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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one):
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTER ENDED MARCH 31, 2000
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________.
COMMISSION FILE NUMBER 0-27946
SIMPLAYER.COM LTD.
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(Exact name of registrant as specified in its charter)
ISRAEL N/A
------ ---
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2 MOHALIVER STREET, YEHOOD, ISRAEL
- ---------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (781) 481-9120
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
The number of shares outstanding of the registrant's Ordinary Shares, NIS 0.01
Par Value, as of May 12, 2000, was 9,033,760 shares.
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<PAGE>
SIMPLAYER.COM LTD.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2000 (unaudited)
and December 31, 1999 ...................................... 3
Consolidated Statements of Operations (unaudited) for the
three and six months ended March 31, 2000 and 1999 ........ 5
Notes to Consolidated Financial Statements (unaudited) ..... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 7
Item 3. Quantitative and Qualitative Disclosure about Market Risk... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .......................................... 9
Item 2. Changes in Securities and Use of Proceeds .................. 9
Item 4. Submission of Matters to a Vote of Security Holders ........ 9
Item 6. Exhibits and Reports on Form 8-K ........................... 10
Signatures ......................................................... 11
2
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PART I.
ITEM 1. FINANCIAL STATEMENTS
SIMPLAYER.COM LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
U.S. dollars in thousands
<TABLE><CAPTION>
March 31, December 31,
------------------- --------
2000 1999 1999
-------- -------- --------
Unaudited Audited
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 8,391 1,617 4,199
Short-term deposits -- 711 --
Trade receivable -- 536 --
Other receivable 808 219 99
Inventories -- 63 --
-------- -------- --------
Total current assets 9,199 3,146 4,298
SEVERANCE PAY FUND 61 539 99
FIXED ASSETS:
Cost 485 1,347 322
Less - accumulated depreciation 266 961 255
-------- -------- --------
219 386 67
LONG-TERM RECEIVABLES 469 -- --
-------- -------- --------
Total assets 9,948 4,071 4,464
======== ======== ========
</TABLE>
3
<PAGE>
SIMPLAYER.COM LTD. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
U.S. dollars in thousands
<TABLE><CAPTION>
March 31, December 31,
------------------- --------
2000 1999 1999
-------- -------- --------
Unaudited Audited
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current
maturities of long-term loans -- 24 --
Trade payables 61 327 172
Accrued expenses and other liabilities 1,408 1,569 671
-------- -------- --------
Total current liabilities 1,469 1,920 843
LONG-TERM LIABILITIES:
Accrued restructuring costs 9 39 --
Accrued severance pay 76 573 133
Other accrued expenses 10 51 37
-------- -------- --------
Total long-term liabilities 95 663 170
SHAREHOLDERS' EQUITY:
Share capital 29 21 21
Additional paid-in capital 24,751 18,389 18,580
Accumulated deficit (16,396) (16,922) (15,150)
-------- -------- --------
Total shareholders' equity 8,384 1,488 3,451
-------- -------- --------
Total liabilities and shareholders' equity 9,948 4,071 4,464
======== ======== ========
</TABLE>
4
<PAGE>
SIMPLAYER.COM LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
U.S. dollars in thousands, except per share data
<TABLE><CAPTION>
Three months ended Year ended
------------------- --------
March 31, December 31,
------------------- --------
2000 1999 1999
-------- -------- --------
Unaudited Audited
<S> <C> <C> <C>
Development fees -- -- 500
Cost of development fees -- -- 103
Gross profit -- -- 397
Operating expenses:
Research and development costs 712 183 947
Marketing and selling expenses 403 35 382
General and administrative expenses 236 48 560
-------- -------- --------
Operating loss (1,351) (266) (1,492)
Financial income, net 101 37 129
Other income (expenses) 4 12 29
-------- -------- --------
Loss from continuing operations (1,246) (217) (1,334)
Discontinued operations:
Loss from Discontinued operations of segment -- (1,154) (2,607)
Income on disposal of segment -- -- 4,342
-------- -------- --------
Net income (loss) (1,246) (1,371) 401
======== ======== ========
Basic and diluted loss per share :
From continuing operations (0.16) (0.04) $(0.23)
From discontinuing operations -- (0.20) 0.30
-------- -------- --------
Basic and diluted loss per share : (0.16) (0.24) $ 0.07
======== ======== ========
Weighted average number of shares outstanding 7,567 5,820 5,930
======== ======== ========
</TABLE>
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The accompanying notes are an integral part of the financial statements.
