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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 JUNE 30, 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
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2 MOHALIVER STREET, YEHOOD, ISRAEL 56207
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (781) 743-2100
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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
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The number of shares outstanding of the registrant's Ordinary Shares, NIS 0.01
Par Value, as of August 9, 2000, was 9,079,505 shares.
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SIMPLAYER.COM LTD.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements..............................................3
Consolidated Balance Sheets at June 30, 2000 (unaudited)
and December 31, 1999..........................................3
Consolidated Statements of Operations (unaudited) for the
three and six months ended June 30, 2000 and 1999............. 4
Notes to Consolidated Financial Statements (unaudited)............5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................7
Item 3. Quantitative and Qualitative Disclosures about Market Risk........8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders...............9
Item 5. Other Information.................................................9
Item 6. Exhibits and Reports on Form 8-K.................................10
Signatures...............................................................12
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PART I.
ITEM 1. FINANCIAL STATEMENTS
SIMPLAYER.COM LTD.
CONSOLIDATED BALANCE SHEETS
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U.S. DOLLARS IN THOUSANDS
JUNE 30, MARCH 31, DECEMBER 31,
2000 2000 1999
-------- -------- -------
UNAUDITED AUDITED
--------------------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,349 $ 8,391 $ 4,199
Other receivables 526 808 99
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Total current assets 6,875 9,199 4,298
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SEVERANCE PAY FUND 67 61 99
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FIXED ASSETS:
Cost 762 485 322
Less - accumulated depreciation 298 266 255
-------- -------- --------
464 219 67
-------- -------- --------
LONG TERM RECEIVABLE 484 469 --
-------- -------- --------
Total assets $ 7,890 $ 9,948 $ 4,464
======== ======== ========
The accompanying notes are an integral part of the financial statements.
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SIMPLAYER.COM LTD.
CONSOLIDATED BALANCE SHEETS
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U.S. DOLLARS IN THOUSANDS
<TABLE><CAPTION>
JUNE 30, MARCH 31, DECEMBER 31,
2000 2000 1999
-------- -------- --------
UNAUDITED AUDITED
-------------------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C> <C>
Trade payables $ 429 $ 61 $ 172
Accrued expenses and other liabilities 985 1,408 671
-------- -------- --------
Total current liabilities 1,414 1,469 843
-------- -------- --------
LONG-TERM LIABILITIES:
Accrued severance pay 85 76 133
Accrued other liabilities -- 19 37
-------- -------- --------
Total long-term liabilities 85 95 170
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SHAREHOLDERS' EQUITY:
Share capital 29 29 21
Additional paid-in capital 24,985 24,751 18,580
Deferred compensation on issuance of stock options
to employees (177) -- --
Accumulated deficit (18,446) (16,396) (15,150)
-------- -------- --------
Total shareholders' equity 6,391 8,384 3,451
-------- -------- --------
Total liabilities and shareholders' equity $ 7,890 $ 9,948 $ 4,464
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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SIMPLAYER.COM LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
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U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA
<TABLE>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30, YEAR ENDED
-------------------- -------------------- DECEMBER 31,
2000 1999 2000 1999 1999
------- ------- ------- -------- -------
UNAUDITED UNAUDITED AUDITED
-------------------- -------------------- -------
<S> <C> <C> <C> <C> <C>
Development fees $ 0 $ 0 $ 0 $ 0 $ 500
Cost of development fees 0 0 0 0 103
------- ------- ------- ------- -------
Gross profit 0 0 0 0 397
------- ------- ------- ------- -------
Operating expenses:
Research and development
costs, net 1,980 366 1,268 183 947
Marketing and selling expenses 785 71 382 36 382
General and administrative
expenses 746 96 510 48 560
------- ------- ------- ------- -------
Operating loss (3,511) (533) (2,160) (267) (1,492)
Financial income, net 206 54 105 17 129
Other income (expenses) 10 13 6 1 29
------- ------- ------- ------- -------
Loss from Continuing operations $(3,295) $ (466) $(2,049) $ (249) $(1,334)
------- ------- ------- ------- -------
Discontinued operations :
Loss from Discontinued operation of
segment -- (2,119) -- (965) (2,607)
Income on disposal of segment -- -- -- -- 4,342
------- ------- ------- ------- -------
Net Income (loss) $(3,295) $(2,585) $(2,049) $(1,214) $ 401
======= ======= ======= ======= =======
Basic and diluted loss per share :
From continuing operations $ (0.40) $ (0.08) $ (0.23) $ (0.04) $ (0.23)
From discontinuing operations $ -- $ (0.36) $ -- $ (0.17) $ 0.30
------- ------- ------- ------- -------
Basic and diluted loss per share $ (0.40) $ (0.44) $ (0.23) $ (0.21) $ 0.07
======= ======= ======= ======= =======
Weighted average number of
shares outstanding 8,300 5,827 9,032 5,834 5,930
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
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1) Interim Financial Statements
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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 and six months ended June 30, 2000
are not necessarily indicative of the results to be expected for the full year.
