U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K\A 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: April 16, 1997, amending the Form 8-K
previously dated November 14, 1996
SDT HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of incorporation)
0-24590 84-1275559
(Commission File No.) (IRS Employer
Identification No.)
1 Stoke Road
Guildford
Surrey, England GU1 4HW
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
011-44-1483-458-300
<PAGE>
Item 7(a) and 7(b). Financial Statements and Pro Forma Financial
Statements
(a) Financial Statements of Businesses Acquired.
Audited Financial Statements for the fiscal years ended August
31, 1996 and 1995 of European Business Group, Plc.
(b) Pro Forma Financial information.
The Pro Forma Consolidated Financial Statements (unaudited)
are not included herewith. An explanation therefore is included in
the contents of the verbage located at page F-2 hereinbelow.
2
<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.
SDT HOLDING CORPORATION
By:/s/ Carsten Iversen
Carsten Iversen,
President
Dated: April 16, 1997
3
<PAGE>
SDT HOLDING CORPORATION
Contents
_________________________________________________________________
SDT Holding Corporation
Pro Forma Consolidated Financial Statements
(Unaudited) F-2
European Business Group (UK) Plc:
Independent Auditors' Report F-3
Consolidated Financial Statements:
Balance Sheets F-4 - F-5
Statements of Operations F-6
Statements of Stockholders' Equity F-7
Statements of Cash Flows F-8
Summary of Accounting Policies F-9 - F-12
Notes to Consolidated Financial Statements F-13 - F24
F-1
<PAGE>
SDT HOLDING CORPORATION
Pro Forma Consolidated Financial Statements (Unaudited)
_________________________________________________________________
Effective October 30, 1996 SDT Holding Corporation ("SDT") acquired
the stock of European Business Group (UK), Plc, ("EBG") in a
reverse acquisition in which EBG's stockholders acquired voting
control of SDT. The acquisition was accomplished through an
exchange of stock in which SDT exchanged 18,000,000 shares of newly
issued common stock for 100% of the outstanding common stock of
EBG, resulting in ownership by the stockholders of EBG of
approximately 82% of the combined company.
The transaction is accounted for as a reverse acquisition and
recapitalization with EBG as the acquiring company because EBG's
stockholders acquired a majority of the voting rights in the
combined company. Under this method of accounting, SDT's assets
and liabilities are recorded at their fair values which
approximates historical cost and the historical financial results
reported by SDT are those of EBG with SDT operations reported from
the date of acquisition forward.
Due to the fact that SDT has been a development stage entity since
its inception and its assets, liabilities and operations are
insignificant to those of EBG, no separate pro forma financial
statements are presented, since in fact the actual historical
financial statements of EBG also represent the financial position
and combined operations of the entities. Earnings per share for
pro forma results of operations are Pounds .07 for fiscal year
1996.
In the opinion of management, all adjustments have been made that
are necessary to present fairly such pro forma data.
F-2
<PAGE>
Independent Auditors' Report
Board of Directors
European Business Group (UK) Plc
Surrey, England
We have audited the accompanying consolidated balance sheets of
European Business Group (UK) Plc and subsidiaries as of August 31,
1996 and 1995, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with 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 audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of European Business Group (UK) Plc and subsidiaries as of
August 31, 1996 and 1995, and the results of their operations and
their cash flows for each of the years then ended, in conformity
with United States generally accepted accounting principles.
