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): February 22, 1999
PUBLICARD, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-29794 23-0991870
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
One Post Road, Fairfield, Connecticut 06430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 254-3900
(Former name or former address, if changed since last report.)
The undersigned registrant hereby amends in its entirety Item 7 of its
Current Report on Form 8-K originally filed with the Securities and Exchange
Commission on March 8, 1999 as set forth below.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
Audited financial statements of Greystone Peripherals, Inc.
Report of Independent Public Accountants
Consolidated Balance Sheet as of December 31, 1998
Consolidated Statement of Operations for the year ended December 31, 1998
Consolidated Statement of Shareholders' Equity for the year ended
December 31, 1998
Consolidated Statement of Cash Flows for the year ended December 31, 1998
Notes to Consolidated Financial Statements
(b) Pro forma financial information
Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1998 and Unaudited Pro Forma Condensed Combined
Statement of Income for the year ended December 31, 1998
Notes to Unaudited Pro Forma Condensed Combined Financial
Information
(c) Exhibits:
2.1 Agreement and Plan of Merger dated as of February 22,
1999 among PubliCARD, Inc., GPI Acquisition, Inc., Greystone
Peripherals, Inc. and the Security Holders of Greystone
Peripherals, Inc. (previously filed with Current Report on
Form 8-K filed on March 8, 1999)
23.1 Consent of Independent Public Accountants
<PAGE>
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.
PUBLICARD, INC.
(Registrant)
May 6, 1999 /s/ Antonio L. DeLise
Antonio L. DeLise, Vice President
Chief Financial Officer and Secretary
<PAGE>
GREYSTONE PERIPHERALS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Greystone Peripherals, Inc.:
We have audited the accompanying consolidated balance sheet of Greystone
Peripherals, Inc. (a California corporation) and subsidiary as of
December 31, 1998, and the related consolidated statements of
operations, shareholders' equity and cash flows for the year ended
December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material aspects, the financial position of Greystone
Peripherals, Inc. and subsidiary as of December 31, 1998, and the
results of their operations and their cash flows for the year ended
December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
San Jose, California
April 23, 1999
<PAGE>
GREYSTONE PERIPHERALS, INC.
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27,797
Accounts receivable, less allowances of $22,000 250,075
Inventories (Note 3) 928,485
Other assets 249
Total current assets 1,206,606
PROPERTY AND EQUIPMENT, net (Note 3) 86,107
OTHER ASSETS 10,656
Total assets $1,303,369
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit (Note 4) $414,950
Accounts payable and accruals 447,066
Total liabilities 862,016
COMMITMENTS (Note 6)
SHAREHOLDERS' EQUITY:
Common stock: no par value; 20,000,000 shares
authorized; 6,674,749 shares issued and
outstanding 449,725
Accumulated deficit (8,372)
Total shareholders' equity 441,353
$1,303,369
The accompanying notes are an integral part of these financial
statements.
<PAGE>
GREYSTONE PERIPHERALS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
REVENUES $4,196,145
COST OF REVENUES 2,552,260
Gross profit 1,643,885
OPERATING EXPENSES:
Research and development 397,346
Sales and marketing 424,617
General and administrative 1,021,962
Total operating expenses 1,843,925
LOSS FROM OPERATIONS (200,040)
INTEREST AND OTHER INCOME, net 1,269
LOSS BEFORE TAXES (198,771)
INCOME TAXES 3,991
NET LOSS $(202,762)
The accompanying notes are an integral part of these financial
statements.<PAGE>
GREYSTONE PERIPHERALS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998
Retained
Earnings Total
Common Stock (Accumulated Shareholders'
Shares Amount Deficit) Equity
BALANCE, DECEMBER 31, 1997 6,674,749 $449,725 $194,390 $644,115
Net loss - - (202,762) (202,762)
BALANCE, DECEMBER 31, 1998 6,674,749 $449,725 $ (8,372) $441,353
The accompanying notes are an integral part of these financial
statements.<PAGE>
GREYSTONE PERIPHERALS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(202,762)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Provision for inventory reserves 105,000
Depreciation and amortization 68,675
Loss on disposition of fixed assets 20,223
Changes in current assets and liabilities:
Accounts receivable 477,503
Inventories 19,257
Other assets 18,249
Accounts payable (448,323)
Accrued liabilities (12,665)
Net cash provided by operating activities 45,157
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (67,927)
Net cash used in investing activities (67,927)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit 39,950
Net cash provided by financing activities 39,950
NET INCREASE IN CASH AND CASH EQUIVALENTS 17,180
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 10,617
CASH AND CASH EQUIVALENTS AT END OF YEAR $27,797
The accompanying notes are an integral part of these financial
statements.