5
<PAGE>
1) Interim Financial Statements
----------------------------
The accompanying unaudited consolidated financial statements of
SimPlayer.com Ltd. ("SimPlayer" or the "Company") in this Form 10-Q have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission (the "Commission"). As permitted by the rules of the
Commission applicable to quarterly reports on Form 10-Q, these notes are
condensed and do not contain all disclosures required by generally accepted
accounting principles. In the opinion of management, these financial statements
contain all adjustments (consisting of only normal, recurring adjustments)
necessary to present fairly the Company's financial position, results of
operations and cash flows as of the dates and for the periods indicated. While
management believes the disclosures presented are adequate to make these
financial statements not misleading, these financial statements should be read
in conjunction with SimPlayer's audited financial statements and related notes
included in the Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 1999.
The results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the full year.
6
<PAGE>
PART I.
ITEM 2: MANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. SIMPLAYER MAKES SUCH FORWARD LOOKING STATEMENTS
UNDER THE PROVISIONS OF THE "SAFE HARBOR" SECTION OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. IN THIS QUARTERLY REPORT ON FORM 10-Q, THE WORDS
"ANTICIPATES," "BELIEVES," "EXPECTS," "FUTURE," "INTENDS," "MAY," AND SIMILAR
WORDS OR EXPRESSIONS (AS WELL AS OTHER WORDS OR EXPRESSIONS REFERENCING FUTURE
EVENTS, CONDITIONS OR CIRCUMSTANCES) IDENTIFY FORWARD LOOKING STATEMENTS. OUR
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO, FLUCTUATIONS IN QUARTERLY RESULTS; OUR SUCCESS IN
ACQUIRING LICENSES FROM MAJOR SPORTS ORGANIZATIONS AND FOR KEY SPORTING EVENTS;
SUCCESSFUL DEVELOPMENT AND ENHANCEMENT OF OUR PRODUCTS; DEMAND FOR AND MARKET
ACCEPTANCE OF OUR PRODUCTS; AVAILABILITY OF FUNDS FOR THE CONTINUED FINANCING OF
OUR OPERATIONS AND DEVELOPMENT ACTIVITIES; AND THE HIGHLY COMPETITIVE NATURE OF
OUR MARKETS. FURTHER INFORMATION ON POTENTIAL FACTORS THAT COULD AFFECT OUR
FINANCIAL RESULTS ARE INCLUDED OUR FILINGS MADE FROM TIME TO TIME WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE SECTION ENTITLED "CERTAIN
FACTORS THAT MAY AFFECT FUTURE RESULTS" CONTAINED IN OUR ANNUAL REPORT ON FORM
20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 (FILE NO. 0-27946).
RESULTS OF OPERATIONS
- ---------------------
The consolidated financial statements of SimPlayer.com Ltd. reported $8.4
million in cash and shareholders equity at March 31, 2000. The significant
increase in the Company's cash and equity position from year end 1999 resulted
from the $6 million private placement that closed in February 2000.
For the three months ending March 31, 2000, SimPlayer.com Ltd. had a net
loss of $1.2 million or $0.16 per share, which was ahead of our budget
expectations. No revenues were posted for the period.
Operating expenses, primarily reflecting staff expenses, totaled $1.3
million during the first three months of 2000 as compared to $266,000 in the
prior year period when the Company was in the initial stages of developing the
SimPlayer technology. During the first quarter of 2000, the Company increased
its engineering, research and development staff in association with its first
baseball application, which debuted in April on eSportsPlus.com, the Company's
sports destination website. The Company also hired additional business
development staff to begin recruiting new marketing partners.
During the three months ending March 31, 2000, other income of $105,000,
primarily from interest income, partially offset expenses. In the prior year
period, other income totaled $49,000, which reflects the Company's significantly
lower level of invested cash.