BDO Stoy Hayward
Richmond Upon Thames, England
December 12, 1996 except for
Note 3, which is as of April 9,
1997
F-3
<PAGE>
<TABLE>
EUROPEAN BUSINESS GROUP (UK) Plc
Consolidated Balance Sheets
_________________________________________________________________
<CAPTION>
August 31, 1996 1995
(Pounds) (Pounds)
________________________________ ___________ __________
<S> <C> <C>
Assets
Current assets:
Cash 106,821 -
Accounts receivable - trade 150,373 50,000
Accounts receivable -
other (Note 5) 10,755,893 -
Inventories - marine containers 9,131,943 -
Current maturities of installment
contracts receivable, net of
unamortized interest of
Pounds 20,077,483 15,471,474 -
Prepaid expenses and other 2,581,587 -
__________ __________
Total current assets 38,198,091 50,000
Property and equipment (Note 15):
Marine containers 42,995,931 -
Office furniture and equipment 163,761 -
Leasehold improvements 54,920 -
Vehicles 29,995 -
__________ __________
43,244,607 -
Less accumulated depreciation
and amortization 686,532 -
__________ __________
Property and equipment, net 42,558,075 -
Other assets:
Installment contracts
receivable, less current
maturities, net of unamortized
interest of Pounds 42,564,289 128,151,528 -
License rights (Note 3) 59,000,000 59,000,000
Goodwill, net of accumulated
amortization of Pounds
59,136 (Note 2) 827,905 -
Other 37,190 -
___________ __________
Total other assets 188,016,623 59,000,000
___________ __________
268,772,789 59,050,000
<FN>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
EUROPEAN BUSINESS GROUP (UK) Plc
Consolidated Balance Sheets
_________________________________________________________________
<CAPTION>
August 31, 1996 1995
(Pounds) (Pounds)
________________________________ ___________ __________
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable - trade 256,181 -
Accounts payable - other 10,494,898 -
Accruals and deferred income 12,285,931 27,000
Taxes and other 1,480,858 -
Current portion of capital
lease obligations (Note 6) 15,512,886 -
___________ __________
Total current liabilities 40,030,754 27,000
Capital lease obligations, less
current portion (Note 6) 130,669,109 -
Accruals and deferred income 39,393,735 -
Deferred income taxes 3,193,796 -
___________ __________
Total liabilities 213,287,394 27,000
Commitments (Note 7)
Stockholders' equity:
Common stock - Pound 1 shares;
70,000,000 shares authorized
and 59,050,000 shares issued 59,050,000 59,050,000
Foreign currency translation
adjustment 1,234,226 -
Accumulated deficit (4,798,831) (27,000)
___________ __________
Total stockholders' equity 55,485,395 59,023,000
___________ __________
268,772,789 59,050,000
<FN>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
</TABLE>
F-5
<PAGE>
<TABLE>
EUROPEAN BUSINESS GROUP (UK) Plc
Consolidated Statements of Operations
_________________________________________________________________
<CAPTION>
Years Ended August 31, 1996 1995
(Pounds) (Pounds)
________________________________ ___________ __________
<S> <C> <C>
Revenues (Note 10) 30,701,688 -
Cost of revenues 20,616,530 -
___________ __________
Gross profit 10,085,158 -
Administrative expenses 2,173,567 27,000
Amortization expense 59,136 -
___________ __________
Income (loss) from operations 7,852,455 (27,000)
Interest income and similar income 232,034 -
Interest expense (404,591) -
___________ __________
Income (loss) before taxes on income 7,679,898 (27,000)
Taxes on income (Note 4) 2,917,000 -
___________ __________
Net income (loss) 4,762,898 (27,000)
<FN>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
</TABLE>
F-6
<PAGE>
<TABLE>
EUROPEAN BUSINESS GROUP (UK) Plc
Consolidated Statements of Stockholders' Equity
Years Ended August 31, 1996 and 1995
_________________________________________________________________
<CAPTION>
Foreign
Common Stock Currency
_______________________ Translation Accumulated
Shares Amount Adjustment Deficit Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
__________ __________ __________ ___________ ___________
<S> <C> <C> <C> <C> <C>
Issuance of
common stock 59,050,000 59,050,000 - - 59,050,000
Net loss - - - (27,000) (27,000)
__________ __________ __________ ___________ __________
Stockholders' equity,
August 31, 1995 59,050,000 59,050,000 - (27,000) 59,023,000
Net income - - - 4,762,898 4,762,898
Excess of fair
market value
paid over
sellers'
historical
cost basis
of acquisitions
(Note 2) - - - (9,534,729) (9,534,729)
Translation
adjustment - - 1,234,226 - 1,234,226
__________ __________ __________ ___________ __________
Stockholders' equity,
August 31, 1996 59,050,000 59,050,000 1,234,226 (4,798,831) 55,485,395
<FN>
See accompanying summary of accounting policies and notes to consolidated financial
statements.
