Amendment No. 2 to 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
 
FORM 8-K/A
Amendment No. 2
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
 
 
Date of Report (Date of earliest event reported)  July 1, 2005

 
Commission File Number  0-15949


INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
 
 California 
 94-2862863
 (State or other jurisdiction of incorporation or organization)
 (I.R.S. Employer identification No.)
 
 
 
 100 Rowland Way, Suite 300, Novato, CA 
 94945
 (Address of principal executive offices)
 (Zip code)
 


(415) 878-4000
(Registrant's telephone number including area code)

1
 
This Form 8-K/A amends the current report on Form 8-K dated July 8, 2005 (filed July 7, 2005) to include Item 9.01-Financial Statements and Exhibits and this document should be read in place of the current report on Form 8-K/A filed September 14, 2005.


Item 9.01 Financial Statements and Exhibits

(b)         Pro Forma Financial Information.

The unaudited pro forma condensed consolidated financial statements presented below are based on the historical financial statements of International Microcomputer Software, Inc. (the “Company” or “IMSI”) and give effect to the disposition of Allume Systems, Inc. (“Allume“)   The pro forma condensed consolidated balance sheet gives effect to the sale to Smith Micro Software, Inc. as if it occurred on June 30, 2004.  The unaudited pro forma condensed consolidated statements of operations eliminate the Allume operations of the business sold in order to reflect the operations of the Company, as if the business had been sold as of the date of original purchase of Allume by IMSI (April 19, 2004) for the year ended June 30, 2004 and the nine months ended March 31, 2005.
 
The unaudited pro forma condensed consolidated statements of operations for the year ended June 30, 2004 reflect the pro forma adjustments necessary to eliminate the results of the Allume operations, including revenue, cost of services and other costs and expenses related to Allume. The pro-forma financial information purports to represent what the Company’s results of operations would have been had the sale of Allume to Smith Micro Software, Inc. occurred on April 19, 2004.
 
The unaudited pro forma condensed consolidated balance sheet is presented for illustrative purposes only and is not necessarily indicative of the financial position that would have been achieved had the pro forma events described in the notes to the pro forma condensed consolidated balance sheet described below been completed as of April 19, 2004.
 
The following pro forma condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes thereto included in the Company’s Annual Report on Form 10-KSB for the year ended June 30, 2004, and Quarterly Reports on Form 10-QSB for the nine months ended March 31, 2005.

2
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data) 
       
Year Ended June 30, 2004
          
   
IMSI
  
Allume Systems,
Inc.
  
 
 
Pro-forma
Adjustments
  
 
 
 
Notes
  
Pro-forma
IMSI
  
Net revenues
  
 
$11,985
    
($1,968
)
  
 
    
 
  
 
$10,017
  
Product costs
    
4,138
   
(488
)
              
3,650
 
 
    
 
    
 
    
 
    
 
    
 
  
Gross margin
    
7,847
   
(1,480
)
              
6,367
 
 
    
 
    
 
    
 
    
 
    
 
  
Costs and expenses
    
 
    
 
    
 
    
 
    
 
  
Sales and marketing
    
5,190
   
(762
)
  
 
    
 
    
4,428
 
General and administrative
    
3,910
   
(233
)
              
3,677
 
Research and development
    
2,519
   
(480
)
        
 
    
2,039
 
 
    
 
    
 
          
 
    
 
  
Total operating expenses
    
11,619
   
(1,475
)
        
 
    
10,144
 
 
    
 
    
 
          
 
    
 
  
Operating loss
    
(3,772
)
  
(5
)
        
 
    
(3,777
)
 
    
 
    
 
          
 
    
 
  
Other income and (expense)
    
 
    
 
          
 
    
 
  
Interest and other, net
    
78
   
(14
)
        
 
    
64
 
Realized and unrealized gains on marketable securities
    
2,567
   
 
          
 
    
2,567
  
Loss on disposal of fixed assets
    
(13
)
  
 
          
 
    
(13
)
Gain on sale of product line
    
59
   
 
          
 
    
59
 
Gain on extinguishment of debt
    
76
   
 
          
