UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
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 333-35563
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
As of May 13, 1998, 20,316,585 shares of the Company's Common
Stock, $.001 par value per share ("Common Stock"), were outstanding.
VASCO Data Security International, Inc.
Form 10-Q
For The Three Months Ended March 31, 1998
Table of Contents
PART I. FINANCIAL INFORMATION
This report contains the following trademarks of the
Company, some of which are registered: VASCO, AccessKey, VACMan
Server and VACMan/CryptaPak, AuthentiCard and Digipass.
Page No.
-------
Item 1.Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 31, 1997 and March 31, 1998 (Unaudited) ......... 3
Consolidated Statements of Operations (Unaudited)
for the three months ended March 31, 1997 and 1998 ....... 4
Consolidated Statements of Comprehensive Income (Unaudited)
for the three months ended March 31, 1997 and 1998 ........5
Consolidated Statements of Cash Flows (Unaudited)
for the three months ended March 31, 1997 and 1998 ....... 6
Notes to Consolidated Financial Statements ............... 7
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................... 8
PART II. OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K........................ 11
SIGNATURES..................................................... 14
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
VASCO Data Security International, Inc.
Consolidated Balance Sheets
December 31, March 31,
1997 1998
ASSETS (Unaudited)
Current assets: ----------- -----------
Cash $ 1,897,666 2,195,917
Accounts receivable, net of allowance for
doubtful accounts of $429,000 and $226,000
in 1997 and 1998 2,458,451 2,041,017
Inventories, net 1,001,294 1,201,460
Prepaid expenses 86,426 69,699
Deferred income taxes 83,000 83,000
Other current assets 221,572 254,682
--------- ---------
Total current assets 5,748,409 5,845,775
--------- ---------
Property and equipment:
Furniture and fixtures 488,338 552,970
Office equipment 322,434 383,664
--------- ---------
810,772 936,634
Accumulated depreciation (497,381) (542,394)
--------- ---------
313,391 394,240
--------- ---------
Goodwill, net of accumulated amortization of
$198,000 and $230,000 in 1997 and 1998 704,124 671,896
Other assets 1,609,901 1,436,275
--------- ---------
Total assets $ 8,375,825 $ 8,348,186
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt $ 3,185,400 $ 3,153,350
Accounts payable 1,083,965 1,873,371
Customer deposits 426,914 399,517
Other accrued expenses 1,606,810 1,630,542
--------- ---------
Total current liabilities 6,303,089 7,056,780
--------- ---------
Long-term debt, including stockholder note of
$5,000,000 in 1997 and 1998 8,442,946 8,454,610
Common stock subject to redemption 494,668 494,668
Stockholders' equity (deficit):
Common stock, $.001 par value - 75,000,000
shares authorized; 20,132,968 shares issued
and outstanding in 1997; 20,316,585
shares issued and outstanding in 1998 20,133 20,786
Additional paid-in capital 9,186,726 9,301,420
Accumulated deficit (15,901,575) (16,639,673)
Accumulated other comprehensive
income-cumulative translation adjustment (170,162) (340,405)
--------- ---------
Total stockholders' equity (deficit) (6,864,878) (7,657,872)
--------- ---------
Total liabilities and stockholders'
equity (deficit) $ 8,375,825 8,348,186
========= =========
See accompanying notes to consolidated financial statements.
VASCO Data Security International, Inc.
Consolidated Statements of Operations
(Unaudited)
For the Quarter Ended March 31,
------------------------------
1997 1998
---- ----
Net revenues $ 3,548,210 $ 2,612,967
--------- ---------
Total revenues 3,548,210 2,612,967
Cost of goods sold 1,922,415 1,221,823
--------- ---------
Gross profit 1,625,795 1,391,144
--------- ---------
Operating costs:
Sales and marketing 731,455 882,613
Research and development 271,924 437,434
General and administrative 839,275 575,789
--------- ---------
Total operating costs 1,842,654 1,895,836
--------- ---------
Operating loss (216,859) (504,692)
Interest expense (178,318) (209,570)
Other expense, net (42,803) (14,462)
--------- ---------
Loss before income taxes (437,980) (728,724)
Provision for income taxes 35 9,374
--------- ---------
Net loss (438,015) (738,098)
Preferred stock dividends (27,000) -
--------- ---------
Net loss available to
common stockholders $ (465,015) $ (738,098)
========= =========
Basic loss per common share $ (0.03) $ (0.04)
========= =========
Shares used to compute basic
loss per common share 18,469,302 20,510,308
========= =========
See accompanying notes to consolidated financial statements.
