<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
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 20, 1997
-----------------
Optical Security Group, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 0-17531 84-1094032
- --------------------------------------------------------------------------------
(State of other jurisdiction (Commission File Number) (IRS Employer
of Incorporation Identification No.)
535 16th Street, Suite 920, Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone number, including area code (303) 534-4500
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
On December 17, 1996, Optical Security Group, Inc. (the "Registrant")
through Opsec Pasternak & Partner holding GmbH, a newly-formed wholly-owned
German subsidiary of the Registrant, completed the purchase of all the shares in
the capital of Opsec Pasternak & Partner GmbH, a German private company. The
purchase was effective as of November 1, 1996.
The Financial Statements and Proforma financial statements are hereby filed
under this Amendment to the Form 8-K Filing dated December 17, 1996.
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of business acquired.
(b) Pro forma financial information.
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.
OPTICAL SECURITY GROUP, INC.
Date: February 20, 1997 By: /s/ Richard H. Bard
-------------------------------------
Richard H. Bard, CEO & President
Date: February 20, 1997 By: /s/ Gerald A. Melfi
----------------------------------
Gerald A. Melfi, Principal
Financial Officer
<PAGE>
Ernst & Young GMBH
REPORT OF ERNST & YOUNG GMBH, INDEPENDENT AUDITORS
We have audited the balance sheets of OpSec Pasternak & Partner GmbH, formerly
Spectrum Pasternak & Partner GmbH (a German Limited Liability Company), as
prepared by the Company's bookkeepers' Schwenck GmbH of December 31, 1995 and
October 31, 1996 and the related statement of income, for the period ended
December 31, 1995 and for the ten month period ended October 31, 1996. 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 audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the balance
sheet and income statement are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosure in the
balance sheet and income statement. An audit also includes assessing the
accounting principles used and significant estimates made by mananagment, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of OpSec Pasternak & Partner
GmbH, formerly Spectrum Pasternak & Partner GmbH, at December 31, 1995 and
October 31, 1996, and the results of their operations for the period ended
December 31, 1995 and for the ten month period ended October 31, 1996 in
conformity with accounting principles generally accepted in the United States of
America.
Dusseldorf, Germany
December 9, 1996
/s/ ERNST & YOUNG GmbH
<PAGE>
SPECTRUM
PASTERNAK & PARTNER GMBH
KREFELD
FINANCIAL REPORT
-UNAUDITED-
Period ended October 31, 1996
SCHWENCK GMBH
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
47877 WILLICH HALSKESTRASSE 3-5
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
CONTENTS
--------
PAGE
----
ACCOUNTANTS' REPORT AND CERTIFICATION 1
FINANCIAL STATEMENTS
Balance sheet 2
Statement of income 3
Statement of changes in shareholders' equity 4
Statement of cash flow 5
Notes to financial statements 6-9
SUPPLEMENTAL INFORMATION
Schedule of selling, administrative and general expenses 10
GENERAL CONDITIONS OF ASSIGNMENT
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 1
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
ACCOUNTANTS' REPORT AND CERTIFICATION
-------------------------------------
To the shareholders of OpSec Pasternak & Partner GmbH:
We have prepared the bookkeeping of the company and assisted in the preparation
of the accompanying balance sheet as of October 31, 1996 and the related
statement of income, changes in shareholders' equity and statement of cash flow
for the period then ended.
Accordingly, we are not considered to be independent in respect of the
preparation of the financial statements and are therefore precluded by the rules
of our German Institute of Wirtschaftsprufer from expressing an opinion on the
accompanying financial statements as independent auditors.
However, in accordance with the professional rules of our German Institute of
Wirtschaftsprufer we certify on the basis of our work performed that nothing
came to our attention to conclude that the accompanying financial statements as
of October 31, 1996 do not conform with generally accepted German accounting
principles and German law.
