UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q/A
(AMENDMENT NO. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________TO __________
Commission file number 000-24389
VASCO DATA SECURITY INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 36-4169320
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1901 SOUTH MEYERS ROAD, SUITE 210
OAKBROOK TERRACE, ILLINOIS 60181
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (630) 932-8844
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
------ ------
As of October 31, 2003, 30,425,284 shares of the Company's Common
Stock, $.001 par value per share ("Common Stock"), were outstanding.
EXPLANATORY NOTE:
The Company has restated its Consolidated Statements of Operations for the
three- and nine-month periods ended September 30, 2003 to reflect a beneficial
conversion feature of $3,720,000 related to the issuance of Series D Convertible
Preferred Stock, in accordance with Emerging Issues Task Force (EITF) No. 98-5,
"Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios." The beneficial conversion feature
represents the difference in the proceeds from the issuance of the preferred
stock and the value of the common stock it was immediately convertible into,
based upon the market value of the common stock on the date of issuance. The
beneficial conversion feature is analogous to a dividend and is recognized as a
return to the preferred shareholders.
The effect of the restatement was to reduce net income (loss) available to
common shareholders by $3,720,000; reduce basic and diluted income (loss) per
common share from $0.04 per share to ($0.08) per share for the three months
ended September 30, 2003 and from $0.06 per share to ($0.06) per share for the
nine months ended September 30, 2003; and reduce basic and diluted loss from
continuing operations from ($0.01) per share to ($0.13) per share for the three
months ended September 30, 2003 and from $0.00 per share to ($0.13) per share
for the nine months ended September 30, 2003.
The restatement had no impact on the Consolidated Balance Sheet as of September
30, 2003, or on the Consolidated Statements of Comprehensive Income (Loss) and
the Consolidated Statements of Cash Flows for the nine-month period ended
September 30, 2003.
- 2 -
VASCO DATA SECURITY INTERNATIONAL, INC.
FORM 10-Q/A
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets (Unaudited) as of
December 31, 2002 and September 30, 2003 ...................................................4
Consolidated Statements of Operations (Unaudited)
for the three and nine months ended September 30, 2002 and 2003 - (Restated).............. 5
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
for the three and nine months ended September 30, 2002 and 2003........................... 6
Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 2002 and 2003..................................... 7
Notes to Consolidated Financial Statements................................................ 8
Item 4. Controls and Procedures................................................................... 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................................................... 13
SIGNATURES............................................................................................. 14
CERTIFICATIONS......................................................................................... 15
- 3 -
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 31, September 30,
2002 2003
------------- -------------
ASSETS
CURRENT ASSETS:
Cash $ 2,615,935 $ 5,523,655
Accounts receivable, net of allowance for doubtful accounts
of $461,129 and $318,798 in 2002 and 2003 2,870,533 2,724,610
Inventories, net 1,579,125 1,654,366
Prepaid expenses 394,867 245,828
Assets of discontinued operations 155,661 --
Other current assets 119,687 712,052
------------ ------------
Total current assets 7,735,808 10,860,511
Property and equipment
Furniture and fixtures 1,485,140 1,870,294
Office equipment 1,926,553 1,971,706
------------ ------------
Total property and equipment 3,411,693 3,842,000
Accumulated depreciation (2,255,693) (2,994,430)
------------ ------------
Net property and equipment 1,156,000 847,570
Intangible assets, net of accumulated amortization of
$3,545,104 in 2002 and $3,958,627 in 2003 1,910,504 1,504,323
Goodwill 249,967 249,967
Note receivable and investment in SSI -- 1,211,966
Other assets 81,161 86,844
------------ ------------
TOTAL ASSETS $ 11,133,440 $ 14,761,181
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,589,645 $ --
Accounts payable 1,849,572 1,818,859
Liabilities related to assets of discontinued operations 107,643 42,775
Deferred revenue 644,330 678,708
Payable to Ubizen related to stock purchase -- 1,000,000
Other accrued expenses 2,131,172 2,667,002
------------ ------------
Total current liabilities 8,322,362 6,207,344
STOCKHOLDERS' EQUITY :
Series C Convertible Preferred Stock, $.01 par value -
500,000 shares authorized; 150,000 shares issued
and outstanding in 2002 9,108,066 --
Series D Convertible Preferred Stock, $10,000 par value -
500,000 shares authorized; 800 shares issued
and outstanding in 2003 5,830,787
Common stock, $.001 par value - 75,000,000 shares
authorized; 28,389,484 and 30,415,159 shares issued
and outstanding in 2002 and 2003, respectively 28,389 30,415
Additional paid-in capital 36,763,330 47,162,596
Accumulated deficit (42,608,077) (43,858,067)
Accumulated other comprehensive income (loss) -
cumulative translation adjustment (480,630) (611,894)
------------ ------------
Total stockholders' equity 2,811,078 8,553,837
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,133,440 $ 14,761,181
============ ============
See accompanying notes to consolidated financial statements.