 
    
76
 
 
    
 
    
 
          
 
    
 
  
Loss before income tax
    
(1,005
)
  
(19
)
        
 
    
(1,024
)
 
    
 
    
 
          
 
    
 
  
Income tax provision
    
(38
)
              
 
    
(38
)
 
    
 
    
 
          
 
    
 
  
Loss from continuing operations
    
(1,043
)
  
(19
)
        
 
    
(1,062
)
 
    
 
    
 
          
 
    
 
  
Loss from discontinued operations, net of tax
    
(312
)
  
19
         
 
    
(293
)
Gain from the sale of discontinued operations, net of tax
    
2,000
   
 
    
(260
)
  
(A)
 
  
1,740
 
     
 
    
 
    
 
    
 
    
 
  
Net income
   
645
   
0
    
(260
)
  
 
    
385
 
     
 
    
 
    
 
    
 
    
 
  
Other comprehensive loss
    
 
    
 
    
 
    
 
    
 
  
Foreign currency translation adjustment
    
(8
)
  
 
    
 
    
 
    
(8
)
                                 
Comprehensive income
  
 
$637
  
 
$0
    
($260
)
  
 
  
 
$377
  
Basic earnings (loss) per share:
    
 
    
 
    
 
    
 
    
 
  
Loss from continuing operations
    
($0.04
)
              
 
    
($0.04
)
Loss from discontinued operations, net of income tax
    
($0.01
)
              
 
    
($0.01
)
Gain from the sale of discontinued operations, net of income tax
  
 
$0.08
                
 
  
 
$0.07
  
Net income
  
 
$0.03
                
 
  
 
$0.02
  
Diluted earnings (loss) per share:
    
 
                
 
    
 
  
Loss from continuing operations
    
($0.04
)
              
 
    
($0.04
)
Loss from discontinued operations, net of income tax
    
($0.01
)
              
 
    
($0.01
)
Gain from the sale of discontinued operations, net of income tax
  
 
$0.08
                
 
  
 
$0.07
  
 Net income
  
 
$0.03
                
 
  
 
$0.02
  
 
    
 
    
 
    
 
    
 
    
 
  
Shares used in computing basic earnings per share
    
23,838
    
 
    
 
    
 
    
23,838
  
Shares used in computing diluted earnings per share
    
23,838
    
 
    
 
    
 
    
23,838
  
 
See accompanying notes to pro forma condensed consolidated financial statements.
3
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data) 

       
Nine Months Ended
March 31, 2005
          
   
IMSI
  
Allume Systems,
Inc.
  
 
 
Pro-forma
Adjustments
  
 
 
 
Notes
  
Pro-forma
IMSI
  
 
  
 
  
 
          
 
  
Net revenues
  
 
$18,054
    
($7,641
)
  
 
    
 
  
 
$10,413
  
Product costs
    
4,833
   
(1,417
)
              
3,416
 
 
    
 
    
 
    
 
    
 
    
 
  
Gross margin
    
13,221
   
(6,224
)
              
6,997
 
 
    
 
    
 
    
 
    
 
    
 
  
Costs and expenses
    
 
    
 
    
 
    
 
    
 
  
Sales and marketing
    
7,259
   
(2,736
)
              
4,523
 
General and administrative
    
3,590
   
(817
)
              
2,773
  
Research and development
    
3,078
   
(1,823
)
              
1,255
 
 
    
 
    
 
                
 
  
Total operating expenses
    
13,927
   
(5,376
)
              
8,551
 
 
    
 
    
 
                
 
  
Operating loss
    
(706
)
  
(848
)
              
(1,554
)
 
    
 
    
 
                
 
  
Other income and (expense)
    
 
    
 
                
 
  
Interest and other, net
    
(42
)
  
(12
)
              
(54
)
Realized and unrealized gains on marketable securities
    
145
   
 
                
145
 
Gain on sale of product line
    
33
    
 
                
33
  
 
    
 
    
 
                
 
  
Loss before income tax
    
(570
)
  
(860
)
              
(1,430
)
 
    
 