Willich, December 9, 1996
Schwenck GmbH
Wirtschaftsprufungsgesellschaft
/s/ K. Schwenck
K. Schwenck
Wirtschaftsprufer
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 2
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
BALANCE SHEET
-------------
<TABLE>
<CAPTION>
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
October 31, 1996 October 31, 1996
---------------- ----------------
<S> <C> <C> <C>
Current assets Current liabilities
Cash and cash equivalents Accounts payable trade DM 62.260.77
(Note 2) DM 103.901.03
Accrued expenses 83.800.00
Receivables
Trade 168.690.29 Income taxes (Note 1) 173.923.00
Other 48.025.36
Other liabilities 40.571.16
Prepaid expenses 21.848.10
---------------- ----------------
Total current assets 342.464.78 Total current liabilities 360.554.93
---------------- ----------------
Commitments and contingencies
(Note 4)
Fixed and intangible assets Shareholders' equity
Intangible assets, at net book
value (Notes 1 and 3) 149.933.98 Share capital - paid-in (Note 6) 25.000.00
Property and equipment, at net Retained earnings 224.884.64
book value (Notes 1 and 3) 118.040.81 ----------------
---------------- 249.884.64
267.974.79 ----------------
----------------
DM 610.439.57 DM 610.439.57
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 3
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
STATEMENT OF INCOME
-------------------
Period ended
October 31, 1996
------------------
Net sales DM 3.335.838.84
Cost of sales 2.312.060.46
----------------
Gross profit 1.023.778.38
Selling, administrative
and general expenses 1.036.935.51
Depreciation 33.194.71
----------------
Loss from operations 46.351.84
Other income(expense)
Interest expense, net (1.799.35)
Miscellaneous income, net 43.512.07
----------------
Loss before income taxes 4.639.12
Provision for income taxes (Note 1) 505.00
----------------
Net loss DM 5.144.12
================
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 4
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
--------------------------------------------
Period ended October 31, 1996
<TABLE>
<CAPTION>
Share Capital Retained
paid-in Earnings Total
----------------- --------------- --------------
<S> <C> <C> <C>
Capital paid-in DM 25.000.00 DM 0.00 DM 25.000.00
Net income 1995 DM 0.00 DM 230.028.76 DM 230.028.76
----------------- --------------- --------------
Balance at
December 31, 1995 DM 25.000.00 DM 230.028.76 DM 255.028.76
----------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net loss for the period
January 1, to
October 31, 1996 DM 0.00 DM 5.144.12 DM 5.144.12
----------------- --------------- --------------
Balance at
October 31, 1996 DM 25.000.00 DM 244.884.64 DM 249.884.64
================= =============== ==============
</TABLE>
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 5
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
STATEMENT OF CASH FLOW
----------------------
Period ended
October 31, 1996
------------------
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) DM ( 5.144.12)
---------------
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 33.194.71
(Increase) in accounts receivable
and prepaid expenses (222.811.97)
(Increase) decrease in inventories 84.576.50
Increase (decrease)in accounts payable trade (48.234.76)
Increase (decrease) in accrued expenses 29.800.00
Increase (decrease) in other liabilities (342.470.50)
Increase (decrease) in income taxes (16.149.00)
---------------
TOTAL ADJUSTMENTS
DM (482.095.12)
---------------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES DM (487.239.24)
---------------
CASH FLOW USED IN INVESTING ACTIVITIES
Purchase of fixed and intangible assets DM (219.985.50)
---------------
NET CASED USED IN INVESTING ACTIVITIES DM (219.985.50)
---------------
NET INCREASE (DECREASE) IN CASH
(707.224.74)
---------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 811.125.77
---------------
CASH AND CASH EQUIVALENTS AT END OF YEAR DM 103.901.03
===============
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 6
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Period ended October 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a. DEPRECIATION AND AMORTIZATION
-----------------------------
Depreciation of fixed and intangible assets is computed on the basis
of annual rates, applied on the straight-line which are sufficient
to amortize the cost of such assets over their estimated useful
lives as follows:
Furniture and equipment -2 to 10 years
Automobiles and parts -3 to 5 years
Intangible assets -3 to 10 years
b. INCOME TAXES
------------
Taxation assessments of the firm are subject to review and possible
adjustment by German tax authorities following a tax audit and
amended assessments.
