<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 11, 1996
4Front Software International, Inc.
(Exact name of issuer as specified in its charter)
Colorado
(State or other jurisdiction of incorporation)
0-8345 84-0675510
(Commission File Number) (IRS Employer Identification No.)
5650 Greenwood Plaza Boulevard
Suite 107
Englewood, Colorado 80111
<PAGE>
ITEM 2. ACQUISITION OF ASSETS.
On October 11, 1996 4Front Software International Inc., acquired all of the
issued and outstanding stock of Datapro Computers Group Limited ("Datapro"),
based in the United Kingdom. The purchase price was L1.39 million cash ($2.15
million) subject to certain conditions as set forth below.
Pursuant to the stock purchase agreement, L1.25 million cash ($1.95
million) was paid to the stockholders of Datapro from available cash at bank
resources of the registrant.
If the net assets of Datapro as per the September 1996 Management accounts
as prepared on a consistent basis with Datapro's previous accounts, exceeds
L400,000 ($620,000) then the remaining L135,000 ($200,000) will be paid. If the
net assets are less than L400,000 ($620,000), then the additional payment shall
be adjusted downwards on a pound-for-pound basis.
There is no material relationship between the registrant, it's affiliates,
officers or directors and any affiliate, officer or director of Datapro
Computers Group Limited.
Datapro is a United Kingdom supplier of services, storage solutions and
computer sub-systems, with revenues of approximately $17 million. Datapro,
based in Brighton, Southern England, provides a full range of specialized
computer services to approximately 1,250 customers, principally large blue chip
corporations and public sector organizations. Services offered include systems
integration, hardware and software maintenance and systems support, and other
technology enabling services. Datapro provides high-end support for a number of
U.S. and U.K. technology manufacturers, including IBM, NCR and Mitsubishi
Apricot. Datapro's service and systems integration activities account for the
majority of its business.
Datapro also offers a range of software and hardware products, some of
which are proprietary to the Company including asset management software
developed for the health services industry and project accounting software
developed primarily for the construction industry.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Datapro Computers Group Limited, the acquired
business.
(b) Pro Forma Financial Statements.
(c) Exhibits (1)
1. Form of Share Sale Agreement relating to Datapro Computers Group Ltd,
ended October 11, 1996. Previously filed as Exhibit to current Form
8-K filed October 25, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
4FRONT SOFTWARE INTERNATIONAL, INC.
(Registrant)
By: ____Stephen McDonnell__________________________
STEPHEN MCDONNELL, CHIEF FINANCIAL OFFICER
Dated: December 6, 1996
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
DATAPRO COMPUTERS GROUP LIMITED
Independent Auditors' Report F-1
Financial Statements:
Consolidated Balance Sheet
As of June 30, 1996 F-2
Consolidated Statement of Operations
For the year ended June 30, 1996 F-4
Consolidated Statement of Stockholders' Equity
For the year ended June 30, 1996 F-5
Consolidated Statement of Cash Flows
For the year ended June 30, 1996 F-6
Notes to Consolidated Financial Statements F-7
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS
Explanatory Headnote F-15
Unaudited Pro Forma Consolidated Financial Statements:
Consolidated Statements of Operations
For the year ended January 31, 1996 and the
year ended December 31, 1995 (unaudited) F-16
Consolidated Balance Sheet
As of July 31, 1996 and June 30, 1996 F-18
Consolidated Statements of Operations
For the six month period ended July 31, 1996
and for the six month period ended June 30,
1996 F-22
Notes to Unaudited Pro Forma Consolidated Financial
Statements F-24
<PAGE>
MOORES ROWLAND
INDEPENDENT AUDITORS' REPORT
To the Stockholders
and Board of Directors
Datapro Computers Group Limited
We have audited the accompanying consolidated balance sheet of Datapro Computers
Group Limited a UK Company as of June 30, 1996 and the related consolidated
statement of operations, changes in stockholders' equity and cash flows for the
year ended June 30, 1996 set out on pages F-2 to F-13. We have not audited Note
11 on page F-14. These consolidated financial statements are the responsibility
of the Company's directors. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with United Kingdom generally accepted
auditing standards, which do not differ in any significant respect from United
States generally accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material aspects, the financial position of Datapro Computers
Group Limited as of June 30, 1996 and the results of their operations and cash
flows for the year ended June 30, 1996 in conformity with United Kingdom
generally accepted accounting standards.
