Exhibit 9.3
TDS (DERMATOLOGY) LIMITED
DIRECTORS' REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2001
TDS (DERMATOLOGY) LIMITED
COMPANY INFORMATION
Directors R. Coomber
K. Freeman
Secretary R.A. Waterer
Company number 3687072
Registered office The Innovation Centre
University of Wales Swansea
Singleton Park
Swansea
SA2 8PP
Auditors BKR Haines Watts
9-21 Princess Street
Albert Square
Manchester
M2 4DN
TDS (DERMATOLOGY) LIMITED
CONTENTS
Page
Directors' report F1 - F2
Independent auditors' report F3
Profit an loss account F4
Balance sheet F5
Notes to the financial statements F6 - F9
The following pages do not form part of the audited accounts:
Detailed trading profit and loss account F10
Schedule of administrative expenses F11
TDS (DERMATOLOGY) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2001
The directors present their report and financial statements for the year ended
31 December 2001.
Principal activities
The principal activity of the company during the year was that of remote medical
diagnosis.
Results
The results for the year are set out in the profit and loss account on page 3.
During the year the Company changed its year end to 31st December 2001,
consequently the comparative figures are for the year ended 30th June 2001.
Directors
The following directors have held office since 1 January 2001:
R. Coomber
K. Freeman
Directors' interests
The directors' interests in the shares of the company were as stated below:
Ordinary shares of (pound) 1 each
31 December 2001 1 January 2001
R. Coomber -- --
K. Freeman -- --
K. Freeman and R. Coomber have interests in the shares of the holding company
and their interests are shown in the accounts of that company.
Auditors
BKR Haines Watts were appointed auditors to the company and in accordance with
Section 385 of the Companies Act 1985, a resolution proposing that they be
re-appointed will be put to the Annual General Meeting.
F-1
TDS (DERMATOLOGY) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2001
Directors' responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:
- - select suitable accounting policies and then apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position for the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
This report has been prepared in accordance with the special provisions of part
VII of the Companies Act 1985 relating to small companies.
By order of the board
R. A. Waterer
Secretary
12 August 2002
F-2
TDS (DERMATOLOGY) LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF TDS (DERMATOLOGY) LIMITED
We have audited the financial statements of TDS (DERMATOLOGY) LIMITED on pages 4
to 9 for the year ended 31 December 2001. These financial statements have been
prepared in accordance with the Financial Reporting Standard for Smaller
Entities (effective June 2002), under the historical cost convention and the
accounting policies set out therein.
Respective responsibilities of the directors and auditors. As described in the
statement of directors' responsibilities on page 2 the company's directors are
responsible for the preparation of the financial statements in accordance with
applicable law and United Kingdom Accounting Standards.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and United Kingdom Auditing
Standards.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the directors' report is not
consistent with the financial statements, if the company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and transactions with the company is not disclosed.
We read the directors' report and consider the implications for our report if we
become aware of any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing Standards
issued by the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the company's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Going concern
In forming our opinion, we have considered the adequacy of the disclosures made
in note 1 of the financial statements concerning the uncertainty as to the
continuation and renewal of the company's bank overdraft facility. In view of
the significance of this uncertainty we consider that it should be drawn to your
attention but our opinion is not qualified in this respect.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 December 2001 and of its profit for the year
then ended and have been properly prepared in accordance with the Companies Act
1985.