To conform with German accounting legislation the German trade tax
on income and German corporation income tax must be presented under
income taxes.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 7
NOTE 2 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following:
Period ended
October 31, 1996
--------------------
Cash on deposit DM 103.306.01
Cash on hand 595.02
--------------------
DM 103.901.03
====================
NOTE 3 - FIXED AND INTANGIBLE ASSETS
Fixed and intangible assets at net
book value consist of the following:
Period ended
October 31, 1996
--------------------
Factory and office equipment DM 118.040.81
Intangible assets
Software, and non-compete
agreement net of amortization 149.933.98
--------------------
DM 267.974.79
====================
NOTE 4 - COMMITMENTS AND CONTINGENT LIABILITIES
The future minimum rental payments required under real estate operating
leases that have initial or remaining non-cancellable lease terms in
excess of one year as of October 31, 1996 are as follows:
Thousand
Period ending October 31 Amount DM
------------------------ --------------
1996 21
1997 124
1998 120
1999 86
2000 21
Thereafter 0
---
Total minimum lease payments 372
===
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 8
NOTE 5 - FOREIGN CURRENCY EXCHANGE
The company incurred a foreign currency exchange gain of DM 25.028.87
for the business period ended October 31, 1996.
NOTE 6 - SHAREHOLDERS' EQUITY
Share capital - authorized and issued amounted to DM 50.000, whereof DM
25.000 have been paid in by the shareholders.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 9
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
FIXED AND INTANGIBLE ASSETS AT OCTOBER 31, 1996
-----------------------------------------------
(all amounts in German marks)
Factory and
office Intangible Fixed Assets
equipment Assets Total
----------- ---------- ------------
COST
At January 1, 1996 107.191.47 1.609.00 108.800.47
Additions during period 65.680.50 154.305.00 219.985.50
---------- ---------- ----------
At October 31, 1996 172.871.97 155.914.00 328.785.97
---------- ---------- ----------
DEPRECIATION
At January 1, 1996 27.571.47 45.00 27.616.47
Charge for period 27.259.69 5.935.02 33.194.71
---------- ---------- ----------
At October 31, 1996 54.831.16 5.980.02 60.811.18
---------- ---------- ----------
Net book value
at October 31, 1996 118.040.81 149.933.98 267.974.79
========== ========== ==========
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSELLSCHAFT Page 10
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
SCHEDULE OF SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
--------------------------------------------------------
Period ended
October 31, 1996
----------------
SELLING, ADMINISTRATIVE
AND GENERAL EXPENSES
Salaries and social security expenses DM 308.349.68
Commission 272.484.33
Travel expenses, entertainment, advertising 121.664.25
Other shipping costs 3.463.50
Repairs and maintenance 370.00
Rent 71.500.00
Car leasing and other car expenses 72.397.99
Service charges 81.947.26
Utilities 27.762.64
Miscellaneous 76.995.86
---------------
DM 1.036.935.51
===============
<PAGE>
Appendix II - A
SPECTRUM
PASTERNAK & PARTNER GMBH
KREFELD
FINANCIAL REPORT
-UNAUDITED-
Year ended December 31, 1995
SCHWENCK GMBH
WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
47877 WILLICH HALSKESTRASSE 3-5
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
CONTENTS
--------
PAGE
----
ACCOUNTANTS' REPORT AND CERTIFICATION 1
FINANCIAL STATEMENTS
Balance sheet 2
Statement of income 3
Statement of changes in shareholders' equity 4
Statement of cash flow 5
Notes to financial statements 6-9
SUPPLEMENTAL INFORMATION
Schedule of selling, administrative
and general expenses 10
GENERAL CONDITIONS OF ASSIGNMENT
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 1
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
ACCOUNTANTS' REPORT AND CERTIFICATION
-------------------------------------
To the shareholders of Spectrum Pasternak & Partner GmbH:
We have prepared the bookkeeping of the company and assisted in the preparation
of the accompanying balance sheet as of December 31, 1995 and the related
statement of income, changes in shareholders' equity and statement of cash flow
for the period then ended.
Accordingly, we are not considered to be independent in respect of the
preparation of the financial statements and are therefore precluded by the rules
of our German Institute of Wirtschaftsprufer from expressing an opinion on the
accompanying financial statements as independent auditors.
However, in accordance with the professional rules of our German Institute of
Wirtschaftsprufer we certify on the basis of our work performed that nothing
came to our attention to conclude that the accompanying financial statements as
of December 31, 1995 do not conform with generally accepted German accounting
principles and German law.
