VASCO Announces Acquisition of Secure Smart Card Reader Specialist, AOS-Hagenuk

VASCO will acquire all of the stock of AOS-Hagenuk, in exchange for consideration totalling Euro 5 million ($6.5 million U.S. dollars using the exchange rate at the date of close), consisting of Euro 3.75 million cash & Euro 1.25 million VASCO common stock AOS-Hagenuk is an established, privately-owned company with a growing revenue base and significant technical expertise in the smart card related e-banking market. AOS-Hagenuk generated revenues of Euro 4.4 million in 2004 ($5.4 million U.S. dollars using the average exchange rates for 2004), an eighty-five percent increase over 2003. AOS-Hagenuk has a strong market position in The Netherlands and its customers include Fortis and ABN-Amro. AOS-Hagenuk generated modest operating profits in both 2004 and 2003 and is debt free. AOS-Hagenuk has a strong installed base of more than 2.5 million smart card based authentication devices. Although before today VASCO and AOS- Hagenuk were competitors, there is hardly any overlap in the current product offerings of VASCO & AOS-Hagenuk. With the acquisition of AOS-Hagenuk, VASCO expands and strengthens its product line and position in the smart card enabled secure e-banking and e- commerce market. With the addition of AOS-Hagenuks technical expertise, VASCO expects to be able to further accelerate its product development and revenue growth. VASCO will centralize its smart card related R&D activities in AOS- Hagenuks offices in The Netherlands, thus creating a secure smart card reader research and development center focused on smart card technology. VASCO believes that the combination will allow it to take advantage of current and future opportunities and evolutions in the global smart card authentication business, including the emerging EMV (Europay-Mastercard-Visa) environment. We welcome AOS-Hagenuk, its products and its people, said Jan Valcke, VASCOs President and COO. During our Q3 2004 conference call, we announced that we would grow our number of employees, our geographical presence, our market penetration and our product range. With regards to products, we announced that we would implement a make or buy strategy. The acquisition of AOS-Hagenuk reinforces VASCOs position in the smart card enabled e-banking authentication market. In addition, AOS-Hagenuk brings us a number of highly experienced smart card developers, which allows us to accelerate the development of VASCOs smart card reader offerings and to be confident about future evolutions in the smart card market. We believe that there are important synergies between VASCOs Digipass and AOS-Hagenuks PocketID unconnected smart card reader. Mr. Mladen Filipan, CEO of AOS-Hagenuk, will join VASCO as VP Business Development.