</TABLE>
F-7
<PAGE>
<TABLE>
EUROPEAN BUSINESS GROUP (UK) Plc
Consolidated Statements of Cash Flows
_________________________________________________________________
<CAPTION>
Increase (Decrease) in Cash
Years Ended August 31, 1996 1995
(Pounds) (Pounds)
____________________________________ ___________ __________
<S> <C> <C>
Cash flows from operating activities
Net income (loss) 4,762,898 (27,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation/amortization 686,505 -
Deferred income taxes 2,745,500 -
Foreign currency translation adjustment 1,234,226 -
Interest on capital lease obligation 404,109 -
Foreign currency exchange gain (220,967) -
Pre-capitalization interest/forex (430,809) -
Increase/(decrease) from changes in:
Accounts receivable - trade 249,663 -
Accounts receivable - other (9,129,196) -
Inventories 8,564,157 -
Installment contacts receivable (72,531,786) -
Prepaid expenses and other (2,581,587) -
Other assets (37,190) -
Accounts payable - trade 256,181 -
Accounts payable - other (1,409,690) -
Accruals and deferred income 13,108,775 27,000
Taxes and other 194,339 -
Net capital lease obligation
relating to the acquisition
of inventories 54,567,441 -
__________ __________
Net cash provided by operating activities 432,569 -
Cash flows from investing activities:
Purchase of tangible fixed assets (68,637) -
Purchase of subsidiary undertaking
(net of cash) (Note 2) (195,250) -
__________ __________
Net cash used in investing activities (263,887) -
__________ __________
Cash flows from financing activities:
Payments on capital lease obligations (61,861) -
__________ __________
Increase in cash 106,821 -
<FN>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
</TABLE>
F-8
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Summary of Accounting Policies
_________________________________________________________________
Business European Business Group (UK) Plc ("EBG" or "Company")
was incorporated on January 19, 1995 in the United Kingdom.
EBG is involved in the provision of corporate and private
finance services and the identification of tax efficient
products and investment opportunities.
During the year ended August 31, 1996, the Company established
its core business activities through the acquisition of
various trading subsidiaries. Details of these acquisitions
are set out in Note 2 to the financial statements. The
principal activity of the Company during the year related to
the purchase and sale of marine containers under lease
purchase agreements through its main subsidiary.
Future developments within EBG will include projects with UK
and international marketing companies and the establishment of
interests in banking, both on-shore and off-shore.
Consolidation The consolidated accounts include the financial statements of
European Business Group (UK) Plc and all of its subsidiaries
made up to August 31, 1996. The group uses the acquisition
method of accounting to consolidate the results of subsidiary
undertakings. The results of subsidiary undertakings are
included from the date of acquisition. All intercompany
accounts and transactions are eliminated on consolidation.
Revenues Revenues represent income derived from marine containers under
lease purchase agreements, the lease of marine containers and
container lease purchase handling fees and is recorded on the
accrual basis. Revenues are net of Value Added Taxes, where
such is applicable.
Inventories Inventories consist primarily of marine containers held for
resale and are stated at lower of specific cost and
net realizable value. Cost represents the present value of
the minimum lease purchase payments due over the term of the
related lease purchase agreements.
Net realizable value is calculated on the basis of anticipated
receivables under the provision of subsequent lease purchase
contracts.
F-9
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Summary of Accounting Policies
_________________________________________________________________
Property and Property and equipment is recorded at cost. Depreciation and
Equipment amortization is provided to write off the cost of all property
and equipment on a straight-line basis over their expected
useful lives. It is calculated at the following rates:
Leasehold improvements 25% per annum
Fixtures, fittings and equipment 25% per annum
Motor vehicles 33 1/3% per annum
Marine containers held as property and equipment are
depreciated at the same rate that the related lease purchase
creditor is settled. This results in the write down of the
marine containers involved to their estimated residual values
over a period of approximately ten years.
Goodwill Goodwill arising on an acquisition of a subsidiary undertaking
is the difference between the fair value of the consideration
paid and the fair value of the assets and liabilities
acquired. Goodwill is being amortized through the statement
of operations over its useful economic life of 15 years (Note
2).
License Rights License rights are valued at the lower of cost or net
realizable value. The license rights are held for sale and
not for the exploitation of the marketing concept. Therefore,
the Company has not amortized these rights (Note 3).
Foreign The functional currency for the Company's foreign operations
Currency is the applicable local currency. The translation of the
Translation applicable foreign currency into UK pounds is performed for
balance sheet accounts using current exchange rates in effect
at the balance sheet date and for revenue and expense accounts
using a weighted average exchange rate during the period. The
gains or losses resulting from such translation are included
in stockholders' equity.
