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Amadeus International closes a strategic transaction with Fujitsu Consulting
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QUEBEC CITY, May 3 /CNW Telbec/ - Amadeus International inc. "Amadeus" (TSX-V: AML), a pioneer and leader of advanced compliance process control solutions, announced today the conclusion of a transaction to sell its Corporate Governance and Financial Compliance Consulting Unit, formerly known as M3K Solutions, to Fujitsu Consulting, for an amount of three million five hundred eighty thousand seven hundred ninety five dollars ($3 580 795), subject to final approval by the TSX Venture Exchange and some of Amadeus creditors. Over the last months, M3K Solutions was liquidated into Amadeus International. The transaction with Fujitsu Consulting consisted of selling the consulting unit assets: ongoing client engagements, employment and subcontractor contracts, as well as the intellectual property specifically required for the conduct of compliance consulting engagements. Sixty percent (60%) of the agreed amount, that is two million one hundred forty eight thousand four hundred seventy seven dollars ($2 148 477) has been paid up front by Fujitsu Consulting while the remaining portion, forty percent (40%) of one million four hundred thirty two thousand three hundred and eighteen dollars ($1 432 318), will be paid in deferred quarterly installments over a 24 month period. M3K Solutions Inc., an independent consulting firm in corporate governance and financial compliance, was acquired by Amadeus in June 2005. M3K Solutions Inc. was instrumental in substantially increasing Amadeus' visibility in the public companies market as well as in providing Amadeus with the knowledge and intellectual capital required to enhance eQCM, its process control software solution, with Sarbanes Oxley and Bill 198 financial and corporate governance content. "In reviewing Amadeus market strategy, business and investment plans since I joined as President and CEO of Amadeus in January of this year, it became apparent that we had to focus our energies on the development and distribution of our compliance process control solution, the eQCM suite, and that a two-pronged strategy would have required substantial investments in two very distinct areas", says Yves Leblanc. "We thus started to look for a buyer that would enhance the value of our consulting unit while maintaining the quality, integrity and exceptional client service that we have become known for in the corporate governance and financial compliance market. We were also seeking a buyer that could complement Amadeus as a potential partner to accompany our eQCM clients in the deployment of their financial and operational compliance strategies and business processes. Fujitsu Consulting provided the impetus to move forward with this transaction. Fujitsu Consulting is acquiring our consulting unit activities and both the acquirer and Amadeus are engaged in negotiating a partnership agreement that will complement and enhance our compliance process control solution with highly professional consulting services. Amadeus International will continue its focus on Sarbanes-Oxley and Bill 198 compliance process control through the development and delivery of a comprehensive solution integrated in eQCM. During the first and second quarters of 2006 financial year, the M3K division net revenues represented 68.96% of Amadeus total revenues. After the transaction, Amadeus will concentrate its efforts on its core business, that is the development and distribution of eQCM, its compliance process control solution; the activities and revenues of Amadeus will thus be concentrated in perpetual software license sales, annual maintenance revenues and professional services fees. The professional services fees will be solely those related to the implementation and deployment of eQCM. "Proceeds from the transaction will be used to offset the bank loan that Amadeus took when acquiring M3K. Amadeus bankers have agreed to a loan repayment schedule that is in line with the transaction payment schedule. Amadeus will also use the proceeds to invest into our North American and European business model as well as our direct and indirect commercial networks to substantially increase market awareness, market share, sales velocity and deal flows", added Mr. Leblanc. For a better understanding of the transaction and its financial impacts, you will find below a comparison of Amadeus' December 2005 financial statements and the same period post transaction pro-forma financial statements, including the financing round completed in February 2006.
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AMADEUS INTERNATIONAL INC. CONSOLIDATED PRO FORMA BALANCE SHEET (UNAUDITED) AS AT DECEMBER 31st, 2005 Amadeus International Inc. as at December 31st, 2005
Amadeus Proforma Amadeus International adjustments International Inc. (note 2) Inc. as at consolidated December proforma 31st, 2005
ASSETS CURRENT ASSETS Cash - 960,483 a) 2,130,000 b)
(850,000) c) 2,240,483
Accounts receivable 1,631,763 1,631,763 Balance of purchase price receivable 710,000 b) 710,000 Net investment in a lease agreement 36,061 36,061 Refundable tax credits 658,411 658,411 Income tax refund receivable 10,000 10,000 Inventories 116,000 116,000 Prepaid expenses 83,190 83,190
2,535,425 2,950,483 5,485,980
PROPERTY, PLANT AND EQUIPMENT 238,421 238,421
INTANGIBLE ASSETS AND OTHER ASSETS 2,528,949 39,517 a)
(1,320,358) b) 1,248,108
GOODWILL 203,089 (203,089) b) -
BALANCE OF PURCHASE PRICE RECEIVABLE 710,000 b) 710,000
NET INVESTMENT IN A LEASE AGREEMENT 5,173 5,173
FUTURE INCOME TAX ASSETS 648,840 (409,575) b) 239,265 6,159,897 1,766,978 7,926,875 LIABILITIES CURRENT LIABILITIES Bank loan 813,971 813,971 Loan secured by the refundable tax credits 307,000 307,000 Accounts payable 1,193,583 200,000 b) 1,393,583 Income taxes 89,000 89,000 Deferred revenues 338,706 338,706 Current portion of long-term debt 545,622 545,622
3,287,882 200,000 3,487,882 DEFERRED REVENUES - - LONG-TERM DEBT 1,212,115 (850,000) c) 362,115 LIABILITIES COMPONENTS OF THE CONVERTIBLE DEBENTURES 1,569,419 816,706 a) 2,386,125 FUTURE INCOME TAX LIABILITIES 648,840 (409,575) b) 239,265 6,718,256 (242,869) 6,475,387 SHAREHOLDERS' EQUITY Equity components of the convertible debentures 380,924 88,355 a) 469,279 Capital stock 4,187,651 4,187,651
Stock options 338,307 338,307 Warrants 161,815 94,939 a) 256,754 Contributed surplus 291,127 291,127 Deficit (5,918,183) 1,826,553 b) (4,091,630) (558,359) 2,009,847 1,451,488 6,159,897 1,766,978 7,926,875 The accompanying notes are integral parts of these pro forma consolidated financial statements.
