SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 4, 2005 VASCO DATA SECURITY INTERNATIONAL, INC. (Exact name of registrant as specified in charter) Delaware 000-24389 36-4169320 -------- --------- ---------- (State or otherjurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1901 South Meyers Road, Suite 210 Oakbrook Terrace, Illinois 60181 (Address of principal executive offices) (630) 932-8844 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 - FINANCIAL INFORMATION ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS On February 4, 2005, pursuant to a Share Sale and Purchase Agreement by and among VASCO Data Security International, Inc., A.O.S. Holding B.V., Filipan Beheer B.V., Mr. Mladen Filipan and Pijnenburg Beheer N.V, VASCO completed its acquisition of 100% of the issued share capital of A.O.S.- Hagenuk B.V., a private limited liability company organized and existing under the laws of the Netherlands. On February 8, 2005, VASCO filed a Current Report on Form 8-K reporting that it had completed the acquisition and that the financial statements and information required under Item 9 would be filed not later than seventy one (71) calendar days after the date that current report. This Amendment No. 1 to the Current Report on Form 8-K contains the required financial statements and pro forma financial information. SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS (a) Audited financial statements of A.O.S.-Hagenuk B.V. at December 31, 2004, 2003 and 2002, and for each of the three years in the period ended December 31, 2004, are attached as Exhibit 99.3 hereto. (b) Unaudited consolidated pro forma balance sheet as of December 31, 2004 and the unaudited consolidated pro forma statement of operations for the year then ended, including notes thereto, are attached as Exhibit 99.4 hereto. (c) Exhibits Exhibit Number Description ------- ----------- 2.1 Share Sale and Purchase Agreement by and among Vasco Data Security International, Inc., A.O.S. Holding B.V., Filipan Beheer NV/Mr. Mladen Filipan, and Pijnenburg Beheer NV, dated February 4, 2005. * 2.2 Consent of Berk Accountants en Belastingadviseurs 99.1 Press Release announcing the acquisition of A.O.S.-Hagenuk dated February 8, 2005 * 99.2 Registration Rights Agreement by and among A.O.S. Holding B.V., Filipan Beheer B.V., Mr. Mladen Filipan, and Pijnenburg Beheer N.V., and VASCO Data Security International, Inc., dated February 4, 2005. * 99.3 Financial Statements 99.4 Unaudited Pro Forma Financial Information * Filed Previously.
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: April 20, 2005 VASCO Data Security International, Inc. -------------------------------------------------- (Registrant) By: /s/Clifford K. Bown ------------------------------------- Clifford K. Bown Chief Financial Officer
EXHIBIT INDEX Exhibit Number Description --------- ----------- 2.1 Share Sale and Purchase Agreement by and among Vasco Data Security International, Inc., A.O.S. Holding B.V., Filipan Beheer NV/Mr. Mladen Filipan, and Pijnenburg Beheer NV, dated February 4, 2005. * 2.2 Consent of Berk Accountants en Belastingadviseurs 99.1 Press Release announcing the acquisition of A.O.S.-Hagenuk dated February 8, 2005 * 99.2 Registration Rights Agreement by and among A.O.S. Holding B.V., Filipan Beheer B.V., Mr. Mladen Filipan, and Pijnenburg Beheer N.V., and VASCO Data Security International, Inc., dated February 4, 2005. * 99.3 Financial Statements 99.4 Unaudited Pro Forma Financial Information * Filed Previously.
