Amendment No. 4 to Current Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
 
FORM 8-K/A
Amendment No. 4
 
 
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 reflects changes to loss from discontinued operations when eliminating results of Allume Systems, Inc. This document should be read in place of prior current reports amending current report on Form 8-K dated July 8, 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
)
 
   
 
   
 
               
 
 
Income/(loss) from discontinued operations, net of tax
   
(5
)
 
860
               
855
 
Gain from the sale of discontinued operations, net of tax
   
53
   
 
               
53
 
     
 
   
 
               
 
 
Net loss
   
(532
)
 
(0
)
             
(532
)
     
 
   
 
               
 
 
Other comprehensive loss
   
 
   
 
               
 
 
Foreign currency translation Adjustment
   
(39
)
 
 
               
(39
)
Comprehensive loss
   
($571
)
 
($0
)
             
($571
)
Basic earnings (loss) per share:
                               
Loss from continuing operations
   
($0.02
)
       
 
   
 
   
($0.05
)
Loss from discontinued operations, net of income tax
   
($0.00
)
       
 
   
 
   
$0.03
 
Gain from the sale of discontinued operations, net of income tax
 
 
$0.00
         
 
   
 
 
 
$0.00
 
Net loss
   
($0.02
)
       
 
   
 
   
($0.02
)
Diluted earnings (loss) per share:
   
 
         
 
   
 
   
 
 
Loss from continuing operations
   
($0.02
)
       
 
   
 
   
($0.05
)
Loss from discontinued operations, net of income tax
   
($0.00
)
       
 
   
 
   
$0.03
 
Gain from the sale of discontinued operations, net of income tax
 
 
$0.00
         
 
   
 
 
 
$0.00
 
Net loss
   
($0.02
)
       
 
   
 
   
($0.02
)
 
   
 
   
 
   
 
   
 
   
 
 
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 20, 2005 By:   /s/ MARTIN WADE, III
 
 
Name: Martin Wade, III
Title: Chief Executive Officer

 
6