AMADEUS INTERNATIONAL INC. CONSOLIDATED PRO FORMA STATEMENT OF EARNINGS (UNAUDITED) FOR THE 6-MONTH PERIOD ENDING DECEMBER 31st, 2005
Amadeus Proforma International International Inc. adjustments Inc. (note 2) consolidated proforma
REVENUES Software 445,671 - 445,671 Services 2,370,976 (2,149,664) 221,312
Maintenance 300,765 - 300,765
3,117,412 (2,149,664) 967,748
COST OF REVENUES 1,400,170 (1,027,833) 372,337
GROSS MARGIN 1,717,242 (1,121,831) 595,411
OPERATING EXPENSES Research and development 578,371 - 578,371 Selling, general and administrative 1,379,767 (111,036) 1,268,731 Depreciation and amortization 440,537 (216,990) 223,547
2,398,675 (328,026) 2,070,649
EARNINGS (LOSS) BEFORE OTHER EXPENSES (681,433) (793,805) (1,475,238) Accretion on convertible debentures 8,530 - 8,530 Net interests 177,174 (42,782) 134,392
185,704 (42,782) 142,922 EARNINGS (LOSS) BEFORE TAXES (867,137) (751,023) (1,618,160)
INCOME TAXES EXPENSES (RECOVERY) Current income taxes (422) (422) Future income taxes - - (422) - (422)
NET LOSS FOR THE PERIOD (866,715) (751,023) (1,617,738) The accompanying notes are integral parts of these pro forma consolidated financial statements.
AMADEUS INTERNATIONAL INC. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31st, 2005
1. PRESENTATION MODE
The unaudited consolidated pro forma financial statements for the 6-month period ending December 31st, 2005 (the "pro forma financial statements") of Amadeus International Inc. (the "company") were established by the company's management as the result of the selling transaction of its M3K Solutions unit ("M3K"), at transaction date, i.e. May 1st, 2006, as if it was held as of December 31st, 2005 for the unaudited consolidated pro forma balance sheet, and as of July 1st, 2005 for the unaudited consolidated pro forma statement of earnings. Some of these pro forma financial statements do not necessarily reflect the financial position the corporation would have achieved if the transaction would have taken effect on the date stated, nor its future financial position. These pro forma financial statements must be read concurrently with the unaudited financial statements of the corporation as of December 31st, 2005, as well as the audited financial statements of the corporation as of June 30th, 2005. These pro forma financial statements were established according to Canadian generally accepted accounting principles. The accounting policies of the company are consistant with those described in the audited financial statements of the corporation as of and for the 12-month period ended June 30th, 2005.
2. ASSUMPTIONS AND OTHER PRO FORMA ADJUSTMENTS
a) On February 9th, 2006, the corporation concluded a financing of $1 000 000, raised by means of convertible debenture. Warrants were also issued to the debentureholders. The equity component of the debentures amounts to $88 355, and the warrants amount to $94 939. These amounts were assessed by the Board according to the Black & Scholes model.
b) The transaction was concluded on May 1st, 2006. Under the terms of the agreement, the corporation will receive a cash payment of $2 130 000 upon signature and a balance of $1 420 000 is receivable in 8 quarterly installments over a 24-month period. Furthermore, transaction-related expenses of $200 000 payable in cash were engaged to finalize the transaction.
Book value of the sold assets: Backlog 239,170 Customer relationship 1,081,188 Goodwill 203,089 Further tax debit 409,575 Further tax credit (409,575) Total 1,523,447
Settled as follows:
Cash payments 2,130,000 Balance of purchase price 1,420,000 receivable Transaction-related fees (200,000) 3,350,000 >>
c) Pursuant to the completion of the transaction, the corporation accepted to reimburse the amount of $850 000 on the long-term borrowing contracted when acquiring M3K Solutions Inc. last June, 2005.
About Amadeus International
Amadeus International is a pioneer and leader in compliance process control solutions and corporate governance services. Its flagship product, eQCM(R), is a flexible, Web-based integrated suite of applications that allow organizations to map regulated business processes such as CAPA, non- conformances, customer complaints, EH&S, corporate governance, and other related quality and business processes. The application suite is coupled with powerful business intelligence capabilities, enterprise content management, and related technologies that help organizations achieve sustained compliance. Also, Amadeus' Consulting Services division offers world-class professional services for corporate governance that comply with global regulations like Sarbanes-Oxley, Basel II, and others. Amadeus International's global headquarters are located in Quebec City, with satellite offices in Chicago, Montreal, New Jersey, Paris, Minnesota and Philadelphia. Amadeus solutions are distributed across four continents.
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