Willich, November 24, 1996
Schwenck GmbH
Wirtschaftsprufungsgesellschaft
/s/ K. Schwenck
K. Schwenck
Wirtschaftsprufer
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 2
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
BALANCE SHEET
-------------
<TABLE>
<CAPTION>
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, 1995 December 31, 1995
----------------- -----------------
<S> <C> <C> <C>
Current assets Current liabilities
Cash and cash equivalents Accounts payable trade DM 110.495.53
(Note 2) DM 811.125.77
Receivables Accrued expenses 54.000.00
Other 1.802.50
Inventories (Notes 1 and 3) 84.576.50 Income taxes (Note 1) 190.072.00
Prepaid expenses 13.949.28 Other liabilities 383.041.76
------------- --------------
Total current assets 911.454.05 Total current liabilities 737.609.29
------------- --------------
Commitments and contingencies
(Note 5)
Fixed assets
Shareholders' equity
Intangible assets, at net book
value (Notes 1 and 4) 1.664.00 Share capital - paid-in (Note 7) 25.000.00
Property and equipment, at net Retained earnings 230.028.76
--------------
book value (Notes 1 and 4) 79.620.00 255.028.76
------------- --------------
81.184.00
-------------
DM 992.638.05 DM 992.638.05
============= ==============
</TABLE>
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 3
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
STATEMENT OF INCOME
-------------------
Year ended
December 31, 1995
-------------------
Net sales DM 4.392.407.61
Cost of sales 3.179.889.27
-------------------
Gross profit 1.212.518.34
Selling, administrative
and general expenses 775.660.66
Depreciation 27.616.47
-------------------
Income from operations 409.241.21
Other income(expense)
Interest expense, net (6.697.65)
Miscellaneous income, net 17.557.20
-------------------
Income before income taxes 420.100.75
Provision for income taxes
(Note 1) 190.072.00
-------------------
Net income DM 230.028.76
===================
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 4
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
--------------------------------------------
Year ended December 31, 1995
Share Capital Retained
paid-in Earnings Total
------------- ------------- --------------
Capital paid-in DM 25.000.00 DM 0.00 DM 25.000.00
Net income DM 0.00 DM 230.028.76 DM 230.028.76
----------------- ------------- -------------
Balance
December 31, 1995 DM 25.000.00 DM 230.028.76 DM 255.028.76
================= ============= =============
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 5
OPSEC PASTERNAK & PARTNER GMBH, KREFELD
STATEMENT OF CASH FLOW
----------------------
Year ended
December 31, 1995
--------------------------
CASH FLOW FROM OPERATING ACTIVITIES
Net income DM 230.028.76
--------------------------
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 27.616.47
(Increase)in accounts receivable
other and prepaid expenses (15.751.78)
(Increase) in inventories (84.576.50)
Increase in accounts payable trade 110.495.53
Increase in accrued expenses 54.000.00
Increase in other liabilities
383.041.76
Increase in income taxes 190.072.00
--------------------------
TOTAL ADJUSTMENTS DM 664.897.48
--------------------------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES DM 894.926.24
--------------------------
CASH FLOW USED IN INVESTING ACTIVITIES
Purchase of fixed and assets DM (108.800.47)
--------------------------
NET CASH USED IN INVESTING ACTIVITIES DM (108.800.47)
--------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Share capital paid-in DM 25.000.00
--------------------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 25.000.00
--------------------------
NET INCREASE IN CASH 811.125.77
--------------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 0.00
--------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR DM 811.125.77
==========================
See notes to financial statements.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 6
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Year ended December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a. INVENTORIES
-----------
Inventories at balance sheet date consist of goods in transit and
are generally stated at the lower of cost purchase price or market
value. Market is considered as the net realisable value.
b. DEPRECIATION AND AMORTIZATION
-----------------------------
Depreciation of fixed and intangible assets is computed on the
basis of annual rates, applied on the straight-line which are
sufficient to amortize the cost of such assets over their estimated
useful lives as follows:
Furniture and equipment -2 to 10 years
Automobiles and parts -3 to 5 years
Intangible assets -3 to 10 years
c. INCOME TAXES
------------
Taxation assessments of the firm are subject to review and possible
adjustment by German tax authorities following a tax audit and
amended assessments.