The weighted average number of shares outstanding at March 31, 2000
increased to 7,567,000 from 5,820,000 a year earlier due to the exercise of
employee stock options and the 1,202,500 shares issued for the $6 million
private placement. The actual number of shares outstanding at March 31,2000 was
9,026,772.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of March 31, 2000, we had $8.4 million in cash, cash equivalents,
marketable securities, and bank deposits. Our accounts receivable increased from
$0 on December 31, 1999 to $0.8 million on March 31 2000. As of March 31, 2000,
we had working capital of $7.73 million compared to $3.45 million as of December
31, 1999. We have not utilized borrowings to any material extent to finance
operations. Our financing requirements have been met primarily from the sale of
assets to Riverdeep in July 1999, and from a private placement financing in
February 2000 in which we received gross proceeds of $6 million, and issued 1.2
million Ordinary Shares. We expect that the proceeds from the Riverdeep
transaction and this private placement, together with our existing cash, will be
sufficient to fund the SimPlayer business for the next 18 months.
7
<PAGE>
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
8
<PAGE>
PART II.
ITEM 1. LEGAL PROCEEDINGS
SimPlayer is subject to legal proceedings and claims which arise in the
normal course of business. While the outcome of these matters cannot be
predicted with certainty, management does not believe the outcome of any of
these other legal matters will have a material adverse effect on the Company's
future financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On February 23, 2000, SimPlayer completed a financing from a group of 17,
non-US accredited investors who invested approximately $6 million in the Company
through a private placement of 1,202,500 unregistered Ordinary Shares at a price
of $5.00 per share. SimPlayer received net proceeds of approximately $5.6
million after deducting the estimated expenses and finders fee. The private
placement was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and Regulation S of such Act.
The Company has also issued warrants to a non U.S. finder in connection
with this transaction. The warrants would permit its holder to purchase, within
one year of the closing, up to 55,000 shares at a price of $6.00 per share,
35,000 shares at a price of $8.00 per share, and 30,000 shares at a price of
$10.00 per share.
SimPlayer filed a registration statement on Form F-3 with the Securities
and Exchange Commission on April 25, 2000 covering the resale of certain of its
outstanding Ordinary Shares, including shares issued in connection with the
private placement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
SimPlayer held its Annual General Meeting of Shareholders on April 24,
2000. The following actions were taken by the Company's shareholders at the
meeting:
1. Each of Michael Anghel, Yoel Givol, Jonathan Ilany, Elaine LeBlanc, Pat
McDonagh and Barry O'Callaghan were elected to the board, with 5,084,441 votes
for, and 100 votes withheld from, each of the candidates.
2. Shareholders approved the grant of options to purchase an aggregate of
390,000 Ordinary Shares of the Company to certain of the Company's current
directors and members of its management team, with 5,083,141 votes for such
grant and 1,400 against, with no abstentions.
3. Shareholders ratified the Loan Agreement by and between the Company and Yoel
Givol dated as of January 31, 2000, adopted by the Company's Board of Directors
and Audit Committee with 5,084,141 votes for such ratification and 400 against,
with no abstentions.
4. Shareholders approved certain amendments to the Company's 1995 International
Employee Stock Plan, including an amendment increasing the number of Ordinary
Shares of the Company available for issuance pursuant to that plan from
1,910,298 to 3,089,702, with 5,083,941 votes for such ratification, 400 against,
and 200 abstentions.
5. Shareholders approved and adopted the Company's 2000 Employee Stock Purchase
Plan, with 5,084,441 votes for adoption, none against, and 500 abstentions.
6. Shareholders ratified the appointment of Kost, Forer & Gabbay as the
Company's independent auditors for the year ending December 31, 2000 and
authorized the Board of Directors to fix their compensation, with 5,084,441
votes for such ratification and 100 against, with no abstentions.
7. Shareholders received, considered and approved the Auditor's Report, the
Directors' Report and the Consolidated Financial Statements of the Company for
the year ended December 31, 1999, with 5,084,541 votes for such approval and
none against, with no abstentions.