VASCO Data Security International, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
For the Quarter ended March 31,
------------------------------
1997 1998
---- ----
Comprehensive income:
Net loss $ (465,015) $ (738,098)
Other comprehensive income -
cumulative translation adjustment 60,482 (170,243)
--------- ---------
Comprehensive loss $ (404,533) $ (908,341)
========= =========
VASCO Data Security International, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Quarter Ended
March 31,
---------------------
1997 1998
---- ----
Cash flows from operating activities:
Net loss $ (438,015) $ (738,098)
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 240,603 251,486
Interest paid in shares of
common stock 112,500 -
Changes in current assets and
current liabilities:
Accounts receivable, net (462,112) 417,434
Inventories, net (182,144) (200,166)
Other current assets 19,099 (16,942)
Accounts payable (202,244) 789,406
Customer deposits (587,215) (27,397)
Other accrued expenses 640,265 23,732
--------- ---------
Net cash provided by (used in) operations (859,263) 499,455
--------- ---------
Cash flows from investing activities:
Dispositions of property and equipment 7,633 -
Additions to property and equipment (5,615) (125,922)
--------- ---------
Net cash provided by (used in)
investing activities 2,018 (125,922)
--------- ---------
Cash flows from financing activities:
Series B preferred stock dividends (27,000) -
Proceeds from exercise of stock options 11,250 115,347
Proceeds from issuance of debt 280,115 -
Repayment of debt (70,154) (20,386)
--------- ---------
Net cash provided by
financing activities 194,211 94,961
--------- ---------
Effect of exchange rate changes on cash 60,482 (170,243)
--------- ---------
Net increase (decrease) in cash (602,552) 298,251
Cash, beginning of period 1,813,593 1,897,666
--------- ---------
Cash, end of period $ 1,211,041 $ 2,195,917
========= =========
Supplemental disclosure of cash
flow information:
Interest paid $ 84,065 $ 20,764
Income taxes paid $ - $ -
See accompanying notes to consolidated financial statements.
VASCO Data Security International, Inc.
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements
include the accounts of VASCO Data Security International, Inc. and
its subsidiaries (collectively, the "Company") 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, 1997.
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. The operating results for the interim periods
presented are not necessarily indicative of the results expected for
a full year.
Note 2 - Exchange Offer
VASCO Data Security International, Inc. ("VDSI Inc.") was
organized in 1997 as a subsidiary of VASCO Corp., a Delaware
corporation ("VASCO Corp."). Pursuant to an exchange offer
("Exchange Offer") by VDSI Inc. for securities of VASCO Corp. that
was completed March 11, 1998, VDSI Inc. acquired 97.7% of the
outstanding common stock of VASCO Corp. Consequently, VASCO Corp.
became a subsidiary of VDSI Inc., with certain VASCO Corp.
shareholders holding the remaining 2.3% of the VASCO Corp. common
stock representing a minority interest. The impact of the minority
interest is not material to the Company's consolidated financial
statements. The December 31, 1997 financial statements have been
restated to account for the Exchange Offer as a transaction between
entities under common control in a manner similar to a pooling of
interests.
The assets and liabilities of VASCO Corp. were recorded by VDSI
Inc. at their historical carrying values.
Note 3 - Subsequent Events
Loan Agreement/License Agreement. On March 31, 1998, the
Company entered into two agreements with Lernout & Hauspie Speech
Products N.V. ("L&H"), consisting of a loan agreement and a license
agreement. The loan agreement, in the amount of $3 million, bears
interest at the prime rate plus 1%, payable quarterly, and matures on
January 4, 1999. This loan is convertible at the option of the holder
into shares of the Company's common stock, par value $.001 per share
("Common Stock"), based upon the average closing price of the Common
Stock for the 10 trading days prior to March 11, 1998, the date the
Exchange Offer closed. This loan was funded in April 1998.