BKR Haines Watts 12 August 2002
Chartered Accountants 9-21 Princess Street
Registered Auditor Albert Square
Manchester
M2 4DN
F-3
TDS (DERMATOLOGY) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2001
Year Year
ended ended
31 December 30 June
2001 2001
Notes (pound) (pound)
Turnover 753,255 453,807
Cost of sales (411,105) (208,894)
--------- ---------
Gross profit 342,150 250,913
Administrative expenses (325,580) (285,812)
--------- ---------
Operating profit/(loss) 2 16,570 (34,899)
Interest payable and similar charges (12,760) (3,451)
--------- ---------
Profit/(loss) on ordinary activities
before taxation 3,810 (38,350)
Tax on profit/(loss) on ordinary activities 3 -- --
--------- ---------
Profit/(loss) on ordinary activities
after taxation 9 3,810 (38,350)
========= =========
F-4
TDS (DERMATOLOGY) LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2001
Dec 2001 June 2001
Notes (pound) (pound) (pound) (pound)
Fixed assets
Tangible assets 4 6,501 1,235
Current assets
Debtors 5 235,094 292,647
Cash at bank and in hand 200 50
-------- --------
235,294 292,697
Creditors: amounts falling due within
one year 6 (255,654) (295,579)
-------- --------
Net current liabilities (20,360) (2,820)
------- --------
Total assets less current liabilities (13,859) (1,647)
Creditors: amounts falling due after
more than one year 7 (30,833) (33,333)
------- --------
(44,692) (34,980)
======= ========
Capital and reserves
Called up share capital 8 100 100
Share premium account 9 14,996 14,996
Profit and loss account 9 (59,788) (50,076)
------- --------
Shareholders' funds (44,692) (34,980)
======= ========
These financial statements have been prepared in accordance with the special
provisions of Part VII of the Companies Act 1985 relating to small companies and
with the Financial Reporting Standard for Smaller Entities (effective March
2000).
The financial statements were approved by the Board on 12 August 2002
R. Coomber K. Freeman
Director Director
F-5
TDS (DERMATOLOGY) LIMITED
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2001
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost convention
and in accordance with the Financial Reporting Standard for Smaller
Entities (effective March 2000).
The company meets its day to day working capital requirements through an
overdraft facility and the continued support of the crown and its
suppliers. The directors are currently in the process of preparing a
prospectus to obtain equity funding in order to provide a cash injection.
The directors have reviewed the business projections for 12 months from
the date of their approval of these financial statements. On the basis of
the business review and discussions with their advisors and main
creditors, the directors consider the company will continue to operate as
a going concern and have prepared the financial statements on this basis.
1.2 Turnover
Turnover represents amounts receivable for goods and services net of VAT
and trade discounts
1.3 Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation
is provided at rates calculated to write off the cost less estimated
residual value of each asset over its expected useful life, as follows:
Medical equipment 20% Straight line
Computer and camera equipment 25% Straight line
Fixtures, fittings & equipment 20% Straight line
1.4 Leasing
Rentals payable under operating leases are charged against income on a
straight line basis over the lease term.
1.5 Deferred taxation
Deferred taxation is provided at appropriate rates on all timing
differences using the liability method only to the extent that, in the
opinion of the directors, there is a reasonable probability that a
liability or asset will crystallise in the foreseeable future.
1.6 Comparatives
This year the company has not taken advantage of the audit exemption
available, consequently the comparative figures shown for the year ended
30th June 2001 have not been audited.
2 Operating profit/(loss) Dec 2001 June 2001
(pound) (pound)
Operating profit/(loss) is stated after charging:
Depreciation of tangible assets 1,955 343
Auditors' remuneration 3,800 --
Directors' emoluments 45,574 111,626
------- -------
3 Taxation
The directors do not expect a tax liability to crystallise due to trading
losses in previous periods.
F-6
TDS (DERMATOLOGY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2001
4 Tangible fixed assets
Other
Land and tangible
buildings fixed assets Total
(pound) (pound) (pound)
Cost
At 1 January 2001 -- 36,698 36,698
Additions 1,569 10,830 12,399
Disposals -- (40,390) (40,390)
---------- --------- ----------
At 31 December 2001 1,569 7,138 8,707
---------- --------- ----------
Depreciation
At 1 January 2001 -- 12,590 12,590
On disposals -- (12,339) (12,339)
Charge for the year 314 1,641 1,955
---------- --------- ----------
At 31 December 2001 314 1,892 2,206
---------- --------- ----------
Net book value
At 31 December 2001 1,255 5,246 6,501
========== ========= ==========
At 30 June 2001 -- 1,235 1,235
========== ========= ==========
5 Debtors
Dec 2001 June 2001
(pound) (pound)
Trade debtors 105,578 174,631
Other debtors 129,516 118,016
---------- ----------
235,094 292,647
========== ==========
F-7
TDS (DERMATOLOGY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2001
6 Creditors: amounts falling due within one year Dec 2001 June 2001
(pound) (pound)
Bank loans and overdrafts 1,101 20,971
Trade creditors 16,112 12,808
Taxation and social security 91,836 75,474
Other creditors 145,605 186,236
---------- ----------
255,654 295,579
========== ==========
The bank overdraft is secured by a fixed and floating charge over all of
the company's assets.