EXHIBIT 2.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors VASCO Data Security International, Inc.: We consent to the incorporation by reference in the registration statements (No. 333-62829 on Form S-8 and No. 333-46256 on Form S-3) of our report dated January 31, 2005 relating to the Balance Sheets of AOS-Hagenuk B.V. as of December 31, 2004, 2003 and 2002 and the related Statements of Operations, Cash Flows and Stockholders' Equity for each of the years in the three-year period ended December 31, 2004, which report appears in the April 20, 2005 current report on Form 8-K/A of VASCO Data Security International, Inc. /s/ BERK Accountants en Belastingadviseurs BERK Accountants en Belastingadviseurs 's-Hertogenbosch The Netherlands April 20, 2005
Exhibit 99.3 AOS-HAGENUK B.V. BALANCE SHEET (IN EURO'S) December 31, December 31, December 31, 2004 2003 2002 ---------------- ------------------ ----------------- ASSETS CURRENT ASSETS Cash and cash equivalents (euro) 690,066 (euro) 1,333,739 (euro) - Trade accounts receivable 137,418 575,818 337,703 Related party receivables 450,075 - 662,705 Inventory 58,505 27,269 55,636 Taxes and social security premiums 3,446 4,960 28,722 Prepaid expenses and other current assets 149,678 65,323 188,579 ---------------- ----------------- ---------------- Total current assets 1,489,188 2,007,109 1,273,345 ---------------- ----------------- ---------------- PROPERTY, PLANTS AND EQUIPMENT, AT COST Equipment 138,525 196,017 - ---------------- ----------------- ---------------- Total property, plants and equipment 138,525 196,017 - ---------------- ----------------- ---------------- OTHER ASSETS Development expenses, net of accumulated amortization 539,020 544,128 544,536 ---------------- ----------------- ---------------- TOTAL ASSETS (euro) 2,166,733 (euro) 2,747,254 (euro) 1,817,881 ================ ================= ================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Banks (euro) - (euro) 38,186 (euro) 741,842 Advance payments on orders 1,416,932 1,577,331 74,752 Trade accounts payable 32,950 74,562 451,432 Related party payables 21,497 275,062 209,122 Other accrued liabilities 102,994 171,055 31,799 Taxes payable 22,644 145,207 280,306 ---------------- ----------------- ---------------- Total current liabilities 1,597,017 2,281,403 1,789,253 ---------------- ----------------- ---------------- SHAREHOLDERS' EQUITY Share capital, shares of common stock, par value (euro) 100 Authorized 900 shares, issued and outstanding 180 18,000 18,000 18,000 Additional paid-in capital 500,000 500,000 - Retained earnings 51,716 (52,149) 10,628 ---------------- ----------------- ---------------- Total shareholders' equity 569,716 465,851 28,628 ---------------- ----------------- ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (euro) 2,166,733 (euro) 2,747,254 (euro) 1,817,881 ================ ================= ================ See accompanying notes to the financial statements.
AOS-HAGENUK B.V. STATEMENT OF OPERATIONS (IN EURO'S) For the Years Ended December 31, --------------------------------------------------- 2004 2003 2002 --------------- ---------------- ---------------- REVENUE (euro) 4,385,101 (euro) 2,374,537 (euro) 3,747,817 Cost of revenues 2,585,276 1,174,268 2,685,601 --------------- ---------------- ---------------- Gross profit 1,799,825 1,200,269 1,062,216 Other operating income - 172,385 116,881 --------------- ---------------- ---------------- 1,799,825 1,372,654 1,179,097 --------------- ---------------- ---------------- OPERATING EXPENSES Selling 814,931 486,935 411,397 Research & Development 679,544 479,533 420,118 Administrative and general expenses 175,510 392,494 302,649 --------------- ---------------- ---------------- Operating expenses 1,669,985 1,358,962 1,134,164 --------------- ---------------- ---------------- Operating income 129,840 13,692 44,933 OTHER INCOME (EXPENSE) Interest income 13,053 - 18 Interest expense (14,978) (80,865) (29,927) --------------- ---------------- ---------------- Income before provisions for corporate tax 127,915 (67,173) 15,024 Provision for corporate tax 24,050 (4,396) 4,396 --------------- ---------------- ---------------- Net income (euro) 103,865 (euro) (62,777) (euro) 10,628 =============== ================= ================= See accompanying notes to the financial statements.
AOS-HAGENUK B.V. STATEMENT OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002 (IN EURO'S) Aditional Paid-In Paid-In Retained Capital Capital earnings Total ---------------- ---------------- ---------------- ---------------- BALANCE, January 1, 2002 (euro) - (euro) - (euro) - (euro) - ================ ================ ================ ================ Share issue 18,000 - - 18,000 Net income - - 10,628 10,628 ---------------- ---------------- ---------------- ---------------- BALANCE, December 31, 2002 18,000 - 10,628 28,628 ================ ================ ================ ================ Share issue - 500,000 - 500,000 Net income - - (62,777) (62,777) ---------------- ---------------- ---------------- ---------------- BALANCE, December 31, 2003 18,000 500,000 (52,149) 465,851 ================ ================ ================ ================ Net income - - 103,865 103,865 ---------------- ---------------- ---------------- ---------------- BALANCE, December 31, 2004 (euro) 18,000 (euro) 500,000 (euro) 51,716 (euro) 569,716 ================ ================ ================ ================ See accompanying notes to the financial statements.