The license agreement with L&H is for the use of L&H's speech
recognition and speech verification technology for data security,
telecom and physical access applications. This license agreement
includes a prepayment of royalties by the Company in the amount of
$600,000, payable no later than June 30, 1998 and an additional
prepayment in the amount of $200,000, payable no later than March 31,
1999. L&H is an international leader in the development of advanced
speech technology for various commercial applications and products.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
VDSI Inc. designs, develops, markets and supports open
standards-based hardware and software security systems which manage
and secure access to data.
The following discussion is based upon VDSI Inc.'s consolidated
results of operations for the three months ended March 31, 1998 as
compared to VASCO Corp.'s consolidated results of operations for the
three months ended March 31, 1997. See "Note 2 - Exchange Offer."
References to the "Company" or "VDSI Inc." represent the consolidated
entity. References to "VASCO NA" represent the North American
operations, including VDSI, Inc., VASCO Corp., and VDS. References
to "VASCO Europe" mean the operations of Lintel Security, VASCO Data
Security nv/sa and VASCO Data Security Europe.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q, including the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 concerning,
among other things, the prospects, developments and business
strategies for the Company and its operations, including the
development and marketing of certain new products and the anticipated
future growth in certain markets in which the Company currently
markets and sells its products or anticipates selling and marketing
its products in the future. These forward-looking statements (i) are
identified by their use of such terms and phrases as "expected,"
"expects," "believe," "believes," "will," "anticipated," "emerging,"
"intends," "plans," "could," "may," "estimates," "should,"
"objective," and "goals" and (ii) are subject to risks and
uncertainties and represent the Company's present expectations or
beliefs concerning future events. The Company cautions that the
forward-looking statements are qualified by important factors that
could cause actual results to differ materially from those in the
forward-looking statements, including (a) risks of general market
conditions, including demand for the Company's products and services,
competition and price levels and the Company's historical dependence
on relatively few products, certain suppliers and certain key
customers, and (b) risks inherent to the computer and network
security industry, including rapidly changing technology, evolving
industry standards, increasing numbers of patent infringement claims,
changes in customer requirements, price competitive bidding, changing
government regulations and potential competition from more
established firms and others. Therefore, results actually achieved
may differ materially from expected results included in, or implied
by these statements.
Comparison of Three Months Ended March 31, 1997 and March 31, 1998
The following discussion and analysis should be read in
conjunction with the Company's Consolidated Financial Statements for
the three months ended March 31, 1997 and 1998.
Revenues
The Company's consolidated revenues for the three months ended
March 31, 1998 were $2,613,000, a decrease of $935,000, or 26%, as
compared to the three months ended March 31, 1997. VASCO Europe
contributed $2,155,000, or 82%, of total consolidated revenues, and
VASCO NA contributed the remaining $458,000, or 18% during the three
months ended March 31, 1998.
VASCO Europe's revenues were $2,155,000 for the three months
ended March 31, 1998, a decrease of $401,000, or 16%, as compared to
the three months ended March 31, 1997. This decrease was due to the
introduction of the Digipass 300 during the first quarter 1998. Due
to the anticipated release of this product, management believes that
many customers held off ordering existing products, thus curtailing
revenue until the shipment of Digipass 300, which began mid-way
through the first quarter of 1998.
VASCO NA's revenues were $458,000 for the three months ended
March 31, 1998, a decrease of $534,000, or 54%, as compared to the
three months ended March 31, 1997 and accounted for 18% of
consolidated revenues for the three months ended March 31, 1998. The
decrease can be attributed, in part, to a reduction in shipments to
Concord-Eracom Nederland BV during the three months ended March 31,
1998. Concord-Eracom Nederland BV represented approximately $981,000
in revenue for the three months ended March 31, 1997, as compared to
$278,000 for the three months ended March 31, 1998. In March 1998,
however, Concord-Eracom Nederland BV placed an additional order with
VASCO NA of approximately $1,250,000. The entire order is expected
to be shipped during 1998.
Cost of Goods Sold
The Company's consolidated cost of goods sold for the three
months ended March 31, 1998 was $1,222,000, a decrease of $700,000,
or 36%, as compared to the three months ended March 31, 1997.
