 were due for redemption
on 31st December, 1993 but have been carried forward for redemption at an
appropriate time without affecting the adequacy of working capital. In the
event of winding up the company, the preference shares rank first and would
be paid the original subscription price plus any arrears of dividend. They
have no voting rights.
-14-
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
-----------
9. CALLED UP SHARE CAPITAL - Continued
-----------------------------------
In each year commencing 1st August, 1989 the holders of preference shares
are to be paid out of the profits of the company available for dividend a fixed
preferential dividend of 10% per annum in priority to any other shareholders,
such dividend being paid half yearly, the first payment having fallen due on
31st January, 1990. Due to insufficiency of profits available for dividend these
could not be paid, and therefore the cumulative arrears of dividend at 31st
March, 1995 amounted to (Pounds)814,905 (1994: (Pounds)605,428).
10. SEGMENTAL INFORMATION
---------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
Turnover to:
United Kingdom 1,497,726 1,874,299
Rest of Europe 203,052 -
Other Markets 240,935 -
--------- ---------
(Pounds)1,941,713 (Pounds)1,874,299
========= =========
</TABLE>
The turnover, loss after taxation and net liabilities are all attributable
to the principal activity.
11. OPERATING EXPENSES
------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
Distribution Costs 684,964 830,495
Administrative Expenses 1,396,812 960,255
Research and Development Costs 370,385 479,110
--------- ---------
(Pounds)2,452,161 (Pounds)2,270,190
========= =========
</TABLE>
- 15 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
12. OPERATING RESULT
----------------
<TABLE>
<CAPTION>
This is stated after charging:
<S> <C> <C>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
Directors' Emoluments (Note 15) 209,200 162,962
Auditors' Remuneration
Audit Services 7,700 13,750
-Non-audit Services - 4,763
Depreciation (Note ID & 2B) 138,957 81,660
Operating Lease Rentals
-Land and Buildings 111,086 116,036
-Other 115,703 77,233
Research and Development 370,385 479,440
======= =======
</TABLE>
13. EXCEPTIONAL ITEMS
-----------------
During the period other loans which were owed to a former shareholder
totalling (Pounds)229,286 were waived as part of the company's financial
restructuring.
Reorganization costs were also incurred totalling (Pounds)103,328.
14. STAFF COSTS
-----------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
Wages and Salaries 932,584 762,772
Social Security Costs 94,674 76,022
Other Pension Costs (Note 18) 45,483 42,501
--------- --------
(Pounds)1,072,741 (Pounds)881,295
========= =======
</TABLE>
This includes remuneration paid to the directors.
-16-
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
-----------
15. DIRECTORS' EMOLUMENTS
---------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
For Services as Directors 20,440 22,500
For Other Services 188,760 132,962
Compensation for Loss of Office - 7,500
------- -------
(Pounds)209,200 (Pounds)162,962
======= =======
</TABLE>
Remuneration includes an amount of (Pounds)187,560 paid to shareholder
representatives and third parties for making available the services of
persons as directors.
Analysis, excluding pension scheme contributions:-
Chairman (Pounds)65,559 (Pounds)35,000
====== ======
Highest Paid Director (Pounds)66,549 (Pounds)45,317
====== ======
Others:-
<TABLE>
<CAPTION>
Number
------
<S> <C> <C>
(Pounds)0 - (Pounds)5,000 1 -
(Pounds)5,001 - (Pounds)10,000 - 2
(Pounds)15,001 - (Pounds)20,000 2 1
(Pounds)20,001 - (Pounds)25,000 - 1
(Pounds)25,001 - (Pounds)30,000 - 1
(Pounds)30,001 - (Pounds)35,000 1 -
(Pounds)45,001 - (Pounds)50,000 - 1
=== ===
</TABLE>
- 17 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
-----------
16. EMPLOYEE INFORMATION
--------------------
The average weekly number of persons employed by the company including
directors during the period was as follows:-
<TABLE>
<CAPTION>
Number
------
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
Management 3 3
Consultants 8 7
Technical and Development 13 11
Administration 3 2
Sales 8 7
--- ---
35 30
== ==
</TABLE>
17. INTEREST PAYABLE AND SIMILAR CHARGES
------------------------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
On bank overdraft repayable within
5 years not by instalments 6,950 4,684
On medium term loan repayable within
5 years by instalments - 1,250
On Loan Stock 69,199 4,792
On Finance Leases 188 995
(Pounds)76,337 (Pounds)11,721
====== ======
</TABLE>
18. PENSION SCHEME
--------------
The company pays pension contributions in respect of employee's personal
pension schemes. The pension cost charge represents contributions payable by
the company and amounted to (Pounds)45,483 (1994: (Pounds)42,501).
