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EXHIBIT 99.01
Advantis Network & System Sdn. Bhd. Audited Financial Statements for the Years
Ended March 31, 1996 and 1997 (with unaudited information as of September 30,
1997 and for the six months ended September 30, 1996 and 1997)
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Advantis Network &
System Sdn Bhd
Consolidated Financial Statements
YEARS ENDED MARCH 31, 1996 AND 1997
(With Unaudited Information as of September 30, 1997 and
for the Six Months Ended September 30, 1996 and 1997)
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ADVANTIS NETWORK & SYSTEM SDN BHD
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT 10
FINANCIAL STATEMENTS
Consolidated Balance Sheets 11 - 12
Consolidated Statements of Operations 13
Consolidated Statements of Shareholders' Equity 14
Consolidated Statements of Cash Flows 15 - 16
Summary of Accounting Policies 17 - 19
Notes to Financial Statements 20 - 23
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and the Shareholders of Advantis Network & System Sdn Bhd and
NHancement Technologies Inc.
We have audited the accompanying consolidated balance sheets of Advantis Network
& System Sdn Bhd as of March 31, 1996 and 1997, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
two years in the period ended March 31, 1997. These consolidated financial
statements are the responsibility of Advantis' 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
in the United States and Malaysia. 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 Advantis Network &
System Sdn Bhd as of March 31, 1996 and 1997 and the results of its operations
and its cash flows for each of the two years in the period ended March 31, 1997,
in conformity with the accounting principles generally accepted in the United
States.
BDO Binder
Kuala Lumpur, Malaysia
October 29, 1997, except for
Note 9 which is as of December 15, 1997
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ADVANTIS NETWORK & SYSTEM SDN BHD
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------
September 30,
MARCH 31, MARCH 31, 1997
1996 1997 (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
ASSETS (NOTE 9)
CURRENT
Cash $ 2,530 $ 421 $ 83
Accounts receivable, less allowance for doubtful 712,364 2,621,285 1,335,239
accounts of Nil and $212,060 at March 31,1996
and 1997 and $206,159 at September 30,1997
Inventories
Systems and system components 223,051 282,956 291,708
Work in process - - 35,380
- --------------------------------------------------------------------------------------------------------------------
Total inventories 223,051 282,956 327,088
- --------------------------------------------------------------------------------------------------------------------
Restricted cash (Note 2) - 40,225 31,104
Prepaid expenses and other 9,443 18,596 12,803
Current portion of amount due from shareholder (Notes 2 and
6) - - 16,641
- --------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 947,388 2,963,483 1,722,958
- --------------------------------------------------------------------------------------------------------------------
DUE FROM SHAREHOLDER, NET OF CURRENT PORTION (NOTES 2
AND 6) - - 230,206
PROPERTY AND EQUIPMENT, NET (NOTE 1) 78,036 175,010 136,620
- --------------------------------------------------------------------------------------------------------------------
$ 1,025,424 $ 3,138,493 $ 2,089,784
====================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements
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ADVANTIS NETWORK & SYSTEM SDN BHD
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------
September 30,
MARCH 31, MARCH 31, 1997
1996 1997 (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Line of credit (Note 2 ) $ 32,367 $ 56,044 $ 131,824
Accounts payable 364,644 1,933,877 714,053
Accrued expenses 47,916 248,972 182,788
Payable to affiliates (Note 6) 241,453 801,187 502,823
Payable to shareholders (Note 6) 103,100 102,494 60,636
Income taxes payable 42,531 39,829 32,316
Current portion of term loan (Note 2) - - 16,641
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 832,011 3,182,403 1,641,081
- --------------------------------------------------------------------------------------------------------------------
Due to NHancement Technologies Inc. (Note 9) - - 300,000
Term loan, net of current portion (Note 2) - - 230,206
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 832,011 3,182,403 2,171,287
- --------------------------------------------------------------------------------------------------------------------
MINORITY INTERESTS 11,380 - -
COMMITMENTS AND CONTINGENCY (NOTES 4, 5 AND 9)
- --------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (NOTE 9)
Ordinary shares, at par 97,429 97,429 97,429
500,000 shares authorized;
250,000 shares issued and
outstanding
Retained earnings (accumulated deficit) 85,382 (153,991) (156,602)
Cumulative translation adjustment (778) 12,652 (22,330)
- --------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 182,033 (43,910) (81,503)
- --------------------------------------------------------------------------------------------------------------------
$ 1,025,424 $ 3,138,493 $ 2,089,784
====================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements
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ADVANTIS NETWORK & SYSTEM SDN BHD
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
Six Months
ended September 30,
YEARS ENDED MARCH 31, 1996 1997
1996 1997 (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
NET REVENUES $ 1,670,868 $ 3,851,412 $ 696,683 $ 1,151,334
Cost of revenues 1,325,206 3,454,711 660,658 932,996
