-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GfXANmB+wIu5FxlTdE4fTK1PPfKxTpK3zLWdOJrbZj7TUJxvDmG2c00A+I6gup+W AQD+QVn7woBhqJdFLtKAoQ== 0000891618-98-003805.txt : 19980813 0000891618-98-003805.hdr.sgml : 19980813 ACCESSION NUMBER: 0000891618-98-003805 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980603 ITEM INFORMATION: FILED AS OF DATE: 19980812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCM MICROSYSTEMS INC CENTRAL INDEX KEY: 0001036044 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 770444317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22689 FILM NUMBER: 98683927 BUSINESS ADDRESS: STREET 1: 131 ALBRIGHT WAY CITY: LOS GATOS STATE: CA ZIP: 95030 BUSINESS PHONE: 4083704888 MAIL ADDRESS: STREET 1: 131 ALBRIGHT WAY CITY: LOS GATOS STATE: CA ZIP: 95030 8-K/A 1 AMENDMENT #1 TO FORM 8-K DATED JUNE 3, 1998. 1 ================================================================================ 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): JUNE 3, 1998 SCM MICROSYSTEMS, INC. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-22689 77-0444317 - ------------------------------- -------------------------- ------------------- (STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 131 ALBRIGHT WAY LOS GATOS, CALIFORNIA 95032 - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 370-4888 NOT APPLICABLE - -------------------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) 1 2 The undersigned Registrant hereby amends the following items, financial statements, exhibits, or other portions of its Current Report on Form 8-K, originally filed with the Securities and Exchange Commission on June 3, 1998 ("the Form 8-K") as set forth in the pages attached hereto: Item 7. Financial Statements and Exhibits. The following financial statements of the business acquired are filed as part of this report, where indicated. (a) Financial Statements of Business Acquired:
Page Index Page 3 Report of the Directors 4 Statement by Directors 7 Report of the Auditors 7 Balance Sheets as of 31 December 1997 and 1996 8 Profit and Loss Accounts for the years ended 31 December 1997 and 1996 9 Statements of Cash Flows for the years ended 31 December 1997 and 1996 10 Notes to the Accounts 11 Unaudited Balance Sheet as of 31 March 1998 17 Unaudited Profit and Loss Accounts for the quarters ended 31 March 1998 and 1997 18 Unaudited Statements of Cash Flows for the quarters ended 31 March 1998 and 1997 19 Note to Unaudited Financial Statements 20
(b) Pro forma Financial Information:
Page Unaudited Pro Forma Combined Condensed Balance Sheet as of March 31, 1998 21 Unaudited Pro Forma Combined Condensed Statement of Operations for the year ended December 31, 1997 and the three months ended March 31, 1998 22 Notes to Pro Forma Combined Condensed Financial Information 23
2 3 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 1997 INDEX
Page Report of the Directors .................................................. 4 Statement by Directors ................................................... 7 Report of the Auditors ................................................... 7 Balance Sheets as of 31 December 1997 and 1996 ........................... 8 Profit and Loss Accounts for the years ended 31 December 1997 and 1996 ... 9 Statements of Cash Flows for the years ended 31 December 1997 and 1996 ... 10 Notes to the Accounts .................................................... 11
3 4 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) REPORT OF THE DIRECTORS The directors present their report to the members together with the audited accounts of the company for the financial year ended 31 December 1997. DIRECTORS The directors in office at the date of this report are: NGIAM MIA JE PATRICK TAN THYE SENG TAN TAI CHEW GOH BOON HUAT NGIAM MIA KIAT BENJAMIN (Alternate to NGIAM MIA JE PATRICK) LIOW VOON KHEONG (Alternate to TAN THYE SENG) LIM KIM LARK (Alternate to GOH BOON HUAT) PRINCIPAL ACTIVITIES The principal activities of the company are that of development, manufacture and repair of PCMCIA peripherals and related subassemblies. There have been no significant changes in the nature of these activities during the financial year under review. ACQUISITION AND DISPOSAL OF SUBSIDIARIES There was no acquisition or disposal of any subsidiary during the financial year. FINANCIAL RESULTS
$ Sing. -------- Profit after taxation 263,826 Accumulated loss brought forward (192,339) -------- Retained profits carried forward 71,487 ========
