-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GFcoZXJRleSA/bzTb/VOgZSPQO2S/8OW7nTghlAM2OZLAQ/V0/mj/8sVtCsIsvbb VFnJW/Wwg5W6G6Om1ZDNvg== 0000909012-04-000433.txt : 20040614 0000909012-04-000433.hdr.sgml : 20040611 20040614150031 ACCESSION NUMBER: 0000909012-04-000433 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040402 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSCAN IMAGING INC CENTRAL INDEX KEY: 0001096857 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 593134518 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-27773 FILM NUMBER: 04861210 BUSINESS ADDRESS: STREET 1: 1754 TECHNOLOGY DRIVE CITY: SAN JOSE STATE: CA ZIP: 95110 BUSINESS PHONE: 408-436-9888 MAIL ADDRESS: STREET 1: 1754 TECHNOLOGY DRIVE CITY: SAN JOSE STATE: CA ZIP: 95110 FORMER COMPANY: FORMER CONFORMED NAME: BANKENGINE TECHNOLOGIES INC DATE OF NAME CHANGE: 20010321 FORMER COMPANY: FORMER CONFORMED NAME: ZEE INC DATE OF NAME CHANGE: 19991014 8-K/A 1 t301096.txt SYSCAN IMAGING (4/2/04) 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) April 2, 2004 SYSCAN IMAGING, INC. (Formerly known as BankEngine Technologies, Inc.) (Exact name of registrant as specified in its charter) DELAWARE 000-27773 59-3134518 - -------- --------- ---------- (State of Incorporation) (Commission File Number) (IRS Employer Identification No.) 1754 TECHNOLOGY DR., SUITE 129 SAN JOSE, CALIFORNIA 95110 (Address of principal executive offices, including zip code) (408) 436-9888 (Registrant's telephone number, including area code) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired On April 2, 2004, Syscan Imaging, Inc. (formerly BankEngine Technologies, Inc.) (the "Company") completed the acquisition of Syscan, Inc. ("SI") pursuant to a share exchange agreement entered into on March 29, 2004, between the Company, Michael J. Xirinachs, the majority shareholder of the Company, SI and Syscan Imaging Limited, the sole shareholder of SI. This Amended Current Report on Form 8-K amends Item 7(a) of the Form 8-K filed on April 19, 2004, by attaching hereto as exhibit 99.2 and incorporating herein by reference the audited consolidated financial statements of Syscan, Inc. and Subsidiaries for the years ended December 31, 2003 and 2002. (b) Pro Forma Financial Information On April 2, 2004, Syscan Imaging, Inc. (the "Company") completed the acquisition of Syscan, Inc. ("SI") pursuant to a share exchange agreement entered into on March 29, 2004, between the Company, Michael J. Xirinachs, the majority shareholder of the Company, SI and Syscan Imaging Limited, the sole shareholder of SI. This Amended Current Report on Form 8-K amends Item 7(b) of the Form 8-K filed on April 19, 2004, by attaching hereto as exhibit 99.3 and incorporating herein by reference the unaudited pro forma consolidated financial information of the Company and Syscan, Inc. (c) Exhibits 23.1 Consent of Independent Registered Public Accounting Firm 99.2 Syscan, Inc. and Subsidiaries - Audited Consolidated Financial Statements 99.3 Unaudited Pro Forma Consolidated Financial Information of the Company and Syscan, Inc. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized. SYSCAN IMAGING, INC. Dated: June 14, 2004 By: /S/ DARWIN HU ------------------------ Name: Darwin Hu Title: Chairman, CEO and President EX-23 2 ex23-1.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------- To the Board of Directors of Syscan Imaging, Inc. We consent to the use in this Form 8-K/A of Syscan Imaging, Inc. of our report dated February 29, 2004, with respect to the consolidated financial statements of Syscan, Inc. and Subsidiaries for the years ended December 31, 2003 and 2002, to be filed with the Securities and Exchange Commission /s/ Clancy and Co., P.L.L.C. Phoenix, Arizona June 9, 2004 EX-99.2 3 ex99-2.txt 12/31/03 & 12/31/02 FINANCIALS EXHIBIT 99.2 SYSCAN, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Independent Auditors' Report.................................................2 Consolidated Balance Sheets..................................................3 Consolidated Statements of Operations........................................4 Consolidated Statements of Changes in Stockholders' Equity...................5 Consolidated Statements of Cash Flows........................................6 Notes to Consolidated Financial Statements................................7-14 1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Syscan, Inc. We have audited the accompanying consolidated balance sheets of Syscan, Inc., a California Corporation, and Subsidiaries (the "Company") as of December 31, 2003 and 2002, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United States of America. 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 audits provide a reasonable basis for our opinion. In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for the periods indicated, in conformity with generally accepted accounting principles in the United States of America. /s/ Clancy and Co., P.L.L.C. Clancy and Co., P.L.L.C. Phoenix, Arizona February 29, 2004