Installment The installment contracts receivables represent the present
Contracts value of the minimum lease purchase payments receivable over
Receivables the term of the agreement.
F-10
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Summary of Accounting Policies
_________________________________________________________________
Installment Payments receivable under lease purchase contracts are
Contracts analyzed between the principal and interest component so that
Receivables the interest element is credited to the statement of
(Continued) operations over the period of the agreement and represents a
constant proportion of the outstanding principal payments
receivable.
Lease Purchase Lease purchase payments are analyzed between principal and
Payments and interest components so that the interest element is charged to
Receipts the statement of operations over the period of the lease
purchase agreement and represents a constant proportion of the
balances of principal repayments outstanding. The principal
elements reduces amounts payable to the lessor.
All other leases are treated as operating leases. The annual
rentals are credited or charged to the statement of operations
on a straight-line basis over the term of the lease.
Deferred Income Profit arising on the acquisition and provision of marine
containers under lease purchase agreements all undertaken for
5 year periods, has been deferred upon inception of the
agreements and released to the statement of operations so as
to give a constant periodic rate of return on capital over the
lease term.
Taxes on Income Deferred income taxes are provided for temporary differences
between the treatment of certain items for taxation and
accounting purposes at the end of each accounting period.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
Use of The preparation of financial statements in conformity with
Estimates generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates and
assumptions.
F-11
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Summary of Accounting Policies
_________________________________________________________________
Financial Installment contracts receivables were estimated by
Instruments discounting future cash flows using the current rates at which
similar installment contracts receivable would be made with
similar credit risks and for the same remaining maturities.
The fair value of installment contracts receivables and
capital lease obligations approximated the carrying value at
the balance sheet dates.
The fair value of all other financial instruments also
approximated the carrying value at the balance sheet dates.
Recent The Financial Standards Board has recently issued Statement of
Accounting Financial Accounting Standards ("SFAS") No. 121, "Accounting
Pronouncements for the Impairment of Long-Lived Assets" and SFAS No. 123,
"Accounting for Stock-Based Compensation". SFAS No. 121
requires that long-lived assets and certain identifiable
intangibles be reported at the lower of the carrying amount of
their estimated recoverable amount. SFAS No. 123 encourages
the accounting for stock-based employee compensation programs
to be reported within the financial statements on a fair value
based method. If the fair value based method is not adopted,
then the statement requires pro forma disclosure of net income
and earnings per share as if the fair value based method had
been adopted. The Company has not yet determined how SFAS No.
123 will be adopted or the statements impact on the financial
statements. Both statements are effective for fiscal years
beginning after December 15, 1995.
F-12
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
1. Acquisition Effective October 30, 1996 SDT Holding Corporation ("STD")
acquired the stock of European Business Group (UK), Plc,
("EBG") in a reverse acquisition in which EBG's stockholders
acquired voting control of SDT. The acquisition was
accomplished through an exchange of stock in which SDT
exchanged 18,000,000 shares of newly issued common stock for
100% of the outstanding common stock of EBG, resulting in
ownership by the stockholders of EBG of approximately 82% of
the combined company.
The transaction is accounted for as a reverse acquisition and
recapitalization with EBG as the acquiring company because
EBG's stockholders acquired a majority of the voting rights in
the combined company. Under this method of accounting, SDT's
assets and liabilities are recorded at their fair values which
approximates historical cost and historical financial results
reported by SDT are those of EBG with SDT operations reported
from the date of acquisition forward.
Due to the fact that SDT has been a development stage entity
since its inception and its assets, liabilities and operations
are insignificant to those of EBG, no pro forma financial
amounts are presented, since in fact the actual historical
financial statements of EBG also represent the pro forma
financial position and combined operations of the entities.
F-13
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
2. Subsidiaries The following were subsidiaries at August 31, 1996 and have
and all been included in the consolidated financial statements.