AOS-HAGENUK B.V. STATEMENT OF CASH FLOWS (IN EURO'S) FOR THE YEARS ENDED DECEMBER 31, --------------------------------------------------- 2004 2003 2002 ---------------- ---------------- ---------------- OPERATING ACTIVITIES Net income (euro) 103,865 (euro) (62,777) (euro) 10,628 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 73,312 83,492 - Changes in assets and liabilities: Inventory (31,236) 28,367 (55,636) Trade accounts receivable and unbilled (94,516) 571,608 (1,217,709) revenues Short term liabilities (684,386) 492,150 1,789,253 --------------- --------------- --------------- Net cash provided by (used in) operating (632,961) 1,112,840 526,536 activities INVESTING ACTIVITIES Purchase of development expenses - - (544,536) Purchase of property, plant and equipment (10,712) (279,101) - FINANCING ACTIVITIES Share issue - 500,000 18,000 --------------- --------------- --------------- NET DECREASE/INCREASE IN CASH (643,673) 1,333,739 - =============== =============== =============== MOVEMENTS IN CASH: Balance as at January 1 1,333,739 - - Mutation bookyear (643,673) 1,333,739 - --------------- --------------- --------------- Balance as at December 31 (euro) 690,066 (euro)1,333,739 (euro) - =============== =============== =============== See accompanying notes to the financial statements.
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS (IN EUROS) 1. NATURE OF OPERATIONS The activities of the AOS-Hagenuk B.V. consist mainly of the development and production of smart card products. 2. BASIS OF PRESENTATION The valuation of assets and liabilities and the determination of the result take place on the basis of historical costs. Assets and liabilities are valued at nominal value unless otherwise stated in the notes below. Balance sheet items relating to assets and liabilities in foreign currency are converted at the rates that apply at the end of the financial year, unless the exchange rate risk has been hedged. The exchange rate differences that arise during conversion are credited or charged to the profit and loss account. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES TRADE ACCOUNTS RECEIVABLE The trade accounts receivable are valued at nominal value, where necessary less a bad debt provision. The provision is determined on the basis of an individual assessment of outstanding debts. INVENTORY The stocks are stated at the lower of cost or market value. The inventory costing method is FIFO. PROPERTY, PLANT AND EQUIPMENT The equipment is valued at the purchase cost, less straight-line depreciation based on their anticipated useful economic life. DEVELOPMENT EXPENSES The development expenses are valued at the purchase price, less depreciation based upon the expected sales of end products. Internal hours have not been activated. OTHER ASSETS AND LIABILITIES The other assets and liabilities are valued at nominal value.
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) NET TURNOVER The net turnover is the revenue obtained from goods and services supplied to third parties, less any discounts issued and the tax levied on the turnover. OTHER OPERATING INCOME Other operating income relates to grants received, which is accounted for in the year to which it relates. COST OF SALES These costs are determined on the basis of the acquisition price. Also included are the value adjustment of stocks to a lower net realizable value and the addition to or release of the provision made for obsolete stocks. DEPRECIATION The depreciation of development expenses is based upon the expected sales of end products. The depreciation of equipment is based on the following percentages of the acquisition cost: Furniture and fixtures: 20%; Computer equipment: 33,33%; Software: 33,33%. TAX Corporation tax is calculated on the commercial result before tax on the basis of the applicable tax rate, taking into account tax-exempt profit constituents, restricted costs and tax facilities. CASH FLOW STATEMENT The cash flow statement is based on the indirect method. 4. REVENUE RECOGNITION Income and expenditure are ascribed to the year to which they relate. Profits are only recognized if they have been realized on the balance sheet date. Items are recorded as revenue upon customer acceptance. Losses and risks that originate before the end of the financial year are considered if they have become known before the annual accounts are drawn up.