MOORES ROWLAND
Chartered Accountants
Registered Auditors
Brighton
England
Date: August 8, 1996
-F1-
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(POUNDS STERLING)
ASSETS
JUNE 30,
1996
-----------
CURRENT ASSETS:
Cash L 891
Accounts receivable, net of allowance
for doubtful accounts of, L99,166 2,196,436
Inventories 1,819,016
Prepaid expenses 146,583
Income taxes receivable 31,500
Other current assets 31,585
----------
Total current assets 4,226,011
----------
PROPERTY AND EQUIPMENT, net 887,597
SOFTWARE COPYRIGHT 31,667
INVESTMENTS 514,027
----------
TOTAL ASSETS L 5,659,302
-----------
-----------
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- F2 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(POUNDS STERLING)
LIABILITIES AND STOCKHOLDERS' FUNDS
JUNE 30,
1996
-----------
CURRENT LIABILITIES:
Accounts payable L 1,902,847
Accrued liabilities 288,698
Deferred revenue 1,286,898
Bank line of credit 439,518
Capital lease obligations, current portion 388,392
-----------
Total current liabilities 4,306,353
LONG TERM DEBT, less current portion 321,623
CAPITAL LEASE OBLIGATIONS, less current portion 247,959
DEFERRED TAXATION 110,908
-----------
TOTAL LIABILITIES 4,986,843
-----------
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' EQUITY:
Common stock of L1 each, 100,000 shares
authorized, 21,817 issued and outstanding 21,817
'A' stock of L1 each, 5,500 shares authorized,
5,500 issued and outstanding 5,500
11.5% preference stock of L1 each, 619,500 shares
authorized, 115,041 issued and outstanding 112,910
11.5% 'A' preference stock of L1 each, 275,000
shares authorized, 275,000 issued and outstanding 275,000
Revaluation reserve 207,884
Additional paid in capital 172,275
Capital redemption reserve 118,983
Retained (deficit) (241,910)
-----------
Total stockholders' equity 672,459
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY L 5,659,302
-----------
-----------
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- F3 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(POUNDS STERLING)
FOR THE YEAR ENDED
JUNE 30,
1996
-----------
REVENUES L 11,279,449
Cost of revenues 5,716,644
---------
GROSS PROFIT 5,562,805
---------
OPERATING EXPENSES
Selling, general and administrative
expenses 5,274,824
Depreciation 338,385
-------
Total operating expenses 5,613,209
---------
LOSS BEFORE INTEREST EXPENSE, INCOME TAXES
AND SHARE OF RESULTS IN EQUITY INVESTEES (50,404)
INTEREST INCOME (EXPENSE)
Interest income 280
Interest expense (142,000)
---------
Total interest income (expense) (141,720)
---------
LOSS BEFORE INCOME TAXES AND SHARE
OF RESULTS IN EQUITY INVESTEES (192,124)
SHARE OF RESULTS IN EQUITY INVESTEES 47,831
------
LOSS BEFORE INCOME TAXES (144,293)
INCOME TAXES 20,103
------
NET LOSS L (124,190)
-----------
-----------
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- F4 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
(POUNDS STERLING)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
JUNE 30, 1995 JUNE 30, 1996
------------------ NET INCOME DIVIDEND REVALUATION OF -------------------
SHARES AMOUNT FOR YEAR PAYABLE INVESTMENTS SHARES AMOUNT
------ ------ ---------- -------- -------------- ------ ------
L L L L L
<S> <C> <C> <C> <C> <C> <C> <C>
Stock
- -----
Common Stock 21,817 21,817 - - - 21,817 21,817
'A' Common Stock 5,500 5,500 - - - 5,500 5,500
11.5% Preference Stock 115,041 112,910 - - - 115,041 112,910
11.5% 'A' Preference Stock 275,000 275,000 - - - 275,000 275,000
------- ------- ------- ------ ------- ------- -------
417,358 415,227 - - - 417,358 415,227
Revaluation Reserve 67,719 - - 140,165 207,884
Additional Paid in Capital 172,275 - - - 172,275
Capital Redemption Reserve 118,983 - - - 118,983
Retained (Deficit) (52,985) (124,190) (64,735) - (241,910)
------- ------- ------ ------- -------
721,219 (124,190) (64,735) 140,165 672,459
------- ------- ------ ------- -------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- F5 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(POUNDS STERLING)
JUNE 30,
1996
----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) L(124,190)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation 334,385
Amortization of copyright 4,000
(Gain) on disposal of fixed assets (49,574)
Profits from equity investees (47,831)
Decrease in accounts receivable 304,543
Decrease in inventories 707,586
(Increase) in prepaid expenses (22,535)
(Decrease) in income taxes (65,505)
(Decrease) in other liabilities (235,121)
(Increase) in other current assets (17,431)
Decrease in accounts receivable related parties 294
Increase in accounts payable and accrued liabilities 26,749
(Decrease) in deferred revenue (315,201)
-------
Net cash provided by operating activities 500,169
CASH FLOWS (TO) INVESTING ACTIVITIES:
Purchase of equipment (158,664)
Proceeds from disposal of equipment 55,550
-------
Net cash (used) by investing activities (103,114)
CASH FLOWS (TO) FINANCING ACTIVITIES:
Increase in bank line of credit 152,322
Decrease in accounts payable related parties (1,486)
Payments of capital lease obligations (488,151)
Dividends paid (64,735)
Dividend from associated companies 4,000
-------
Net cash (used) by financing activities (398,050)
NET (DECREASE) IN CASH (995)
Cash at beginning of period 1,886
------
Cash at end of period 891
-------
Cash paid for interest expense L 142,000
-------
-------
Cash paid for income taxes L 53,497
-------
-------
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- F6 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 1 - THE COMPANY AND ITS OPERATIONS
Datapro Computers Group Limited was formed in 1986. Currently the Group employs
over 150 staff mainly operating from the company's offices in Brighton, England,
the Group also has several smaller locations throughout the United Kingdom.