VASCO Europe's cost of goods sold was $994,000 for the three
months ended March 31, 1998, representing a decrease of 33%, as
compared to the three months ended March 31, 1997. VASCO NA's cost
of goods sold was $228,000 for the three months ended March 31, 1998,
representing a decrease of 47%, as compared to the three months ended
March 31, 1997. This combined decrease is consistent with the 26%
decrease in revenues for the same period and was due in part to a
reduction in shipments to Concord-Eracom Nederland BV. The cost of
goods sold for security products, however, decreased as a percentage
at a quicker pace than revenues for security products. This was due
to certain efficiencies in the manufacture of the products.
Gross Profit
The Company's consolidated gross profit for the three months
ended March 31, 1998 was $1,391,000, a decrease of $235,000, or 14%,
as compared to the three months ended March 31, 1997. This
represents a consolidated gross margin of 53%, as compared to 46% for
the same period of 1997. VASCO Europe contributed $1,161,000 to the
consolidated gross profit representing a gross margin of 54% as
compared to 42% for the three months ended March 31, 1997. VASCO NA
contributed $230,000 to the consolidated gross profit representing a
gross margin of 50% as compared to 57% for the three months ended
March 31, 1997. The increase in VASCO Europe's gross margin was due
in part to certain efficiencies in the manufacture of the Company's
products.
Sales and Marketing Expenses
Consolidated sales and marketing expenses for the three months
ended March 31, 1998 were $883,000, an increase of $151,000, or 21%,
over the three months ended March 31, 1997. The increase is
attributed to increased sales efforts including, in part, increased
travel costs and an increase in marketing activities, including print
media campaigns and other efforts.
Research and Development
Consolidated R&D costs for the three months ended March 31, 1998
were $437,000, an increase of $165,000, or 61%, as compared to the
three months ended March 31, 1997. R&D costs represented 17% of
consolidated revenues for the three months ended March 31, 1998 as
compared to 8% for the three months ended March 31, 1997. The
increase is due to the addition of R&D personnel, in both the U.S.
and Europe.
General and Administrative Expenses
Consolidated general and administrative expenses for the three
months ended March 31, 1998 were $576,000, a decrease of $263,000, or
31%, compared to the three months ended March 31, 1997. This
decrease was due to economies of scale being realized as a result of
the combination of the operations of Lintel Security and VDS during
1997, as well as a favorable experience with regard to bad debt
recovery. The consolidated operating loss for the three months ended
March 31, 1997 and 1998 included amortization expense relating to
intangible assets of $205,000 and $206,000, respectively.
Interest Expense
Consolidated interest expense for the three months ended March
31, 1998 was $210,000, compared to $178,000, an increase of 18% over
the same period of 1997. This increase can be attributed to an
increased borrowing base during 1998.
Operating Loss
The Company's consolidated operating loss for the three months
ended March 31, 1998 was $505,000, compared to the consolidated
operating loss of $217,000 for the three months ended March 31, 1997.
Of the consolidated operating loss for the three months ended March
31, 1998, VASCO NA contributed a loss of $334,000 and VASCO Europe
contributed a loss of $171,000.
The consolidated operating loss for the three months ended March
31, 1998, excluding the amortization of intangibles, was attributable
in part to continued investment in R&D and sales and marketing
investments in North America.
Liquidity and Capital Resources
Since inception, the Company has financed its operations through
a combination of the issuance of equity securities, private
borrowings, short-term commercial borrowings, cash flow from
operations, and loans from Mr. T. Kendall Hunt, its Chief Executive
Officer, and one of the stockholders of the Company's original
corporate predecessor.
The Company's cash and cash equivalents were $2,196,000 at March
31, 1998, which is an increase of approximately $298,000 from
$1,898,000 at December 31, 1997. As of March 31, 1998, the Company
had working capital of ($1,211,000). During the first quarter of
1998, the Company used the cash provided by operations principally
for working capital needs.
Capital expenditures during the first three months of 1998 were
$126,000 and consisted primarily of computer equipment and office
furniture and fixtures.