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) 5. COMMITMENTS AND CONTINGENCIES CREDIT FACILITY The company has a credit-facility with ABN-AMRO bank for the amount of EUR 500.000. which is secured by pledging receivables. The facility has no expiration date. FISCAL UNIT This company has a fiscal unit for corporate tax with AOS Holding B.V. LEASE OBLIGATIONS AND RENT COMMITMENTS RENT OFFICE: The company has a contract to rent the office from January 1, 2004 until December 31, 2005. The total obligation as per December 31, 2004 is EUR 68,728. LEASE VEHICLES: The company has lease obligations at the end of 2004 of EUR 174,510, of which will be released in 2005 EUR 61,260. Future minimum lease payments are as follows: Rent office vehicles ---------------- ---------------- 2005 (euro) 68,728 (euro) 61,260 2006 - 51,150 2007 - 43,019 2008 - 19,081 2009 - - ---------------- ---------------- Total (euro) 68,728 (euro) 174,510 ================ ================ 6. SUBSEQUENT EVENTS On February 4, 2005 Vasco Data Security International, Inc. purchased 100% of the shares of A.O.S. Hagenuk B.V. CURRENT ASSETS 7. TRADE ACCOUNTS RECEIVABLE December 31, ---------------------------------------------------- 2004 2003 2002 ---------------- ---------------- ---------------- Trade debtors (euro) 137,418 (euro) 575,818 (euro) 337,703 Provsion for bad debts - - - ---------------- ---------------- ---------------- (euro) 137,418 (euro) 575,818 (euro) 337,703 ================ ================ ================
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) 8. RELATED PARTY RECEIVABLES December 31, ------------------------------------------------- 2004 2003 2002 ---------------- ------------- ---------------- AOS Holding B.V. (euro) 450,075 (euro) - (euro) - CPS Broadcast Products B.V. - - 167,656 B.V. Hagenuk CPS - - 495,049 ---------------- ------------- ---------------- (euro) 450,075 (euro) - (euro) 662,705 ================ ============= ================ Note: 2002 The related party receivables are on behalf of the takeover of activities from CPS Broadcast Products B.V. and B.V. Hagenuk CPS. 2004 AOS-Hagenuk B.V. has financed obligations of AOS Holding B.V. during the year. 9. INVENTORY December 31, -------------------------------------------- 2004 2003 2002 ------------- ------------- -------------- Raw materials and consumables (euro) 58,505 (euro) 27,269 (euro) 55,636 Inventory obsolescence reserve - - - ------------- ------------- -------------- (euro) 58,505 (euro) 27,269 (euro) 55,636 ============= ============= ============== 10. Taxes and social security premiums December 31, ------------------------------------------- 2004 2003 2002 ------------- ------------ --------------- Industrial insurance board (euro) 534 (euro) 564 (euro) 172 Corporate tax - 4,396 - Pension contributions 2,912 - 1,766 Wage tax - - 26,784 -------------- -------------- --------------- (euro) 3,446 (euro) 4,960 (euro) 28,722 ============== ============== ===============
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) PROPERTY, PLANT AND EQUIPMENT 11. EQUIPMENT December 31, --------------------------------------------------- 2004 2003 2002 --------------- ----------------- --------------- Situation as at 1 January Purchasing cost (euro) 279,101 (euro) - (euro) - Accumulated depreciation (83,084) - - --------------- ----------------- --------------- Book value as at 1 January 196,017 - - =============== ================= =============== Mutations during the financial year Investments 10,712 279,101 - Depreciation (68,204) (83,084) - --------------- ----------------- --------------- (57,492) 196,017 - =============== ================= =============== Situation as at 31 December Purchasing cost 289,813 279,101 - Accumulated depreciation (151,288) (83,084) - --------------- ----------------- --------------- Book value as at 31 December (euro) 138,525 (euro) 196,017 (euro) - =============== ================= =============== OTHER ASSETS 12. DEVELOPMENT EXPENSES December 31, --------------------------------------------------- 2004 2003 2002 --------------- ----------------- --------------- Situation as at 1 January Purchasing cost (euro) 544,536 (euro) 544,536 (euro) - Accumulated depreciation (408) - - --------------- ----------------- --------------- Book value as at 1 January 544,128 544,536 - =============== ================= =============== Mutations during the financial year Investments - - 544,536 Depreciation (5,108) (408) - --------------- ----------------- --------------- (5,108) (408) 544,536 =============== ================= =============== Situation as at 31 December Purchasing cost 544,536 544,536 544,536 Accumulated depreciation (5,516) (408) - --------------- ----------------- --------------- Book value as at 31 December (euro) 539,020 (euro) 544,128 (euro) 544,536 =============== ================= ===============