RESERVES AND PROVISION MOVEMENTS There were no material transfers to or from reserves and provision except for normal amounts set aside for such items as depreciation of fixed assets, provisions for doubtful debts and income tax if any as disclosed in the accounts. ISSUE OF SHARES AND DEBENTURES There were no shares or debentures issued by the company during the financial year. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES During and at the end of the financial year, the company was not a party to any arrangement whose object is to enable the directors to acquire benefits through the acquisition of shares in or debentures of the company or any other body corporate. 4 5 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) REPORT OF THE DIRECTORS (CONTINUED) DIRECTORS' INTEREST IN SHARES OR DEBENTURES The following directors who held office at the end of the financial year had an interest in shares of the company, according to the register of directors' shareholdings kept by the company under Section 164 of the Companies Act, Cap. 50:-
Ordinary Shares of $1.00 each ----------------------------- Name of Director At 1.1.97 At 31.12.97 --------- ----------- GOH BOON HUAT 500,000 500,000 TAN TAI CHEW 1,040,000 1,040,000 LIM KIM LARK 300,000 300,000
DIVIDENDS The directors do not recommend that a final dividend be paid for the financial year. No dividends have been paid or declared since the end of the previous financial year. BAD AND DOUBTFUL DEBTS Before the accounts of the company were made out, the directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts if any had been written off and that where necessary adequate provision had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances which would render any amounts written off for bad debts or provided for doubtful debts inadequate to any substantial extent. CURRENT ASSETS Before the accounts of the company were made out, the directors took reasonable steps to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the accounts misleading. CHARGES AND CONTINGENT LIABILITIES At the date of this report:- (a) there are no charges on the assets of the company which have arisen since the end of the financial year which secure the liabilities of any other person; and (b) there are no contingent liabilities of the company which have arisen since the end of the financial year other than in the normal course of business. ABILITY TO MEET OBLIGATIONS No contingent or other liability has become enforceable or is likely to become enforceable within twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the company to meet their obligations as and when they fall due. 5 6 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) REPORT OF THE DIRECTORS (CONTINUED) OTHER CIRCUMSTANCES AFFECTING ACCOUNTS At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in the report or the accounts which would render any amount stated in the accounts of the company misleading. UNUSUAL ITEMS In the opinion of the directors, the results of the operations of the company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. UNUSUAL ITEMS AFTER THE FINANCIAL YEAR In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which would affect substantially the results of the operations of the company for the financial year in which this report is made. DIRECTORS' CONTRACTUAL BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than as disclosed in the accounts) which is required to be disclosed by Section 201(8) of the Companies Act, Cap. 50 by reason of a contract made by the company with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest. OPTIONS GRANTED During the financial year, no option to take up unissued shares of the company was granted. OPTIONS EXERCISED During the financial year, there were no shares of the company that were issued by virtue of the exercise of an option to take up unissued shares. OPTIONS OUTSTANDING At the end of the financial year, there were no unissued shares of the company under option. AUDITORS The auditors, Richard Chan & Company, Certified Public Accountants, have expressed their willingness to accept re-appointment. On behalf of the Board, /s/ TAN TAI CHEW /s/ LIM KIM LARK - ---------------------- ---------------------- TAN TAI CHEW LIM KIM LARK Director Director Singapore: 16 March 1998 6 7 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) STATEMENT BY DIRECTORS We state that, in the opinion of the directors:- (a) the balance sheet, profit and loss account and statement of cash flows together with the notes thereon, set out on pages 7 to 15 are drawn up so as to give a true and fair view of the state of affairs of the company as at 31 December 1997, and the results of the business of the company for the year ended on that date; (b) at the date of this