The Company intends to seek acquisitions of businesses, products
and technologies that are complementary or additive to those of the
Company. While from time to time the Company engages in discussions
with respect to potential acquisitions, the Company has no present
plans, commitments or agreements with respect to any such
acquisitions as of the date of this Form 10-Q and currently does not
have excess cash for use in making acquisitions. There can be no
assurance that any such acquisitions will be made.
The Company believes that its current cash balances and
anticipated cash generated from operations will be sufficient to meet
its anticipated cash needs through December 31, 1998. Continuance of
the Company's operations beyond December 31, 1998, however, will
depend on the Company's ability to obtain adequate financing. To
this end, in March 1998, the Company entered into a loan agreement in
the amount of $3 million with Lernout & Hauspie Speech Products N.V.
("L&H"); the funding of this occurred in April 1998. The loan bears
interest at the prime rate plus 1%, payable quarterly, and matures on
January 4, 1999.
The Company has previously entered into engagement letters with
Banque Paribas S.A. and Generale Bank dated June 20, 1997 and June
26, 1997, respectively, for a possible future public offering.
Further, the Company has had preliminary discussions regarding other
possible debt or equity financing. There can be no assurance,
however, that the Company will be successful in effecting a public
offering or obtaining other additional financing.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) The following exhibits are filed with this Form 10-Q or
incorporated by reference as set forth below:
Exhibit Description
Number
+3.1 Certificate of Incorporation of Registrant, as amended.
++3.2 Bylaws of Registrant, as amended and restated.
4.1 Intentionally Omitted.
+4.2 Specimen of Registrant's Common Stock Certificate.
4.3 Intentionally Omitted.
+4.4 Form of Letter of Transmittal and Release.
+4.5 Form of Registrant's Warrant Agreement.
+4.6 Form of Registrant's Option Agreement.
+4.7 Form of Registrant's Convertible Note Agreement.
+10.1 Netscape Communications Corporation OEM Software Order
Form dated March 18, 1997 between VASCO Data Security,
Inc. and Netscape Communications Corporation.**
+10.2 License Agreement between VASCO Data Security, Inc. and
SHIVA Corporation effective June 5, 1997.**
+10.3 Heads of Agreement between VASCO Corp., VASCO Data
Security Europe S.A., Digiline International
Luxembourg, Digiline S.A., Digipass S.A., Dominique
Colard and Tops S.A. dated May 13, 1996.
+10.4 Agreement relating to additional terms and conditions
to the Heads of Agreement dated July 9, 1996, among the
parties listed in Exhibit 10.3.
+10.5 Agreement between VASCO Corp., VASCO Data Security
Europe SA/NV, Mario Houthooft and Guy Denudt dated
March 1, 1996.
+10.6 Asset Purchase Agreement dated as of March 1996 by and
between Lintel Security SA/NV and Lintel SA/NV, Mario
Houthooft and Guy Denudt.
+10.7 Management Agreement dated January 31, 1997 between
LINK BVBA and VASCO Data Security NV/SA (concerning
services of Mario Houthooft).
+10.8 Sublease Agreement by and between VASCO Corp. and APL
Land Transport Services, Inc. dated as of August 29,
1997.
+10.9 Office Lease by and between VASCO Corp. and LaSalle
National Bank, not personally, but as Trustee under
Trust Agreement dated September 1, 1997, and known as
Trust Number 53107, dated July 22, 1985.
+10.10 Lease Agreement by and between TOPS sa and Digipass sa
effective July 1, 1996.
+10.11 Lease Agreement by and between Perkins Commercial
Management Company, Inc. and VASCO Data Security, Inc.
dated November 21, 1995.
+10.12 Asset Purchase Agreement by and between VASCO Corp. and
Wizdom Systems, Inc. dated August 20, 1996.
+10.13 1997 VASCO Data Security International, Inc. Stock
Option Plan, as amended.
+10.14 Distributor Agreement between VASCO Data Security, Inc.
and Hucom, Inc. dated June 3, 1997.**
+10.15 Non-Exclusive Distributor Agreement by and between
VASCO Data Security, Inc. and Concord-Eracom Nederland
BV dated May 1, 1994.**
+10.16 Banque Paribas Belgique S. A. Convertible Loan
Agreement for $3.4 million.