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) The development expenses consist of a contribution in the joint development expenses of the PCC810 chip. The development expenses are depreciated by EUR 4 per sold final product in which the chip has been processed. Based on current developments the board expects that there will be sufficient potential for depreciation in the oncoming two years. CURRENT LIABILITIES 13. RELATED PARTY PAYABLES December 31, --------------------------------------------------- 2004 2003 2002 --------------- ----------------- --------------- Pijnenburg Beheer N.V. (euro) 21,497 (euro) 275,062 (euro) 78,130 Hagenuk CPS USA Inc. - - 130,992 --------------- ----------------- --------------- (euro) 21,497 (euro) 275,062 (euro) 209,122 =============== ================= =============== Note: 2002 Debt to Pijnenburg Beheer N.V. due to applied group costs. Debt to Hagenuk CPS Inc. due to applied marketing costs. 2003 Debt to Pijnenburg Beheer N.V. due to pay off bank debts and profit share. 2004 Debt to Pijnenburg Beheer N.V. due to pay off bank debts and profit share. 14. Taxes and social security premiums December 31, --------------------------------------------------- 2004 2003 2002 --------------- ----------------- --------------- V.A.T. (euro) 2,386 (euro) 108,195 (euro) 275,910 Corporate tax - - 4,396 Wage tax 17,093 8,998 - Pension contributions 3,165 28,014 - --------------- ----------------- --------------- (euro) 22,644 (euro) 145,207 (euro) 280,306 =============== ================= =============== STATEMENT OF OPERATIONS 15. RENT EXPENSES For the Years Ended December 31, --------------------------------------------------- 2004 2003 2002 --------------- ----------------- --------------- Rent office (euro) 70,941 (euro) 92,040 (euro) 6,275 Rent vehicles 94,241 39,877 - --------------- ----------------- --------------- Total rent expenses (euro) 165,182 (euro) 131,917 (euro) 6,275 =============== ================= ===============
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) 16. OTHER OPERATING INCOME The other operating income consists of grants for a joint European development project. The project was ended in 2003. 17. Exchange gains and losses There are no material exchange gains and losses. 18. Corporate tax For the Years Ended December 31, --------------------------------------------------- 2004 2003 2002 --------------- ----------------- --------------- Corporate tax in fiscal year (euro) 24,050 (euro) (4,396) (euro) 4,396 =============== ================= =============== Statutory tax rate 29-34,5% 29% 29% Differences: - Deduction for investments -2.0% -1.6% - Costs not deductable 2.7% 0.2% - Carry back -23.6% - Carry forward -12.0% Effective tax rate 18.8% 6.5% 29.2% Note: There are no deferred taxes 19. COSTS AND SERVICES PROVIDED BY RELATED PARTIES For the Years Ended December 31, ----------------------------------------------- 2004 2003 2002 --------------- -------------- --------------- Management fee 1. (euro) 120,000 (euro) 16,250 (euro) - Rent office 2. 70,783 5,790 - Share in holding costs 3. 26,213 248,108 230,148 Profit share 4. - 171,966 135,216 Development 5. - - 147,204 Marketing 6. - - 133,255 Interest (9,300) - 14,654 --------------- -------------- --------------- (euro) 207,696 (euro) 442,114 (euro) 660,477 =============== ============== ===============
AOS - HAGENUK B.V. NOTES TO THE FINANCIAL STATEMENTS - (CONTINUED) (IN EUROS) 1. CEO mr. Filipan 2. Art of Security B.V. 3. en 4. Pijnenburg Beheer N.V. 5. CPS Broadcast B.V. 6. CPS Hagenuk USA Inc. 20. INTEREST INCOME AND EXPENSE For the Years Ended December 31, --------------------------------------------- 2004 2003 2002 -------------- ------------- -------------- INTEREST INCOME Interest bank deposits (euro) 3,753 (euro) - (euro) 18 Interest AOS Holding B.V. 9,300 - - -------------- ------------- -------------- (euro) 13,053 (euro) - (euro) 18 ============== ============= ============== INTEREST EXPENSE Interest and costs bank accounts (euro) 14,978 (euro) 80,865 (euro) 29,927 ------------- ------------- -------------- (euro) 14,978 (euro) 80,865 (euro) 29,927 ============= ============= ============== 21. NET INCOME AOS-HAGENUK B.V. AND HER PREDECESSOR CORPORATIONS For the Years Ended December 31, ----------------------------------------------- 2004 2003 2002 -------------- --------------- -------------- AOS-Hagenuk B.V. (euro) 103,865 (euro) (62,777) (euro) 10,628 -------------- --------------- -------------- (euro) 103,865 (euro) (62,777) (euro) 10,628 ============== =============== ============== Note: Hagenuk Smart Card Solutions B.V. is founded at May 17, 2002. As of January 1, 2002 the company took over the smart car activities from her associated companies, B.V. Hagenuk CPS. As at June 25, 2004 Hagenuk Smart Card Solutions B.V. changed her statutory name in AOS-Hagenuk B.V.