There were no outstanding or prepaid contributions at the balance sheet
date.
- 18 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
-----------
19. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
--------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Loss for the Period (586,785) (406,413)
Opening Shareholders' Funds 35,435 441,848
-------- --------
Closing Shareholders' Funds (Pounds)(551,350) (Pounds) 35.435
======== ========
</TABLE>
20. PROFIT AND LOSS RESERVE
-----------------------
<TABLE>
<CAPTION>
1995
----
<S> <C>
At 1st February, 1994 as
Previously Reported (1,514,565)
Prior Year Adjustment:
Dividends Attributable to Non-Equity Interests
Charged to Profit and Loss Account (605,428)
Dividend Attributable to Non-Equity Shares
Credited to Profit and Loss Reserve 605,428
----------
(1,514,565)
Retained Loss for the Period (796,262)
Dividend on Non-Equity Shares 209,477
----------
At 31st March, 1995 (Pounds)(2,101,350)
==========
</TABLE>
21. RECONCILIATION OF OPERATING PROFIT TO
-------------------------------------
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Operating Loss (510,448) (395,891)
Depreciation Charges 101,139 82,050
Loss/(Profit) on Sale of
Tangible Assets 37,818 (390)
Decrease in Debtors 236,865 60,960
Increase in Creditors 11,116 66,204
Loan Written Off (229,286) -
------- -------
Net Cash Outflow from Operating Activities (Pounds)(352,796) (Pounds)(187,067)
======= =======
</TABLE>
- 19 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTANTS
------------------------
(Continued)
-----------
22. ANALYSIS OF MOVEMENTS IN CASH AND CASH EQUIVALENTS
--------------------------------------------------
DURING THE PERIOD
-----------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Balance at 1st February, 1994 266,420 141,420
Net Cash (Outflow)/Inflow (325,538) 125,000
------- -------
Balance at 31st March, 1995 (Pounds)(59,118) (Pounds)266,420
====== =======
</TABLE>
23. ANALYSIS OF THE BALANCES OF CASH AND CASH
-----------------------------------------
EQUIVALENTS AS SHOWN IN THE BALANCE SHEET
-----------------------------------------
<TABLE>
<CAPTION>
Change
1995 1994 In Period
---- ---- ---------
<S> <C> <C> <C>
Cash at Bank and in Hand 2,372 300,109 (297,737)
Bank Overdraft (61,490) (33,689) (27,801)
------ ------ -------
(Pounds)(59,118) (Pounds)266,420 (Pounds)(325,538)
====== ======= =======
</TABLE>
24. ANALYSIS OF CHANGES IN FINANCING DURING THE PERIOD
--------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Loans and Finance Lease Obligations:-
Balance at 1st February, 1994 409,335 34,921
Repayments of Principal on Finance Leases (5,049) (4,872)
Debentures Issued 195,000 379,286
Loans Written Off (229,286) -
------- -------
Balance at 31st March, 1995 (Pounds)370,000 (Pounds)409,335
======= =======
</TABLE>
- 20 -
<PAGE>
STATUS/IQ LIMITED
-----------------
NOTES TO THE ACCOUNTS
---------------------
(Continued)
-----------
25. DIVIDENDS
---------
<TABLE>
<CAPTION>
1995 1994
---- ----
As Restated
-----------
<S> <C> <C>
Dividend on Non-Equity Shares:
Preference 10% - Charged to the
Profit and Loss Account (Pounds)209,477 (Pounds)158,555
======= =======
</TABLE>
26. CAPITAL COMMITMENTS
-------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Capital expenditure that has been contracted for
but has not been provided for in the financial statements (Pounds)NIL (Pounds)15,000
=== ======
Capital expenditure that has been authorised by the directors
but has not yet been contracted for (Pounds)NIL (Pounds)248,000
=== =======
</TABLE>
27. ULTIMATE PARENT UNDERTAKING
---------------------------
The parent company of Status/IQ Limited is Entrust Nominees Limited "D"
account, a company registered in England and Wales, which holds the shares
in Status/IQ Limited on trust for and on behalf of the New Court Ventures.