- 4 -
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
2002 2003 2002 2003
----------- ----------- ----------- -----------
(RESTATED) (RESTATED)
Net revenues $ 4,739,854 $ 5,598,872 $13,979,478 $16,669,989
Cost of goods sold 2,060,751 2,146,119 5,935,771 6,727,538
----------- ----------- ----------- -----------
Gross profit 2,679,103 3,452,753 8,043,707 9,942,451
Operating costs:
Sales and marketing (exclusive of $(16,310) and
$(7,694) for the three and nine months ended
September 30, 2002, respectively, and $31,666 and
$40,009 for the three and nine months ended
September 30, 2003 respectively, reported
below as non-cash compensation (recovery)) 1,825,605 1,578,804 5,740,869 4,589,272
Research and development 650,864 746,944 2,043,155 2,063,684
General and administrative (exclusive of $(53,076) and
$(25,028) for the three and nine months ended
September 30, 2002 reported below as non-cash (recovery)) 1,177,345 1,037,001 3,183,437 2,491,621
Non-cash compensation (recovery) (69,386) 31,666 (32,722) 40,009
----------- ----------- ----------- -----------
Total operating costs 3,584,428 3,394,415 10,934,739 9,184,586
Operating income (loss) from continuing operations (905,325) 58,338 (2,891,032) 757,865
Interest expense, net (45,109) (22,480) (238,441) (119,549)
Other income (expense), net (70,932) (4,959) (115,598) 375,758
----------- ----------- ----------- -----------
Income (loss) from continuing operations before income taxes (1,021,366) 30,899 (3,245,071) 1,014,074
Provision for income taxes -- 224,650 140,272 489,112
----------- ----------- ----------- -----------
Income (loss) from continuing operations (1,021,366) (193,751) (3,385,343) 524,962
Discontinued operations (Note 3):
Income (loss) from discontinued operations 212,484 (6,771) 745,840 596,916
Gain on sale of discontinued operations -- 1,488,360 -- 1,368,132
----------- ----------- ----------- -----------
Net income (loss) (808,882) 1,287,838 (2,639,503) 2,490,010
Preferred stock beneficial conversion option -- (3,720,000) -- (3,720,000)
Preferred stock accretion and dividends (290,996) (67,445) (872,988) (649,347)
----------- ----------- ----------- -----------
Net loss available to common shareholders $(1,099,878) $(2,499,607) $(3,512,491) $(1,879,337)
=========== =========== =========== ===========
Basic and diluted income (loss) per common share:
Loss from continuing operations $ (0.05) $ (0.13) $ (0.15) $ (0.13)
Income from discontinued operations 0.01 0.05 0.03 0.07
=========== =========== =========== ===========
Net income (loss) $ (0.04) $ (0.08) $ (0.12) $ (0.06)
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 28,389,484 30,391,827 28,333,449 29,211,293
=========== =========== =========== ===========
Diluted 28,389,484 31,222,297 28,333,449 29,510,033
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
- 5 -
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------------- ------------------------------
2002 2003 2002 2003
--------- ---------- ----------- ----------
Net income (loss) $(808,882) $1,287,838 $(2,639,504) $2,490,010
Other comprehensive income (loss) -
cumulative translation adjustment
85,310 8,365 181,388 (131,264)
--------- ---------- ----------- ----------
Comprehensive income (loss) $(723,572) $1,296,203 $(2,458,116) $2,358,746
========= ========== =========== ==========
See accompanying notes to consolidated financial statements.