<PAGE>
GREYSTONE PERIPHERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION AND OPERATIONS OF THE COMPANY
The Company
Greystone Peripherals, Inc. (the "Company") was incorporated in
California on March 10, 1992. The Company develops and manufactures
high capacity disk drive duplication products for OEM's, as well as
smart card readers and other peripheral devices such as PCMCIA card
ports and readers for digital photography applications.
On February 22, 1999 (the "Closing Date"), PubliCARD, Inc.
("PubliCARD") completed the acquisition of the Company, pursuant to
an Agreement and Plan of Merger dated as of February 22, 1999 (the
"Merger Agreement"), whereby a wholly-owned subsidiary of PubliCARD
merged with and into the Company. As a result of this merger, the
Company became a wholly-owned subsidiary of PubliCARD. As
consideration in the merger, the holders of the Company's common
stock received a total of 666,401 shares of common stock of PubliCARD
and $6,180 in exchange for all of the shares of common stock of
the Company.
The Company is subject to a number of risks, including but not
limited to, the dependence upon PubliCARD for its continuing
financial support; competition from larger, more established
companies in the industry; the successful development and marketing
of its products; rapid technological changes in the industry; and the
dependence on key individuals. PubliCARD has committed to continue
to support the Company's working capital needs for the foreseeable
future.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and a wholly-owned subsidiary which was dormant during 1998.
All significant intercompany transactions and balances have been
eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.<PAGE>
Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash, cash equivalents and
accounts receivable. The Company places its cash and cash
equivalents with high credit quality financial institutions. The
Company's accounts receivable are derived from revenue earned from
customers located primarily in the U.S. The Company performs ongoing
credit evaluations of its customers' financial condition and,
generally, requires no collateral from its credit customers. The
Company maintains an allowance for doubtful accounts receivable based
upon the expected collectibility of all accounts receivable.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market and include materials, labor and manufacturing overhead costs.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets, generally five to seven years.
Income Taxes
The Company has elected under the Internal Revenue Code to be treated
as an S corporation. Tax attributes, including profits or losses for
such corporations, are passed through to their respective
shareholders, and no provision for income taxes is required at the
corporate level except for state tax in California of 1.5% and
certain taxes in some states.
Revenue Recognition
Revenue from product sales is recognized at the time the product is
shipped, with provisions established for estimated product returns
and allowances.
Research and Development
Research and development costs are expensed as incurred and consist
primarily of payroll costs, other direct expenses and overhead.
<PAGE>
Warranty Costs
Anticipated costs related to product warranties are charged to
expense as sales are recognized. The Company has not experienced
significant warranty claims to date.
Stock-Based Compensation
The Company accounts for stock-based employee compensation
arrangements in accordance with provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB No. 25"), and complies with the disclosure provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation ("SFAS No. 123"). Under APB No. 25,
compensation cost is recognized based on the difference, if any, of
the date of grant between the fair value of the Company's stock and
the amount an employee must pay to acquire the stock.
Recent Accounting Pronouncements
In June 1997, the FASB issued Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for the reporting of comprehensive
income and its components in a full set of general-purpose financial
statements for periods ending after December 15, 1997. As the
Company has no material items of other comprehensive income, this
statement has no impact on the Company's financial statements.
During 1998, the Company adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information." SFAS No. 131
requires a new basis for determining reportable business segments,
i.e., the management approach. This approach requires that business
segment information used by management to assess performance and
manage company resources be the source for information disclosure.
On this basis, the Company is organized and operates in one business
segment the development and manufacturing of high capacity disk drive
duplication products and smart card reader-related products. As a
result, the adoption of SFAS No. 131 had no impact on the Company's
disclosures or financial statements.
<PAGE>
3. BALANCE SHEET COMPONENTS
December 31, 1998
Inventories, net
Finished goods $625,867
Raw materials 302,618
$928,485
Property and equipment:
Furniture and fixtures 28,546
Manufacturing equipment 58,740
Engineering test equipment 10,797
Office equipment 76,333
Software 28,906
Motor vehicles 6,303
209,625
Less: Accumulated depreciation
and amortization (123,518)
$86,107
4. LINE OF CREDIT
As of December 31, 1998, the Company has a line of credit agreement
with a bank that provides for borrowings of up to $1,000,000 secured
by the Company's accounts receivable, inventories and fixed assets.