SYSCAN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31 ASSETS 2003 2002 - ------------------------------------------------------------- ----------------- ---------------- Current assets Cash and cash equivalents $ 1,019,822 $ 333,611 Trade receivables, net 2,099,282 910,066 Inventories (Note 3) 199,550 158,794 Prepayments and other current assets 10,816 39,893 Due from related parties (Note 2) 2,514,612 2,850,146 ----------------- ---------------- Total current assets 5,844,082 4,292,510 Fixed assets, net (Note 4) 10,816 17,731 Other assets Intangible assets 13,493 13,493 Long-term investment (Note 6) 997,692 597,692 ----------------- ---------------- Total other assets 1,011,185 611,185 ----------------- ---------------- TOTAL ASSETS $ 6,866,083 $ 4,921,426 ================= ================ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities Trade payables $ 25,646 $ 7,452 Other payables and accruals (Note 5) 386,830 70,577 Due to related parties (Note 2) 1,491,051 716,073 ----------------- ---------------- Total current liabilities 1,903,527 794,102 Commitments and contingencies (Notes 9 and 11) - - Stockholders' equity Common stock: no par value; 10,000 shares authorized and 1,000 shares issued and outstanding 25,501,373 25,501,373 Accumulated deficit (20,538,817) (21,374,049) ----------------- ---------------- Total stockholders' equity 4,962,556 4,127,324 ----------------- ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,866,083 $ 4,921,426 ================= ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 3
SYSCAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31 2003 2002 ----------------- ---------------- NET SALES $ 7,456,782 $ 1,983,551 COSTS OF SALES 5,089,453 1,329,352 ----------------- ---------------- GROSS PROFIT (LOSS) 2,367,329 654,199 OPERATING EXPENSES Selling and marketing expenses 635,966 603,953 General and administrative expenses 625,156 506,788 Research and development expenses 799,825 307,862 ----------------- ---------------- Total operating expenses 2,060,947 1,418,603 ----------------- ---------------- OPERATING EARNINGS (LOSS) 306,382 (764,404) Other income (Note 7) 529,650 255,154 ----------------- ---------------- NET EARNINGS (LOSS) BEFORE TAXES 836,032 (509,250) PROVISION FOR INCOME TAXES (NOTE 8) 800 800 ----------------- ---------------- NET EARNINGS (LOSS) $ 835,232 $ (510,050) ================= ================ EARNINGS (LOSS) PER SHARE $ 835.23 $ (510.05) ================= ================ WEIGHTED AVERAGE SHARES OUTSTANDING 1,000 1,000 ================= ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4
SYSCAN, INC. AND SUBISIDARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31 COMMON COMMON STOCK STOCK ACCUMULATED (SHARES) (AMOUNT) DEFICIT TOTAL ------------- ---------------- --------------------- ------------------ Balance, December 31, 2001 1,000 $25,501,373 $ (20,863,999) $ 4,637,374 Net loss - - (510,050) (510,050) ------------- ---------------- --------------------- ------------------ Balance, December 31, 2002 1,000 25,501,373 (21,374,049) 4,127,324 Net earnings - - 835,232 835,232 ------------- ---------------- --------------------- ------------------ Balance, December 31, 2003 1,000 $25,501,373 $ (20,538,817) $ 4,962,556 ============= ================ ===================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 5
SYSCAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31 2003 2002 ----------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ 835,232 $ (510,050) Adjustments to reconcile net earnings (loss) to net cash flows used in operating activities Depreciation 7,938 18,201 Provision for doubtful accounts 23,560 17,618 Provision (write-back) of slow-moving inventories (408,034) (252,122) Negative goodwill acquired in acquisition (18,262) - Changes in assets and liabilities (Increase) decrease trade receivables (1,212,776) (927,684) (Increase) decrease in inventories 367,278 257,324 (Increase) decrease in other current assets 29,077 43,550 (Increase) decrease in deferred assets - - Increase (decrease) in trade payables 18,195 (6,681) Increase (decrease) in other payables and accruals 316,252 (989) ----------------- ----------------- Net cash flows used in operating activities (41,540) (1,360,833) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of a subsidiary (1) 770 Capital expenditures (1,023) - ----------------- ----------------- Net cash flows provided by (used in) investing activities (1,024) 770 CASH FLOWS FROM FINANCING ACTIVITIES Advances (repayments) - related party payables 393,241 104,117 (Advances) repayments - related party receivables 335,534 1,292,043 ----------------- ----------------- Net cash flows provided by financing activities 728,775 1,396,160 ----------------- ----------------- Increase in cash and cash equivalents 686,211 36,097 Cash and cash equivalents, beginning of year 333,611 297,514 ----------------- ----------------- Cash and cash equivalents, end of year $ 1,019,822 $ 333,611 ================= ================= Cash paid for: Interest - - Income taxes $ 800 $ 800 ================= =================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 6 SYSCAN, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 NOTE 1-ORGANIAZTION / SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ---------------------------------------------------------------- DESCRIPTION OF BUSINESS Syscan, Inc. (the "Company") was incorporated on May 1, 1995, under the laws of the State of California. The Company is headquartered in San Jose, California, and is principally engaged in the design, development and marketing of Contact Image Sensor ("CIS") modules for use in personal computer scanners and fax machines. Its ultimate holding company is SYSCAN Technology Holdings Limited, a company which is incorporated in Bermuda and its shares are listed on The Growth Enterprise Market of The Stock Exchange of Hong Kong Limited. The Company is subject to a number of business risks affecting companies at a similar stage of development, including competition from companies with greater resources and alternative technologies, the ability to obtain financing to fund future operations, dependence on new product introductions in a rapidly changing technological environment, dependence on a limited number of customers, dependence on key employees, and the ability to attract and retain additional qualified personnel to manage the anticipated growth of the Company. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING METHOD - The Company uses the accrual method of accounting for financial statement and tax return purposes. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company and its subsidiaries. The results of subsidiaries acquired or disposed of during the periods presented are consolidated from or to their effective dates of acquisition or disposal. All significant intercompany balances and transactions have been eliminated in consolidation. USE OF ESTIMATES - The preparation of financial statements in conformity with U.S. 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 the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS - For certain of the Company's financial instruments, including cash and cash equivalents, trade receivables and payables, prepaid expenses and other current assets, amounts due to / from related parties, and other payables and accruals, the carrying amounts approximate fair values due to their short maturities. RELATED PARTY TRANSACTIONS - A related party is generally defined as (i) any person that holds 10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. 7 CASH AND CASH EQUIVALENTS - The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. CONCENTRATION OF CREDIT RISK FOR CASH HELD AT BANKS - The Company maintains cash balances at several banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100,000. CONCENTRATION OF CREDIT RISK DUE TO GEOGRAPHIC SALES AND SIGNIFICANT CUSTOMERS - The Company operates in a single industry segment - scanner and fax modules. The Company markets its products in the United States, Europe and the Asia Pacific region through its sales personnel and independent sales representatives. The Company's geographic sales as a percent of total revenue are as follows: 2003 2002 ---------------- -------------- United States 80% 95% Asia Pacific 13% 1% Europe and others 7% 4% Sales to major customers, as a percentage of total revenues, are as follows: 2003 2002 ---------------- ----------- A 41% 57% CONCENTRATION OF CREDIT RISK - Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of trade receivables. The Company's customers are concentrated in the personal computer industry, motherboard manufacturers and original equipment manufacturers. As of December 31, 2003 and 2002, the concentration was approximately 82% (5 customers) and 71% (1 customer), respectively. The loss of any of these customers could have a material adverse effect on the Company's results of operations, financial position and cash flows. CONCENTRATION OF CREDIT RISK DUE TO SIGNIFICANT VENDORS - For the years