    
 
                
 
  
Income tax provision
    
(10
)
  
 
                
(10
)
 
    
 
    
 
                
 
  
Loss from continuing operations
    
(580
)
  
(860
)
              
(1,440
)
 
    
 
    
 
                
 
  
Loss from discontinued operations, net of tax
    
(5
)
  
 
                
(5
)
Gain from the sale of discontinued operations, net of tax
    
53
   
 
                
53
 
     
 
    
 
                
 
  
Net loss
    
(532
)
  
(860
)
              
(1,392
)
     
 
    
 
                
 
  
Other comprehensive loss
    
 
    
 
                
 
  
Foreign currency translation Adjustment
    
(39
)
  
 
                
(39
)
Comprehensive loss
    
($571
)
  
($860
)
              
($1,431
)
Basic earnings (loss) per share:
                                
Loss from continuing operations
    
($0.02
)
        
 
    
 
    
($0.05
)
Loss from discontinued operations, net of income tax
    
($0.00
)
        
 
    
 
    
($0.00
)
Gain from the sale of discontinued operations, net of income tax
  
 
$0.00
          
 
    
 
  
 
$0.00
  
Net loss
    
($0.02
)
        
 
    
 
    
($0.05
)
Diluted earnings (loss) per share:
    
 
          
 
    
 
    
 
  
Loss from continuing operations
    
($0.02
)
        
 
    
 
    
($0.05
)
Loss from discontinued operations, net of income tax
    
($0.00
)
        
 
    
 
    
($0.00
)
Gain from the sale of discontinued operations, net of income tax
  
 
$0.00
          
 
    
 
  
 
$0.00
  
Net loss
    
($0.02
)
        
 
    
 
    
($0.05
)
 
    
 
    
 
    
 
    
 
    
 
  
Shares used in computing basic earnings per share
    
27,623
    
 
    
 
    
 
    
27,623
  
Shares used in computing diluted earnings per share
    
27,623
    
 
    
 
    
 
    
27,623
  
 
See accompanying notes to pro forma condensed consolidated financial statements.
4
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data) 

       
March 31, 2005
          
   
IMSI
  
Allume Systems,
Inc.
  
 
 
Pro-forma
Adjustments
  
 
 
 
Notes
  
Pro-forma
IMSI
  
ASSETS
    
 
    
 
    
 
    
 
    
 
  
Current assets:
    
 
    
 
    
 
    
 
    
 
  
Cash and cash equivalents
  
 
$2,391
    
($765
)
 
$9,745
    
(B)
 
 
$11,371
  
Restricted cash and cash equivalents
                
126
   
(B)
 
  
126
 
Investment in marketable securities
    
2,258
         
1,000
   
(B)
 
  
3,258
 
Receivables, less allowances for doubtful accounts
    
3,141
   
(1,121
)
  
 
    
 
    
2,020
 
Inventories, net of reserves for obsolescence
    
1,140
   
(368
)
  
 
    
 
    
772
 
Receivable, other (related to discontinued operations)
    
11,506
   
(220
)
  
 
    
 
    
11,286
 
Other current assets
    
692
   
(692
)
  
 
    
 
    
0
 
Assets related to discontinued operations
    
499
   
 
    
 
    
 
    
499
 
Total current assets
    
21,627
   
(3,166
)
  
10,871
   
 
    
29,332
 
 
    
 
    
 
    
 
    
 
    
 
  
Fixed assets, net
    
601
   
(211
)
  
 
    
 
    
390
 
 
                                
Intangible assets
                                
Capitalized software, net
    
2,587
   
(1,998
)
  
 
    
 
    
589
 
Domain names and trademarks, net
    
2,667
   
(992
)
  
 
    
 
    
1,675
 
Distribution rights, net
    
518
   
(339
)
  
 
    
 
    
179
 
Capitalized customer lists, net
    
873
   
(511
)
  
 
    
 
    
362
 
Goodwill
    
8,698
   
(6,810
)
  
 
    
 
    
1,888
 
Total intangible assets
    
15,343
   
(10,650
)
  
 
    
 
    