7 Creditors: amounts falling due after more than one year Dec 2001 June 2001
(pound) (pound)
Other creditors 30,833 33,333
========== ==========
Analysis of loans
Wholly repayable within five years 77,833 80,333
Included in current liabilities (47,000) (47,000)
---------- ----------
30,833 33,333
========== ==========
8 Share capital Dec 2001 June 2001
(pound) (pound)
Authorised
100 Ordinary shares of(pound)1 each 100 100
========== ==========
Allotted, called up and fully paid
100 Ordinary shares of(pound)1 each 100 100
========== ==========
Share Profit and
premium loss
9 Statement of movements on reserves account account
(pound) (pound)
Balance at 1 January 2001 14,996 (63,598)
Retained profit for the period - 3,810
---------- ----------
14,996 (59,788)
========== ==========
F-8
TDS (DERMATOLOGY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2001
10 Financial commitments
AT 31 December 2001 the company had annual commitments under
non-cancelable operating leases as follows:
Dec 2001 June 2001
(pound) (pound)
Expiry date:
Between two and five years 51,820 --
========= =========
11 Transactions with directors
The following directors had interest free loans during the year. The
movement on these loans are as follows:
Amount outstanding Maximum
Dec 2001 June 2001 In period
(pound) (pound)
Director's current account (debit bal) 14,278 10,039 14,278
Director's current account (debit bal) 20,704 20,327 20,704
====== ====== ======
Included within consultation costs is (pound)67,128 that was paid to K.
Freeman, who is a director of the company, in regard to services provided
by himself.
12 Control
The ultimate parent company is TDS (Telemedicine) Limited, a company
registered in England and Wales.
F-9
TDS (DERMATOLOGY) LIMITED
DETAILED TRADING AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2001
Year ended
Year ended 30 June
31 December 2001 2001
(pound) (pound) (pound) (pound)
Turnover
Consultations 753,255 453,807
Cost of sales
Consultations 204,175 78,151
Travel costs 31,903 15,715
Medical sundries 16,759 4,309
Clinic rental 11,596 9,005
Wages and salaries (excl. N.I. 104,528 76,233
Employer's N.I. contributions 9,575 --
Equipment lease 32,569 19,481
---------- ----------
(411,105) (202,894)
--------- ---------
Gross profit 45.42% 342,150 55.29% 250,812
--------- ---------
Administrative expenses (325,850) (285,812)
--------- ---------
Operating profit/(loss) 16,570 (34,899)
Interest payable
Bank interest paid 4,480 1,518
Factor interest paid 2,730 1,933
Other interest paid 5,550 --
---------- ----------
(12,760) (3,451)
--------- ---------
Profit/(loss) before taxation 0.51% 3,810 8.45% (38,350)
========= =========
F-10
TDS (DERMATOLOGY) LIMITED
SCHEDULE OF ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED 31 DECEMBER 2001
Year Year
ended ended
31 December 30 June
2001 2001
(pound) (pound)
Administrative expenses
Wages and salaries (excl. N.I.) 116,615 59,473
Directors' remuneration 45,574 111,626
Employer's N.I. contributions 13,602 7,888
Rent re operating leases 11,021 5,508
Insurance 3,750 2,618
Repairs and maintenance 147 --
Printing, postage and stationery 33,875 24,240
Advertising -- 1,003
Telephone 22,150 16,073
Computer running costs 948 1,083
Motor vehicle leasing 9,449 --
Travelling & Motor expenses 38,523 30,960
Legal and prof fees - allowable 7,377 --
Accountancy 8,663 10,265
Audit fees 3,800 --
Bank charges 6,281 12,007
Factoring charges 10,418 5,688
Sundry expenses - allowable 2,137 2,952
Subscriptions - allowable 2,023 2,364
Depreciation on plant and machinery 1,395 --
Depreciation on FF & E 560 343
Profits/losses on disp of tangibles (12,728) (8,279)
--------- ---------
325,580 285,812
========= =========
F-11
tds (Telemedicine) Limited
FINANCIAL REPORT
DECEMBER 31, 2001
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT..............................................F-13*
FINANCIAL STATEMENTS
Consolidated Balance Sheet...........................................F-14
Consolidated Statement of Operations.................................F-15