ended December 31, 2003 and 2002, the Company's purchases have primarily been concentrated with three vendors that are fellow subsidiaries of the Company. If these vendors were unable to provide materials in a timely manner and the Company was unable to find alternative vendors, the Company's business, operating results and financial condition could be adversely affected. INVENTORIES - Inventories consist of finished goods, which are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. Provision is made for obsolete, slow-moving or defective items where appropriate. The amount of any provision of inventories is recognized as an expense in the period the provision occurs. The amount of any reversal of any provision is recognized as other income in the period the reversal occurs. FIXED ASSETS - Fixed assets, stated at cost, are depreciated over the estimated useful lives of the assets using the straight-line method over periods ranging from three to ten years. Significant improvements and betterments are capitalized. Routine repairs and maintenance are expensed when incurred. Gains and losses on disposal of fixed assets are recognized in the statement of operations based on the net disposal proceeds less the carrying amount of the assets. 8 LONG-LIVED ASSETS - Long-lived assets, such as fixed assets, are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment loss is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. LONG-TERM INVESTMENTS - Long-term investments are carried at cost less provision for any impairment in value. Income from long-term investments is accounted for to the extent of dividends received or receivable. Upon disposal of investments, any profit and loss thereon is accounted for in the statement of operations. REVENUE RECOGNITION - Revenues consist of sales of merchandise including optical image capturing devices, modules of optical image capturing devices, and chips and other optoelectronic products. Revenue is recognized when the product is shipped, net of an allowance for estimated returns and exclusion of value-added tax, and the risks and rewards of ownership have transferred to the customer. The Company recognizes shipping and handling fees as revenue, and the related expenses as a component of cost of sales. All internal handling charges are charged to selling, general and administrative expenses. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND RETURN ALLOWANCES - The Company presents accounts receivable, net of allowances for doubtful accounts and returns, to ensure accounts receivable are not overstated due to uncollectibility. The allowances are calculated based on detailed review of certain individual customer accounts, historical rates and an estimation of the overall economic conditions affecting the Company's customer base. The Company reviews a customer's credit history before extending credit. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Allowance for doubtful accounts at December 31, 2003 and 2002 was $86,780 and $63,220, respectively. RESEARCH AND DEVELOPMENT EXPENSES - Research and development costs are expensed as incurred and amounted to $799,825 in 2003 and $307,862 in 2002. ADVERTISING COSTS - Advertising costs are expensed as incurred and amounted to $10,364 in 2003 and $64,633 in 2002. INCOME TAXES - The Company accounts for income taxes under the provisions of Statement of Financial Accounting Standards ("SFAS" No. 109), "Accounting for Income Taxes," whereby deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary, to reduce deferred income tax assets to the amount expected to be realized. INTANGIBLE ASSETS - Intangible assets represents goodwill arising from the excess of the purchase consideration over the fair value of the net assets at the date of acquisition of subsidiaries. Goodwill arising in a business combination initiated after June 30, 2001 is not amortized. Negative goodwill is charged to the statement of operations as the carrying amount of the asset cannot be reduced to below zero. The amount was immaterial to the financial statements as a whole. 