New Court Ventures is an unauthorised closed end unit trust which is
ultimately owned by a number of pension funds.
- 21 -
<PAGE>
STATUS/IQ LIMITED
-----------------
TRADING AND PROFIT AND LOSS ACCOUNT
-----------------------------------
FOR THE PERIOD ENDED 31ST MARCH, 1995
-------------------------------------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C> <C> <C>
SALES 1,941,713
- - -----
LESS: COST OF SALES
- - -------------------
Authoring 17,177
Royalties 10,545
Education 673
General 38,391
Sub-contracts 11,826
Computer Consumables 29,940
Product Development 67,834
Software Costs 9,204
Consultants 521,503
Discounts Receivable (2,000)
------- -------
705,093
------- -------
GROSS PROFIT
- - ------------ 1,236,620
LESS OVERHEADS
- - --------------
DIRECTORS
- - ---------
Renumeration 187,000
State Contributions 668
Pension Scheme 1,000
------- -------
188,668
------- -------
PREMISES
- - --------
Rent and Rates 116,869
Insurance 17,702
Power, Light and Heat 11,879
Repairs and Renewals 5,100
Building Security 15,589
Cleaning 11,771
------- -------
178,910
------- -------
</TABLE>
<PAGE>
STATUS/IQ LIMITED
-----------------
TRADING AND PROFIT AND LOSS ACCOUNT
-----------------------------------
FOR THE PERIOD ENDED 31ST MARCH, 1995
-------------------------------------
(Continued)
---------
<TABLE>
<CAPTION>
1.2.94 1.2.93
to to
31.3.95 31.1.94
------- -------
<S> <C> <C>
ADMINISTRATION
- - --------------
Salaries 385,780
Postage, Printing, Stationery
and Advertising 42,468
Telephone 25,450
Sundry Expenses 7,117
Subscriptions 4,087
Software Maintenance 12,390
Hardware Maintenance 16,123
Maintenance Contracts 4,333
Seminars/Conferences 2,411
Life Insurance 3,704
Temporary Staff 10,297
Recruitment/Termination 64,674
Staff Training 8,350
------- -------
587,184
------- -------
SELLING
- - -------
Salaries 358,166
Motor Expenses and Travelling 283,348
Entertaining 2,560
Marketing 43,450
------- -------
687,524
------- -------
</TABLE>
<PAGE>
STATUS/IQ LIMITED
Annual report
for the period ended 28 March 1996
Registered no: 2013859
<PAGE>
STATUS/IQ LIMITED
Interim report
for the period ended 28 March 1996
Pages
Directors' report 1 - 2
Profit and loss account 4
Balance sheet 5
Cash flow statement 6 - 7
Notes to the financial statements 8 - 20
<PAGE>
STATUS/IQ LIMITED 1
Directors' report
for the period ended 28 March 1996
The directors present their report and the audited financial statements for the
period ended 28 March 1996.
Principal activities
The profit and loss account for the period is set out on page 4.
The principal activities of the company are the marketing and technical support
of computer software and computer technology in the field of information
management, of text retrieval and the development of new products and related
consultancy services.
Dividends and transfers to reserves
The directors do not recommend the payment of a dividend. The loss for the
financial year of (Pounds)196,849 (1995: loss of (Pounds)796,262) will be
transferred to reserves.
Directors
The directors of the company during the period are listed below:
C T Edge (resigned 28 March 1996)
A R Lowrey (resigned 28 March 1996)
J Tuck
K L Coleman (appointed 28 March 1996)
J O Nyweide (appointed 28 March 1996)
Directors' interests
None of the directors had any interest in the shares of the company at 28 March
1996 or at any time during the period.