The Group supplies services, systems integration, storage solutions and computer
sub-systems for use within many commercial, industrial, scientific and
government applications.
The investment in subsidiary undertakings is as follows, at June 30, 1996:-
COMPANY % OWNERSHIP ACTIVITIES
------- ----------- ----------
Datapro Computers Limited 100% Computer Services
Allied Business Systems Limited 100% Holding Company
ABS Computers Limited 100% Hire of Equipment
Shortlands Computing Services Limited 100% Hire of Equipment
Multibus Limited 100% Dormant
All subsidiary companies are registered in England.
The Company's investments in equity investees is as follows, at June 30, 1996:-
COMPANY % OWNERSHIP ACTIVITIES
------- ----------- ----------
Micabuild Limited 18.97% Development and supply
of computer systems
for the construction
industry
Channel Business Systems PLC 27.25% Sale and installation
of electronic business
systems
Following the year ended June 30, 1996 the Group has disposed of its interest in
Micabuild Limited and accordingly the investment in this Company has been
revalued up to the level of the sale proceeds less costs of disposal. The sale
proceeds include a retention of L79,000, which will be released after December
31, 1996 subject to the net assets of the Company, as at June 30, 1996, not
falling below a predetermined level.
NOTE 2 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. The preparation of
financial statements in conformity with United Kingdom generally accepted
accounting principles requires the directors to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.
In the opinion of the directors, the accompanying financial statements contains
all material adjustments consisting only of normal recurring adjustments
necessary to present fairly the financial condition, the results of operations,
the changes in stockholders' equity and cash flows.
- F7 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
EQUITY INVESTEES
The Group follows the provisions of United Kingdom Statement of Standard
Accounting Practice No. 1 in relation to all investments where it is able to
exercise significant influence and in which the Group's interest is either in
the nature of a joint venture or is substantial and for the long term.
In the Group accounts the investments are stated at cost plus attributable share
of post acquisition profits less losses. In addition where, in the opinion of
the directors, the value of the investment is significantly greater, then it is
revalued. Full provision is made for the Group's share of any deficiency in an
equity investees net assets value.
FOREIGN EXCHANGE
The accompanying condensed consolidated financial statements are presented in
pounds sterling (L), the currency in which the Group conducts its normal
business. At June 30, 1996 the exchange rate was L1 = US $1.551.
REVENUE SOURCES AND RECOGNITION
Revenue represents the net amount charged to customers in respect of goods
supplied and services rendered. Revenue arising under hardware maintenance
agreements, net of initial costs, is taken evenly over the period of the
agreement. Income arising under software maintenance support contracts is taken
when invoiced with provision being made for the anticipated future support
costs.
INVENTORIES
Stocks of spares and components and goods for resale are stated at the lower of
cost and net realizable value, where cost is determined by reference to purchase
cost on a weighted average basis for spares and components and on a first in,
first out basis in respect of goods for resale. Net realizable value is based
on estimated selling price less any costs expected to be incurred to completion
and disposal.
Rental stocks are written off in equal annual installments over three years and
are shown in the accounts at cost less amounts written off.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost or valuation. Depreciation is
provided on a straight-line basis using estimated useful lives of four years for
motor vehicles, 3 to 10 years for fixtures and fittings and equipment and over
the unexpired terms of the lease for leasehold. Depreciation expense was
L334,385 for the year ended June 30, 1996.
PENSION
The Group operates a defined contribution pension scheme for certain of its
employees. The assets of the scheme are held separately from those of the Group
in an independently administered fund. Contributions to the scheme are charged
to the profit and loss account as they become payable.
GOODWILL
Goodwill arising on consolidation and purchased goodwill are written off against
reserves immediately on acquisition.
- F8 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE FIXED ASSETS
Intangible fixed assets include software development costs of acquired
subsidiaries which, up to March 31, 1993, were capitalized and written off over
three years. Subsequent to this date such costs are charged directly to profit
and loss account as incurred. The Crown copyright in Pharaoh, which has been
purchased, is being written off over ten years.
LEASED ASSETS
Assets acquired under finance leases that give rights approximating to ownership
are treated as if they had been purchased outright and depreciated on the basis
stated above. The corresponding liability to the leasing company is included as
an obligation under finance leases.
Annual rentals for all operating leases are charged to the profit and loss
account as they arise.