statement, there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due. On behalf of the Board, /s/ TAN TAI CHEW /s/ LIM KIM LARK - ---------------------- ---------------------- TAN TAI CHEW LIM KIM LARK Director Director Singapore: 16 March 1998 - -------------------------------------------------------------------------------- REPORT OF THE AUDITORS TO THE MEMBERS OF INTELLICARD SYSTEMS PTE LTD We have audited the accompanying balance sheet as at 31 December 1997 and the profit and loss account and cash flow statement for the year then ended. These financial statements are the responsibility of the Company's directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing, which standards are substantially equivalent to the auditing standards generally accepted in the United States. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion:- (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, Cap. 50 and Statements of Accounting Standard and so as to give a true and fair view of:- (i) the state of affairs of the company as at 31 December 1997 and of the results and cash flows of the company for the year then ended on that date, and (ii) the other matters required by Section 201 of the Act to be dealt with in the accounts; (b) the accounting and other records and the registers required by the Act to be kept by the company have been properly kept in accordance with the provisions of the Act. /S/ RICHARD CHAN & COMPANY ------------------------------ RICHARD CHAN & COMPANY Certified Public Accountants Singapore: 16 March 1998 7 8 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) BALANCE SHEET AS AT 31 DECEMBER 1997 (Singapore $)
Note 1997 1996 ---- ----------- ----------- $ $ SHARE CAPITAL 3 4,000,000 4,000,000 PROFIT AND LOSS ACCOUNT 71,487 (192,339) ----------- ----------- 4,071,487 3,807,661 =========== =========== Represented by:- FIXED ASSETS 4 704,113 1,056,723 INVESTMENTS 5 1,230,584 971,384 EXPENDITURE CARRIED FORWARD Preliminary and pre-operation expenses -- 31,458 ----------- ----------- CURRENT ASSETS Inventories 6 686,041 618,881 Trade debtors 3,072,226 1,047,503 Other debtors, deposits and prepayments 7 42,434 24,300 Fixed deposits with bank 8 636,500 800,000 Bank and cash balances 121,560 387,908 ----------- ----------- 4,558,761 2,878,592 ----------- ----------- LESS: CURRENT LIABILITIES Trade creditors 1,991,571 409,188 Other creditors and accruals 9 134,296 88,506 Hire purchase creditor 10 296,104 336,698 ----------- ----------- 2,421,971 834,392 ----------- ----------- NET CURRENT ASSETS 2,136,790 2,044,200 ----------- ----------- 4,071,487 4,103,765 LESS: NON-CURRENT LIABILITY Hire purchase creditor 10 -- 296,104 ----------- ----------- 4,071,487 3,807,661 =========== ===========
The annexed notes form an integral part of the accounts. 8 9 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1997 (Singapore $)
Note 1997 1996 ---- --------- --------- $ $ TURNOVER 1 9,101,947 6,746,588 ---------- ---------- Net profit for the year 263,826 36,314 After charging:- Auditors' remuneration 6,000 5,000 Bad debts written off 97,172 -- Hire purchase interest 16,414 28,193 Interest on bank overdraft 2,839 -- Preliminary and pre-operation expenses written off 31,458 31,457 Fees for professional services paid to a firm in which a director is a member 6,555 -- Provision for inventory obsolescence 250,000 -- Provision for warranty 20,000 -- Depreciation of fixed assets 380,382 376,456 And after crediting:- Interest income 21,426 29,721 Director's fees -- 18,800 Taxation 11 -- -- ---------- ---------- Profit after taxation 263,826 36,314 Accumulated loss brought forward (192,339) (228,653) ---------- ---------- Accumulated profit/(loss) carried forward 71,487 (192,339) ========== ==========
The annexed notes form an integral part of the accounts. 9 10 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 1997 (Singapore $)
1997 1996 ---------- ---------- $ $ CASH FLOWS FROM OPERATING ACTIVITIES: Profit before taxation 263,826 36,314 Adjustments for: Depreciation of fixed assets 380,382 376,456 Preliminary and pre-operation expenses written off 31,458 31,457 ---------- ---------- OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 675,666 444,227 (Increase)/decrease in inventories (67,160) 471,408 (Increase)/decrease in trade debtors (2,024,723) 465,856 Increase in other debtors, deposits and prepayments (18,134) (6,922) Increase/(decrease) in trade creditors 1,582,383 (397,715) Increase/(decrease) in other creditors and accruals 45,790 (32,182) ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 193,822 944,672 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investment (259,200) -- Purchase of fixed assets (27,772) (45,564) ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (286,972) (45,564) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITY: Payment of hire purchase liability (336,698) (324,919) ---------- ---------- NET CASH USED IN FINANCING ACTIVITY (336,698) (324,919) ---------- ---------- Net (decrease)/increase in cash and cash equivalents (429,848) 574,189 Cash and cash equivalents at beginning of year 1,187,908 613,719 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 13) 758,060 1,187,908 ========== ==========