<PAGE>
STATUS/IQ LIMITED 2
CHANGES IN FIXED ASSETS
The movements in fixed assets during the period are set out in notes 9 and 10 to
the financial statements.
POST BALANCE SHEET EVENTS
Details of post balance sheet events are given in note 22 to the financial
statements.
INSURANCE OF DIRECTORS
The company maintains insurance for the directors in respect of their duties as
directors of the company.
DIRECTORS' RESPONSIBILITIES
The directors are required by UK company law to prepare financial statements for
each financial year that give a true and fair view of the state of affairs of
the company as at the end of the financial period and of the loss of the company
for that period.
The directors confirm that suitable accounting policies have been used and
applied consistently and reasonable and prudent judgements and estimates have
been made in the preparation of the financial statements for the period ended 28
March 1996. The directors also confirm that applicable accounting standards have
been followed and that the financial statements have been prepared on the going
concern basis.
The directors are responsible for keeping proper accounting records, for
safeguarding the assets of the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
AUDITORS
During the period, M J Ventham & company resigned as auditors of the company and
Coopers & Lybrand were appointed in their place.
A resolution to confirm the appointment of Coopers & Lybrand will be proposed at
the annual general meeting.
BY ORDER OF THE BOARD
K L Coleman
Company secretary
<PAGE>
STATUS/IQ LIMITED 3
Profit and loss account
for the period ended 28 March 1996
<TABLE>
<CAPTION>
1 April 1 February
1995 to 1994 to
28 March 31 March
1996 1995
(Pounds) (Pounds)
<S> <C> <C>
Turnover 1,355,429 1,941,713
Net Operating expenses (1,431,939) (2,452,161)
---------- ----------
Operating loss (76,510) (510,448)
Interest payable and similar charges (114,541) (76,337)
---------- ----------
Loss on ordinary activities before taxation (191,051) (586,785)
Tax on loss on ordinary activities - -
---------- ----------
Loss on ordinary activities after taxation (191,051) (586,785)
Dividends attributable to non-equity interests (191,491) (209,477)
---------- ----------
Loss for the financial period (382,542) (796,262)
========== ==========
</TABLE>
All figures included in the profit and loss account are derived from continuing
operations.
The company has no recognized gains and losses other than the losses above and
therefore no separate statement of total recognized gains and losses has been
presented.
There is no difference between the loss on ordinary activities before taxation
and the retained loss for the period stated above, and their historical cost
equivalents.
<PAGE>
STATUS/IQ LIMITED 4
<TABLE>
<CAPTION>
Balance sheet
at 28 March 1996
1996 1995
(Pound) (Pound)
<S> <C> <C>
Fixed assets
Tangible assets 134,571 211,071
Investments in subsidiaries - 2
---------- ----------
134,571 211,073
Current assets
Debtors 438,658 366,576
Cash at bank and in hand 1 2,372
---------- ----------
438,659 368,948
---------- ----------
Creditors: amounts falling due within one year (1,315,631) (761,371)
---------- ----------
Net current liabilities (876,972) (392,423)
---------- ----------
Total assets less current liabilities (742,401) (181,350)
---------- ----------
Creditors: amounts falling due after more than
one year - (370,000)
---------- ----------
Net liabilities (742,401) (551,350)
========== ==========
Capital and reserves
Called up share capital 1,550,000 1,550,000
Profit and loss account (2,292,401) (2,101,350)
---------- ----------
Deficit on shareholders' funds (742,401) (551,350)
========== ==========
Equity shareholders' funds (2,666,255)
Non-equity shareholders' funds 2,114,905
---------- ----------
(742,401) (551,350)
========== ==========
</TABLE>
<PAGE>
STATUS/IQ LIMITED 5
Cash flow statement
for the period ended 28 March 1996
<TABLE>
<CAPTION>
1 April 1 February
1995 to 1994 to
28 March 31 March
1996 1995
(Pound) (Pound)
<S> <C> <C>
Net cash inflow from continuing operating
activities 3,219 (353,796)
(reconciliation to operating profit on page 7)
---------- --------
Returns on investments and servicing
of finance
Interest received -
Interest paid (5,337) (6,950)
Interest paid on finance leases (188)
---------- --------
Net cash outflow from returns on investments
and servicing of finance (5,337) (7,138)
---------- --------
Taxation
UK corporation tax paid - -
---------- --------
Investment activities
Purchase of tangible fixed assets (8,022) (166,246)
Sale of tangible fixed assets 4,104 10,691
