Amendment to Current Report
UNITED STATES
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)  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.
 
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“) and give effect to the disposition of Allume Systems, Inc.   The pro forma condensed consolidated balance sheet gives effect to the sale to Smith Micro Software, Inc. as if it occurred as of 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 Systems, Inc. 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
  
 
  
 
  
 
          
 
  
Revenue
  
 
$11,985
    
($1,968
)
            
 
$10,017
  
Cost of revenue
    
4,137
    
(488
)
              
3,649
  
Gross profit
    
7,848
    
(1,480
)
              
6,368
  
 
    
 
    
 
                
 
  
Operating expenses:
    
 
    
 
                
 
  
Sales and marketing
    
5,190
    
(763
)
              
4,427
  
General and administrative
    
3,910
    
(233
)
              
3,677
  
Research and development
    
2,519
    
(480
)
              
2,039
  
Total operating expenses
    
11,619
    
(1,476
)
              
10,143
  
 
    
 
    
 
                
 
  
Income (loss) from operations
    
(3,771
)
  
(4
)
              
(3,775
)
 
    
 
    
 
                
 
  
Other income and expense
                                
Interest and other, net
    
78
    
(14
)
  
41
    
(A)
 
  
105
  
Realized gain on marketable securities
    
585
                      
585
  
Unrealized gain on marketable securities
    
1,982
                      
1,982
  
Loss on disposal of fixed assets
    
(13
)
                    
(13
)
Gain (loss) on sale of product line
    
59
                      
59
  
Gain on extinguishment of debt
    
76
                      
76
  
Gain (loss) on sale of subsidiary
    
0
          
(260
)
  
(B)
 
  
(260
)
Gain (loss) before income tax
    
(1,004
)
  
(18
)
  
(219
)
        
(1,241
)
 
                                
Provision for income taxes (benefit)
    
38
    
(45
)
              
(7
)
                                 
Loss from Continuing Operations
    
(1,042
)
  
27
    
(219
)
        
(1,234
)
                                 
Income (loss) from discontinued
operations, net of tax
    
(312
)
                    
(312
)
Gain from the sale of discontinued
operations, net of tax
    
2,000
                      
2,000
  
                                 
Net Income
  
 
$646
    
27
    
(219
)
      
 
$454
  
                                 
Other comprehensive income
                                
Foreign currency operations
    
(8
)
                    
(8
)
Comprehensive income
  
 
$638
    
27
    
(219
)
      
 
$446
  
Basic earnings (loss) per share
                                
Loss from continuing operations
    
($0.04
)
                    
($0.05
)
Income (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
                    
 
$0.08
  
Net income
  
 
$0.03
                    
 
$0.02
  
Diluted earnings (loss) per share
                                
Net income (loss) from continuing operations
    
($0.04
)
                    
($0.05
)
Income from discontinued operations, net of income tax
    
($0.01
)
                    
($0.01
)
 Gain from the sale of discontinued operations,
net of income tax
  
 
$0.08
    
 
              
 
$0.08
  
 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
  
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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
  
 
  
 
  
 
          
 
  
Revenue
  
 
$18,054
    
($7,641
)
            
 
$10,413
  
Cost of revenue
    
4,833
    
(1,417
)
              
3,416
  
 
    
 
    
 
                
 
  
Gross profit
    
13,221
    
(6,224
)
              
6,997
  
 
    
 
    
 
                
 
  
Operating 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
  
 
    
 
    
 
                
 
  
Loss from operations
    
(706
)
  
(848
)
              
(1,554
)
 
    
 
    
 
                
 
  
Other income and expense
                                
Interest and other, net
    
(42
)
  
(12
)
  
246
    
(A)
 
  
192
  
Realized/unrealized gain (loss)on marketable securities
    
145
                      
145
  
Loss on disposal of fixed assets
    
0
                      
0
  
Gain (loss) on sale of product line
    
33
                      
33
  
Gain on extinguishment of debt
    
0
                      
0
  
Gain on sale of subsidiary
    
0
                      
0
  
Gain (loss) before income tax
    
(570
)
  
(860
)
  
246
          
(1,184
)
 
                                
Provision for income taxes
    
(10
)
                    
(10
)
                                 
Gain (loss) from Continuing Operations
    
(580
)
  
(860
)
  
246
          
(1,194
)
                                 
Income (loss) from discontinued operations, net of tax
    
(5
)
                    
(5
)
Gain from the sale of discontinued operations, net of tax
    
53
                      
53
  
                                 
Net Income (Loss)
    