The annexed notes form an integral part of the accounts. 10 11 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTES TO THE ACCOUNTS - 31 DECEMBER 1997 These notes form an integral part of and should be read in conjunction with the accompanying accounts. 1. PRINCIPAL ACTIVITIES AND TURNOVER The principal activities of the company are that of development, manufacture and repair of PCMCIA peripherals and related subassemblies. Turnover represents the invoiced value of goods sold and services rendered, net of goods and services tax. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting The accounts expressed in Singapore dollars are prepared in accordance with the historical cost convention. (b) Depreciation of Fixed Assets Depreciation is calculated on the straight line method to write off the cost of the assets over their estimated useful lives as follows: Manufacturing equipment - 5 years Test and other equipment - 5 years Leasehold improvements - 3 years Computer - 5 years Furniture and fittings - 5 years Office equipment - 5 years (c) Investments Quoted and unquoted equity investments are stated at cost less provision for any permanent diminution in value of the investment. (d) Preliminary and pre-operation expenses Preliminary expenses incurred on the incorporation of the company and pre-operation expenses for the period from July to September 1994 are written off to the profit and loss account over a three-year period. 11 12 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTES TO THE ACCOUNTS - 31 DECEMBER 1997 (CONTINUED) (e) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined principally on a first-in, first-out basis. Provision is made, where necessary for obsolete and slow-moving inventories. Cost of finished goods and work-in-progress include direct material, labour and an appropriate portion of production overheads. Work-in-progress is stated at standard cost up to stage of completion incurred to balance sheet date. (f) Foreign Currencies Assets and liabilities in foreign currencies are translated into Singapore dollars at rates of exchange closely approximating those ruling at balance sheet date. Transactions in foreign currencies are converted at rates closely approximating those ruling at the transaction dates. All exchange differences are taken to the profit and loss account. (g) Debtors Bad debts are written off and specific provisions are made for those debts considered to be doubtful. General provisions are made on the balance of trade debtors to cover potential losses which have not been specifically identified. 3. SHARE CAPITAL
1997 1996 --------- --------- $ $ Authorised:- 5,000,000 5,000,000 ========= ========= 5,000,000 ordinary shares of $1.00 each Issued and fully paid:- 4,000,000 ordinary shares of $1.00 each 4,000,000 4,000,000 ========= =========
12 13 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTES TO THE ACCOUNTS - 31 DECEMBER 1997 (CONTINUED) 4. FIXED ASSETS
Accumulated Net Book Depreciation Cost Depreciation Value Charge --------- ------------ --------- --------- $ $ $ $ 1997 Manufacturing equipment 1,604,446 1,004,572 599,874 320,476 Test and other equipment 76,131 38,634 37,497 14,139 Leasehold improvements 83,518 79,644 3,874 25,158 Computer 81,472 37,820 43,652 14,862 Furniture and fittings 6,272 3,868 2,404 1,255 Office equipment 29,275 12,463 16,812 4,492 ------------------------------------------------------------ 1,881,114 1,177,001 704,113 380,382 ------------------------------------------------------------ 1996 Manufacturing equipment 1,601,696 684,096 917,601 318,567 Test and other equipment 70,509 24,495 46,014 11,835 Leasehold improvements 83,518 54,486 29,032 27,839 Computer 70,449 22,958 47,491 12,781 Furniture and fittings 6,272 2,613 3,659 1,254 Office equipment 20,898 7,971 12,926 4,180 ------------------------------------------------------------ 1,853,342 796,619 1,056,723 376,456 ------------------------------------------------------------
Fixed assets include the following item which is acquired under hire purchase arrangement (Note 10).