- 6 -
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended September 30,
2002 2003
----------- -----------
Cash flows from operating activities:
Net income (loss) from continuing operations $(3,385,343) $ 524,962
Adjustments to reconcile net income (loss) from continuing
operations to net cash provided by (used in) operating
activities:
Depreciation and amortization 912,880 817,363
Non-cash compensation expense (recovery) (32,722) 40,009
Changes in assets and liabilities, net of effects of acquisition
and discontinued operations:
Accounts receivable, net (663,126) 333,667
Inventories, net 997,275 79,332
Prepaid expenses (22,791) 171,093
Other current assets 332,209 (262,324)
Deferred income taxes 83,000 --
Accounts payable (1,274,443) (180,121)
Deferred revenue (410,613) (13,617)
Accrued expenses (499,865) 387,565
Net cash provided by discontinued operations 665,959 437,144
----------- -----------
Net cash provided by (used in) operating activities (3,297,580) 2,335,073
----------- -----------
Cash flows from investing activities:
Acquisition of Identikey, Ltd. (23,362) (7,341)
Other assets (2,869) (4,034)
Proceeds from the disposition of assets 107,765 132,324
Payments received on note receivable -- 45,859
Additions to property and equipment, net (415,371) (48,761)
----------- -----------
Net cash used in investing activities (333,837) 118,047
----------- -----------
Cash flows from financing activities:
Repayment of debt (154,453) (3,589,645)
Purchase and retirement of Series C preferred stock and warrants -- (3,000,000)
Net proceeds from sale of Series D preferred stock and warrants -- 7,315,922
Proceeds from the exercise of common stock options -- 48,082
----------- -----------
Net cash provied by (used in) financing activities (154,453) 774,359
----------- -----------
Effect of exchange rate changes on cash 181,388 (319,759)
----------- -----------
Net increase (decrease) in cash (3,604,482) 2,907,720
Cash, beginning of period 6,342,440 2,615,935
----------- -----------
Cash, end of period $ 2,737,958 $ 5,523,655
=========== ===========
See accompanying notes to consolidated financial statements
- 7 -
VASCO DATA SECURITY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of VASCO Data Security International, Inc. and its subsidiaries
(collectively, the "Company" or "VASCO") and have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission regarding
interim financial reporting. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements and should be read in conjunction with the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002.
In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared on the same basis as the audited
consolidated financial statements, and include all adjustments, consisting only
of normal recurring adjustments, necessary for the fair presentation of the
results of the interim periods presented. All significant intercompany accounts
and transactions have been eliminated. The operating results for the interim
periods presented are not necessarily indicative of the results expected for a
full year.
STOCK-BASED COMPENSATION
At September 30, 2003, the Company had a stock-based employee
compensation plan. The Company accounts for the plan using the intrinsic method
under the recognition and measurement principles of APB Opinion No. 25,
"Accounting for Stock Issued to Employees", and related Interpretations. No
stock-based compensation is reflected in net income, as all options granted to
employees under the plan had an exercise price equal to the market value of the
underlying Common Stock on the date of grant. The following table illustrates
the effect on net income (loss) and earnings per share if the Company had
applied the fair value recognition provisions of FASB Statement No. 123,
"Accounting for Stock-Based Compensation", to stock-based employee compensation.