- --------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 345,662 396,701 36,025 218,338
- --------------------------------------------------------------------------------------------------------------------
Marketing and selling 88,714 142,502 53,466 79,680
General and administrative 113,371 462,691 55,016 59,545
- --------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 202,085 605,193 108,482 139,225
- --------------------------------------------------------------------------------------------------------------------
INCOME(LOSS) FROM OPERATIONS 143,577 (208,492) (72,457) 79,113
Other:
Loss on disposal of a subsidiary - (30,765) - -
company (Note 6)
Unrealised foreign exchange loss - - - (80,339)
Minority interest (4,856) - (7,987) -
- --------------------------------------------------------------------------------------------------------------------
INCOME(LOSS) BEFORE INCOME TAXES 138,721 (239,257) (80,444) (1,226)
INCOME TAXES (NOTE 3) 41,431 116 36 1,385
- --------------------------------------------------------------------------------------------------------------------
====================================================================================================================
NET INCOME(LOSS) $ 97,290 $ (239,373) $ (80,480) $ (2,611)
====================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements
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ADVANTIS NETWORK & SYSTEM SDN BHD
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------
Retained Total
Earnings Cumulative Shareholders'
Ordinary shares (Accumulated Translation Equity
Shares Amount Deficit) Adjustment (Deficit)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, March 31, 1995 100,000 $ 37,091 $ (11,908) $ 1,842 $ 27,025
Issuance of ordinary shares 150,000 60,338 60,338
Net income 97,290 97,290
Translation adjustment (2,620) (2,620)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, March 31, 1996 250,000 97,429 85,382 (778) 182,033
Net loss (239,373) (239,373)
Translation adjustment 13,430 13,430
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, March 31, 1997 250,000 97,429 (153,991) 12,652 (43,910)
Net loss (unaudited) (2,611) (2,611)
Translation adjustment (unaudited) (34,982) (34,982)
- -----------------------------------------------------------------------------------------------------------------------
BALANCE, September 30, 1997
(unaudited) 250,000 $ 97,429 $ (156,602) $ (22,330) $ (81,503)
=======================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements
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ADVANTIS NETWORK & SYSTEM SDN BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------------
Six Months
ended September 30,
YEARS ENDED MARCH 31, 1996 1997
1996 1997 (Unaudited) (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $ 97,290 $ (239,373) $ (80,480) $ (2,611)
Adjustments to reconcile net income(loss)
to net cash provided by (used in)
operating activities:
Provision for doubtful accounts - 212,361 2,167 6,159
Loss on disposal of assets 459 2,593 - -
Depreciation 20,612 58,470 14,240 16,840
Income taxes 42,531 525 70 1,518
Translation exchange differences (2,641) 16,888 2,983 (16,170)
Minority interest 3,256 - 7,953 -
Changes in assets and liabilities:
Accounts receivable (214,259) (2,135,440) (283,222) 1,279,887
Inventories (114,658) (59,905) (26,861) (44,132)
Prepaid expenses and other (5,869) (25,517) (3,202) 5,793
Accounts payable and accrued
expenses (161,129) 1,757,656 380,383 (1,277,755)
Payable to shareholders 7,656 4,901 (22,250) (41,858)
Payable to affiliates 241,453 561,103 (8,935) (298,364)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATIONS (85,299) 154,262 (17,154) (370,693)
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (46,652) (141,003) - (18,133)
Proceeds from sales of assets 9,466 1,987 - -
Restricted cash - (40,225) (23,477) -
Due from shareholder - - - (246,848)
- -----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES $ (37,186) $ (179,241) $ (23,477) $ (264,981)
- -----------------------------------------------------------------------------------------------------------------------
See accompanying summary of accounting policies and notes to consolidated
financial statements
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ADVANTIS NETWORK & SYSTEM SDN BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------------
Six Months
ended September 30,
YEARS ENDED MARCH 31, 1996 1997
1996 1997 (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under lines of credit $ 32,367 $ 22,870 $ 38,209 $ 88,488
Proceeds from issuance of ordinary shares 60,338 - - -
Proceeds from term loan - - - 248,834
Payment of term loan - - - (1,986)
Borrowings from NHancement
Technologies Inc. - - - 300,000
- ---------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 92,705 22,870 38,209 635,336
=====================================================================================================================
NET DECREASE IN CASH (29,780) (2,109) (2,422) (338)
CASH, beginning of period 32,310 2,530 2,530 421
- ---------------------------------------------------------------------------------------------------------------------
CASH, end of period $ 2,530 $ 421 $ 108 $ 83
=====================================================================================================================
See accompanying summary of accounting policies and notes to consolidated
financial statements
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ADVANTIS NETWORK & SYSTEM SDN BHD
SUMMARY OF ACCOUNTING POLICIES
BUSINESS Advantis Network & System Sdn Bhd (the Company),
is a data networking systems integrator located
and incorporated in Kuala Lumpur, Malaysia.