CONCENTRATION OF CREDIT RISK
Ongoing credit evaluations of customers' financial condition are performed and,
generally, no collateral is required. The Group maintains reserves for
potential credit losses and such losses, in the aggregate have not exceeded
director's expectations. Customers are located throughout the United Kingdom.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:-
JUNE 30,
1996
----------
Vehicles L 776,465
Leasehold 30,001
Computer equipment 1,235,985
----------
Less accumulated depreciation (1,154,854)
----------
L 887,597
----------
----------
NOTE 5 - ACCRUED EXPENSES
Accrued expenses consist of the following:-
JUNE 30,
1996
----------
Value Added Tax (VAT) liability L 182,026
Payroll taxes 106,672
----------
L 288,698
----------
----------
- F9 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 6 - INVESTMENTS
The Company's investments in equity investees is as follows, at June 30, 1996:-
COMPANY % OWNERSHIP ACTIVITIES
------- ----------- ----------
Micabuild Limited 18.97% Development and supply of
computer systems for the
construction industry
Channel Business Systems PLC 27.25% Sale and installation of
electronic business systems
Following the year end the Group has disposed of its interest in Micabuild
Limited and accordingly the investment in this Company has been revalued up to
the level of the sale proceeds less costs of disposal. The sale proceeds
include a retention of L79,000, which will be released after December 31, 1996
subject to the net assets of the Company, as at June 30, 1996, not falling below
a predetermined level.
The value of these investments at June 30, 1996, is as follows:-
EQUITY LISTED
COST OR VALUATION INVESTEES INVESTMENTS TOTAL
----------------- --------- ----------- -----
L L L
July 1, 1995 228,141 1,206 229,347
Revaluation 251,073 - 251,073
Share of profit for the year
net of income taxes 37,607 - 37,607
Dividends received in the year (4,000) - (4,000)
--------- ------- ---------
JUNE 30, 1996 L 512,821 L 1,206 L 514,027
--------- ------- ---------
--------- ------- ---------
- F10 -
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 7 - INCOME TAXES
The charge for taxation is based on the loss for the year and takes into account
taxation deferred because of timing differences between the treatment of certain
items for taxation and accounting purposes. Provision is made for deferred tax
only to the extent that it is probable that an actual liability will
crystallize.
The Company is a limited company within the meaning of the United Kingdom Income
and Corporation Taxes Act of 1970, as amended.
The provision (benefit) for income taxes is as follows at June 30:
1996
--------
Based on the loss for the year:
Income tax at 25% L(31,072)
Share of equity investees tax on profits 10,224
--------
L(20,848)
In respect of prior years:
Income tax under-provided 745
--------
L(20,103)
========
DEFERRED TAXATION
Deferred tax in respect of the Group only, provided and unprovided are as
follows:
1996
UNPROVIDED PROVIDED
---------- --------
L L
Surplus of equity investees valuation over cost 30,000 110,908
====== =======
-F11-
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
======================================================
NOTE 8 - LEASE COMMITMENTS
CAPITAL LEASE OBLIGATIONS
The Group leases assets under capital lease obligations which are included in
property and equipment as at June 30:
1996
---------
Vehicles L 364,864
Others 54,263
Less accumulated depreciation (151,289)
-------
L 267,838
=======
Future minimum lease payments including payments for rental inventories with a
net book value of L334,258, under capital leases together with the present value
of net minimum lease payments at June 30:
1996
---------
1996-1997 L 442,069
1997-1998 195,520
1998-1999 64,963
1999-2000 32,789
2000-2001 1,140
-------
Total minimum lease payments 736,481
Less amount representing interest (100,130)
-------
Present value of net minimum lease payments 636,351
Less current portion (388,392)
-------
L 247,959
=======
OPERATING LEASES
The Group leases various equipment and vehicles under operating leases.
Commitments under operating leases in existence at June 30, 1996 are as follows:
1997 L 203,825
1998 196,397
1999 180,500
2000 180,000
Thereafter 1,972,500
---------
L 2,733,222
=========
Rent expense for the operating leases for the year ended June 30, 1996 was
L312,897.
-F12-
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 8 - LEASE COMMITMENTS (CONTINUED)
The Group leases several properties throughout the United Kingdom, the details
of which at June 30, 1996, are as follows:-
UNITED KINGDOM SQUARE ANNUAL EXPIRY
LOCATION FOOTAGE LEASE/RENT DATE
-------------- ------- ---------- ------
Rugby 900 L6,000 July 1998
London 4,500 L42,000 June 2000
Ipswich 2,400 L17,825 January 1998
Brighton 30,000 L125,000 June 2015
Horsham 1,400 L13,000 December 2008
NOTE 9 - ECONOMIC DEPENDENCY
The Group has had four suppliers upon whom it depended upon for greater than 10%
of its product supplies for all products purchased during the year ended June
30:
1996
-------
Supplier A 34%
Supplier B 19%
Supplier C 18%
Supplier D 11%
The Group had no customers who accounted for more than 10% of revenue for the
year ended June 30, 1996.
NOTE 10 - SUPPLEMENTAL INFORMATION TO CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR NONCASH INVESTING AND FINANCING ACTIVITIES
1996
-------
During the year ended June 30, 1996. the Group
financed through lease obligations the following:
Property and equipment L 163,817
Rental Inventories L 188,551
-F13-
<PAGE>
DATAPRO COMPUTERS GROUP LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================
NOTE 11 - SUBSEQUENT EVENTS (UNAUDITED)
Effective October 11, 1996, 4Front Software International, Inc. (4Front)
acquired all of the outstanding shares of the Company for cash. Details of the
purchase are discussed in the accompanying unaudited pro forma financial
statements (See F-15).