Consolidated Statement of Changes in Members' Equity.................F-16
Consolidated Statement of Cash Flows.................................F-17*
Notes to Consolidated Financial Statements...........................F-18
* to be filed by amendment
F-12
tds (TELEMEDICINE) LIMITED
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2001
ASSETS
CURRENT ASSETS
Cash $ 290
Trade accounts receivable 246,996
Receivable from directors 50,863
Prepaid expenses 8,960
---------
Total current assets 307,109
PROPERTY AND EQUIPMENT, at cost
Medical equipment 2,275
Other 10,354
---------
12,629
Less accumulated depreciation 3,203
---------
9,426
---------
TOTAL ASSETS $ 316,535
=========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 112,858
Checks issued in excess of bank balances 1,596
Accounts payable 105,409
Taxes payable 133,162
Other accrued expenses 62,380
---------
Total liabilities 415,405
MEMBERS' EQUITY
Ordinary shares of 50 pence each; 2,000,000 shares
authorized and issued; 100 shares outstanding 158
Additional paid-in capital 23,695
Accumulated other comprehensive income (1,696)
Accumulated deficit (121,027)
---------
(98,870)
---------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 316,535
=========
F-14
tds (TELEMEDICINE) LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001
OPERATING REVENUES
Medical consultations $ 1,085,290
-----------
Total operating revenues 1,085,290
COST OF SALES 592,320
-----------
Gross profit 492,970
GENERAL AND ADMINISTRATIVE 502,947
-----------
Loss from operations (9,977)
OTHER INCOME (EXPENSE)
Interest expense (18,385)
-----------
Loss before income tax (28,362)
INCOME TAX --
-----------
Net loss ($28,362)
===========
Loss per share:
Basic $ 283.62
===========
Weighted average number
of shares outstanding
Basic 100
===========
F-15
tds (TELEMEDICINE) LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS' EQUITY
YEAR ENDED DECEMBER 31, 2001
Other
Additional Accumulated
Common Stock Paid-in Comprehensive Accumulated
Shares Amount Capital Income Deficit Total
------ ------ ------- ------ ------- -----
Balance, January 1, 2001 100 $158 $23,695 ($3,940) ($92,665) ($72,752)
Other comprehensive income -- -- -- 2,244 --
Net loss -- -- -- -- (28,362)
Total comprehensive income -- -- -- -- -- (26,118)
------ ------ ------- ------ --------- --------
Balance, December 31, 2001 100 $158 $23,695 ($1,696) ($121,027) ($98,870)
====== ====== ======= ====== ========= ========
F-16
tds (TELEMEDICINE) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
tds (Telemedicine) Limited (the Company) is a private company
incorporated under the Companies Act 1985 in the United Kingdom. The
consolidated financial statements include the accounts of tds
(Telemedicine) Limited and its wholly owned subsidy, tds
(Dermatology) Limited.
All intercompany transactions and balances have been eliminated upon
consolidation.
Nature of Operations
The Company utilizes the internet and digital and voice
communication technology to bridge the separation between medical
patients and diagnosing physicians when medical conditions exist in
which the patient and the physician are separated by space, time or
both. Since 1998, the Company has been providing these services to
the National Health Service in the United Kingdom. Expansion of
these services to the United States of America is anticipated in
future years.
Revenue
Revenue from medical consultations are recognized as services are
rendered.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided
over the estimated useful lives of the assets primarily by the
straight-line method as follows:
Computer equipment 4 years
Medical equipment 5 years
Other 5 years
Earnings (Loss) Per Common Share
Basic earnings (loss) per common share are computed based on the
weighted average number of common shares outstanding for the period.
The Company does not have any other potential common shares.
Cash Flows Presentation
For purposes of the statement of cash flows, the Company considers
all highly liquid investments purchased with maturities of three
months or less to be cash equivalents.