Exhibit 99.4 VASCO DATA SECURITY INTERNATIONAL, INC. UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (Amounts in thousands, except per share amounts) The Unaudited Consolidated Pro Forma Statement of Operations combines the historical consolidated statements of operations of VASCO Data Security International, Inc. ("VASCO") and AOS-Hagenuk B.V. ("A.O.S.") as if the merger had occurred on January 1, 2004. The Unaudited Consolidated Pro Forma Balance Sheet combines the historical consolidated balance sheet of VASCO and the historical consolidated balance sheet of A.O.S., giving effect to the merger as if it had occurred on December 31, 2004. VASCO has adjusted the historical consolidated financial information to account for pro forma events that are (1) directly attributable to the merger, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. On February 4, 2005, pursuant to a Share Sale and Purchase Agreement (the "Purchase Agreement") by and among VASCO, A.O.S. Holding B.V. ("Seller"), Filipan Beheer B.V. ("Guarantor"), Mr. Mladen Filipan ("Surety") and Pijnenburg Beheer N.V. ("Guarantor"), VASCO completed its acquisition of 100% of the issued share capital of A.O.S., a private limited liability company organized and existing under the laws of the Netherlands. The base purchase price paid to the Seller for the acquisition was EUR 5,000, of which EUR 3,750 was paid in cash ("Consideration Cash") and the remainder of which was paid in VASCO common stock ("Consideration Shares"). The Consideration Shares will be held in escrow for the benefit of the Seller for a period of twelve (12) months, pursuant to the terms of an Escrow Agreement. Twelve (12) months after the Closing Date and five days prior to the expiration of the Escrow Agreement (the "Re-measurement Date") the value of the Consideration Shares will be re-measured as of the Re-measurement Date by reference to the average closing price of VASCO's common stock during a period of thirty (30) trading days prior to the Re-measurement Date less five percent (5%) (the "Final Value'). If: (a) the Final Value is 90% or greater, then there shall be no adjustment of the amount of Closing Consideration Shares; (b) the Final Value is 80% or greater but less than 90% of the initial value then the amount of Consideration Shares shall be increased to the number of Consideration Shares multiplied by a fraction consisting of the initial value divided by the Final Value; (c) the Final Value is less than 80% of the initial value then the amount of Consideration Shares shall be increased to the number of Closing Shares multiplied by 1.25. Six (6) months after closing, the Seller shall have the right to pay EUR 1,250 into the escrow account against release of the Consideration Shares, pursuant to the terms set forth in the Purchase Agreement. In addition to the base purchase price, a variable amount related to the gross profits collected on the sales of certain equipment will be paid to the Seller over a period of two (2) years following the closing, pursuant to the terms of the Purchase Agreement. The following Unaudited Consolidated Pro Forma financial information gives effect to VASCO's acquisition of A.O.S. as if the transaction had occurred on December 31, 2004 for purposes of the Unaudited Consolidated Pro Forma Balance Sheet, and as of January 1, 2004 for purposes of the Unaudited Consolidated Pro Forma Statement of Operations. The acquisition of A.O.S. will be recorded using the purchase method of accounting. The following unaudited consolidated pro forma financial statements are based on the historical statements of VASCO and A.O.S. during the periods presented, adjusted to give effect to the acquisition. The total purchase price of A.O.S. has been allocated on a preliminary basis to identifiable assets acquired and liabilities assumed based on valuation procedures performed to date. This allocation is subject to change pending a final analysis of the total purchase price paid, including direct costs of the acquisition, and the estimated fair value of the assets acquired and liabilities assumed. However, the Company does not believe the impact of these changes will be material. The pro forma adjustments are described in the accompanying notes and are based upon available information and various assumptions that management believes are reasonable. These adjustments give effect to events directly attributable to the transaction and do not reflect any restructuring or integration costs, or any potential cost savings or other synergies that management expects to realize as a result of the transaction. The accompanying unaudited pro forma consolidated financial information should be read in conjunction with the historical financial statements and the related notes thereto of VASCO, included in its Annual Report on Form 10-K, and the historical financial statements and the related notes thereto of A.O.S., included elsewhere in this Current Report on Form 8-K/A. The unaudited pro forma combined financial information is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been consummated on the dates indicated, nor is it necessarily indicative of the future financial position and the results of operations of VASCO.