4Front (a United States public company), operating through 4Front Group Plc (a
United Kingdom wholly owned subsidiary) is a computer software sales,
consultancy, service and support company specializing in systems integration,
connectivity, networking and communications products, and installation services.
-F14-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS
EXPLANATORY HEADNOTE
ITEM 2. ACQUISITION OF ASSETS.
On October 11, 1996 4Front Software International Inc., acquired all of the
issued and outstanding stock of Datapro Computers Group Limited ("Datapro"),
based in the United Kingdom. The purchase price was L1.39 million cash ($2.15
million) subject to certain conditions as set forth below.
Pursuant to the stock purchase agreement, L1.25 million cash ($1.95
million) was paid to the stockholders of Datapro from available cash at bank
resources of the registrant.
If the net assets of Datapro as per the September 1996 Management accounts
as prepared on a consistent basis with Datapro's previous accounts, exceeds
L400,000 ($620,000) then the remaining L135,000 ($200,000) will be paid. If the
net assets are less than L400,000 ($620,000), then the additional payment shall
be adjusted downwards on a pound-for-pound basis.
There is no material relationship between the registrant, it's affiliates,
officers or directors and any affiliate, officer or director of Datapro
Computers Group Limited.
Datapro is a United Kingdom supplier of storage solutions and computer
sub-systems, with revenues of approximately $17 million. Datapro, based in
Brighton, Southern England, provides a full range of specialized computer
services to approximately 1,250 customers, principally large blue chip
corporations and public sector organizations. Services offered include systems
integration, hardware and software maintenance and systems support, and other
technology enabling services. Datapro provides high-end support for a number of
U.S. and U.K. technology manufacturers, including IBM, NCR and Mitsubishi
Apricot. Datapro's service and systems integration activities account for the
majority of its business.
Datapro also offers a range of software and hardware products, some of
which are proprietary to the Company including asset management software
developed for the health services industry and project accounting software
developed primarily for the construction industry.
ACCOMPANYING UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The accompanying unaudited pro forma financial statements have been prepared
with the inclusion of the pro forma effect of an earlier acquisition made by the
Company, "Hammer Distribution Limited" for which an 8-K was filed with financial
statements and pro forma information on October 31, 1996.
The cumulative pro forma financial statements show the effect of the acquisition
of Hammer Distribution Limited and then the effect of the acquisition of Datapro
Computers Group Limited.
The accompanying financial statements of Datapro Computers Group Limited have
been prepared in accordance with United Kingdom generally accepted accounting
principles. Adjustments required for United States generally accepted
accounting principles are included in the Pro Forma Adjustments column.
-F15-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIODS (UNAUDITED)
<TABLE>
<CAPTION>
4FRONT SOFTWARE HAMMER
INTERNATIONAL, INC. DISTRIBUTION
AND SUBSIDIARIES LIMITED
JANUARY 31, JANUARY 31, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES $32,248,697 $12,978,581 $ - $45,227,278
---------- --------- ---------- ---------
Cost of revenues 20,807,858 11,350,379 - 32,158,237
Write down of software
development costs 755,184 - - 755,184
---------- --------- ---------- ---------
GROSS PROFIT 10,685,655 1,628,202 - 12,313,857
---------- --------- ---------- ---------
OPERATING EXPENSES:
Selling, general and
administrative expenses 9,566,257 1,520,251 - 11,086,508
Depreciation 356,379 34,740 - 391,119
Amortization 203,938 - 133,590 (4) 337,528
---------- --------- ---------- ---------
Total operating expenses 10,126,574 1,554,991 133,590 11,815,155
---------- --------- ---------- ---------
INCOME BEFORE INTEREST
EXPENSE, INCOME TAXES AND
SHARE OF RESULTS IN EQUITY
INVESTEE 559,081 73,211 (133,590) 498,702
INTEREST INCOME (EXPENSE):
Interest income 14,189 526 - 14,715
Interest expense (258,421) (73,483) - (331,904)
---------- --------- ---------- ---------
Total interest expense (244,232) (72,957) - (317,189)
---------- --------- ---------- ---------
INCOME BEFORE INCOME TAXES
AND SHARE OF RESULTS IN
EQUITY INVESTEE 314,849 254 (133,590) 181,513
SHARE OF RESULTS IN EQUITY
INVESTEE:
Write down of investment in and
advances to equity investee (581,770) - - (581,770)
Share of operating (loss) of