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- -----------------------
2002 2003 2002 2003
----------- ----------- ----------- -----------
(Restated) (Restated)
Net loss available to common
shareholders as reported ........................ $(1,099,878) $(2,499,607) $(3,512,491) $(1,879,337)
Deduct: Total stock-based employee
compensation determined under fair
value based method for all awards 253,891 251,854 751,561 763,892
----------- ----------- ----------- -----------
Pro forma net loss ............................ $(1,353,769) $(2,751,461) $(4,264,052) $(2,643,229)
=========== =========== =========== ===========
Net loss per common share-basic and diluted:
As reported ..................................... $ (0.04) $ (0.08) $ (0.12) $ (0.06)
Pro forma ....................................... $ (0.05) $ (0.09) $ (0.15) $ (0.09)
Weighted average shares outstanding
Basic ............................................ 28,389,484 30,391,827 28,333,449 29,211,293
Diluted .......................................... 8,389,484 31,222,297 28,333,449 29,510,033
- 8 -
NOTE 2 - RESTATEMENT
The Company has restated its Consolidated Financial Statements for the
three- and nine-month periods ended September 30, 2003 to reflect a beneficial
conversion feature of $3,720,000 related to the issuance of its Series D
Convertible Preferred Stock in accordance with Emerging Task Force (EITF) No.
98-5, "Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios." The beneficial conversion feature
represents the difference in the proceeds from the issuance of the preferred
stock and the value of the Company's common stock it was immediately convertible
into, based upon the market value of the common stock on the date of issuance.
The beneficial conversion feature is analogous to a dividend and is recognized
as a return to the preferred shareholders.
The effect of the restatement is to reduce net income (loss) available
to common shareholders, basic and diluted loss per share and basic and diluted
loss from continuing operations for the three- and nine-month periods ended
September 30, 2003. The restatement had no impact on our Consolidated Balance
Sheets as of December 31, 2002 and September 30, 2003. This restatement also had
no impact on our Consolidated Statements of Comprehensive Income (Loss) or our
Consolidated Statements of Cash Flow for the nine-month period ended September
30, 2003.
The restatement had the following impact to our Consolidated Statements of
Operations:
As Reported As Restated
----------- -----------
Three months ended September 30, 2003:
Net income $1,287,838 $ 1,287,838
Preferred stock beneficial conversion feature -- (3,720,000)
Preferred stock accretion and dividends (67,445) (67,445)
---------- -----------
Net income (loss) available to common shareholders $1,220,393 $(2,499,607)
========== ===========
Basic and diluted income (loss) per common share:
Loss from continuing operations $ (0.01) $ (0.13)
Income from discontinued operations 0.05 0.05
---------- -----------
Net income (loss) $ 0.04 $ (0.08)
========== ===========
Nine months ended September 30, 2003:
Net income $2,490,010 $ 2,490,010
Preferred stock beneficial conversion feature -- (3,720,000)
Preferred stock accretion and dividends (649,347) (649,347)
---------- -----------
Net income (loss) available to common shareholders $1,840,663 $(1,879,337)
========== ===========
Basic and diluted income (loss) per common share:
Income (loss) from continuing operations $ -- $ (0.13)
Income from discontinued operations 0.06 0.07
---------- -----------
Net income (loss) $ 0.06 $ (0.06)
========== ===========
- 9 -
NOTE 3 - INVENTORIES
Inventories, consisting principally of hardware and component parts,
are stated at the lower of cost or market. Cost is determined using the
first-in-first-out (FIFO) method.
Inventories, net of valuation allowance of $111,566 and $262,251 at
December 31, 2002 and September 30, 2003, respectively, are comprised of the
following:
December 31, September 30,
2002 2003
------------ --------------
Component parts......................... $ 772,523 $ 242,831
Work-in-process and finished goods...... 806,602 1,411,535
---------- ----------
Total....................... $1,579,125 $1,654,366
========== ==========
NOTE 4 - DISCONTINUED OPERATIONS
On July 8, 2003, effective as of July 1, 2003, VASCO sold its VACMAN
Enterprise ("VME") business, originally known as Intellisoft and/or Snareworks,
to SecureD Services, Inc. (SSI). Under the terms of the agreement, VASCO
received a senior secured promissory note with a face value of approximately
$1.1 million, valued at $1.0 million by an independent valuation firm, and $2
million of Convertible Preferred Stock from SSI, valued at $0.6 million by an
independent valuation firm, in exchange for the VACMAN Enterprise assets. The
promissory note bears a 6% interest rate and is payable in 36 equal and
consecutive monthly payments. The Preferred Stock includes a 6% cumulative stock
dividend, payable quarterly, and can be converted into SSI's common stock at
defined intervals beginning July 1, 2005. In accordance with Statement of
Financial Accounting Standard (SFAS) No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets", the assets and liabilities of this business unit
have been disaggregated from the operational assets and liabilities of the
Company. The results of the operations of VME for the three- and nine-month
periods ended September 30, 2003 have been reported as results of discontinued
operations. Prior periods have been restated to conform to this presentation.