VASCO DATA SECURITY INTERNATIONAL, INC. UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 2004 (IN THOUSANDS) VASCO Data Security AOS- Pro Forma Pro Forma International, Inc. Hagenuk B.V. Adjustments Notes Consolidated ------------------- ------------ ----------- ----- ------------ ASSETS Current assets: Cash $ 8,138 $ 9418 (4,374) 1 $ 4,705 Restricted cash 82 -- 82 Accounts receivable, net 5,965 187 6,152 Inventories, net 1,346 80 1,426 Prepaid expenses 791 204 995 Deferred income taxes 23 -- 23 Foreign sales tax receivable 313 -- 313 Other current assets 464 619 (616) 1 467 -------- ------ -------- Total current assets 17,122 2,031 14,163 Property and equipment Furniture and fixtures 1,683 -- 1,683 Office equipment 2,008 395 (395) 3 2,196 188 3 -------- ------ -------- 3,691 395 3,879 Accumulated depreciation (2,853) (206) 206 3 (2,853) -------- ------ -------- Net property and equipment 838 188 1,025 Intangible assets, net 1,134 735 (735) 2 1,134 367 2 367 Goodwill, net 250 -- 5,997 5 6,247 Note receivable and investment in SSI 760 -- 760 Other assets 146 -- 146 -------- ------ -------- TOTAL ASSETS $ 20,250 $ 2,955 $ 23,843 ======== ====== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,065 45 $ 3,110 Deferred revenue 620 1,933 (862) 4 1,691 Accrued wages and payroll taxes 1,602 -- 1,602 Income taxes payable 435 31 466 Other accrued expenses 1,345 170 150 1 1,665 -------- ------ -------- Total current liabilities 7,067 2,178 8,533 Deferred warranty revenues 152 -- 152 Stockholders' equity : Series D Convertible Preferred Stock 1,504 -- 1,504 Common stock 34 25 (25) 6 34 Additional paid-in capital 51,825 682 (682) 6 53,953 2,128 1 Retained earnings (accumulated deficit) (40,672) 71 (71) 6 (40,672) Accumulated other comprehensive income - cumulative translation adjustment 340 -- 340 -------- ------ -------- Total stockholders' equity 13,031 777 15,158 -------- ------ -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,250 $ 2,955 $ 23,843 ======== ====== ======== See accompanying notes to the unaudited consolidated pro forma financial statements.
VASCO DATA SECURITY INTERNATIONAL, INC. UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004 (IN THOUSANDS EXCEPT PER SHARE DATA) VASCO Data Security International AOS-Hagenuk Pro Forma Pro Forma Inc. B.V. Adjustments Notes Consolidated ------------ ----------- ----------- ----- ------------ Net revenues $ 29,893 $ 5,418 $ (862) 7 $ 34,449 Cost of goods sold 9,184 3,194 12,378 -------- -------- -------- -------- Gross profit 20,709 2,224 (862) 22,071 -------- -------- -------- -------- Operating costs: Sales and marketing 9,160 1,007 10,167 Research and development 2,835 840 3,675 General and administrative 3,194 217 367 8 3,778 Restructuring expenses (32) - (32) -------- -------- -------- -------- Total operating costs 15,157 2,063 367 17,587 -------- -------- -------- -------- Operating income from continuing operations 5,552 160 (1,229) 4,483 Interest income (expense), net 120 (2) (87) 9 31 Other income (expense), net (539) - (539) -------- -------- -------- -------- Income before income taxes 5,133 158 (1,316) 3,975 Provision for income taxes 1,880 30 (30) 10 1,880 -------- -------- -------- -------- Net income from continuing operations 3,253 128 (1,286) 2,095 Preferred stock accretion and dividends (232) - (232) -------- -------- -------- -------- Net income available to common shareholders $ 3,021 $ 128 $ (1,286) $ 1,863 ======== ======== ======== ======== Basic net income per common share: $ 0.09 $ 0.06 ======== ======== Diluted net income per common share: $ 0.09 $ 0.06 ======== ======== Weighted average common shares outstanding: Basic 32,216 263 32,479 ======== ======== ======== Dilutive 33,128 263 33,391 ======== ======== ======== See accompanying notes to the unaudited consolidated pro forma financial statements.