Accumulated Net Book Depreciation Cost Depreciation Value Charge --------- ------------ --------- ------------ $ $ $ $ 1997 Manufacturing equipment 1,533,977 969,461 564,516 306,795 ------------------------------------------------------------ 1996 Manufacturing equipment 1,533,977 662,666 871,311 306,795 ------------------------------------------------------------
13 14 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTES TO THE ACCOUNTS - 31 DECEMBER 1997 (CONTINUED) 5. INVESTMENTS
1997 1996 --------- --------- $ $ Quoted equity investment, at cost 971,384 -- Unquoted investment, at cost 259,200 971,384 --------- --------- 1,230,584 971,384 ========= ========= Market value of quoted equity investment 6,947,811 -- ========= =========
6. INVENTORIES
1997 1996 --------- --------- $ $ Direct materials and inventory 357,535 270,279 Work-in-progress 251,100 148,002 Finished goods 327,406 200,600 --------- --------- 936,041 618,881 Less: Provision for obsolescence 250,000 -- --------- --------- 686,041 618,881 ========= ========= Movements in the provision for obsolescence are as follows: Balance, 1 January -- -- Provision for the year 250,000 -- --------- --------- Balance, 31 December 250,000 -- ========= =========
7. OTHER DEBTORS, DEPOSITS AND PREPAYMENTS These comprise mainly utility deposits, prepayments and accrued interest on fixed deposits arising in the normal course of business. 8. FIXED DEPOSITS WITH BANK Fixed deposits are held by the bank as security against bank guarantee issued. 14 15 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTES TO THE ACCOUNTS - 31 DECEMBER 1997 (CONTINUED) 9. OTHER CREDITORS AND ACCRUALS These comprise mainly accruals for utilities, staff salaries and bonus. 10. HIRE PURCHASE CREDITOR 1997 1996
------- ------- $ $ Payable within one year 300,803 353,112 Less: Interest suspense 4,699 16,414 ------- ------- 296,104 336,698 ------- ------- Payable after one year -- 300,803 Less: Interest suspense -- 4,699 ------- ------- -- 296,104 ------- ------- 296,104 632,802 ======= =======
11. TAXATION The company has been granted a 7-year Pioneer Certificate subject to certain conditions. This is effective from the Production Day of 1 May 1995. No provision for taxation has been set up in the accounts as the company had non-pioneer tax losses for the current year. 12. BANK OVERDRAFT The bank overdraft facility is secured against fixed deposits of the company and personal guarantee of two directors of the company. 13. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statement of cash flows comprise the following balance sheet amounts:
1997 1996 --------- --------- $ $ Fixed deposits 636,500 800,000 Bank and cash balances 121,560 387,908 --------- --------- 758,060 1,187,908 ========= =========
15 16 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTES TO THE ACCOUNTS - 31 DECEMBER 1997 (CONTINUED) 14. CONTINGENT LIABILITIES
1997 1996 ------- ------- $ $ There is contingent liability not provided for in the accounts for:- Bank guarantees (secured) 484,786 787,461 ======= =======
15. RELATED PARTY TRANSACTIONS
1997 1996 ------- ------- $ $ Significant related party transactions were: Purchases from a related party 34,559 388,316 Sales to a related party 56,881 366,414 Rental and reimbursements received 8,789 -- ------- -------
16 17 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) CONDENSED BALANCE SHEET AS OF 31 MARCH 1998 (Unaudited, Singapore $)
As of March 31, ASSETS 1998 ---------- Current assets: Cash and cash equivalents $ 626,000 Accounts receivable, net 2,168,000 Inventories 738,000 Other receivables and deposits 157,000 ---------- Total current assets 3,689,000 Property and equipment, net, and other assets 614,000 Investments 1,230,000 ========== $5,533,000 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,073,000 Accrued expenses 128,000 Current portion of lease obligation 210,000 ---------- Total current liabilities 1,411,000 Stockholders' equity: Capital stock 4,000,000 Retained earnings 122,000 ---------- Total stockholders' equity 4,122,000 ---------- $5,533,000 ==========
See note to unaudited condensed financial statements. 17 18 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) PROFIT AND LOSS ACCOUNT FOR THE QUARTERS ENDED 31 MARCH 1998 AND 1997 (Unaudited, Singapore $)
