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.