Operations of the Company commenced in 1994. Its
revenues are derived principally from the sale
of equipment to support local area and wide area
networks. The Company also provides associated
services related to system design, cable
installation and project management.
Substantially all customers are located in
Malaysia.
PRINCIPLES OF The consolidated financial statements include
CONSOLIDATION the accounts of the Company, its 51% owned
subsidiary, Advantis Structures System Sdn
Bhd, and the accounts of Advantis Integration
Sdn Bhd, a 51% owned subsidiary, through the
date of its sale, January 10, 1997. All
significant inter company transactions and
accounts are eliminated on consolidation.
INVENTORIES Inventories consist primarily of systems and
system components and are valued at the lower of
cost (first-in, first-out method) or market.
PROPERTY, Property and equipment is stated at cost.
EQUIPMENT AND Depreciation is provided using the straight-line
DEPRECIATION method over the estimated useful lives of the
respective assets, which range from three to
five years. Maintenance and repairs are expensed
as incurred and improvements are capitalized.
REVENUE RECOGNITION The Company recognizes revenue under several
methods as dictated by the nature of the service
or product provided and the terms of the sales
agreement. Generally, equipment sales are
recognized when all significant uncertainties
about customer acceptance of the equipment have
been resolved. Once equipment installation is
complete, seller obligations, including
estimated future technical support costs, are
immaterial. The cost of these obligations,
including estimated warranty costs, are provided
as a charge in the period revenue is earned and
the estimated future obligation is included in
other accrued liabilities. Cabling services,
design and project management revenues are
recognized when the services are provided.
INCOME TAXES The Company uses the liability method of
accounting for income taxes in accordance with
Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." Deferred
income tax assets and liabilities are recognized
based on the temporary differences between the
carrying amounts of assets and liabilities for
financial reporting purposes and the amounts
used for income tax purposes.
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ADVANTIS NETWORK & SYSTEM SDN BHD
SUMMARY OF ACCOUNTING POLICIES
NEW ACCOUNTING In June 1997, the Financial Accounting Standards
PRONOUNCEMENTS Board issued Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive
Income (SFAS 130), which establishes standards
for reporting and display of comprehensive
income, its components and accumulated balances.
Comprehensive income is defined to include all
changes in equity except those resulting from
investments by owners and distributions to
owners. Among other disclosures, SFAS 130
requires that all items that are required to be
recognized under current accounting standards as
components of comprehensive income be reported
in a financial statement that is displayed with
the same prominence as other financial
statements.
SFAS 130 is effective for financial statements
for periods beginning after December 15, 1997
and requires comparative information for earlier
years to be restated. Because of the recent
issuance of this standard, management has been
unable to fully evaluate the impact, if any, the
standard may have on future financial statement
disclosures. Results of operations and financial
position, however, will be unaffected by
implementation of this standard.
In June 1997, the Financial Accounting Standards
Board issued SFAS No. 131, Disclosures about
Segments of an Enterprise and Related
Information, (SFAS 131) which supersedes SFAS
No. 14, Financial reporting for Segments of a
Business Enterprise. SFAS 131 establishes
standards for the way that public companies
report information about operating segments in
annual financial statements and requires
reporting of selected information about
operating segments in interim financial
statements issued to the public. It also
establishes standards for disclosures regarding
products and services, geographic areas and
major customers. SFAS 131 defines operating
segments as components of a company about which
separate financial information is available that
is evaluated regularly by the chief operating
decision maker in deciding how to allocate
resources and in assessing performance.
SFAS 131 is effective for financial statements
for period beginning after December 15, 1997 and
requires comparative information for earlier
years to be restated. Because of the recent
issuance of this standard, management has been
unable to fully evaluate the impact, if any, it
may have on future financial statement
disclosures. Results of operations and financial
position, however, will be unaffected by
implementation of this standard.