Quarter Ended March 31, 1998 1997 ----------- ----------- Net sales $ 2,265,000 $ 1,102,000 Cost of sales 1,698,000 1,065,000 ----------- ----------- Gross profit 567,000 37,000 ----------- ----------- Operating Expenses: Research and development 105,000 78,000 Sales and marketing 199,000 117,000 General and administrative 127,000 111,000 ----------- ----------- Total operating expenses 431,000 306,000 ----------- ----------- Income (loss) from operations 136,000 (269,000) Interest and other income (expense), net (86,000) 7,000 ----------- ----------- Income (loss) before income taxes 50,000 (262,000) Provision for income taxes -- -- ----------- ----------- Net income (loss) $ 50,000 $ (262,000) =========== ===========
See note to unaudited condensed financial statements. 18 19 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) CONDENSED STATEMENT OF CASH FLOWS FOR THE QUARTERS ENDED 31 MARCH 1998 AND 1997 (Unaudited, Singapore $)
Quarter ended March 31, ------------------------------- 1998 1997 ----------- ----------- Cash flows from operating activities: Net income (loss) $ 50,000 $ (262,000) Adjustment for depreciation of fixed assets 92,000 95,000 ----------- ----------- Operating profit (loss) before working capital changes 142,000 (167,000) Increase in inventories (52,000) (180,000) Decrease in accounts receivable, net 904,000 322,000 Increase in other receivables and deposits (114,000) (46,000) Decrease in accounts payable (918,000) 2,000 Decrease in accrued expenses (6,000) (11,000) ----------- ----------- Net cash used in operating activities (44,000) (84,000) ----------- ----------- Cash flows from investing activities: Purchase of fixed assets (2,000) -- ----------- ----------- Net cash used in investing activities (2,000) -- ----------- ----------- Cash flows from financing activities: Repayment of lease obligation (86,000) (83,000) ----------- ----------- Net cash used in financing activities (86,000) (83,000) ----------- ----------- Net decrease in cash and cash equivalents (132,000) (167,000) Cash and cash equivalents at beginning of period 758,000 1,188,000 ----------- ----------- Cash and cash equivalents at end of period $ 626,000 $ 1,021,000 =========== ===========
See note to unaudited condensed financial statements. 19 20 INTELLICARD SYSTEMS PTE LTD (Incorporated in Singapore) NOTE TO UNAUDITED CONDENSED FINANCIAL STATEMENTS The accompanying unaudited condensed financial statements have been prepared in accordance with the provisions of the Companies Act, Cap. 50 and Statements of Accounting Standard in Singapore for interim financial information. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered for a fair presentation have been included. Operating results for the three-month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 20 21 SCM MICROSYSTEMS, INC. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The following unaudited pro forma combined condensed financial statements give effect to the acquisition by SCM Microsystems, Inc. ("SCM" or the "Company") of all of the issued and outstanding capital stock of Intellicard Systems Pte. Ltd. ("ICS") in a business combination accounted for by the purchase method of accounting. The unaudited pro forma combined condensed balance sheet gives effect to the business combination as if it had occurred on March 31, 1998. The unaudited pro forma combined condensed statements of operations give effect to the business combination as if it had occurred at the beginning of the period presented. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances. In the opinion of management, all adjustments have been made that are necessary to present fairly the pro forma data. Final amounts could differ from those set forth below. In the quarter ended June 30, 1998, the Company recorded a charge of $700,000 representing the fair value of in process research and development acquired from ICS. Such charge has not been included in the unaudited pro forma combined condensed statements of operations. The following unaudited pro forma combined condensed financial statements are not necessarily indicative of the future results of operations of the Company or the results of operations which would have resulted had the Company and ICS been combined during the periods presented. In addition, the pro forma results are not intended to be a projection of future results. The unaudited pro forma combined condensed financial statements should be read in conjunction with the audited consolidated financial statements of SCM for the year ended December 31, 1997 included in the December 31, 1997 annual report on form 10-K, and the unaudited consolidated financial statements for the quarter ended March 31, 1998 included in the March 31, 1998 form 10-Q, and the financial statements of ICS appearing elsewhere in this Form 8-K/A. UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