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PART I.
ITEM 2. MANAGEMENT'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. THE
COMPANY'S 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; SUCCESSFUL
DEVELOPMENT AND ENHANCEMENT OF SIMPLAYER PRODUCTS; DEMAND FOR AND MARKET
ACCEPTANCE OF SIMPLAYER PRODUCTS; AVAILABILITY OF FUNDS FOR THE CONTINUED
FINANCING OF THE COMPANY'S OPERATIONS AND DEVELOPMENT ACTIVITIES; AND THE HIGHLY
COMPETITIVE NATURE OF THE COMPANY'S MARKETS. FURTHER INFORMATION ON POTENTIAL
FACTORS THAT COULD AFFECT SIMPLAYER'S FINANCIAL RESULTS ARE INCLUDED IN THE
COMPANY'S 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 SIMPLAYER'S ANNUAL REPORT ON FORM 20-F FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1999 (FILE NO. 0-27946).
RESULTS OF OPERATIONS
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The consolidated financial statements of SimPlayer.com Ltd. reported $6.3
million in cash and $7.9 million in total assets at June 30, 2000. Shareholders
equity totaled $6.4 million at June 30, 2000. The significant increase in the
Company's cash and equity position from year end 1999 resulted from a $6 million
private placement that closed in February 2000.
For the three months ended June 30, 2000, SimPlayer.com Ltd. had a net loss of
$2 million or $0.23 per share on a basic and diluted basis. This compares to a
net loss of $1.2 million for the three months ended March 31, 2000. Operating
expenses increased from $1.4 million in the first quarter 2000 to $2.2 million
in the second quarter 2000 due to the hiring of additional programming staff and
management personnel. Interest income of $105,000 was slightly higher than the
$101,000 earned during the first three months of 2000. The net loss for the six
months ended June 30, 2000 was $3.3 million or $0.40 per share on a basic and
diluted basis, which bettered the Company's budget expectations. No revenues
were posted for the period.
The weighted average number of shares outstanding at June 30, 2000 was 9,032,000
and 8,300,000 for the six months ending June 30, 2000. Actual number of shares
outstanding at June 30, 2000 was 9,073,317 as compared to 9,026,772 outstanding
at March 31, 2000.
The Company believes that comparisons with results from 1999 are not meaningful
as SimPlayer was then operating an educational software business, which was sold
in July of last year.
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LIQUIDITY AND CAPITAL RESOURCES
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As of June 30, 2000, the Company had $6.3 million in cash, cash equivalents,
marketable securities, and bank deposits. Accounts receivable decreased from
$0.8 million on March 31, 2000 to $0.5 million on June 30, 2000. As of June 30,
2000, working capital totaled $5.5 million compared to $7.7 million as of March
31, 2000 and $3.45 million as of December 31, 1999. The Company has not utilized
borrowings to finance operations. Financing requirements have been met primarily
from the sale of assets of the Company's educational software business to
Riverdeep Interactive Learning in July 1999, and from a private placement
financing in February 2000, in which the Company received gross proceeds of $6
million, and issued 1.2 million Ordinary Shares. In order to continue its
current rate of growth and operations, the Company will need to raise additional
funds by the end of the first quarter 2001.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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PART II.