Acquisitions
Proportion
of voting
rights
and
ordinary
share
capital
Name held Nature of business
_______________________________ ____ ___________________
W Limited 100% Asset leasing
Lupa Marine (UK) Ltd 100% Purchase and sale of
marine containers
EBB Company Finance Limited 100% Business consulting
Crisum Corporate Consulting
Limited 100% Asset leasing and
group administration
Industrial & Trade Consultants Ltd 100% Asset leasing and
advertising,
partnership
investment
EBB Company Management
Limited 100% Marketing of licenses
EBB Trade Management
Limited 100% Advertising agent
EBG Trade Management
Limited 100% Dormant
EBG Corporate Consulting
Limited 100% Dormant
EBG Finance Limited 100% Dormant
EBG License Trade (UK)
Limited 100% Dormant
EBG License Trade (INT)
Limited 100% Dormant
EBG Company Leasing
Limited 100% Dormant
EBG Partner Limited 100% Dormant
EBG Timecharter Limited 100% Dormant
F-14
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
2. Subsidiaries i) Acquisitions in the year
and
Acquisitions During fiscal 1996 the Company acquired the following
(continued) subsidiaries, all of which have been included in the
consolidated accounts using the principles of acquisition
accounting:
Date of % of Consideration
Subsidiary Acquisition Holding (Fair Value)
(Pounds)
___________________ _________________ _______ ____________
Lupa Marine (UK) Ltd September 4, 1995 100% 7,800,000
loan debt
Industrial & Trade 2,200,000
Consultants Limited September 4, 1995 100% loan debt
W Limited October 1, 1995 100% 1 cash
EBB Company Finance
Limited September 4, 1995 100% 225,000 cash
Crisum Corporate
Consulting Limited September 4, 1995 100% 225,000 cash
EBB Trade Management
Limited June 3, 1996 100% 2 cash
EBG Trade Management
Limited September 4, 1995 100% 2 cash
EBG Corporate
Consulting Limited October 6, 1995 100% 2 cash
EBB Company
Management Limited September 4, 1995 100% (Acquired via
Industrial
& Trade
Consultants
The amount paid for the acquisitions exceeded the fair value
of net assets acquired, which also approximated historical
costs, by Pounds 10,421,770. However of this amount
Pounds 9,534,729 was attributed to net assets acquired from
persons who also own substantial portions of SDT Holding
Corporation. Therefore the Pounds 9,534,729 was written off
against the stockholders' equity of the Company leaving a
balance Pounds 887,041 which was assigned to Goodwill.
Unaudited pro forma results of operations as if the
acquisitions occurred at the beginning of each of the fiscal
years 1996 and 1995 are presented below. The unaudited pro
forma results have been prepared for comparative purposes only
and are not necessarily indicative of what would have occurred
had the acquisitions been completed as of those dates or of
any results that may occur in the future.
1996 1995
(Pounds) (Pounds)
__________ _________
Revenue 30,701,688 8,986,742
Net income (loss) 4,762,898 (4,097,293)
The amounts for fiscal year 1996 are approximately the same as
the consolidated statement of operations for fiscal year 1996
since the acquisitions of the operating companies took place
approximately at the beginning of fiscal year 1996.
F-15
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
3. License License rights consist of certain rights relating to the "City
Rights Info" marketing concepts venture acquired by the Company and
comprises:
1996 1995
(Pounds) (Pounds)
__________ __________
US license rights 42,000,000 42,000,000
UK license rights 17,000,000 17,000,000
__________ __________
Cost at August 31, 1996
and 1995 59,000,000 59,000,000
The license rights held at August 31, 1996 are rights to the
exploitation of the marketing concept in the US and the UK.
These license rights were acquired on the basis of the values
for which similar US license rights have been sold by other
parties. The consideration for the acquisition of these
license rights was satisfied through the issue of shares in
the Company during the period ended August 31, 1995.
On February 18, 1997, the Company entered into agreements for
the sale of the US and UK license rights for total
consideration of Pounds 59 million, payable no later than
February 19, 1997. The purchase consideration was
underwritten by Filbert Industries (Antilles) NV from whom the
Company purchased Worldwide license rights (excluding Denmark,
Norway, Sweden, Iceland, Great Britain and Northern Ireland
and the United States of America), ("the Worldwide License
Rights") for a consideration of Pounds 59 million payable no
later than February 19, 1997.
There has been no trading or any activity to date in the
Worldwide License Rights and accordingly the directors
instructed Corporate Valuations Limited, a firm specializing
in the valuation of intangible assets, to perform a valuation
of the Worldwide License Rights.
The preferred valuation basis adopted by Corporate Valuations
is an assessment of the net present value of future cash flows
derived from financial projections and other information
provided by the directors and obtained by Corporate Valuations
in the course of their work.