equity investee (179,246) - - (179,246)
---------- --------- ---------- ---------
Total share of results in
equity investee (761,016) - - (761,016)
---------- --------- ---------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES (446,167) 254 (133,590) (579,503)
INCOME TAXES 205,784 (271) - 205,513
---------- --------- ---------- ---------
NET INCOME (LOSS) $ (651,951) $ 525 $ (133,590) $ (785,016)
======== ======== ========= =======
NET (LOSS) PER COMMON SHARE $ (0.29)
Weighted average number of
common shares outstanding 2,742,614
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STAEMENTS AND
EXPLANATORY HEADNOTE
-F16-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTH PERIODS (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED DATAPRO
4FRONT SOFTWARE COMPUTERS
INTERNATIONAL, INC. GROUP
AND SUBSIDIARIES LIMITED
JANUARY 31, DECEMBER 31, PRO FORMA PRO FORMA
1996 1995 ADJUSTMENTS CONSOLIDATED
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
REVENUES $45,227,278 $18,478,889 $ - $63,706,167
---------- -------- -------- ----------
Cost of revenues 32,158,237 10,311,530 - 42,469,767
Write down of software
development costs 755,184 - - 755,184
---------- -------- -------- ----------
GROSS PROFIT 12,313,857 8,167,359 - 20,481,216
---------- -------- -------- ----------
OPERATING EXPENSES:
Selling, general and
administrative expenses 11,086,508 7,695,909 - 18,782,417
Depreciation 391,119 561,608 - 952,727
Amortization 337,528 - 294,702 (4) 632,230
---------- -------- -------- ----------
Total operating expenses 11,815,155 8,257,517 294,702 20,367,374
---------- -------- -------- ----------
INCOME/(LOSS) BEFORE INTEREST
EXPENSE, INCOME TAXES AND
RESULTS IN EQUITY INVESTEES 498,702 (90,158) (294,702) 113,842
INTEREST INCOME (EXPENSE):
Interest income 14,715 158 - 14,873
Interest expense (331,904) (143,335) - (475,239)
---------- -------- -------- ----------
Total interest expense (317,189) (143,177) - (460,366)
---------- -------- -------- ----------
INCOME/(LOSS) BEFORE INCOME
TAXES AND RESULTS IN EQUITY
INVESTEES 181,513 (233,335) (294,702) (346,524)
RESULTS IN EQUITY INVESTEES:
Write down of investment in and
advances to equity investee (581,770) - - (581,770)
Share of operating profit (loss) of
equity investee (179,246) 55,946 - (123,300)
---------- -------- -------- ----------
Total share of results in
equity investees (761,016) 55,946 - (705,070)
(LOSS) BEFORE INCOME TAXES (579,503) (177,389) (294,702) (1,051,594)
INCOME TAXES 205,513 3,233 - 208,746
---------- -------- -------- ----------
NET (LOSS) $ (785,016) $(180,622) $(294,702) $(1,260,340)
======== ======= ======= =========
NET (LOSS) PER COMMON SHARE $ (0.29) $ (0.46)
Weighted average number of
common shares outstanding 2,742,614 2,742,614
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STAEMENTS AND
EXPLANATORY HEADNOTE
-F17-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
4FRONT SOFTWARE HAMMER
INTERNATIONAL, INC. DISTRIBUTION
AND SUBSIDIARIES LIMITED
JULY 31, JULY 31, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $11,198,970 $ 337,506 $ (1,700,000)(2) $ 9,836,476
Accounts receivable, net 8,044,793 2,062,014 - 10,106,807
Inventories 4,098,100 840,349 - 4,938,449
Deposits 29,970 - - 29,970
Prepaid expenses 429,673 26,453 - 456,126
Shareholders advances - 46,800 - 46,800
Income tax receivable 165,053 4,168 - 169,221
Other 274,802 468 - 275,270
----------- ----------- ----------- ------------
Total Current Assets 24,241,361 3,317,758 (1,700,000) 25,859,119
PROPERTY AND EQUIPMENT, net 1,065,111 126,095 - 1,191,206
EQUITY INVESTEE 339,421 - - 339,421
RECEIVABLE, related party 644,356 - - 644,356
INTANGIBLE ASSETS 1,950,660 - 1,264,381 (3) 3,215,041
OTHER 616,528 - - 616,528
----------- ----------- ----------- ------------
$28,857,437 $ 3,443,853 $ (435,619) $31,865,671
========== ========= ========= ==========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STAEMENTS AND
EXPLANATORY HEADNOTE
-F18-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED DATAPRO
4FRONT SOFTWARE COMPUTERS
INTERNATIONAL, INC. GROUP
AND SUBSIDIARIES LIMITED
JULY 31, JUNE 30, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 9,836,476 $ 1,382 $(1,950,000)(5) $ 7,887,858
Accounts receivable, net 10,106,807 3,406,672 (80,000)(3) 13,433,479
Inventories 4,938,449 2,821,294 (950,000)(3) 6,809,743
Deposits 29,970 - - 29,970
Prepaid expenses 456,126 227,350 - 683,476
Shareholder advances 46,800 - - 46,800
Income tax receivable 169,221 48,857 - 218,078
Other 275,270 48,988 - 324,258
----------- ----------- ----------- ------------
Total Current Assets 25,859,119 6,554,543 (2,980,000) 29,433,662
PROPERTY AND EQUIPMENT, net 1,191,206 1,376,663 (400,000)(3) 2,167,869
EQUITY INVESTEE 339,421 214,492 - 553,913