9 COMPREHENSIVE INCOME - The Company includes items of other comprehensive income by their nature in a financial statement and displays the accumulated balance of other comprehensive income separately in the equity section of the balance sheet. FOREIGN CURRENCY TRANSLATION - The reporting currency used in the preparation of these consolidated financial statements is U.S. dollars. Local currencies are the functional currencies for the Companies subsidiaries. For the purpose of consolidation, assets and liabilities of subsidiaries with functional currencies other than U.S. dollars are translated into U.S. dollars at the applicable rates of exchange in effect at the balance sheet date and income and expense items are translated into U.S. dollars at the average applicable rates during the year. Translation gains and losses resulting from fluctuations in exchange rates are recorded as a separate component of other comprehensive income within stockholders' equity as cumulative translation adjustments. Gains and losses resulting from foreign currency transactions are included in results of operations. EARNINGS PER SHARE - Basic earnings per share ("EPS") are calculated using net earnings (numerator) divided by the weighted-average number of shares outstanding (denominator) during the reporting period. All per share amounts in these financial statements are basic earnings or loss per share. RECENT ACCOUNTING PRONOUNCEMENTS - The Financial Accounting Standards Board issued the following new accounting pronouncements during 2003: Interpretation No. 46 "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" (FIN 46). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. FIN 46 does not have any impact on the financial position or results of operations of the Company. In April 2003, the FASB issued SFAS No. 149, "Accounting for Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is generally effective for contracts entered into or modified after June 30, 2003, and all provisions should be applied prospectively. This statement does not affect the Company. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Restatement is not permitted. This statement does not affect the Company. 10 NOTE 2 - RELATED PARTY TRANSACTIONS - ----------------------------------- The following is a summary of significant related party purchase transactions, which were carried out in the normal course of the Company's business: 2003 2002 -------------- ------------ SYSCAN Intervision Limited $ 4,418,415 $ 581,440 ============== ============ Shenzhen SYSCAN Technology Company Limited - $ 460,736 ============== ============ SYSCAN Optoelectronics Technology (Shenzhen) Company Limited - $ 548,116 ============== ============ AMOUNTS DUE TO / FROM RELATED PARTIES ARE UNSECURED, INTEREST-FREE AND REPAYABLE ON DEMAND AND CONSISTED OF THE FOLLOWING: AMOUNTS DUE FROM RELATED PARTIES: 2003 2002 ---------------- ------------ Due from ultimate holding company $ 317,280 $ 313,870 Due from immediate holding company 100,000 100,000 Due from fellow subsidiaries 2,097,332 2,436,276 ---------------- ------------ $ 2,514,612 $2,850,146 ================ ============ AMOUNTS DUE TO RELATED PARTIES: Due to fellow subsidiaries $ 1,491,051 $ 716,073 ================ ============ NOTE 3 - INVENTORIES - -------------------- Inventories consist of the following: 2003 2002 ------------ ------------ Finished goods $ 199,550 $566,828 Less: provision for obsolete and slow- moving inventories - 408,034 ------------ ------------ $ 199,550 $158,794 ============ ============ NOTE 4 - FIXED ASSETS - --------------------- Fixed assets consist of the following: 2003 2002 ------------- ------------- Machinery $ 211,301 $ 210,278 Furniture and office equipment 686,107 686,107 Computer equipment 183,254 183,254 Leasehold improvements 47,136 47,136 ------------- ------------- Total 1,127,798 1,126,775 Less accumulated depreciation 1,116,982 1,109,044 ------------- ------------- Net book value $ 10,816 $ 17,731 ============= ============= 11 Depreciation expense charged to operations was $7,938 in 2003 and $18,201 in 2002. NOTE 5 - OTHER PAYABLES AND ACCRUALS - ------------------------------------ Other payables and accruals consist of the following: 2003 2002 ------------- ------------ Accrued product-related costs $ 150,000 $ 37,500 Accrued sales commissions and bonus 132,693 - Accrued professional fees 60,000 8,000 Accrued vacation and sick 9,519 9,519 Other 34,618 15,558 ------------- ------------ $ 386,830 $ 70,577 ============= ============ NOTE 6 - LONG-TERM INVESTMENT Long-term investment consist of an equity interest in CMOS Sensor, Inc. ("CMOS"), a California corporation, which is principally engaged in the research and development of infra-red sensors and CMOS sensors. On June 26, 2002, the Company acquired 100% equity interest of Syscan Laser Technology Ltd. ("Syscan Laser") from Syscan Holdings Limited, a fellow subsidiary of the Company, for total consideration of $1. At the date of acquisition, Syscan Laser held 9.7% equity interest (representing 750,000 shares purchased at $0.80 per share) in CMOS. On October 29, 2003, the Company acquired 100% equity interest of Leadbuilt Technology Limited ("Leadbuilt") from Syscan InterVision Limited, a fellow subsidiary of the Company, for total consideration of $1. At the date of