+10.17 Pledge Agreement dated July 15, 1997 by and between T.
Kendall Hunt and Banque Paribas Belgique S.A.
+10.18 Engagement Letter between Banque Paribas S.A. and VASCO
Corp. dated June 20, 1997, as amended.
+10.19 Financing Agreement between Generale Bank and VASCO
Corp. dated as of June 27, 1997.
+10.20 Letter Agreement between Generale Bank and VASCO Corp.
dated June 26, 1997.
+10.21 Form of Warrant dated June 16, 1997 (with Schedule).
+10.22 Form of Warrant dated October 31, 1995 (with Schedule).
+10.23 Form of Warrant dated March 7, 1997 (with Schedule).
+10.24 Form of Warrant dated August 13, 1996 (with Schedule).
+10.25 Form of Warrant dated June 27, 1996 (with Schedule).
+10.26 Form of Warrant dated June 27, 1996 (with Schedule).
+10.27 Convertible Note in the principal amount of
$500,000.00, payable to Generale de Banque dated
July 1, 1997 (with Schedule).
+10.28 Agreement by and between VASCO Data Security NV/SA and
S.I. Electronics Limited effective January 21, 1997.**
+10.29 Agreement effective May 1, 1993 by and between Digipass
s.a. and Digiline s.a.r.l.
+10.30 VASCO Data Security, Inc. purchase order issued to
National Electronic & Watch Co. LTD. **
+10.31 VASCO Data Security, Inc. purchase order issued to
Micronix Integrated Systems.**
+10.32 Agreement between Registrant and VASCO Corp. dated as
of August 25, 1997.
+10.33 Convertible Note dated June 1, 1996 made payable to
Mario Houthooft in the principal amount of $373,750.00.
+10.34 Convertible Note dated June 1, 1996 made payable to Guy
Denudt in the principal amount of $373,750.00.
+10.35 Osprey Partners Warrant (and Statement of Rights to
Warrant and Form of Exercise) issued June 1, 1992.
+10.36 Registration Rights Agreement dated as of October 19,
1995 between certain purchasing shareholders and VASCO
Corp.
+10.37 First Amendment to Registration Rights Agreement dated
July 1, 1996.
+10.38 Second Amendment to Registration Rights Agreement dated
March 7, 1997.
+10.39 Purchase Agreement by and between VASCO Corp. and Kyoto
Securities Ltd.
+10.40 Convertible Note dated May 28, 1996 payable to Kyoto
Securities, Ltd. in principal amount of $5 million.
+10.41 Amendment to Purchase Agreement and Convertible Note by
and between VASCO Corp. and Kyoto Securities, Ltd.
+10.42 Executive Incentive Compensation Plan.
+10.43 Letter for Credit granted by Generale de Banque to
Digipass SA dated January 27, 1997.
++10.44 License Agreement dated as of March 25, 1998 by and
between VASCO Data Security International, Inc., for
itself and its subsidiaries, and Lernout & Hauspie
Speech Products N.V.
++10.45 Loan Agreement dated as of March 31, 1998 by and
between Lernout & Hauspie Speech Products N.V. and
VASCO Data Security International, Inc.
++10.46 Convertible Note dated April 1, 1998 payable to Lernout
& Hauspie Speech Products N.V. in the principal amount
of $3 million.
27 Financial Data Schedule.
___________________________
+ Incorporated by reference to the Registrant's Registration
Statement on Form S-4, as amended (Registration No. 333-35563),
originally filed with the Securities and Exchange Commission on
September 12, 1997.
++ Incorporated by reference to the Registrant's Annual Report on
Form 10-K, originally filed with the Securities and Exchange
Commission on May 5, 1998.
** Confidential treatment has been granted for the omitted portions
of this document.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant during
the quarter ended March 31, 1998.
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 May 13, 1998.
VASCO Data Security International, Inc.
/s/ T. Kendall Hunt
---------------------------------------
T. Kendall Hunt
Chairman of the Board, Chief Executive
Officer and President
/s/ Gregory T. Apple
--------------------------------------
Gregory T. Apple
Vice President and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
EXHIBIT INDEX
Exhibit Description
Number
27 Financial Data Schedule.