RECEIVABLE, related party 644,356 - - 644,356
INTANGIBLE ASSETS 3,215,041 49,083 2,947,016 (3) 6,211,140
DEFERRED TAXATION - - 800,000 (3) 800,000
OTHER 616,528 582,796 - 1,199,324
----------- ----------- ----------- ------------
$31,865,671 $8,777,577 $367,016 $ 41,010,264
========== ========= ======== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS AND
EXPLANATORY HEADNOTE
-F19-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
4FRONT SOFTWARE HAMMER
INTERNATIONAL, INC. DISTRIBUTION
AND SUBSIDIARIES LIMITED
JULY 31, JULY 31, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Trade accounts payable $ 4,697,120 $ 2,174,526 $ 100,000 (3) $ 6,971,646
Accrued liabilities 1,058,506 68,840 - 1,127,346
Stockholder advances 391,842 - - 391,842
Notes payable - 584,857 - 584,857
Capital lease obligations,
current portion 77,013 13,357 - 90,370
Income taxes payable 271,203 27,815 - 299,018
Deferred revenue 2,393,320 - - 2,393,320
---------- ---------- --------- ----------
Total Current Liabilities 8,889,004 2,869,395 100,000 11,858,399
CAPITAL LEASE OBLIGATIONS,
less current portion 101,091 38,839 - 139,930
---------- ---------- --------- ----------
Total Liabilities 8,990,095 2,908,234 100,000 11,998,329
---------- ---------- --------- ----------
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' EQUITY:
Common stock, no par value 23,164,689 18,525 (18,525) (3) 23,164,689
Additional paid in capital - 1,170 (1,170) (3) -
Capital redemption reserve - 1,170 (1,170) (3) -
Accumulated (deficit) (3,367,177) 514,754 (514,754) (3) (3,367,177)
Foreign currency adjustment 69,830 - - 69,830
---------- ---------- --------- ----------
Total Stockholders' Equity 19,867,342 535,619 (535,619) 19,867,342
---------- ---------- --------- ----------
$28,857,437 $ 3,443,853 $ (435,619) $31,865,671
========== ========= ========= ==========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS AND
EXPLANATORY HEADNOTE
-F20-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED DATAPRO
4FRONT SOFTWARE COMPUTERS
INTERNATIONAL, INC. GROUP
AND SUBSIDIARIES LIMITED
JULY 31, JUNE 30, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
$ 150,000 (3)
300,000 (3)
Trade accounts payable $ 6,971,646 $2,951,316 (340,000)(3) $10,032,962
Accrued liabilities 1,127,346 447,771 - 1,575,117
Stockholder advances 391,842 - - 391,842
Lines of credit-bank - 681,692 - 681,692
Notes payable 584,857 - - 584,857
Capital lease obligations,
current portion 90,370 602,396 - 692,766
Income taxes payable 299,018 - - 299,018
Deferred revenue 2,393,320 1,995,979 1,300,000 (3) 5,689,299
----------- ----------- ----------- ------------
Total Current Liabilities 11,858,399 6,679,154 1,410,000 19,947,553
LONG TERM DEBT - less current
portion - 498,837 - 498,837
CAPITAL LEASE OBLIGATIONS,
less current portion 139,930 384,584 - 524,514
DEFERRED TAXATION - 172,018 - 172,018
----------- ----------- ----------- ------------
Total Liabilities 11,998,329 7,734,593 1,410,000 21,142,922
----------- ----------- ----------- ------------
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' EQUITY:
Common stock, no par value 23,164,689 33,838 (33,838)(3) 23,164,689
'A' stock, no par value - 8,531 (8,531)(3) -
11.5% preference stock - 175,123 (175,123)(3) -
11.5% 'A' preference stock - 426,525 (426,525)(3) -
Additional paid in capital - 267,199 (267,199)(3) -
Capital redemption reserve - 184,543 (184,543)(3) -
Revaluation reserve - 322,428 (322,428 (3) -
Accumulated (deficit) (3,367,177) (375,203) 375,203 (3) (3,367,177)
Foreign currency adjustment 69,830 - - 69,830
----------- ----------- ----------- ------------
Total Stockholders' Equity 19,867,342 1,042,984 (1,042,984) 19,867,342
----------- ----------- ----------- ------------
$31,865,671 $8,777,577 $367,016 $41,010,264
========= ========= ======== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STAEMENTS AND
EXPLANATORY HEADNOTE
-F21-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
4FRONT SOFTWARE HAMMER
INTERNATIONAL, INC. DISTRIBUTION
AND SUBSIDIARIES LIMITED
JULY 31, JULY 31, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES $20,610,663 $ 7,922,786 $ - $28,533,449
----------- ----------- ----------- ------------
Cost of revenues 13,934,697 7,057,120 - 20,991,817
----------- ----------- ----------- ------------
GROSS PROFIT 6,675,966 865,666 - 7,541,632
----------- ----------- ----------- ------------
OPERATING EXPENSES:
Selling, general and
administrative expenses 5,544,194 717,259 - 6,261,453
Depreciation 154,396 20,943 - 175,339
Amortization 123,740 - 63,219(4) 186,959
----------- ----------- ----------- ------------
Total operating expenses 5,822,330 738,202 63,219 6,623,751
----------- ----------- ----------- ------------
INCOME BEFORE INTEREST
EXPENSE, INCOME TAXES AND