The Company ICS Pro Forma Pro Forma ASSETS Actual Actual Adjustments Combined -------- -------- ----------- -------- Current assets: Cash and cash equivalents $ 23,813 $ 569 $ 11,391(a) (14,891)(c) $ 20,882 Short-term investments 34,715 -- 34,715 Accounts receivable, net 7,782 1,443 9,225 Inventories 3,441 473 (201)(b) 3,713 Prepaid expenses 777 -- 777 -------- -------- -------- -------- Total current assets 70,528 2,485 (3,701) 69,312 Property and equipment, net 1,639 382 2,021 Goodwill -- -- 4,704(c) 4,704 Other assets, net 14 11,391 (11,391)(a) 14 -------- -------- -------- -------- $ 72,181 $ 14,258 $(10,388) $ 76,051 ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,431 $ 1,070 $ -- $ 3,501 Accrued expenses 1,387 -- -- 1,387 Income taxes payable 554 -- -- 554 -------- -------- -------- -------- Total current liabilities 4,372 1,070 -- 5,442 Commitments and contingencies Stockholders' equity (deficit): Common stock 12 2,483 (2,483)(c) 12 Additional paid-in capital 75,640 -- 3,500(c) 79,140 Deferred stock compensation (111) -- (111) Retained earnings (deficit) (6,925) 10,705 (201)(b) (11,204)(c) (7,625) Cumulative translation adjustment (807) -- -- (807) -------- -------- -------- -------- Total stockholders' equity (deficit) 67,809 13,188 (10,388) 70,609 -------- -------- -------- -------- $ 72,181 $ 14,258 $(10,388) $ 76,051 ======== ======== ======== ========
See accompanying notes to unaudited pro forma combined condensed financial information. 21 22 SCM MICROSYSTEMS, INC. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
The Company ICS Pro Forma Pro Forma YEAR ENDED DECEMBER 31, 1997: Actual Actual Adjustments Combined -------- -------- ----------- -------- Net sales $ 27,769 $ 6,277 $ (3,326)(d) $ 30,721 Cost of sales 17,524 5,118 (3,326)(d) 19,316 -------- -------- ---------- -------- Gross profit 10,245 1,160 -- 11,405 -------- -------- ---------- -------- Operating Expenses: Research and development 2,940 244 3,184 Sales and marketing 4,221 442 4,663 General and administrative 2,494 363 784(e) 3,641 Settlement of patent claim 515 -- 515 -------- -------- ---------- -------- Total operating expenses 10,170 1,050 784 12,004 -------- -------- ---------- -------- Income (loss) from operations 75 110 (784) (599) Interest and other income (expense), net 866 62 (201)(f) 727 Foreign currency transaction gains 467 31 498 -------- -------- ---------- -------- Income (loss) before income taxes 1,408 203 (985) 626 Provision for income taxes 305 -- 305 -------- -------- ---------- -------- Net income (loss) 1,103 203 (985) 321 Preferred stock interest accretion (802) -- (802) ======== ======== ========== ======== Net income (loss) applicable to common stockholders $ 301 $ 203 $ (985) $ (481) ======== ======== ========== ======== Earnings per share: Basic $ 0.08 $ (0.12) ======== ======== Diluted $ 0.06 $ (0.09) ======== ======== Shares used in per share computations: Basic 3,819 61(g) 3,880 ======== ========== ======== Diluted 5,015 61 5,076 ======== ========== ======== THREE MONTHS ENDED MARCH 31, 1998: Net sales $ 7,815 $ 1,416 $ (777)(d) $ 8,454 Cost of sales 4,916 1,061 (777)(d) 5,200 -------- -------- ---------- -------- Gross profit 2,899 355 -- 3,254 -------- -------- ---------- -------- Operating Expenses: Research and development 766 66 832 Sales and marketing 1,044 125 1,169 General and administrative 778 80 195(e) 1,053 -------- -------- ---------- -------- Total operating expenses 2,588 271 195 3,054 -------- -------- ---------- -------- Income (loss) from operations 311 84 (195) 260 Interest and other income (expense), net 728 (53) (50)(f) 625 -------- -------- ---------- -------- Income (loss) before income taxes 1,039 31 (245) 825 Provision for income taxes 250 -- 250 -------- -------- ---------- -------- Net income (loss) $ 789 $ 31 $ (245) $ 575 ======== ======== ========== ======== Earnings per share: Basic $ 0.07 $ 0.05 ======== ======== Diluted $ 0.07 $ 0.05 ======== ======== Shares used in per share computations: Basic 11,544 61(g) 11,605 ======== ========== ======== Diluted 12,068 61 12,129 ======== ========== ========