As of December 31, 1998, the Company had an outstanding balance on
this line of credit of $414,950. This agreement expires on May 1,
1999. Interest is paid monthly at the reference rate plus 0.5%,
which equated to 8.25% as of December 31, 1998. Additionally, all
debt outstanding under this line of credit, up to the full amount of
the line, was covered by a guarantee to the bank from the primary
shareholder of the Company as of December 31, 1998.
The Company is subject to covenants under this agreement, including
minimum current ratio, minimum tangible net worth and maximum ratio
of debt to tangible net worth. As of December 31, 1998, the Company
was in violation of these covenants and, as such, all debt
outstanding on this line as of that date is reflected as a current
liability in the accompanying financial statements. On March 3, 1999,
subsequent to the closing date of the merger discussed in Note 1,
PubliCARD paid the entire outstanding balance on the line of credit
as of that date, and terminated the line of credit agreement.
5. COMMON STOCK
The Company's Articles of Incorporation, as amended, authorize the
Company to issue 20,000,000 shares of no par value common stock.
<PAGE>
Stock Option Plan
In February 1997, the Company adopted the Incentive Stock Option Plan
(the "Plan"). The Plan provides for the granting of stock options to
employees and consultants of the Company. Options granted under the
Plan may be either incentive stock options or nonqualified stock
options. Incentive stock options ("ISO") may be granted only to
Company employees (including officers and directors who are also
employees). Nonqualified stock options ("NSO") may be granted only
to Company employees and consultants. The Company has reserved
1,600,000 shares of common stock for issuance under the Plan.
Options under the Plan may be granted for periods of up to ten years
and at prices no less than 85% of the estimated fair value of the
shares on the date of grant as determined by the Board of Directors,
provided, however, that (i) the exercise price of an ISO and NSO
shall not be less than 100% and 85% of the estimated fair value of
the shares on the date of grant, respectively, and (ii) the exercise
price of an ISO and NSO granted to a shareholder who holds more than
10% of the total combined voting power of all classes of stock shall
not be less than 110% of the estimated fair value of the shares on
the date of grant. To date, options granted generally vest over four
years with 25% vesting after one year, and the remaining shares
vesting 1/36th per month over the remaining three years.
Additionally, under the Plan, the Company has the right, at its
option, to repurchase any and all shares of stock acquired via
exercise of options under this Plan from a terminated employee,
regardless of the cause of termination, at the then fair market value
of the shares.
Activity under the Option Plan was as follows:
Weighted
Average
Available Options Option Price
for Grant Outstanding Per Share
Outstanding at
December 31, 1997 1,451,000 149,000 $0.25
Granted (75,000) 75,000 $0.50
Outstanding at
December 31, 1998 1,376,000 224,000 $0.33
Weighted
Average Weighted
Remaining Average
Number Contractual Exercise
Options with exercise price of: Outstanding Life (in years) Price
$0.25 149,000 8.25 $0.25
$0.50 75,000 9.40 $0.50
<PAGE>
Fair Value Disclosures
The Company accounts for the Plan under Accounting Principles Board
Opinion No. 25 under which no compensation expense has been
recognized, as all stock options are exercisable at a price equal to
the fair market value of the underlying shares on the date of grant.
Had compensation expense for the Plan been determined consistent with
SFAS No. 123, the impact on the Company's net loss for fiscal 1998
would have been immaterial.
6. COMMITMENTS
Leases
The Company leases office space under noncancellable operating leases
with various expiration dates through December 31, 2001. Rent
expense for the year ended December 31, 1998 was $69,000. The terms
of the facility lease provide for rental payments on a graduated
scale. The Company recognizes rent expense on a straight-line basis
over the lease period and has accrued for rent expense incurred but
not paid.
Future minimum lease payments under noncancellable operating leases,
including lease commitments entered into subsequent to December 31,
1998, are as follows:
Year Ending December 31, Operating Lease
1999 $ 121,354
2000 128,709
2001 136,064
Total $ 386,127
7. EMPLOYEE BENEFIT PLANS
The Company sponsors a 401(k) defined contribution plan covering all
employees. Contributions are made solely by the employees with no
matching or discretionary contributions made by the Company.
Employee contributions under this plan amounted to approximately
$22,000 for the year ended December 31, 1998.
<PAGE>
PUBLICARD, INC.
AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Combined Financial
Statements give effect to the acquisition by PubliCARD, Inc.