acquisition, Leadbuilt held 6.4% (representing 500,000 shares purchased at $0.80 per share) equity interest in CMOS. As a result of both transactions, the Company increased its equity interest in CMOS from 9.7% to 16.1%. The Company's directors are of the opinion that the underlying value of the long-term investment is not less than the carrying value at December 31, 2003 and 2002. Long-term investment amounted to $997,692 at December 31, 2003 and $597,692 at December 31, 2002. NOTE 7 - OTHER INCOME Other income consists of the following: 2003 2002 ------------- --------------- Interest income $ 12,266 $ 3,032 Write back of provision of inventories 408,034 252,122 Recovery of trade receivables written off 109,350 - ------------- --------------- $ 529,650 $ 255,154 ============= =============== NOTE 8 - INCOME TAXES Provision for income taxes for all periods presented represents the minimum franchise tax due ($800) in the State of California. No provision for Hong Kong Profits Tax has been made for the periods presented as the Company and its subsidiaries operating in Hong Kong have no assessable profits during the years being reported. Hong Kong Profits Tax is calculated at 17.5% (2002: 16%) of the estimable assessable profit for the year. 12 THE NET DEFERRED INCOME TAX ASSET CONSISTED OF THE FOLLOWING: 2003 2002 ------------- ------------- Deferred tax assets Federal net operating loss carryforwards $5,462,214 $5,453,604 State net operating loss carryforwards 1,023,375 1,025,542 Excess book over tax depreciation - - Capitalized R&D Expenses 1,121,554 1,310,674 Tax credit carryforwards 641,173 650,369 ------------- ------------- 8,248,316 8,440,189 Less valuation allowance 8,242,668 8,434,414 ------------- ------------- 5,648 5,775 Deferred tax liability Excess tax over book depreciation (5,648) (5,775) ------------- ------------- Net deferred income tax asset $ - $ - ============= ============= The Company believes sufficient uncertainty exists regarding the realizability of the net operating loss carryforwards and other timing differences for the periods presented. Accordingly, a valuation allowance has been provided for the entire amount related thereto. The valuation allowance increased (decreased) by approximately ($192,000) for 2003 and $278,000 for 2002. As of December 31, 2003, the Company has available net operating loss carryforwards for federal and state income tax purposes of approximately $16,000,000 and $11,600,000, which begin to expire in the year 2010 and 2005, respectively. State net operating loss carryforwards are based on federal net operating losses, which are limited to certain percentages and carryover periods based on the year incurred. For taxable years beginning in 2002 and 2003, the State of California has suspended the net operating loss carryover deduction for two years for losses incurred before January 1, 2002, and for one year for losses incurred after January 1, 2002. Pursuant to the Tax Reform Act of 1986, annual utilization of the Company's net operating loss carryforwards may be limited if a cumulative change in ownership of more than 50% is deemed to occur within any three-year period. NOTE 9 - COMMITMENTS - -------------------- OPERATING LEASES - The Company is committed under various noncancelable operating leases which expire through September 2004. Rent expense charged to operations was approximately $99,000 for 2003 and $92,000 for 2002. Future minimum rental commitments under noncancelable leases are as follows: 2004-$60,078. LINE OF CREDIT - The Company has a line of credit to borrow up to $500,000, bearing interest at the rate of prime plus 1%, and secured by substantially all of the assets of the Company. Interest payments are due monthly and all unpaid interest and principal is due in full on December 4, 2004. Upon certain events of defaults as more fully described in the agreement, the variable interest rate increases to prime plus 3%. The entire line of credit was available for use as of December 31, 2003. 