<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 2000
[_] 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: 0-16454
CIMETRIX INCORPORATED
(Exact name of registrant as specified in its charter)
Nevada 87-0439107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6979 South High Tech Drive, Salt Lake City, Utah 84047-3757
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (801) 256-6500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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 [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the registrant's common
stock as of August 11, 2000: Common stock, par value $.0001 - 24,841,690.
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CIMETRIX INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
PART I Financial Information
Item 1. Financial Statements
a) Condensed Statements of Operations.................................1
b) Balance Sheets.....................................................2
c) Statements of Cash Flows...........................................3
d) Notes to Financial Statements......................................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................5
PART II Other Information
Item 1. Legal Proceedings.....................................................9
Item 2. Changes in Securities.................................................9
Item 3. Defaults Upon Senior Securities.......................................9
Item 4. Submission of Matters to a Vote of Security Holders..................10
Item 5. Other Information....................................................10
Item 6. Exhibits and Reports on Form 8-K.....................................10
Signature.....................................................................11
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CIMETRIX INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
----- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 1,587 $ 934 $ 2,345 $ 1,954
---------- ---------- ------------- -------------
OPERATING EXPENSES
Cost of sales 37 16 71 31
Selling, marketing and customer support 275 189 504 381
Research and development 435 366 935 740
General and administrative 419 299 827 599
---------- ---------- ------------- -------------
Total operating expenses 1,166 870 2,337 1,751
---------- ---------- ------------- -------------
INCOME (LOSS) FROM OPERATIONS 421 64 8 203
---------- ---------- ------------- -------------
OTHER INCOME (EXPENSES)
Interest income 58 15 77 32
Interest expense (67) (67) (134) (136)
----------- ----------- -------------- --------------
Total other income (expense) (9) (52) (57) (104)
----------- ----------- -------------- --------------
INCOME(LOSS) BEFORE INCOME TAXES 412 12 (49) 99
CURRENT INCOME TAX EXPENSE
(BENEFIT) - - - -
NET INCOME (LOSS) $ 412 $ 12 $ (49) $ 99
========== ========== ============== =============
BASIC AND DILUTED INCOME (LOSS)
PER COMMON SHARE $ .02 $ .00 $ .00 $ .00
=== === === ===
WEIGHTED AVERAGE SHARES
OUTSTANDING, BASIC AND DILUTED 24,796,000 21,218,000 23,778,000 21,957,000
========== ========== ========== ==========
</TABLE>
See notes to condensed financial statements
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CIMETRIX INCORPORATED
CONDENSED BALANCE SHEETS
(In thousands, except share amounts)
ASSETS
June 30, December 31,
2000 1999
------------ -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 4,043 $ 1,042
Accounts receivable, net 1,682 1,440
Inventories 167 102
Prepaid expenses and other current assets 433 6
--- -
Total current assets 6,325 2,590
Property and equipment, net 280 340
Capitalized software costs, net 72 119
Technology, net 5,884 6,149
Investment in affiliate, net 522 132
Other assets 117 44
--- --
$ 13,200 $ 9,374
====== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 184 $ 170
Accrued expenses 163 643
Customer deposits 128 70
--- --
Total current liabilities 475 883
LONG TERM DEBT, net of current portion 2,681 2,681
----- -----
Total Liabilities 3,156 3,564
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value: 100,000,000 shares
Authorized; 24,841,690 and 23,125,690 shares issued
and outstanding, respectively 3 2
Additional paid-in capital 29,092 24,810
Treasury stock, at cost (1) (1)
Accumulated deficit (19,050) (19,001)
-------- --------
Net Stockholders' Equity 10,044 5,810
------ -----
$ 13,200 $ 9,374
====== =====
See notes to condensed financial statements
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<TABLE>
<CAPTION>
CIMETRIX INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2000 1999
---- ----
Cash Flows to Operating Activities:
<S> <C> <C>
Net Income (Loss) $ (49) $ 99
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Amortization and depreciation 412 169
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (272) (284)
(Increase) decrease in inventory (65) (45)
(Increase) decrease in prepaid expenses 15 18
(Increase) decrease in other assets (11) -
Increase (decrease) in accounts payable 14 (19)
Increase (decrease) in accrued expenses (480) 65
Increase (decrease) in customer deposits 58 101
------------ ------------
Net Cash Flow Provided by (Used in)
Operating Activities (378) 104
------------ -------------
Cash Flows to Investing Activities:
Purchase of property and equipment, net of retirements (10) (12)
Investment in affiliates (478) -
Principal advances on note receivable (416) -
Net Cash Flow Used in Investing Activities (904) (12)
----- ----
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 4,283 --
Sale (purchase) of Treasury stock -- (351)
Retirement of long-term debt -- (10)
------------ -------------
(361)
Net Cash Flow Provided by (Used in)
Financing Activities 4,283 (361)
------------ -------------
Net Increase (Decrease) in Cash and Cash Equivalents 3,001 (269)
Cash and Cash Equivalents at the Beginning of Period 1,042 1,645
Cash and Cash Equivalents at the End of Period 4,043 1,376
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 135 $ 136
Income taxes $ -- $ --
Supplemental Schedule of Noncash Investing and Financing
Activities:
During the six months ended June 30, 2000, the Company $ 30,000 $ --
acquired equipment in satisfaction of accounts receivable
</TABLE>
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CIMETRIX INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying unaudited condensed financial
statements of Cimetrix Incorporated have been prepared in accordance with
the Securities and Exchange Commission's instructions to Form 10-Q and,
therefore, omit or condense footnotes and certain other information
normally included in financial statements prepared in accordance with
generally accepted accounting principles. The accounting policies followed
for quarterly financial reporting conform with generally accepted
accounting policies disclosed in Note 1 to the Notes to Financial
Statements included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. In the opinion of management, all adjustments
of a normal recurring nature that are necessary for a fair presentation of
the financial information for the interim periods reported have been made.