CURRENCY TRANSLATION The Company's functional currency is the
Malaysian ringgit. Balance sheet accounts have
been translated into United States dollars at
the rate of exchange in effect at the balance
sheet dates and revenue and expense accounts are
translated using average rates during the
periods. Translation adjustments are recorded as
a separate component of shareholders' equity.
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ADVANTIS NETWORK & SYSTEM SDN BHD
SUMMARY OF ACCOUNTING POLICIES
USE OF ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting
principles requires management 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.
UNAUDITED INFORMATION The accompanying consolidated balance sheet as
of September 30, 1997 and the consolidated
statements of operations and cash flows for
the six months ended September 30, 1996 and
1997 have not been audited. However, in the
opinion of management, they include all
adjustments necessary for a fair presentation
of the financial position and the results of
operations for the periods presented. The
results of operations for the six months
ended September 30, 1997 are not necessarily
indicative of results to be expected for any
future period.
FINANCIAL INSTRUMENTS The Company's financial instruments consist of
cash, accounts receivable and debt. The carrying
value of cash and accounts receivable
approximate fair value based upon the liquidity
and short-term nature of the assets. The
carrying value of short-term and long-term debt
approximates the fair value based upon
short-term and long-term borrowings at market
rate interest.
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ADVANTIS NETWORK & SYSTEM SDN BHD
NOTES TO FINANCIAL STATEMENTS
(Information for September 30, 1996 and 1997 is Unaudited)
1. PROPERTY AND EQUIPMENT Property and equipment consist of the following:
September 30,
MARCH 31, MARCH 31, 1997
1996 1997 (Unaudited)
----------------------------------------------------------------------------------------
Automobiles $ 45,300 $ 62,362 $ 48,221
Furniture, fixtures
and office equipment
32,657 130,631 104,712
Computers 25,103 62,521 62,777
-----------------------------------------------------------------
103,060 255,514 215,710
Accumulated
depreciation (25,024) (80,504) (79,090)
-----------------------------------------------------------------------------------------
$ 78,036 $ 175,010 $ 136,620
=========================================================================================
2. CREDIT AGREEMENTS At March 31, 1997, the Company had the
AND TERM LOAN following types of credit and term loan
facilities:
o A $100,563 overdraft facility for working
capital purposes from a financial
institution. Interest rate is at 2.00%
plus the base lending rate (BLR). The BLR
at March 31, 1997 was 9.6%. Borrowings are
payable upon demand. At March 31, 1997 the
amount utilised under the facility was
$56,044 and subject to an annual renewal
on June 20, 1998. Certain cash deposits
are pledged as collateral and restricted
for the repayment of this overdraft
facility.
o A $603,379 facility collaterized by
eligible accounts receivable, for document
advances, letters of credit and trust
receipts. Borrowings are short term,
limited to 80% of accounts receivable and
bear interest at 2.25% plus the BLR. No
borrowings were outstanding at March 31,
1996 and 1997. The facility is subject to
an annual renewal on February 28, 1998.
o A $301,689 facility for overdraft,
letters of credit and trust receipts, and
$321,802 for a term loan from another
financial institution. The term loan
requires 180 monthly payments of $3,759
including interest, through April 2012.
Borrowings under the term loan and the
$301,689 short term facility bear interest
at 2.25% plus BLR. No borrowings were
outstanding at March 31, 1996 and 1997.
This facility is subject to an annual
renewal on February 28, 1998.
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ADVANTIS NETWORK & SYSTEM SDN BHD
NOTES TO FINANCIAL STATEMENTS
(Information for September 30, 1996 and 1997 is Unaudited)
Borrowings under these facilities are
guaranteed by the shareholders, and a majority
shareholder has pledged certain owned real
property as collateral. In addition, a sinking
fund amounting to 10% of the cash collections
received must be established and reserved for
loan repayments. In April 1997, all the
proceeds from the term loan were advanced by
the Company to the majority shareholder. The
Company has recorded a receivable from the
majority shareholder and a related loan payable
under the credit facility. Under the terms of
the shareholder loan agreement, repayments
including interest, will match the Company's
payments due under the term loan.
3. INCOME TAXES The provision for income tax consists of :
Six Months
YEARS ENDED ended September 30,
MARCH 31 1996 1997
1996 1997 (Unaudited) (Unaudited)
----------------------------------------------------------------------------------------
Current $ 41,431 116 36 25,487
Deferred - - - (24,102)
----------------------------------------------------------------------------------------
Provision for
income tax $ 41,431 116 36 1,385
========================================================================================
The income taxes for March 31, 1997 and
September 30, 1996 is in respect of taxes on
the profit of a subsidiary. The effective tax
rate is higher than the statutory tax rate for
September 30, 1997 due to certain expenses
which are not deductible for tax purposes.