13 NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION - -------------------------------------------- Supplemental cash flow information for the years ended December 31, 2003 and 2002 is presented below. The assets and liabilities arising from the acquisition of the following subsidiaries, Leadbuilt Technology Ltd. (October 29, 2003) and Syscan Laser Technology Ltd. (June 26, 2002) are as follows: 2003 2002 --------------- ------------- Share of net assets/(liabilities) acquired $ 18,263 $ (13,492) Purchase consideration 1 1 --------------- ------------- (Negative goodwill) / Positive goodwill (18,262) 13,493 =============== ============= Net assets/(liabilities) acquired $ 400,000 $ 597,692 Long-term investment - 1 Due from a fellow subsidiary - 771 Due to a fellow subsidiary (381,737) (611,956) --------------- ------------- 18,263 (13,492) (Negative goodwill) / Positive goodwill (18,262) 13,493 --------------- ------------- Cash consideration $ 1 $ 1 =============== ============= Cash consideration paid $ (1) $ (1) Cash and cash equivalents acquired - 771 --------------- ------------- Net cash (paid) / received $ (1) $ 770 =============== ============= NOTE 11 - LETTER OF INTENT - -------------------------- On December 18, 2003, the Company entered into a non-binding letter of intent to merge with BankEngine Technologies Inc. ("BankEngine"), a public company that trades on the OTCBB. BankEngine has agreed to issue that number of shares of its common stock to the shareholders of Syscan, Inc. that represents ninety percent (90%) of BankEngine's outstanding shares of common stock on a post-transaction basis in exchange for all of the issued and outstanding shares of Syscan. The acquisition of Syscan, Inc. is subject to approval of BankEngine's board of directors and continued due diligence and there can be no assurance that the merger will be consummated in the near future, if at all. 14 EX-99.3 4 ex99-3.txt PRO FORMA FINANCIALS
EXHIBIT - 99.3 SYSCAN IMAGING, INC. (FORMERLY KNOWN AS BANKENGINE TECHNOLOGIES, INC.) PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET BANKENGINE SYSCAN, INC. TECHNOLOGIES INC. DECEMBER 31 AUGUST 31, PRO FORMA 2003 2003 PRO FORMA COMBINED (HISTORICAL) (HISTORICAL) ADJUSTMENTS RESULTS - --------------------------------------------------- ----------- ----------------- ------------------ ---------------- ASSETS Current assets Cash and cash equivalents $ 1,019,822 $ 850 $ 1,020,672 Trade receivables, net 2,099,282 - - Inventories and other current assets 210,366 - 210,366 Due from related parties 2,514,612 - 2,514,612 ------------------ ------------------ ---------------- Total current assets 5,844,082 850 5,844,932 Fixed assets, net 10,816 - 10,816 Other assets Intangible assets 13,493 - 13,493 Long-term investment 997,692 - 997,692 ------------------ ------------------ ---------------- Total other assets 1,011,185 - 1,011,185 ------------------ ------------------ ---------------- TOTAL ASSETS $ 6,866,083 $ 850 $6,866,933 ================== ================== ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Trade payables, other payables and accruals $ 412,476 $ - $ 467,476 Due to related parties 1,491,051 - 1,491,051 ------------------ ------------------ ---------------- Total current liabilities 1,903,527 55,000 1,958,527 Stockholders' equity Common stock 25,501,373 19,116 20,859 A 22,771 (17,204) C (25,501,373) A Additional paid-in capital - 484,556 (20,859) A 25,424,452 17,204 C 25,501,373 A (557,822) B Accumulated deficit (20,538,817) (489,544) 489,544 B (20,538,817) Accumulated other comprehensive loss - (65,778) 65,778 B - Treasury stock - (2,500) 2,500 B - ------------------ ------------------ ---------------- Total stockholders' equity (deficiency) 4,962,556 (54,150) 4,908,406 ------------------ ------------------ ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,866,083 $ 850 $6,866,933 ================== ================== ================
SEE CONDENSED NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. 1
SYSCAN IMAGING, INC. (FORMERLY KNOWN AS BANKENGINE TECHNOLOGIES, INC.) PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT BANKENGINE SYSCAN, INC. TECHNOLOGIES, INC. DECEMBER 31 AUGUST 31, PRO FORMA 2003 2003 COMBINED (HISTORICAL) (HISTORICAL) RESULTS ------------------ ------------------------ -------------------- NET SALES $ 7,456,782 $ - $ 7,456,782 COSTS OF SALES 5,089,453 - 5,089,453 ------------------ ------------------------ -------------------- GROSS PROFIT (LOSS) 2,367,329 - 2,367,329 OPERATING EXPENSES Selling and marketing expenses 635,966 - 635,966 General and administrative expenses 625,156 - 625,156 Research and development expenses 799,825 - 799,825 ------------------ ------------------------ -------------------- Total operating expenses 2,060,947 - 2,060,947 ------------------ ------------------------ -------------------- OPERATING EARNINGS (LOSS) 306,382 - 306,382 Other income 529,650 - 529,650 ------------------ ------------------------ -------------------- NET EARNINGS BEFORE TAXES 836,032 - 836,032 PROVISION FOR INCOME TAXES 800 - 800 ------------------ ------------------------ -------------------- EARNINGS FROM CONTINUING OPERATIONS $ 835,232 - $ 835,232 ================== ======================== ==================== EARNINGS PER SHARE - BASIC AND DILUTED $ $ 0.04 835.23 ================== ==================== WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 1,000 D 22,768,503 POTENTIALLY DILUTIVE SHARES - OPTIONS - 60,000 ------------------ -------------------- DILUTED 1,000 22,828,503 ================== ====================