("PubliCARD" or the "Company") of all of the issued and outstanding
common stock of Greystone Peripherals, Inc. ("Greystone") in a
business combination accounted for by the purchase method of
accounting. The Unaudited Pro Forma Condensed Combined Financial
Statements are derived from the historical financial statements of
PubliCARD and Greystone.
The Unaudited Pro Forma Condensed Combined Balance Sheet gives effect
to the acquisition as if it had occurred on December 31, 1998. The
Unaudited Pro Forma Condensed Combined Statement of Income for the
year ended December 31, 1998 gives effect to the acquisition as if it
had occurred on January 1, 1998. The pro forma adjustments are based
on certain assumptions that management believes are reasonable under
the circumstance. The pro forma information is not necessarily
indicative of the results that would have been reported had such
event actually occurred on the dates specified, nor is it intended to
project PubliCARD's results of operations or financial position for
any future period or date. The information set forth should be read
in conjunction with PubliCARD's audited financial statements for the
year ended December 31, 1998 included in the Company's Form 10-K for
the year ended December 31, 1998, and the audited financial
statements of Greystone included elsewhere in this Form 8-K/A.
<PAGE>
PUBLICARD, INC.
AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF DECEMBER 31, 1998
(in thousands of dollars)
PubliCARD Greystone Pro forma Pro forma
Historical Historical Adjustments Balances
ASSETS
Cash $18,482 $28 $(415)(b) $ 17,789
(306)(c)
Trade receivables 1,988 250 - 2,238
Inventories 2,810 928 - 3,738
Other 1,999 1 - 2,000
Total current assets 25,279 1,207 (721) 25,765
Property, plant & equipment, net 3,606 86 - 3,692
Goodwill 9,781 - 7,454 (a) 17,235
Other assets 1,262 10 - 1,272
$39,928 $ 1,303 $6,733 $47,964
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of
long-term debt $147 $415 $(415)(b) $147
Trade accounts payable 1,331 447 - 1,778
Accrued liabilities 4,384 - - 4,384
Total current liabilities 5,862 862 (415) 6,309
Long-term debt 991 - - 991
Other non-current liabilities 7,780 - - 7,780
Total liabilities 14,633 862 (415) 15,080
Redeemable shares 3,378 - - 3,378
Shareholders' equity
Common shares 2,030 449 (449)(d) 2,104
74 (e)
Additional paid-in capital 67,091 - 8,655 (e) 75,746
Accumulated deficit (38,891) (8) 8 (d) (40,031)
(1,140)(a)
Common shares held in treasury (8,207) - - (8,207)
Unearned compensation (106) - - (106)
Total shareholders' equity 21,917 441 7,148 29,506
$39,928 $ 1,303 $ 6,733 $47,964
<PAGE>
PUBLICARD, INC.
AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands of dollars except share and per share amounts)
PubliCARD Greystone Pro forma Pro forma
Historical Historical Adjustments Balances
Net sales $16,519 $4,196 $ - $20,715
Cost of sales 10,906 2,552 - 13,458
Gross Margin 5,613 1,644 - 7,257
Operating expenses:
General and administrative 5,488 1,022 - 6,510
Sales and marketing 792 425 - 1,217
Product development 740 397 - 1,137
In-process research and
development 2,800 - - 2,800
Goodwill amortization 225 - 1,452(f) 1,677
10,045 1,844 1,452 13,341
Income (loss) from operations (4,432) (200) (1,452) (6,084)
Other income (expenses):
Interest income 551 - (31)(h) 520
Interest expense (339) (57) 57 (g) (339)
Cost of pensions-non operating (846) - - (846)
Other income (expense), net (1,021) 58 - (963)
(1,655) 1 26 (1,628)
Net income (loss) from
continuing operations $(6,087) $(199) $(1,426) $(7,712)
Earnings (loss) per
common share $(0.44) $(0.53)
Weighted average number of
shares outstanding 13,716,243 746,401(i) 14,462,644
PUBLICARD, INC.
AND SUBSIDIARY COMPANIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On February 22, 1999 (the "Closing Date"), PubliCARD, Inc. ("PubliCARD"
or the "Company") completed the acquisition of Greystone Peripherals, Inc.