Assets of and liabilities related to discontinued operations included
in the consolidated balance sheet are as follows:
December 31, September 30,
2002 2003
------------ -------------
Accounts receivable $ 10,724 $ --
Prepaid expenses 12,612 --
Property and equipment, net 132,325 --
-------- -------
$155,661 $ --
======== =======
Accounts payable $ 852 $ --
Deferred revenue 75,721 --
Other accrued expenses 31,070 42,775
-------- -------
$107,643 $42,775
======== =======
- 10 -
Income from discontinued operations is as follows:
Three months ended Nine months ended
September 30 September 30
--------------------- -----------------------
2002 2003 2002 2003
-------- -------- ---------- --------
Net revenues $387,547 $ -- $1,330,604 $989,183
Cost of good sold 6,522 -- 6,522 81,904
-------- -------- ---------- --------
Gross profit 381,025 -- 1,324,082 907,279
Operational costs 168,541 6,771 578,242 310,363
-------- -------- ---------- --------
Operating income (loss) $212,484 $ (6,771) $ 745,840 $596,916
======== ======== ========== ========
Included in the gain on sale of discontinued operations are $29,000 and $149,000
of costs incurred during the three and nine months ended September 30, 2003,
respectively, related to the sale of the business unit.
NOTE 5 - STOCKHOLDERS' EQUITY
On July 15, 2003, the Company reached an agreement with Ubizen N.V.
("Ubizen") whereby VASCO purchased and redeemed all of the VASCO Series C
Convertible Preferred Stock (the "Series C Preferred Stock") and Common Stock
Purchase Warrants owned by Ubizen. Under the terms of the Purchase Agreement,
the Company paid $3 million to Ubizen and issued 2 million shares of the
Company's Common Stock on July 25, 2003. Using the closing price of the
Company's Common Stock on July 25, 2003, the value of the stock issued was
$4,000,000. An additional $1 million will be paid to Ubizen on or before
November 14, 2003. The Common Stock issued by the Company is subject to a
lock-up period wherein the lock-up will expire in increments of 500,000 shares
each on October 15, 2003, January 15, 2004, April 15, 2004 and July 15, 2004.
Once the lock-up expires, the shares will be subject to volume trading
restrictions through January 1, 2005.
On September 11, 2003, the Company sold 800 shares of its Series D 5%
Cumulative Convertible Voting Preferred Stock (the "Series D Preferred Stock")
and 600,000 warrants to purchase Common Stock. The Series D Preferred Stock
carries a 5% dividend, is convertible into 4 million shares of Common Stock at a
fixed price of $2.00 per share and will vote with the Common Stock as a class on
matters presented to the stockholders. The implied value of the Series D
Preferred Stock was $5,714,000, calculated based upon the annual dividend rate
divided by a required rate of return. The warrants are exercisable, over a
five-year period, at $3.47 per share and were valued at $1,455,000 using the
Black-Scholes pricing model. Of the net proceeds from the sale, $5,831,000 was
allocated to the Series D Preferred Stock and $1,485,000 was allocated to the
warrants based upon their relative fair values. In addition, a beneficial
conversion value was calculated for the Series D Preferred Stock as the
difference between the price of the Company's Common Stock at the transaction
date and the conversion price of the Series D Preferred Stock. The amount of the
beneficial conversion, $3,720,000, is analogous to a dividend and was recorded
to retained earnings.
During the third quarter of 2003, the Company issued 25,625 shares of
Common Stock as a result of the exercise of options under the Company's stock
option plan generating total proceeds of $48,082.