---------- --------
Net cash outflow from investment activities (3,918) (155,555)
---------- --------
Net cash (outflow)/inflow before financing (6,126) (515,489)
---------- --------
Financing
Issue of debentures - 195,000
Repayment of principal under finance leases - (5,049)
---------- --------
(Decrease) in cash and cash equivalents (6,126) (325,538)
========== ========
</TABLE>
<PAGE>
STATUS/IQ LIMITED 6
Reconciliation of operating profit to net cash inflow from operating activities
<TABLE>
<CAPTION>
1 April 1 February
1995 to 1994 to
28 March 31 March
1996 1995
(Pounds) (Pounds)
<S> <C> <C>
Continuing operating activities
Operating (loss) (76,510) (510,448)
Depreciation on tangible fixed assets 72,220 101,139
Loss on sale of tangible fixed assets 8,199 37,818
(Increase)/decrease in debtors (66,284) 236,865
Increase/(decrease) in creditors 65,505 11,116
Loan written off - (229,286)
------- --------
Net cash inflow from continuing operating activities 3,129 (352,796)
======= ========
</TABLE>
<PAGE>
STATUS/IQ LIMITED 7
Notes to the financial statements
for the period ended 28 March 1996
1 Principal accounting policies
The financial statements have been prepared in accordance with applicable
Accounting Standards in the United Kingdom. A summary of the more important
accounting policies, which have been applied consistently, is set out below.
The financial statements of the Company for the period from April 1, 1995 to
March 28, 1996 and related footnote information are unaudited. All
adjustments (consisting only of normal recurring adjustments) have been made,
which in the opinion of management, are necessary for a fair presentation.
Results of operations for the period from April 1, 1995 to March 28, 1996, are
not necessarily indicative of the results that may be expected for any future
period.
Basis of accounting
The financial statements are prepared in accordance with the historical cost
convention.
The cost of tangible fixed assets is their purchase cost, together with any
incidental costs of acquisition.
Depreciation is calculated so as to write off the cost of tangible fixed assets,
less their estimated residual values, on a straight line basis over the expected
useful economic lives of the assets concerned. The principal annual rates used
for this purpose are:
%
Office Equipment, furniture, fixtures and fittings 10 - 30
Computer hardware 20
Computer software 33
Cash flow statement
The company qualifies as a small company under the terms of Section 247 of the
Companies Act 1985. As a consequence it is exempt from the requirements to
publish a cash flow statement.
Finance and operating leases
Costs in respect of operating leases are charged on a straight line basis over
the lease term. Leasing agreement which transfer to the company substantially
all the benefits and risks of ownership of an asset are treated as if the asset
had been purchased outright. The assets are included in fixed assets and the
capital element of the leasing commitments is shown as obligations under finance
leases. The leases rentals are treated as consisting of capital and interest
elements. The capital element is applied to reduce the outstanding obligations
and the interest elements is charged against profit on proportion to the
reducing capital element outstanding. Assets held under finance leases are
depreciated over the shorter of the lease terms and the useful lives of
equivalent owned assets.
<PAGE>
STATUS/IQ LIMITED 8
Turnover
Turnover, which excludes value added tax and trade discounts, represents the
invoiced value of goods and services supplied.
Deferred taxation
Provision is made for deferred taxation, using the liability method, on all
material timing differences to the extent that it is probable that a liability
or asset will crystallise. Full provision is made for deferred taxation on
timing differences arising from the provision of employees pensions.
Pension scheme arrangements
The company pays contribution in respect of employees' personal pension schemes.
Contributions paid by the company are disclosed in note 5.
The company provides no other post retirement benefits to its employees.
Research and development expenditure
These expenses are written off in the period it is incurred where it does not
meet the accepted criteria for deferral to future periods.
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at
exchange rates ruling at the date of the transaction. Foreign currencies assets
and liabilities are translated into sterling at the balance sheet date. Exchange
differences are taken to the profit and loss account in the year in which they
arise.