Advertising
The Company expenses all advertising costs as incurred. Expense for
the year ended December 31, 2001 was immaterial.
F-18
tds (TELEMEDICINE) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Allowance for Doubtful Accounts
All receivables for which collection is doubtful have been written
off by management. Thus, no allowance is included in the
accompanying financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States
of America 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
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Financial Instruments
Financial instruments of the Company consist of cash and cash
equivalents, accounts receivable, accounts payable and notes
payable. Recorded values of cash, receivables and payables
approximate fair values due to short maturities of the instruments.
Long-lived Assets
Long-lived assets to be held and used by the Company are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The
Company continuously evaluates the recoverability of its long-lived
assets based on estimated future cash flows and the estimated
liquidation value of such long-lived assets, and provides for
impairment if such undiscounted cash flows are insufficient to
recover the carrying amount of the long-lived assets.
Foreign Currency Translation
Assets, liabilities and operations of subsidiaries are recorded
based on the functional currency of each entity. For the foreign
operations, the functional currency is the local currency, in which
case the assets, liabilities, and operations are translated, for
consolidation purposes, at current exchange rates from the local
currency to the reporting currency, the U. S. dollar. The resulting
gains or losses are reported as a component of stockholders' equity.
NOTE 2. CONCENTRATIONS OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash equivalents and trade
receivables. All cash is maintained in banks in the United Kingdom.
Concentrations of credit risk with respect to trade receivables
consist principally of medical service customers operating within
the United Kingdom.
No allowance for doubtful accounts has been provided for trade
accounts receivable since recorded amounts are determined to be
fully collectible.
NOTE 3. NOTES PAYABLE
Notes payable consist of the following at December 31, 2001:
Note payable to an individual, interest at 15%, no stated payment
terms, classified in accompanying financial statements as due on
demand $ 10,150
F-19
tds (TELEMEDICINE) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. NOTES PAYABLE-continued
Note payable to an individual, unsecured, due January
15, 2002, with interest at 15% 43,500
Note payable to a financial institution, unsecured,
interest at 1.25% above the prevailing bank base rate
at time of borrowing; original term for five years;
classified in accompanying financial statements as due
on demand due to default under loan agreement 59,208
Total notes payable $112,858
========
NOTE 4. INCOME TAXES
Deferred income tax assets and liabilities are computed annually for
differences between financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the
future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized. Income tax expense is the tax payable
or refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.
The Company federal tax provision consists of the following:
Current $ --
Deferred --
-------
$ --
=======
The income tax provision differs from that computed by applying statutory
rates to net income as follows:
Taxes at statutory rates $ 9,643
Losses no providing tax benefits (9,643)
-------
--
Tax provision $ --
========
At March 31, 2002, the deferred tax asset and liability balances are as
follows:
Deferred tax asset
Net operating loss $35,448
Deferred tax liability
Depreciation (9,280)
-------
Net deferred tax asset 26,168
Valuation allowance (26,168)
-------
$ --
=======
The net change in the valuation allowance for 2001 is an increase of
approximately $9,600. The deferred tax asset is due to the net operating
loss carryover.
The Company has a net operating loss carryover of approximately $100,000
available to offset future income for income tax reporting purposes.
F-20
tds (TELEMEDICINE) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. COMPREHENSIVE INCOME
Comprehensive income consists of the following for the year ended December
31, 2001:
Other comprehensive income:
Foreign currency translation gain $ 2,244
Reclassification adjustment --
Tax effect --
-------
Net foreign currency translation gain $ 2,244
========
Accumulated other comprehensive income (loss) consists entirely of foreign
currency translation adjustments.
NOTE 6. SUBSEQUENT EVENT
On December 18, 2002, the Company and its parent, tds (Telemedicine) Inc.
consummated a merger with Surf Group Inc., a United States corporation.
NOTE 7. TRANSFER OF TRADE RECEIVABLES
The Company has entered into a factoring agreement with Royal Bank of
Scotland Commercial Services Limited. This agreement does not meet the
criteria for sales recognition and, accordingly, is accounted for as a
secured borrowing with a pledge of collateral.
Included in accounts payable is $93,908 of proceeds from factoring $111,142
of trade accounts receivable at December 31, 2001.
F-21