- 11 -
NOTE 6 - SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION
Nine months ended September 30,
----------------------------------
2002 2003
-------- ------------
Supplemental disclosure of cash flow information:
Interest paid $ 12,868 $ 205,753
Supplemental disclosure of non-cash investing activities:
Common stock issued in connection with acquisition $284,458 $ --
Note receivable and preferred stock received from sale
of business unit $ -- $ 1,553,000
Supplemental disclosure of non-cash financing activities:
Payable to Ubizen for purchase and retirement of Series C preferred
stock and warrants $ -- $ 1,000,000
Reduction in preferred stock and additional paid-in capital
as a result of the redemption of Series C preferred stock and warrants $ -- $(11,000,000)
Common stock issued to redeem Series C preferred stock and warrants $ -- $ 11,000,000
Increase in additional paid-in capital related to benefical conversion
of Series D preferred stock $ -- $ 3,720,000
Deemed dividend on preferred stock $ -- $ (3,720,000)
Dividends accrued on preferred stock $ -- (20,000)
ITEM 4. CONTROLS AND PROCEDURES
The Chief Executive Officer and the Chief Financial Officer of the
Company (its principal executive officer and principal financial officer,
respectively) have concluded, based on their evaluation as of the end of the
period covered by this Report, that the Company's disclosure controls and
procedures are effective to ensure that the information required to be disclosed
by the Company in the reports filed or submitted by it under the securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods required by the SEC's rules and forms, and
include controls and procedures designed to ensure that information required to
be disclosed by the Company in such reports is accumulated and communicated to
the Company's management, including the Chairman and Chief Executive office and
the Chief Financial Officer of the Company, as appropriate to allow timely
decisions regarding required disclosure.
- 12 -
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. .
(A) EXHIBITS:
Exhibit 31.1 Statement Under Oath of Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated
February 18, 2004.
Exhibit 31.2 Statement Under Oath of Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated
February 18, 2004.
Exhibit 32.1 Statement Under Oath of Principal Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
February 18, 2004.
Exhibit 32.2 Statement Under Oath of Principal Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
February 18, 2004.
- 13 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, on February 18, 2004.
VASCO Data Security International, Inc.
/s/ T. Kendall Hunt
--------------------------------------------
T. Kendall Hunt
Chief Executive Officer and Chairman of the Board of
Directors (Principal Executive Officer)
/s/ Clifford K. Bown
--------------------------------------------
Clifford K. Bown
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer)
- 14 -
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, T. Kendall Hunt, the principal executive officer of VASCO Data Security
International, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of VASCO Data
Security International, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures as of
the end of the period covered by the report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons fulfilling the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Dated: February 18, 2004 /s/ T. Kendall Hunt
-------------------------------------------
T. Kendall Hunt
Chief Executive Officer and Chairman
of the Board of Directors
(Principal Executive Officer)
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EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Clifford K. Bown, the principal financial officer of VASCO Data Security
International, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q/A of VASCO Data
Security International, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures as of
the end of the period covered by the report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons fulfilling the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Dated: February 18, 2004 /s/ Clifford K. Bown
---------------------------------------
Clifford K. Bown
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing with the Securities and Exchange Commission of the
Quarterly Report of VASCO Data Security International, Inc. (the "Company") on
Form 10-Q/A for the period ending September 30, 2003 (the "Report"), I, T.
Kendall Hunt, Chief Executive Officer and Chairman of the Board of Directors of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
/s/ T. Kendall Hunt
- --------------------------------------------------------------
T. Kendall Hunt
Chief Executive Officer and Chairman of the Board of Directors
February 18, 2004
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EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing with the Securities and Exchange Commission of the
Quarterly Report of VASCO Data Security International, Inc. (the "Company") on
Form 10-Q/A for the period ending September 30, 2003 (the "Report"), I, Clifford
K. Bown, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
/s/ Clifford K. Bown
- --------------------------
Clifford K. Bown
Chief Financial Officer
February 18, 2004
- 18 -