F-16
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
3. License The carrying value of the US and UK license rights held at
Rights August 31, 1996 is based on the valuation prepared by
(Continued) Corporate Valuations who have stated that they are of the
opinion that the value of the Worldwide License Rights is at
least equal to Pounds 59 million.
4. Income Taxes 1996 1995
(Pounds) (Pounds)
_________ ________
UK corporation tax - current 171,500 -
Deferred tax expense 2,745,500 -
_________
2,917,000 -
The deferred tax expense for 1996 of Pounds 2,745,500 relates
primarily to the difference in depreciation computations
between amounts allowable for income tax purposes and those
computed for financial reporting purposes. Additionally,
during the current year Pounds 448,296 in deferred tax
liabilities was recorded in connection with subsidiary
acquisitions. Income tax expense approximates the statutory
tax rate of 38%.
5. Accounts Accounts receivable - other are in respect of amounts due from
Receivable - Nadelar Business Corporation ("NBC"), a company registered in
Other the British Virgin Islands, which administers containers on
behalf of the Company and its customers. This amount
effectively represents the difference between amounts due to
the Company under certain hire purchase contracts and amounts
due by the Company to its suppliers under certain hire
purchase contracts, net of fees and similar costs payable by
the Company to NBC.
On November 8, 1996, the Company entered into a lease purchase
contract for the purchase of marine containers with a total
value at the inception of the lease of Pounds 32,344,445
($53,196,908). A deposit of Pounds 9,241,895 ($15,200,144)
under the contract was settled by NBC on behalf of the
Company.
F-17
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
6. Capital Obligations under finance leases and lease purchase contracts
Leases are due as follows:
Obligations
1996 1995
(Pounds) (Pounds)
___________ ________
Current maturities 28,952,684 -
Within 1-2 years 49,086,355 -
Within 2-5 years 118,858,273 -
___________ ________
Total obligation 196,897,312 -
Less amount representing
interest 50,715,317 -
___________ _________
146,181,995 -
Less current portion 15,512,886 -
___________ ________
Long term portion 130,669,109 -
7. Commitments The Company had annual commitments under non-cancelable
operating leases beginning January 18, 1996 for a ten year
period in the amount of Pounds 49,350 annually.
Rent expense for fiscal year 1996 was Pounds 49,350.
8. Going At August 31, 1996, the Company had loans outstanding of
Concern Pounds 10 million in respect of the acquisition of subsidiary
undertakings. Of these loans Pounds 2 million has been
assigned to other parties as per Note 16. The Company has
received confirmation from its creditors in respect of the
remaining loans of Pounds 8 million that they will not seek
payment until such time as the Company has sufficient funds to
make repayments without adversely affecting the trading status
of the Company. The financial statements of the
F-18
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
8. Going Company have been prepared on a going concern basis which
Concern assumes the continued support of its creditors in this
(Continued) respect.
9. Major Non- The Company as lessee, has entered into lease purchase
Cash contracts for the purchase of marine containers. The Company
Transactions as lessor, sells marine containers under lease purchase
contracts. The terms of the lease purchase agreements require
standard principal and associated interest payments plus
additional biannual principal repayments on lease purchase
agreements for the sale of marine containers. The Company has
made no cash payments and has received no cash receipts in
respect of the standard principal and associated interest
payments which have fallen due during the year. Amounts due
by the Company to its suppliers under lease purchase contracts
during the years have been settled by an administrator,
Nadelar Business Corporation, a company registered in the
British Virgin Islands. The difference between the amount
falling due to the Company under lease purchase contracts for
the sale of containers and the amount falling due by the
Company to its suppliers during the year has been settled by
the administrator in the form of deposits to suppliers for the
supply of additional containers to the Company.
During the year ended August 31, 1996, the company purchased
Pounds 42,922,311 in marine containers of which Pounds
34,042,142 was through the settlement of an installment
contract receivable and Pounds 8,880,169 was through capital
lease obligations. Also during the year ended August 31,
1996, the company purchased Pounds 22,995 of vehicles through
a capital lease obligation.
10. Revenues Revenues are comprised of Pounds 26,913,655 marine lease
purchase (including Pounds 18,032,829 interest income),
Pounds 2,935,348 marine container lease and Pounds 852,685
marine container handling fees. Revenues by geographical
market are comprised by country origin of Pounds 26,779,230
United Kingdom and Pounds 3,922,458 Outside European Union.