SHARE OF RESULTS IN EQUITY
INVESTEE 853,636 127,464 (63,219) 917,881
INTEREST INCOME (EXPENSE):
Interest income 81,588 - - 81,588
Interest expense (128,936) (44,312) - (173,248)
----------- ----------- ----------- ------------
Total interest expense (47,348) (44,312) - (91,660)
----------- ----------- ----------- ------------
INCOME BEFORE INCOME TAXES
AND SHARE OF RESULTS IN
EQUITY INVESTEE 806,288 83,152 (63,219) 826,221
SHARE OF RESULTS IN EQUITY
INVESTEE:
Share of operating (loss) of
equity investee (124,392) - - (124,392)
----------- ----------- ----------- ------------
Total share of results in
equity investee (124,392) - - (124,392)
----------- ----------- ----------- ------------
INCOME (LOSS) BEFORE INCOME
TAXES 681,896 83,152 (63,219) 701,829
INCOME TAXES 170,474 27,440 - 197,914
----------- ----------- ----------- ------------
NET INCOME (LOSS) $ 511,422 $ 55,712 $ (63,219) $ 503,915
======== ======== ======== ========
NET INCOME PER COMMON SHARE $ 0.12
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS AND
EXPLANATORY HEADNOTE
-F22-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED DATAPRO
4FRONT SOFTWARE COMPUTERS
INTERNATIONAL, INC. GROUP
AND SUBSIDIARIES LIMITED
JULY 31, JUNE 30, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS CONSOLIDATED
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES $28,533,449 $9,143,969 $ - $37,677,418
--------- -------- --------- ----------
Cost of revenues 20,991,817 4,615,438 - 25,607,255
--------- -------- --------- ----------
GROSS PROFIT 7,541,632 4,528,531 - 12,070,163
--------- -------- --------- ----------
OPERATING EXPENSES:
Selling, general and
administrative expenses 6,261,453 4,090,958 - 10,352,411
Depreciation 175,339 269,909 - 445,248
Amortization 186,959 - 147,351 (4) 334,310
--------- -------- --------- ----------
Total operating expenses 6,623,751 4,360,867 147,351 11,131,969
--------- -------- --------- ----------
INCOME BEFORE INTEREST
EXPENSE, INCOME TAXES AND
SHARE OF RESULTS IN EQUITY
INVESTEES 917,881 167,664 (147,351) 938,194
INTEREST INCOME (EXPENSE):
Interest income 81,588 405 - 81,993
Interest expense (173,248) (168,346) - (341,594)
--------- -------- --------- ----------
Total interest expense (91,660) (167,941) - (259,601)
--------- -------- --------- ----------
INCOME BEFORE INCOME TAXES
AND SHARE OF RESULTS IN
EQUITY INVESTEES 826,221 (277) (147,351) 678,593
SHARE OF RESULTS IN EQUITY
INVESTEES:
Share of operating profit (loss)
of equity investees (124,392) 36,591 - (87,801)
--------- -------- --------- ----------
INCOME (LOSS) BEFORE INCOME
TAXES 701,829 36,314 (147,351) 590,792
INCOME TAXES 197,914 5,058 - 202,972
--------- -------- --------- ----------
NET INCOME (LOSS) $ 503,915 $31,256 $(147,351) $ 387,820
======= ====== ======= ======
NET INCOME PER COMMON
SHARE $ 0.10
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS AND
EXPLANATORY HEADNOTE
-F23-
<PAGE>
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
NOTE 1 - PRO FORMA ADJUSTMENTS
The adjustments relating to the pro forma consolidated balance sheets are
prepared assuming the acquisition of Hammer Distribution Limited and Datapro
Computers Group Limited was consummated at the balance sheet date. The
adjustments relating to the pro forma consolidated statements of operations are
recorded assuming the acquisition of Hammer Distribution Limited and Datapro
Computers Group Limited were consummated at the beginning of the period for all
periods presented.
The contingent consideration payable upon the conditions set out in the
acquisition of Hammer could give effect to an additional cash payment of a
maximum of L750,000 ($1.2 million). If the conditions set out were met the
goodwill on acquisition would increase by $1.2 million with a corresponding
increase to goodwill amortization of $120,000 per annum.
The contingent consideration payable upon the conditions set out in the
acquisition of Datapro Computers Group Limited could give effect to an
additional cash payment of a maximum of L135,000 ($200,000). If the conditions
set out were met the goodwill on acquisition would increase by $200,000 with a
corresponding increase to goodwill amortization of $20,000 per annum.
NOTE 2
To record the initial purchase price of $1,700,000 for the acquisition of Hammer
Distribution Limited.
NOTE 3
To eliminate common stock acquired, to record costs incurred in excess of the
fair market value of the assets acquired as goodwill, and to reflect fair market
value adjustments of assets and liabilities and the reflection of US GAAP
adjustments.
NOTE 4
To record amortization of goodwill using the straight-line method over 10 years.
NOTE 5
To record the initial purchase price of $1,950,000 for the acquisition of
Datapro Computers Group Limited.
-F24-