VASCO DATA SECURITY INTERNATIONAL, INC. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) NOTE 1 ACQUISITION OF AOS-HAGENUK B.V. In accordance with the Purchase Agreement, on February 4, 2005, VASCO acquired all of the outstanding shares of AOS-Hagenuk B.V. ("AOS"). The aggregate purchase price was $7,268, consisting primarily of $4,374 cash, 263 shares of common stock valued at approximately $2,128, the assumed liability due to AOS of $616 and estimated direct costs of the acquisition of $150. As of April 20, 2005, $105 of the direct costs have been paid. The fair value of the common stock issued was determined based on the average market price of the Company's common stock over the period including five days before and after the terms of the Purchase Agreement was signed and closed. In accordance with the Statement of Financial Accounting Standards No. 141," Business Combinations", the Company allocated the consideration given to the assets acquired and the liabilities assumed based on their estimated fair values at date of acquisition. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed at December 31, 2004: Cash $ 941 Accounts receivable, net 187 Inventory 80 Prepaid expenses 204 Other current assets 619 Property and equipment, net 188 Intangible asset 367 Goodwill 5,997 ------ Total assets acquired 8,583 ------ Accounts payable 45 Deferred revenue 1,071 Income taxes payable 31 Accrued expenses 170 ------ Total liabiltites assumed 1,317 ------ ------ Net assets acquired $7,266 ====== The balance sheet of AOS was translated to US dollars using the historical EURO to US Dollar rate on December 31, 2004. The statement of operations of AOS was translated using the average historical EURO to US Dollar rate for the year 2004. NOTE 2 - INTANGIBLE ASSETS An intangible asset of $367 related to customer purchase commitments was recorded at the date of acquisition at its estimated fair value. This intangible asset will be amortized as the goods are shipped and is expected to be fully amortized within a twelve-month period. The intangible asset recorded by AOS of $735 was estimated to have a fair value of $0 at the date of acquisition as its future realization was uncertain. The effect was to increase goodwill recorded.
VASCO DATA SECURITY INTERNATIONAL, INC. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS) NOTE 3 - OFFICE EQUIPMENT The office equipment was recorded at its net book value at the date of acquisition which approximates the fair value of that equipment. Historical accumulated depreciation was eliminated. NOTE 4 - DEFERRED REVENUE The deferred revenue assumed from AOS was recorded at its estimated fair value of $1,071 at the date of acquisition. NOTE 5 - GOODWILL Goodwill represents the amount of consideration paid not specifically allocable to purchased assets or assumed liabilities. NOTE 6 - EQUITY The historical value of AOS' common stock, retained earnings and additional paid-in capital were eliminated at the date of acquisition. NOTE 7 - REVENUE Adjustment to record a reduction in revenue related to the difference between the deferred revenue liability recorded by AOS and the assumed deferred liability recorded by VASCO in the purchase. NOTE 8 - AMORTIZATION OF INTANGIBLE ASSET Adjustment to record the amortization expense of the acquired intangible asset recorded in the purchase. NOTE 9 - INTEREST INCOME Adjustment to reduce interest income of $87 as a result of the cash paid for the purchase of AOS. NOTE 10 - INCOME TAXES Adjustment to eliminate the AOS tax provision as a result of the pro forma adjustments. NOTE 11 - ADJUSTMENT TO THE VALUE OF THE PURCHASE Twelve (12) months after the Closing Date and five days prior to the expiration of the Escrow Agreement (the "Re-measurement Date") the value of the Consideration Shares, 263, will be subject to a re-measurement, providing the Seller has not paid Euro 1,250 into the escrow account against the release of the Consideration shares. The effect of this potential re-measurement will be to adjust goodwill and additional paid-in capital. NOTE 12 - EARN OUT CONSIDERATION In addition to the base purchase price, a variable amount related to the gross profits collected on the sales of certain equipment will be paid to the Seller over a period of two years following the Closing. The Company will record any earn out payments as commission expense in the period earned.