F-19
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
11. Operating This is arrived at after charging/(crediting):
August 31, 1996 1995
(Pounds) (Pounds)
____________________________________ ___________ ________
Allocated profit on lease
purchase contracts for the year (8,880,826) -
Interest receivable on lease purchase
contracts (18,032,829) -
Operating lease income (2,998,027) -
Depreciation 627,369 -
Amortization 59,136 -
Lease of plant and machinery -
operating lease - -
Lease of other assets -
operating leases 42,972 -
Auditors' remuneration -
audit services 40,000
non-audit services 59,156 -
Exchange gain (1,234,226) -
Interest payable on lease purchase
contracts 13,988,529 -
Depreciation includes Pounds 581,708 (1995 - Pounds Nil)
charged on assets held under finance leases and lease purchase
contracts.
12. Employees The average monthly number of employees of the group during
the year, including executive directors, was as follows:
1996 1995
August 31, Number Number
__________________________________ ______ ______
Administration 9 -
F-20
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
12. Employees Staff costs for all employees, including executive directors,
(Continued) consist of:
August 31, 1996 1995
(Pounds) (Pounds)
___________________________________ _______ _______
Wages and salaries 158,800 -
Social security costs 15,361 -
_______ _______
174,161 -
13. Directors August 31, 1996 1995
Emoluments: (Pounds) (Pounds)
___________________________________ _______ _______
Fees 4,000 -
Emoluments (excluding pension
contributions) of: (Pounds) (Pounds)
___________________________________ _______ _______
Chairman - -
Highest paid director 4,000 -
F-21
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
13. Directors Other directors' emoluments (except those whose
(Continued) duties were discharged wholly or mainly outside the United
Kingdom) fell within the ranges:
1996 1995
August 31, Number Number
______________________________________ ______ ______
Pounds 0 - Pounds 5,000 1 -
Grundberg Mocatta, a firm of solicitors, in which Carsten
Iversen is a senior partner and a director of the Company,
received fees amounting to Pounds 81,430 for legal and
professional advice given to the Company in the period.
Wingrave Finance, a consultancy firm, of which John Emms is a
director and a director of the Company received fees amounting
to Pounds 34,521 for consultancy services provided to the
Company in the period.
14. Interest
Payable August 31, 1996 1995
(Pounds) (Pounds)
_____________________________________ _______ _______
[S] [C] [C]
Bank overdrafts 482 -
Interest on lease purchase contracts 404,109 -
_______ _______
404,591 -
F-22
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
15. Property and
Equipment
Office
Lease- Equip-
hold ment & Motor Marine
Improve- Furni- Vehi- Contain-
ments ture cles ers Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
_______ _______ _______ __________ __________
Cost or valuation
At September 1, 1995 - - - - -
Additions 13,028 48,609 29,995 42,921,661 43,013,293
Subsidiary assets
acquired 41,892 115,152 - 74,270 231,314
_______ _______ ______ __________ __________
At August 31,
1996 54,920 163,761 29,995 42,995,931 43,244,607
_______ _______ ______ __________ __________
Depreciation
Provision for year 12,878 32,783 768 580,940 627,369
Subsidiary accumu-
lated depreci-
ation acquired 17,455 38,394 - 3,314 59,163
_______ _______ ______ __________ __________
At August 31,
1996 30,333 71,177 768 584,254 686,532
_______ _______ ______ __________ __________
Net book value
At August 31,
1996 24,587 92,584 29,227 42,411,677 42,558,075
_______ _______ ______ __________ __________
At August 31,
1995 - - - - -
The net book value of fixed assets for the Company includes an
amount of Pounds 42,434,672 (1995:Pounds Nil) in respect of
assets held under finance leases and lease purchase contracts.
Marine containers included in fixed assets are held for rental
under operating leases.
F-23
<PAGE>
EUROPEAN BUSINESS GROUP (UK) Plc
Notes to Consolidated Financial Statements
_________________________________________________________________
16. Subsequent On December 5, 1996 the Company entered into an agreement
Events with Northridge Finance Limited and Roseworth Financial
Services Limited whereby the Company assigned an amount
of Pounds 1,410,000 due to the Company by Nadelar
Business Corporation. As consideration for the
assignment the Company was released from its obligations
under a loan agreement for Pounds 2 million.
F-24