SEE CONDENSED NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. 3 SYSCAN IMAGING, INC. (FORMERLY KNOWN AS BANKENGINE TECHNOLOGIES, INC.) NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 BASIS OF PRESENTATION - ---------------------------- The accompanying pro forma condensed consolidated balance sheet and condensed consolidated income statement give effect to the acquisition of all of the issued and outstanding shares of Syscan, Inc. ("Syscan") in exchange for 20,859,459 common shares of BankEngine Technologies, Inc. ("BankEngine") pursuant to a Share Exchange Agreement dated March 29, 2004, effective April 2, 2004. In connection with the consummation of the agreement, a 10:1 reverse split was effected. The business combination will be accounted for as a reverse acquisition, with Syscan being treated as the accounting acquirer and Syscan's historical carrying value being the carryover basis recognized in the pro forma condensed consolidated financial statements. The registrant has elected to adopt the fiscal year end of Syscan and therefore, no transition report will be filed with the Securities and Exchange Commission. The company's periodic reporting requirements are now based on the fiscal year of the accounting acquirer, Syscan, and will resume for the quarter ended June 30, 2004, and will depict the operating results of the accounting acquirer, including the acquisition of registrant, from the date of consummation of the merger, April 2, 2004. The pro forma condensed consolidated financial statements of BankEngine included herein have been prepared by management in accordance with the accounting principles generally accepted in the United States of America. They have been prepared from information derived from the August 31, 2003 audited financial statements of BankEngine and the December 31, 2003 audited financial statements of Syscan. The pro forma condensed income statement has been presented using BankEngine's fiscal year end. Because the fiscal year ends of the entities involved in the transaction differs from BankEngine's most recent fiscal year end by more than 93 days, Syscan's income statement has not been brought up to within 93 days of BankEngine's most recent fiscal year end because it is impracticable to do so. The pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of Syscan and BankEngine referred to above and included elsewhere in this 8-K/A. The pro forma condensed consolidated balance sheet gives effect to the acquisition of Syscan as if it had occurred on August 31, 2003. The pro forma condensed consolidated income statement gives effect to the acquisition of Syscan as if it had occurred at the start of the fiscal periods beginning on September 1, 2002 for BankEngine and January 1, 2003 for Syscan. These pro forma financial statements are not necessarily indicative of the financial position or results of operations, which would have resulted if the combination and related transactions had actually occurred on those dates. NOTE 2 SYSCAN, INC. - ------------------- Syscan is a California corporation headquartered in San Jose, California, and is principally engaged in the design, development and marketing of Contact Image Sensor ("CIS") modules for use in personal computer scanners and fax machines. The financial statements of Syscan were prepared in accordance with generally accepted accounting principles in the United States of America. 4 NOTE 3 PRO FORMA ADJUSTMENTS - ---------------------------- The pro forma condensed consolidated balance sheet includes the following pro forma adjustments: (A) To record the issuance of 20,859,489 (post-split) common shares of BankEngine to acquire 100% of the issued and outstanding shares of Syscan. (B) To retire net equity of BankEngine against additional paid-in capital. (C) To adjust BankEngine common stock for the reverse stock split. The pro forma condensed consolidated income statement does not include any operations for BankEngine because the results of operations for the fiscal year ended represented Discontinued Operations only, which are not considered in the preparation of the pro forma condensed income statement pursuant to Rule 11-02 of REG S-X. (D) Pro-forma loss per share has been calculated using the historical weighted average number of shares previously reported and amended as if the pro-forma common shares of BankEngine issued pursuant to the acquisition have been outstanding since the beginning of the periods. 5 -----END PRIVACY-ENHANCED MESSAGE-----