<PAGE>
STATUS/IQ LIMITED 9
Creditors: amounts falling due within one year
<TABLE>
<CAPTION>
28 March 31 march
1996 1995
(Pounds) (Pounds)
<S> <C> <C>
Bank loan and overdrafts 64,245 61,490
Debenture loans 370,000 -
Trade creditors 84,385 229,097
Amount due to parent company 84,868 -
Other taxation and social security 53,388 52,174
Other creditors 29,783 -
Accruals and deferred income 628,962 418,610
--------- --------
1,315,631 761,371
========= ========
</TABLE>
The bank loans and overdrafts and debenture loans are secured by fixed and
floating charges over the assets of the company.
Debenture loans consist of:
(Pounds)250,000 10% Redeemable at par on 31 August 1994
(Pounds)120,000 20% Redeemable at a premium of 16.66% on 9 November 1996
See note 22 for details of the post balance sheet event involving the debenture
loans.
Other creditors relate to amounts advanced from Barclays Bank Plc under a
factoring agreement for certain trade debts with full recourse. Separate
presentation of the amounts involved has therefore been made. Factoring costs
are charged at 2.5% of the value of the debts factored and amounted to
(Pounds)744 in the period.
Creditors: amounts falling due after more than one year
<TABLE>
<CAPTION>
28 March 31 March
1996 1995
(Pounds) (Pounds)
<S> <C> <C>
Debenture loan secured by a fixed and floating charges
over the assets of the company (notes 12,22) . 370,000
======== ========
</TABLE>
<PAGE>
STATUS/IQ LIMITED 10
24 Ultimate parent company
The directors regard Dataware Technologies Inc., a company registered in the
United States of America as the ultimate parent company.
<PAGE>
DATAWARE TECHNOLOGIES, INC.
PRO FORMA FINANCIAL INFORMATION
-------------------------------
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1995
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<PAGE>
DATAWARE TECHNOLOGIES, INC.
PRO FORMA FINANCIAL STATEMENTS
------------------------------
On March 28, 1996, Dataware Technologies, Inc., ("Dataware") consummated
the merger of STATUS/I.Q. Limited; The merger was accounted as purchase.
The unaudited pro forma consolidated balance sheet was prepared as of
December 31, 1995 and the unaudited pro forma consolidated statement of
operations was prepared for the year ended December 31, 1995. The numbers
presented in the Dataware and Status/I.Q., Limited columns of the pro forma
financial statements are unaudited reported numbers prior to the combination of
the two companies. The unaudited pro forma financial information was prepared
utilitizing the accounting policies of the respective companies. Any adjustments
to conform Status/I.Q. Limited to reflect the accounting policies of Dataware
are shown in the adjustments columns of the pro forma financial statements.
For the purposes of this presentation, therefor pro forma adjustments have
been made to the results of operations and balance sheet to provide information
as to how the acquistation might have affected the statement of operations and
financial position. This unaudited pro forma financial information does not
purport to be indicative of the results of operations that would have been
obtained if the operations had been combined as of the beginning of the periods
presented, and is not intended to be a projection of future results.
<PAGE>
Dataware Technologies, Inc.
Pro Forma Consolidated Balance Sheet
December 31, 1995
(dollars in thousands, unaudited)
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dataware Status/IQ Adjustments(1) Pro Forma
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,734 $ - $ (764) $ 6,970
Accounts receivable 10,063 661 (147) 10,577
Other current assets 3,070 - 3,070
------------- ------------ ------------- ------------
Total current assets 20,867 661 (911) 20,617
Property and equipment 5,543 206 (9) 5,740
Computer software costs 3,002 175 3,177
Marketable securities 8,908 8,908
Other assets 3,646 3,646
------------- ------------ ------------- ------------
Total assets $ 41,966 $ 867 $ (745) $ 42,088
------------- ------------ ------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes, license 189 663 (663) 189
payable, and capital leases
Demand note payable 50 50
Accounts payable 1,963 129 53 2,145
Accrued expenses 1,396 175 450 2,021
Accrued Compensation 1,690 82 (82) 1,690
Income taxes payable 1,928 - 213 1,928
Deferred revenue 2,530 961 (691) 2,800
------------- ------------ ------------- ------------
9,746 2,010 (933) 10,823
Notes and software licenses payable 4 4
Common stock 62 2,368 (2,343) 87
Additional paid-in capital 36,782 - 213 36,995
Retained earnings (accumulated deficit) (4,445) (3,511) 2,318 (5,638)
Cummulative translation adjustment (209) (209)
Unrealized gain on marketable securities 26 26
------------- ------------ ------------- ------------
Total stockholders' equity 32,216 (1,143) 188 31,261
------------- ------------ ------------- ------------
Total liabilities and stockholders' equity $ 41,966 $ 867 $ (745) $ 42,088
============= ============ ============= ============
</TABLE>
<PAGE>
Dataware Technologies, Inc.