To conform with German accounting legislation the German trade tax
on income and German corporation income tax must be presented under
income taxes. The German corporation income tax has been computed
following the proposal of the managing directors to distribute a
dividend of DM 230.028
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 7
NOTE 2 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following:
Year ended
December 31, 1995
-----------------
Cash on deposit DM 810.560.79
Cash on hand 564.98
-----------------
DM 811.125.77
=================
NOTE 3 - INVENTORIES
Inventories consist of the following:
Year ended
December 31, 1995
-----------------
Merchandise in transit DM 84.576.50
=================
NOTE 4 - FIXED AND INTANGIBLE ASSETS
Fixed and intangible assets at net book
value consist of the following:
Year ended
December 31, 1995
-----------------
Factory and office equipment DM 79.620.00
Software 1.564.00
-----------------
DM 81.184.00
=================
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 8
NOTE 5 - COMMITMENTS AND CONTINGENT LIABILITIES
The future minimum rental payments required under real estate operating
leases that have initial or remaining non-cancellable lease terms in
excess of one year as of December 31, 1995 are as follows:
Thousand
Year ending December 31 Amount DM
----------------------- --------------
1996 107
1997 107
1998 105
1999 86
2000 21
Thereafter 0
---
Total minimum lease payments 426
===
NOTE 6 - FOREIGN CURRENCY EXCHANGE
The company incurred a foreign currency exchange loss of DM 28.749.02
for the business year ended December 31, 1995.
NOTE 7 - SHAREHOLDERS' EQUITY
Share capital - authorized and issued amounted to DM 50.000, whereof DM
25.000 have been paid in by the shareholders.
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT Page 9
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
FIXED ASSETS AT DECEMBER 31, 1995
---------------------------------
(all amounts in German marks)
Factory and
office Fixed Assets
equipment Software Total
----------- -------- ------------
COST
Additions during year 107.191.47 1.609.00 108.800.47
---------- -------- ----------
At December 31, 1995 107.191.47 1.609.00 108.800.47
---------- -------- ----------
DEPRECIATION
Charge for year 27.571.47 45.00 27.616.47
---------- -------- ----------
At December 31, 1995 27.571.47 45.00 27.616.47
---------- -------- ----------
Net book value
at December 31, 1995 79.620.00 1.564.00 81.184.00
========== ======== ==========
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
SUPPLEMENTAL INFORMATION
------------------------
<PAGE>
SCHWENCK GMBH WIRTSCHAFTSPRUFUNGSELLSCHAFT Page 10
SPECTRUM PASTERNAK & PARTNER GMBH, KREFELD
SCHEDULE OF SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
--------------------------------------------------------
Year ended
December 31, 1995
-----------------
SELLING, ADMINISTRATIVE
AND GENERAL EXPENSES
Commission DM 400.017.24
Travel expenses, entertainment 14.409.14
Shipping costs 1.200.00
Repairs and maintenance 4.089.40
Car leasing and other car expenses 14.095.63
Service charges 243.296.33
Exchange loss 28.749.02
Miscellaneous 69.803.90
----------------
DM 775.660.66
================
<PAGE>
OPTICAL SECURITY GROUP, INC.
PROFORMA FINANCIAL STATEMENTS
Acquiring Company: Optical Security Group, Inc. ("OpSec") (U.S. domicile)
Acquired Company: OpSec Pasternak & Partner GmbH ("OPP") (German domicile)
Closing Date: December 10, 1996
Effective Date: November 1, 1996
Audited Periods Reported by OPP:
- -------------------------------
A. Fiscal year ended December 31, 1995 (Company formed May 22, 1995 and
commenced operations in August, 1995);
