EXHIBIT 99.5
INDEX TO AUDITED FINANCIAL STATEMENTS OF TAGSTAR SYSTEMS GMBH
SAUERLACH, GERMANY
Tagstar Systems GmbH is a predecessor company of Bluehill ID AG, a stock corporation incorporated in Switzerland, and was acquired by Bluehill ID AG effective as of June 30, 2008. Bluehill ID AG was acquired by SCM Microsystems, Inc., a Delaware corporation, on January 4, 2010.
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Auditor’s Opinion | | 2 |
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Audited Balance Sheet as of June 30, 2008 | | 3 |
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Audited Income Statement for the six months ended June 30, 2008 | | 4 |
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Notes to Audited Financial Statements | | 5 |
Zurich, 12 March 2010
Report of the independent auditor on the financial statements
As independent auditor and in accordance with your instructions, we have audited the accompanying financial statements of Tagstar Systems GmbH, which comprise the balance sheet, income statement and notes for the period from 1 January 2008 to 30 June 2008.
Management is responsible for the preparation of the financial statements in accordance with the accounting and valuation principles described in the notes to the financial statements. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Management is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements as of and for the six-month period ended 30 June 2008 have been prepared in accordance with the accounting and valuation principles described in the notes.
This report is intended solely for the information and use of Tagstar Systems GmbH and for filing with the US Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.
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| Ernst & Young Ltd | | | | |
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/s/ Louis Siegrist | | | | /s/ Pramit Mehta |
| Louis Siegrist | | | | Pramit Mehta |
| Swiss Certified Accountant | | | | Certified Public Accountant |
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TAGSTAR SYSTEMS GMBH, SAUERLACH
BALANCE SHEET
AS OF 30 JUNE 2008
(in euros)
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ASSETS | | | | |
Current assets: | | | | |
Cash | | € | 57,769 | |
Receivables from goods and services | | | 123,086 | |
Other short-term receivables | | | 338,787 | |
Inventories | | | 447,941 | |
Prepaid expenses | | | 79,056 | |
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Total current assets | | | 1,046,639 | |
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Non-current assets: | | | | |
Tangible fixed assets | | | 170,170 | |
Participations | | | 252,010 | |
Licenses | | | 43,500 | |
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Total non-current assets | | | 465,680 | |
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Total assets | | € | 1,512,319 | |
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LIABILITIES AND SHAREHOLDER’S EQUITY | | | | |
Current liabilities: | | | | |
Payables from goods and services: | | | | |
Third parties | | € | 206,834 | |
Affiliated companies | | | 208,018 | |
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| | | 414,852 | |
Other short-term liabilities | | | 469,537 | |
Tax provisions | | | 64,298 | |
Accrued liabilities and deferred income | | | 148,969 | |
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Total current liabilities | | | 1,097,656 | |
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Long-term financial liabilities affiliated company | | | 70,000 | |
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Total non-current liabilities | | | 70,000 | |
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Total liabilities | | | 1,167,656 | |
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Equity: | | | | |
Share capital | | | 25,000 | |
General legal reserves | | | 395,000 | |
Loss carry forward: | | | | |
Balance brought forward | | | 292,493 | |
Net loss for the period | | | (367,828 | ) |
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Loss carry forward | | | (75,336 | ) |
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Total shareholders’ equity | | | 344,664 | |
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Total liabilities and shareholders’ equity | | € | 1,512,320 | |
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See accompanying notes to Audited Financial Statements of Tagstar Systems GmbH.
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TAGSTAR SYSTEMS GMBH, SAUERLACH
INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2008
(in euros)
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Income | | | | |
Net sales from goods and services | | € | 1,423,780 | |
Other operating income | | | 75,657 | |
Financial income | | | 331 | |
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Total income | | | 1,499,768 | |
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Expenses | | | | |
Material and merchandise expenses | | | 1,061,146 | |
Personnel expenses | | | 270,757 | |
Other operating expenses | | | 406,371 | |
Depreciation | | | 90,652 | |
Financial expenses | | | 2,766 | |
Tax | | | 35,904 | |
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Total expenses | | | 1,867,596 | |
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Net loss for the period | | € | (367,828 | ) |
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See accompanying notes to Audited Financial Statements of Tagstar Systems GmbH.
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TAGSTAR SYSTEMS GMBH, SAUERLACH
NOTES TO AUDITED FINANCIAL STATEMENTS
AS OF 30 JUNE 2008
Company Background
TagStar Systems GmbH is a leading supplier of Radio Frequency Identification inlays for ticketing, labeling, smart cards and special transponder designs in two frequency bands: HF and UHF. Its smart inlay production meets the highest levels of quality using an advanced, cost efficient production processes.
Summary of Significant Accounting Policies
The financial statements have been prepared on a historical cost basis. All amounts are stated in euros (EUR).
Raw materials, semi-finished and finished goods, as well as merchandise, have been valued at a maximum of the acquisition or manufacturing costs. If the cost is higher than the market value generally applicable on the date of the balance sheet, then such market value shall be determinative.
Tangible fixed assets and intangible assets are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any.
Investments in affiliated companies are shares of the capital in other companies held with the intention of a permanent investment and of exercising a substantial influence. Shares representing at least twenty percent of the votes are deemed to be investments.
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.
Depreciation, value adjustments and provisions have been made to the extent required by generally accepted accounting principles in Switzerland. Provisions are to be created in particular to cover uncertain contingent liabilities and potential losses from contractual obligations.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
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| | | June 30, 2008 | |
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Joint and several liability | | | |
Tagstar Systems GmbH belongs to a VAT group and is jointly and severally liable with Exypnotech GmbH for the VAT payments arising from the VAT group’s activities. | | | |
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Total amount of liabilities from leasing contracts not included in the balance sheet | | 1,075,766 | |
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Investment | | | |
Exypno Tech GmbH | | | |
Purpose: | | | |
Development and production of microelectronic components and software | | | |
Share capital | | 102,000 | |
Quote | | 100 | % |
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