4. LEASE COMMITMENTS The Company leases its corporate and sales
office facilities and office equipment under
operating leases that expire at various times
in 1999 and 2000. The lease for the corporate
office facility is with an entity that is
partially owned by a minority shareholder of
the Company (See Note 6). Certain facility
leases require the Company to pay maintenance
and utilities.
The Company's future minimum lease commitments
for operating leases are as follows:
Year ending March 31
----------------------------------------------------------------------------------------
1998 $ 55,350
----------------------------------------------------------------------------------------
1999 52,132
----------------------------------------------------------------------------------------
2000 24,779
$ 132,261
========================================================================================
Rent expense under operating leases was $17,062
and $25,892 for the years ended March 31, 1996
and 1997 respectively.
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ADVANTIS NETWORK & SYSTEM SDN BHD
NOTES TO FINANCIAL STATEMENTS
(Information for September 30, 1996 and 1997 is Unaudited)
5. EMPLOYEES' The Company as a Malaysian corporation, is
RETIREMENT FUND obligated to pay a minimum contribution
equivalent to 12% of employee salaries to a
fund administered by the government.
Contributions in excess of 12% are
discretionary. Contribution expense for the
years ended March 31, 1996 and 1997 totaled
$22,712 and $39,311.
6. RELATED PARTY During the years ended March 31, 1996 and 1997,
TRANSACTIONS the Company has entered into various sales and
purchase transactions with certain companies
whose directors and/or shareholders are also
shareholders of the Company. During 1996 and
1997, sales to these companies were $134,541
and $219,832, respectively, and purchases from
these companies were $144,740 and $609,311,
respectively. At March 31, 1996 and 1997, the
amount payable to these companies was $241,453
and $801,187, respectively.
During the year ended March 31, 1997, a
subsidiary of the Company was sold to the
spouse of one of the Company's minority
shareholders and a third party for $8,122
resulting in a $30,765 loss on disposal.
At March 31, 1996 and 1997, the Company owed
certain shareholders of the Company $103,100
and $102,494 for expenses paid by these
shareholders on behalf of the Company.
The Company leases its corporate facility from
an entity partially owned by a minority
shareholder. The lease commenced in November
1996, and its terms provide for annual payments
of $42,480 through October 1999. Rents paid
under this lease totaled $11,959 for 1997.
7. CONCENTRATION RISK Trade accounts receivable are due primarily
from numerous customers located in various
geographic regions throughout Malaysia. The
Company performs ongoing credit evaluations of
its customers' financial conditions and
establishes an allowance for doubtful accounts
based upon the credit risk of specific customers
historical trends and other information. The
Company does not require collateral from its
customers.
Revenues from two customers accounted for
approximately 59% and 12%, or 71% in the
aggregate, of 1997 net revenues. Included in
accounts receivable at March 31, 1997 is
$664,769 and $171,347 due from these two
customers. Revenue from four customers accounted
for 26%, 17%, 17% and 15%, or 75% in the
aggregate, of 1996 net revenues.
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ADVANTIS NETWORK & SYSTEM SDN BHD
NOTES TO FINANCIAL STATEMENTS
(Information for September 30, 1996 and 1997 is Unaudited)
8. STATEMENT OF Supplemental disclosures of cash flow
CASH FLOWS information:- Cash paid for:
Six Months
YEARS ENDED ended September 30,
MARCH 31 1996 1997
1996 1997 (Unaudited) (Unaudited)
-----------------------------------------------------------------------------------------
Interest $ 3 $ 29 - $ 4,103
=========================================================================================
There were no income taxes paid during any of
the above periods.
9. STOCK SALE AGREEMENT On December 15, 1997, the shareholders of the
AND SUBSEQUENT EVENTS Company consumated an Agreement for the sale of
the shares in the Company (the Sale Shares)
with NHancement Technologies Inc.
(NHancement) whereby NHancement acquired the
entire issued and fully paid up ordinary shares
of the Company. The consideration for the Sale
Shares is a maximum of an aggregate of 530,000
fully paid and non-assessable shares of
NHancement's common stock, of which 230,000
shares are being withheld subject to meeting
profit targets over the next two fiscal years.
During the six months ended September 30, 1997,
the Company borrowed $300,000 from NHancement
for its operations subject to a promissory note
and secured by the assets of the Company and
certain personal guarantees.
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