B. 10 month period ended October 31, 1996.
SCHEDULE 1 OPP HISTORICAL INCOME STATEMENT (IN DEUTSCHE MARKS)
- ----------
Period Ended
---------------------------
December 31, October 31,
1995 1996
---------------------------
Sales 4,392,408 3,335,839
Gross margin 1,212,519 787,895
Net operating income (loss) 409,242 (46,352)
Net income before tax 420,101 (4,639)
Income tax expense (benefit) 190,072 505
Net income (loss) 230,029 (5,144)
SCHEDULE 2 OPP HISTORICAL INCOME STATEMENT (IN US$)
- ----------
Period Ended
---------------------------
December 31, October 31,
1995 1996
---------------------------
Sales 2,855,065 2,168,295
Gross margin 788,137 512,132
Net operating income (loss) 266,007 (30,129)
Net income before tax 273,066 (3,015)
Income tax expense (benefit) 123,547 328
Net income (loss) 149,519 (3,344)
<PAGE>
SCHEDULE 3 OPSEC HISTORICAL INCOME FOR SIMILAR PERIODS
- ----------
Six Month Nine Month
Period Ended Period Ended
December 31, September 30,
1995 1996
---------------------------
Sales 4,826,517 6,533,021
Gross margin 1,511,572 2,387,599
Net operating income (loss) 17,721 95,057
Net income before tax 33,821 152,364
Income tax expense (benefit) 49,862 (134,653)
Net income (loss) (16,041) 287,017
Net income available for common (16,041) 245,214
EPS - Primary ($0.01) $0.08
EPS - Fully Diluted n/a $0.06
Shares - Primary 3,023,282 3,023,282
Shares - Fully Diluted n/a 3,813,500
SCHEDULE 4 ADJUSTMENTS & ELIMINATIONS UPON CONSOLIDATION
- ----------
Period Ended Period Ended
December 31, September 30,
1995 1996
---------------------------
Sales Elimination (2,066,928) (1,502,839)
Compensation decrease n/a (177,000)
Goodwill Amortization 170,000 227,000
Interest Expense 30,000 40,000
Income tax expense (benefit) (123,547) (328)
SCHEDULE 5 PROFORMA CONSOLIDATED INCOME STATEMENTS
- -----------
Period Ended Period Ended
December 31, September 30,
1995 1996
---------------------------
Sales 5,614,654 7,198,477
Gross margin 2,299,709 2,899,731
Net operating income (loss) 113,728 14,928
Net income before tax 106,887 59,349
Income tax expense (benefit) 49,862 (134,653)
Net income (loss) 57,025 194,001
Net income available for common 57,025 152,198
EPS - Primary $0.02 $0.04
EPS - Fully Diluted $0.01 $0.04
Shares - Primary 3,501,220 3,501,220
Shares - Fully Diluted 4,280,168 4,280,168
<PAGE>
SCHEDULE 6 OPP BALANCE SHEET AT OCTOBER 31, 1996
- ----------
Stated Stated
in DM in US$
---------------------------
Current assets 342,465 222,602
Fixed assets, net 118,041 76,727
Intangible assets 149,934 97,457
---------------------------
610,440 396,786
===========================
Current liabilities 360,555 234,361
Long-term obligatins - -
Common stock 25,000 16,250
Retained earnings 224,885 146,175
---------------------------
610,440 396,786
===========================
SCHEDULE 7 OPSEC BALANCE SHEET AT SEPTEMBER 30, 1996
- ----------
Current assets 6,359,387
Fixed assets, net 546,084
Goodwill, net 1,178,529
Other assets 1,132,600
-----------
9,216,600
===========
Current liabilities 1,309,537
Long-term obligations 42,078
Common stock 15,173
Preferred stock 75
Paid in capital 14,196,675
Retained earnings (6,346,938)
-----------
9,216,600
===========
SCHEDULE 8 CONSOLIDATED BALANCE SHEETS AND PURCHASE ADJUSTMENTS
- ----------
Combined Purchase Consolidated
Balance Adjustments Balance
----------------------------------------------
Current assets 6,581,989 (1,300,000) 5,281,989
Fixed assets, net 622,811 622,811
Goodwill, net 1,178,529 5,035,032 6,213,561
Other assets 1,230,057 (97,457) 1,132,600
----------------------------------------------
9,613,386 3,637,575 13,250,961
==============================================
Current liabilities 1,543,898 1,543,898
Long-term obligations 42,078 1,000,000 1,042,078
Common stock 31,423 (16,250) 15,173
Preferred stock 75 75
Paid in capital 14,196,675 2,751,282 16,947,957
Retained earnings (6,200,763) (97,457) (6,298,220)
-----------------------------------------------
9,613,386 3,637,575 13,250,961
===============================================