(532
)
  
(860
)
  
246
          
(1,146
)
                                 
Other comprehensive income
                                
Foreign currency operations
    
(39
)
                    
(39
)
Comprehensive income
    
($570
)
 
$(860
)
 
$246
          
($1,184
)
Basic earnings (loss) per share
                                
Loss from continuing operations
    
($0.02
)
                    
($0.04
)
Income (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 income
    
($0.02
)
                    
($0.04
)
Diluted earnings (loss) per share
                                
Net income (loss) from continuing operations
    
($0.02
)
                    
($0.04
)
Income 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 income
    
($0.02
)
  
 
                
($0.04
)
                                 
Shares used in computing basic earnings per share
    
27,623
                      
27,623
  
Shares used in computing diluted earnings per share
    
27,623
    
 
                
27,623
  
4
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data) 

       
Year Ended June 30, 2004
          
   
IMSI
  
Allume Systems,
Inc.
  
 
 
Pro-forma
Adjustments
  
 
 
 
Notes
  
Pro-
forma
IMSI
  
ASSETS
    
 
    
 
                
 
  
Current assets:
                                
Cash and cash equivalents
  
 
$3,212
    
($472
)
 
$9,745
    
(C)
 
 
$12,485
  
Restricted cash and cash equivalents
    
0
          
126
    
(C)
 
  
126
  
Investment in marketable securities
    
2,151
          
1,000
    
(C)
 
  
3,151
  
Receivables, less allowances for doubtful accounts
    
2,522
    
(950
)
              
1,572
  
Inventories, net of reserves for obsolescence
    
1,122
    
(539
)
              
583
  
Receivable, other (related to discontinue operations)
    
1,000
                      
1,000
  
Notes receivable from related party
    
350
                      
350
  
Other current assets
    
552
    
(132
)
              
420
  
Assets related to discontinued operations
    
828
    
(692
)
              
136
  
Total current assets
    
11,737
    
(2,785
)
  
10,871
          
19,823
  
                                 
Fixed assets, net
    
637
    
(217
)
              
420
  
                                 
Intangible Assets
                                
Capitalized software, net
    
2,748
    
(1,933
)
              
815
  
Domain names, net and trademarks, net
    
2,275
    
(1,003
)
              
1,272
  
Distribution rights, net
    
594
    
(389
)
              
205
  
Capitalized customer lists
    
843
    
(605
)
              
238
  
Goodwill
    
7,559
    
(6,810
)
              
749
  
Total Intangible Assets
    
14,019
    
(10,740
)
              
3,279
  
 
                                
Other assets:
                                
Prepaid expense
    
99
    
(99
)
              
0
  
Investment in securities
    
1,771
                      
1,771
  
Total other assets
    
1,870
    
(99
)
              
1,771
  
                                 
Total assets
  
 
$28,263
    
($13,841
)
 
$10,871
        
 
$25,293
  
                                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                
Current liabilities:
                                
Short term debt
  
 
$3,557
    
($182
)
  
88
    
(D)
 
 
$3,463
  
Trade accounts payable
    
2,375
    
(956
)
              
1,419
  
Accrued and other liabilities
    
1,751
    
(392
)
  
581
    
(E)
 
  
1,940
  
Total current liabilities
    
7,683
    
(1,530
)
  
669
          
6,822
  
                                 
Liabilities related to discontinued operations
    
397
                      
397
  
Long-term debt and other obligations
    
2,318
    
(1,376
)
              
942
  
Total liabilities
    
10,398
    
(2,906
)
  
669
          
8,161
  
                                 
Shareholders’ Equity
                                
Common stock, no par value; 300,000,000 shares authorized;
6,261,829 shares issued and outstanding
    
41,512
    
(47
)
              
41,465
  
Accumulated deficit
    
(23,577
)
  
(10,888
)
  
10,202
          
(24,263
)
Accumulated other comprehensive income
    
(70
)
                    
(70
)
Total shareholders’ equity
    
17,865
    
(10,935
)
  
10,202
          
17,132
  
Total liabilities and shareholders’ equity
  
 
$28,263
    
($13,841
)
 
$10,871
        
 
$25,293
  
 
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) Deemed interest of $41,000 and $246,000 earned on sales proceeds during the fiscal years 2004 and 2005, respectively.

(B) 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

(C) 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 and $126,000 of the escrowed amounts are 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.

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

(E) 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: September 14, 2005 By:   /s/ MARTIN WADE, III
 
 
Name: Martin Wade, III
Title: Chief Executive Officer

 
6