9
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1* Sublease Agreement dated as of February 2000 with ASU International,
Inc. for premises located at 91 Montvale Avenue, Stoneham,
Massachusetts.
10.2* Tenancy Agreement (Unprotected) dated January 4, 2000 with Gimzu
Nihulit Engineering Services (1994) Inc. for premises located at 2B
Mohaliver Street, Yehud, Israel.
10.3* Form of Share Purchase Agreement between SimPlayer.com Ltd. and the
several investors listed therein dated February 14, 2000 (including
Schedule 7 thereto regarding registration rights).
10.4* Forms of Warrants issued to Renanim Trading Ltd. on February 16,
2000.
27 Financial Data Schedule
* Filed on March 8, 2000 with SimPlayer's Annual Report on Form 20-F for the
year ended December 31, 1999 and incorporated herein by reference.
(b) Reports on Form 8-K
The Company believes it meets the qualifications of a foreign private
issuer as such term is defined under Rule 3b-4 of the U.S. Securities Exchange
Act of 1934, as amended. The Company has voluntarily elected to file this
Quarterly Report on Form 10-Q. Prior to such filing, the Company had complied
with the reporting requirements of Section 13 of the Exchange Act by filing
reports on Forms 20-F and/or 6-K. During the quarterly period ending March 31,
2000, the Company filed no reports on Form 8-K.
On February 10, 2000, SimPlayer filed a Report on Form 6-K disclosing
its financial results for the year and fourth quarter ended December 31, 1999.
On February 17, 2000, SimPlayer filed a Report on Form 6-K disclosing
that a group of qualified investors had agreed to invest approximately $6
million in the Company through a private placement of approximately 1.2 million
unregistered ordinary shares at a price of $5.00 per share. In the same report,
the Company also disclosed that Jonathan Ilany and Michael Anghel had joined the
Company's Board of Directors, and that Elaine LeBlanc would be serving the
Company as Executive Vice President of the Company's U.S. subsidiary,
SimPlayer.com, Inc.
On February 23, 2000, SimPlayer filed a Report on Form 6-K disclosing
that it had completed its $6 million private placement of approximately 1.2
million unregistered ordinary shares to a group of qualified investors.
On April 24, 2000, SimPlayer filed a Report on Form 6-K disclosing its
financial results for the quarter ended March 31, 2000. On the same day, the
Company also filed a Report on 6-K disclosing (1) its appointment of a new Chief
Financial Officer and (2) that the Company had relocated its U.S. offices from
Cambridge, Massachusetts to Stoneham, Massachusetts.
10
<PAGE>
SIGNATURES
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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, thereunto duly authorized.
SIMPLAYER.COM LTD.
May 15, 2000 /s/ Paula Butler
- -------------------- ------------------------
Date Paula Butler
Chief Financial Officer
(Principal Financial and Accounting
Officer)
11
<PAGE>
EXHIBIT INDEX
- -------------
Exhibit
Number Description
- ------ -----------
10.1* Sublease Agreement dated as of February 2000 with ASU International,
Inc. for premises located at 91 Montvale Avenue, Stoneham,
Massachusetts.
10.2* Tenancy Agreement (Unprotected) dated January 4, 2000 with Gimzu
Nihulit Engineering Services (1994) Inc. for premises located at 2B
Mohaliver Street, Yehud, Israel.
10.3* Form of Share Purchase Agreement between SimPlayer.com Ltd. and the
several investors listed therein dated February 14, 2000 (including
Schedule 7 thereto regarding registration rights).
10.4* Forms of Warrants issued to Renanim Trading Ltd. on February 16,
2000.
27 Financial Data Schedule
* Filed on March 8, 2000 with SimPlayer's Annual Report on Form 20-F for the
year ended December 31, 1999 and incorporated herein by reference.
12
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 8,391
<SECURITIES> 0
<RECEIVABLES> 808
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,199
<PP&E> 485
<DEPRECIATION> 266
<TOTAL-ASSETS> 9,948
<CURRENT-LIABILITIES> 1,469
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,384
<TOTAL-LIABILITY-AND-EQUITY> 9,948
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,351
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 105
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,246)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