("Greystone"), pursuant to an Agreement and Plan of Merger dated as of
February 22, 1999 (the "Merger Agreement") whereby a wholly-owned subsidiary
of the Company merged with and into Greystone. As a result of this merger,
Greystone became a wholly-owned subsidiary of the Company. As consideration
in the merger, holders of Greystone's common stock received a total of
666,401 shares of common stock of the Company and $6,180 in exchange for all
of the outstanding shares of common stock of Greystone. Mr. John Usher,
President of Greystone, held shares representing approximately 89.4% of
Greystone's outstanding common stock. Pursuant to the Merger Agreement,
80,000 shares of common stock of the Company were issued to certain service
providers of Greystone.
In addition, pursuant to the Merger Agreement, options to purchase
224,000 shares of Greystone common stock outstanding immediately prior to the
closing of the merger were converted into options to purchase 22,388 shares of
PubliCARD common stock with exercise prices ranging from $2.50 to $5.00 per
share. These PubliCARD options vest over four years and are exercisable for
a period of one year after the respective vesting dates. Furthermore,
pursuant to the Merger Agreement, the Company issued on the Closing Date
options to purchase 110,000 shares of PubliCARD common stock to certain key
employees of Greystone. These options have an exercise price of $10.75 per
share, vest over a three year period and will be exercisable until the fifth
anniversary of the Closing Date.
The merger consideration was determined as a result of arms length
negotiations between the Company and Greystone. The merger will be accounted
for under the purchase method of accounting.
Pursuant to the Merger Agreement, the Company is required to register the
shares of PubliCARD common stock issued in connection with the merger under
a shelf registration statement under the Securities Act of 1933.
Pursuant to the Merger Agreement, the Company satisfied certain
indebtedness of Greystone, including accrued interest, to a bank in the
amount of approximately $604,000. The repayment of such indebtedness of
Greystone by the Company was financed with available cash on hand.
The pro forma adjustments included in the unaudited pro forma condensed
combined financial statements were as follows:
(a) Under the purchase method of accounting, the purchase price is allocated
to the assets acquired and liabilities assumed based on their estimated
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
are as follows (in thousands):
<PAGE>
Purchase price:
Estimated value of common stock and stock options $ 8,729
Estimated acquisition expenses 306
$ 9,035
Allocation of purchase price:
Net assets of Greystone $ 441
In-process research and development 1,140
Goodwill 7,454
$ 9,035
For purposes of the accompanying unaudited pro forma condensed combined
financial statements, the aggregate purchase price has been allocated to
the net assets acquired, with the remainder recorded as goodwill on the
basis of preliminary estimates of fair values. These preliminary estimates
of fair value were determined by management based on information currently
available. The Company has retained independent valuation professionals to
assist in the determination of the value to be assigned to the individual
assets acquired, including intangible assets and in-process research and
development. While the pro forma information has been presented based on
the best information currently available to management, the final allocation
of the purchase price will be based on a complete evaluation of the assets
and liabilities of Greystone. The final valuation may result in values that
are different from management's estimates as included in the unaudited pro
forma condensed combined financial statements.
As stated above, the purchase price has been allocated on the basis of
preliminary estimates of fair value. Management currently estimates that
the allocation to in-process research and development will be approximately
$1,140,000. The unaudited pro forma condensed combined statement of income
excludes the write off of the estimated value of the acquired in-process
research and development due to its non-recurring nature. The unaudited
pro forma condensed combined balance sheet reflects an allocation of
$1,140,000 to in-process research and development.
(b) Represents the repayment of Greystone's indebtedness, including accrued
interest, to a bank and to former shareholders of Greystone.
(c) Represents payment of acquisition related expenses.
(d) Represents the elimination of Greystone's equity accounts.
(e) Represents the estimated value of common stock and stock options issued
by the Company as consideration in the merger transaction.
(f) Represents the amortization of goodwill over an estimated life of
five years.
(g) Represents the elimination of interest expense on Greystone's
indebtedness which is assumed to be repaid as of the beginning of the
period presented.
(h) Represents the reduction of interest income due to the repayment of
Greystone's indebtedness and payment of acquisition expenses as of the
beginning of the period presented.
(i) Represents the issuance of shares of the Company's common stock to
the former shareholders of Greystone.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated April 23, 1999, relating to
the financial statements of Greystone Peripherals, Inc. as of and the for
year ended December 31, 1998 included in this Form 8-K/A Amendment No. 1
into PubliCARD, Inc.'s previously filed Registration Statement on Form S-1
File No. 33-9344, Registration Statement on Form S-3 File No. 33-9344,
and Registration Statements on Form S-8 File Nos. 33-56838, 33-88876,
333-72411, 333-73037, 333-73307 and 333-74169.
/s/Arthur Andersen LLP
San Jose, California
May 5, 1999