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 R. LeBlanc,
Patrick 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.
ITEM 5. OTHER INFORMATION
The Company has developed a proprietary technology - SimPlayer(TM) - that can
operate as an e-marketing platform by integrating dynamic sports content,
fantasy/gaming and community products with unique marketing and sponsorship
applications. The Company's strategy is not to be a destination site, but to
position itself as a provider of applications and underlying technology to
sports web sites and sites with sports content. The Company is developing its
distribution network for the sports media market including portals, ISPs, media,
fantasy teams, sports news sites, leagues and teams. During the
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second quarter, SimPlayer entered into arrangements to provide its applications
to My Way.com, NewEnglandPatriots.com, Boston.com, BoadcastAmerica.com,
Sandbox.com and SportsTALK.com. The Company's business development team is
actively negotiating with additional sites to further expand its partner
network.
In April, SimPlayer released its first product, a series of interactive
applications for baseball. The Company is leveraging its modular technology
architecture to rapidly develop additional sports applications. This year, the
Company's development team expects to release applications for football,
basketball, hockey and soccer. In April, SimPlayer announced a strategic
partnership with the New England Patriots to co-develop a specialized pre-game
analyzing tool for the 2000 NFL football season. This is the first data-driven
prediction application in a series of applications that the Company is
developing as part of its fantasy/gaming offerings. The Company's product
development efforts in the second quarter continued on interactive television
and wireless devices, as well as enhancements to SimPlayer applications for
polling, chat, games and video.
The SimPlayer technology allows unique marketing applications and sponsorship
and advertising opportunities to be woven into the context of its applications
on an event-driven basis. Millsport, a leading sports marketing agency that
represents major sponsors including Pepsi, GTE and ExxonMobil, and has
relationships with professional sport properties, was engaged to help the
Company monetize its technology's unique capabilities for contextual points of
sale and sponsorship. Millsport will assist the Company in structuring
sponsorship and marketing programs and in developing strategic relationships
with sports properties and broadcasters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Lease Agreement dated as of June 2000 with New Boston
Montvale Limited Partnership for premises located at 91
Montvale Avenue, Stoneham, Massachusetts.
10.2* Master Strategic Relationship Agreement dated as of May 25, 2000
between New England Patriots L.P. and SimPlayer Sports, Inc.
27 Financial Data Schedule
* Filed on June 1, 2000 as Exhibit 10.1 to the Company's Current Report on Form
8-K 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
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Company has voluntarily elected to file this Quarterly Report on Form 10-Q.
On April 24, 2000, the Company 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 Form 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.
On June 1, 2000, the Company filed a Current Report on Form 8-K disclosing the
execution by SimPlayer Sports, Inc., a wholly-owned subsidiary of the Company,
of a Master Strategic Relationship with New England Patriots L.P.
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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, thereunto duly authorized.
SIMPLAYER.COM LTD.
August 14, 2000 /s/ Paula S. Butler
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Date Paula S. Butler
Chief Financial Officer and Vice
President of Finance
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
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Exhibit
Number Description
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10.1 Lease Agreement dated as of June 2000 with New Boston
Montvale Limited Partnership for premises located at 91
Montvale Avenue, Stoneham, Massachusetts.
10.2* Master Strategic Relationship Agreement dated as of May 25,
2000 between New England Patriots L.P. and SimPlayer Sports, Inc.
27 Financial Data Schedule
* Filed on June 1, 2000 as Exhibit 10.1 to the Company's Current Report on Form
8-K and incorporated herein by reference.
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