See accompanying notes to unaudited pro forma combined condensed financial information. 22 23 SCM MICROSYSTEMS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (1) UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET On June 3, 1998, the Company acquired all of the issued and outstanding capital stock (4,000,000 shares) of Intellicard Systems Pte. Ltd., a Singapore Corporation (ICS), from ICS' stockholders in exchange for aggregate consideration of $18,390,999, of which $14,890,999 was paid in cash and $3,500,000 was paid upon the issuance of 61,185 shares of SCM common stock. Approximately $11.4 million of the cash portion of the consideration was paid in exchange for cash held by ICS stockholders at the closing of the transaction. The pro forma combined condensed balance sheet as of March 31, 1998, gives effect to the business combination as if it had occurred on March 31, 1998. The following adjustments have been reflected in the unaudited pro forma combined condensed balance sheet: (a) This adjustment represents the pro forma effect of the open market sale of 172,856 shares of the Company's Common Stock for an average price of $65.90 per share held by ICS prior to consummation of ICS' acquisition by the Company. (b) This adjustment represents the pro forma elimination of intercompany profit in inventory as of March 31, 1998 relating to product purchased by the Company from ICS. (c) Under purchase accounting, the total purchase price will be allocated to the Company's assets and liabilities based on their relative fair values. Allocations are subject to valuations as of the date of the purchase transaction. The amount and components of the estimated purchase price along with the preliminary allocation of the estimated purchase price to assets purchased are as follows (in thousands): Cash ............................................................. $14,891 Common stock ..................................................... 3,500 ------- Total purchase price ........................... $18,391 ======= Book value of net assets of ICS after adjustments (a) and (b) .... $12,987 In-process research and development .............................. 700 Goodwill ......................................................... 4,704 ------- Net assets acquired............................. $18,391 =======
The actual allocation of the purchase price will depend upon the composition of ICS's net assets on the closing date and the Company's evaluation of the fair value of such net assets as of such date. Consequently, the ultimate allocation of purchase price could differ from that presented above. (2) UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS The Company recorded a charge of $700,000 for the fair value of acquired in process research and development related to the net assets acquired. Such charge has not been included in the unaudited pro forma combined condensed statements of operations. The following adjustments have been reflected in the unaudited pro forma combined condensed statements of operations: (d) These adjustments represent the pro forma elimination of intercompany revenue and costs relating to the sale of products by ICS to the Company during the periods presented. 23 24 SCM MICROSYSTEMS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (CONTINUED) (e) These adjustments represent, for each period presented, the amortization of goodwill over an estimated life of six years. (f) These adjustments represent, for each period presented, the estimated reduction of interest income that would have resulted had the cash portion of the purchase price been paid at the beginning of each period. (g) This adjustment represents the issuance of shares of the Company's Common Stock to the former shareholders of ICS as part of the consideration paid. 24 25 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. SCM MICROSYSTEMS, INC. A Delaware Corporation Dated: August 12, 1998 By: /s/ JOHN G. NIEDERMAIER ----------------------------------------------- John G. Niedermaier Vice President, Finance-Chief Financial Officer (Principal Financial and Accounting Officer) 25 -----END PRIVACY-ENHANCED MESSAGE-----