4,693
 
 
    
 
    
 
    
 
    
 
    
 
  
Other assets
    
 
    
 
    
 
    
 
    
 
  
Prepaid expense
    
57
   
(57
)
  
 
    
 
    
0
 
Total other assets
    
57
   
(57
)
  
 
    
 
    
0
 
 
    
 
    
 
    
 
    
 
    
 
  
Total assets
  
 
$37,628
    
($14,084
)
 
$10,871
    
 
  
 
$34,415
  
 
    
 
    
 
    
 
    
 
    
 
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
    
 
    
 
    
 
    
 
    
 
  
Current liabilities:
    
 
    
 
    
 
    
 
    
 
  
Short-term debt
  
 
$1,974
    
($90
)
 
$88
    
(C)
 
 
$1,972
  
Trade accounts payable
    
1,898
   
(350
)
  
 
    
 
    
1,548
 
Accrued and other liabilities
    
1,497
   
(480
)
  
581
   
(D)
 
  
1,598
 
Total current liabilities
    
5,369
   
(920
)
  
669
   
 
    
5,118
 
 
    
 
    
 
    
 
    
 
    
 
  
Liabilities related to discontinued operations
    
 
    
 
    
 
    
 
    
0
 
Long-term debt and other obligations
    
3,298
   
(73
)
  
 
    
 
    
3,225
 
Total liabilities
    
8,667
   
(993
)
  
669
   
 
    
8,343
 
 
    
 
    
 
    
 
    
 
    
 
  
Shareholders’ equity
    
 
    
 
    
 
    
 
    
 
  
Common stock, no par value; 300,000,000 shares authorized;
28,296,600 shares issued and outstanding
    
53,375
   
(10,407
)
  
 
    
 
    
42,968
 
Accumulated deficit
    
(24,305
)
  
(2,684
)
  
10,202
   
 
    
(16,787
)
Accumulated other comprehensive loss
    
(109
)
  
 
    
 
    
 
    
(109
)
Total shareholders’ equity
    
28,961
   
(13,091
)
  
10,202
   
 
    
26,072
 
 
    
 
    
 
    
 
    
 
    
 
  
Total liabilities and shareholders’ equity
  
 
$37,628
    
($14,084
)
 
$10,871
    
 
  
 
$34,415
  
  
See accompanying notes to pro forma condensed consolidated financial statements.
5
Notes to Pro Forma Information

Unaudited Pro Forma Condensed Consolidated Statement of Operations

(A) The pro forma loss on sale of Allume Systems, Inc. of $260,000 is calculated as: the total consideration received of $10.7 million less: (x) the Company’s net investment in Allume Systems, Inc. of $10.4 million and (y) estimated liabilities for sales expenses of $581,000. Within this consideration received is $126,000 of escrowed funds and currently excluded from this calculation is $1.9 million in escrowed cash and Smith Micro Software, Inc. common stock consideration. Release of the $1.9 million in cash and stock would change the calculated gain (loss) on sale. Changes to the estimated preliminary working capital guarantee adjustment would change the calculated gain (loss) on sale.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

(B) The pro forma activity proceeds of the sale of Allume Systems, Inc. At the closing on July 1, 2005, the Company received cash proceeds of $9.7 million and marketable securities of $1.0 million. Escrow amounts included $1,250,000 in cash and Smith Micro Software, Inc. common stock valued at $750,000. $126,000 of the escrowed amount is currently shown as consideration. The market value of the common stock is based on the average of the closing price of the Purchaser’s stock on the ten (10) trading days ended June 29, 2005.

(C) The pro forma adjustment to short term debt and other obligations of $88,000 is an estimated preliminary working capital guarantee adjustment.

(D) The pro forma adjustment to accrued and other liabilities includes pro forma sale expenses of $581,000 for severance, accounting, legal and escrow fees.

 

SIGNATURES
 
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.
 
     
  INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
 
 		  
 		  
 
Dated: October 18, 2005 By:   /s/ MARTIN WADE, III
 
 
Name: Martin Wade, III
Title: Chief Executive Officer

 
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