Pro Forma Consolidated Statement of Operations
For the Year End December 31, 1995
(in thousands except per share data, unaudited)
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dataware Status/IQ Adjustments Pro Forma
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Software license fees $ 19,996 - $ 19,996
Services 18,871 $ 2,064 20,935
Systems integration 2,257 - 2,257
------------- ------------ ------------- ------------
Total revenues 41,124 2,064 43,188
Cost of revenues
Software license fees 3,125 (2)175 3,300
Services 10,133 10,133
Systems integration 1,790 1,790
------------- ------------ ------------- ------------
Total cost of revenues 15,048 175 15,223
------------- ------------ ------------- ------------
Gross margin 26,076 2,064 27,965
Operating expenses:
Sales and Marketing 13,754 - 13,754
Product development 5,040 241 5,281
General and administrative 5,337 1,949 7,286
Merger costs 171 - 171
------------- ------------ ------------- ------------
Total operating expenses 24,302 2,190 26,492
------------- ------------ ------------- ------------
Income (loss) from operations 1,774 (126) 1,473
Interest income 611 611
Oter income (expenses), net 61 (468) (3)175 (232)
------------- ------------ ------------- ------------
Income (loss) before income taxes 2,446 (594) 1,852
Provision (benefit) for income taxes 733 - 733
------------- ------------ ------------- ------------
Net Income (loss) $ 1,713 $ (594) $ 1,119
============= ============ ------------- ============
Net income per common share $ 0.26 $ 0.17
============= ------------- ============
Weighted average number of common
and common equivalent shares 6,511 (4)25 6,536
============= ------------- ============
</TABLE>
<PAGE>
DATAWARE TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
AND BALANCE SHEET
(1) Adjustment to reflect the estimated allocation of the purchase price
to the net assets of Status I.Q..
(2) Adjustment to amortize the cost of completed technology
purchased.
(3) Adjustment to eliminate interest expense for debt considered to be
paid at the beginning of the year from the proceeds of the buyer.
(4) Adjustment to include in the weighted average shown outstanding the
shares issued in connection with this acquisition.
(5) Note: Dataware Technologies, Inc. expensed the cost of incomplete
technology in the amount of $1,193,000 during its three month
interim period ended March 31, 1996. This adjustment has not been
reflected in these pro forma financial statements.
<PAGE>
The Registrant's Form 8-K as filed April 11, 1996 is hereby amended as
follows:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- - ---- ------------------------------------------------------------------
(a) Financial Statements of Business Acquired. The required financial
-----------------------------------------
statements are included following this page.
(b) Pro Forma Financial Information. The required information is
-------------------------------
included following this page.
(c) Exhibits: See Exhibit Index
--------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 11, 1996 DATAWARE TECHNOLOGIES, INC.
By: /s/ Christopher E. Lorch
---------------------------------
Christopher E. Lorch, Controller
EXHIBIT INDEX
Exhibit
No. Description
--- -----------
2 Agreement - Sale of Shares, dated March 28, 1996,
betweeen Entrust Nominees Limited "D" Account and
Dataware Technologies, Inc. Filed as Exhibit 2.2 to
Dataware's Form 10-K for 1995 and incorporated
herein by reference.
99 Dataware Technologies, Inc. press release dated
April 1, 1996. Filed as Exhibit 99 to the Registrant's
April 11, 1996 8-K and incorporated herein by
reference.