The results of operations for the six month period ended June 30, 2000 are
not necessarily indicative of the results that can be expected for the
entire year ending December 31, 2000. The unaudited condensed financial
statements should be read in conjunction with the financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
NOTE 2 - STOCK OPTIONS AND WARRANTS
As of August 11, 2000, there were issued and outstanding, options for
the purchase of 1,470,000 shares of the Company's common stock, under the
Company's 1998 Stock Option Plan. The following table summarizes the
quantity and exercise price of the options.
Option Price Quantity
$2.50 820,000
$3.00 400,000
$3.50 250,000
-------
Total Options 1,470,000
Approximately 705,000 of these outstanding options are registered for
resale, pursuant to a Form S-3 Registration Statement, which became
effective December 9, 1998. A total of 2,000,000 shares of common stock
have been reserved for issuance under the plan. These options will begin to
expire in December 2002, and continue to expire through July 2005.
As of August 11, 2000, there were issued and outstanding, options for
the purchase of 378,000 shares of the Company's common stock, under the
Company's Director Stock Option Plan. Of these options, 258,000 are
exercisable at $2.50 per share, and 120,000 are exercisable at $3.50 per
share. Approximately 162,000 of these options are registered for resale,
pursuant to the Form S-3 Registration Statement discussed earlier in this
section. These options will begin to expire in January 2003, and continue
to expire through July 2004.
As of August 11, 2000, there were $2,681,000 of the Company's Senior
Notes issued and outstanding, held by 52 bondholders. The Senior Notes are
due and payable September 30, 2002. There were also 3,306 warrants issued
with the Senior Notes, all of which are outstanding, held by 52 warrant
holders. The number of potential shares represented by these outstanding
warrants is 826,500, or 250 shares for each warrant. The exercise price for
the warrants is $2.50 per share, with the warrants expiring October 1,
2002. On December 9, 1998, the underlying shares from the outstanding
warrants were registered for resale pursuant to the Form S-3 Registration
Statement discussed earlier in this section.
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NOTE 3 - COMMON STOCK
On August 11, 2000, the closing quotation for the Company's common
stock on the NASDAQ Bulletin Board was $3.22 per share. Potential investors
should be aware that the price of the common stock in the trading market
can change dramatically over short periods as a result of factors unrelated
to the earnings and business activities of the Company.
On August 11, 2000, there were 24,841,690 shares of common stock
issued and outstanding,held by approximately 3,000 beneficial shareholders.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Following is a brief discussion and explanation of significant
financial data, which is presented to help the reader better understand the
results of the Company's financial performance for the second quarter of 2000.
The information includes discussions of sales, expenses, capital resources and
other significant items. Generally the information is presented in a two-year
comparison format using the second quarter data of 2000 and 1999.
Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the Company's Condensed
Financial Statements and Notes thereto included elsewhere in this Quarterly
Report. The ensuing discussion and analysis contains both statements of
historical fact and forward-looking statements. Forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, generally are
identified by the words "expects," "believes" and "anticipates" or words of
similar import. Examples of forward-looking statements include: (a) projections
regarding sales, revenue, liquidity, capital expenditures and other financial
items; (b) statements of the plans, beliefs and objectives of the Company or its
management; (c) statements of future economic performance, and (d) assumptions
underlying statements regarding the Company or its business. Forward-looking
statements are subject to certain factors and uncertainties that could cause
actual results to differ materially from the forward-looking statements,
including, but not limited to, those factors and uncertainties described below
under "Liquidity and Capital Resources" and "Factors Affecting Future Results."
Overview
The Company is the developer of the world's first open
architecture, standards-based, personal computer (PC) software for
controlling machine tools, industrial robots and industrial automation
equipment that operates on the factory floor. The Cimetrix Open Development
Environment (CODE(TM)) software products are based on standard computer
platforms using Microsoft Windows NT operating system. Cimetrix believes
that manufacturing companies will increasingly demand open architecture,
PC-based controllers on the equipment they purchase, transforming the
worldwide controller market from proprietary solutions to open
architecture, PC-based solutions.
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<TABLE>
<CAPTION>
The following table sets forth the percentage of costs and
expenses to net revenues derived from the Company's Condensed Statements of
Operations for the three and six months ended June 30, 2000 and 1999:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES 100% 100% 100% 100%
---- ---- ---- ----
OPERATING EXPENSES
Cost of sales 2 2 3 2
Selling, marketing and customer support 17 20 21 19
Research and development 28 39 40 38
General and administrative 26 32 35 31
---------- ---------- ------------ ------------
Total operating expenses 73 93 99 90
---------- ---------- ------------ ------------
INCOME (LOSS) FROM OPERATIONS 27 7 1 10
Interest income 4 1 3 2
Interest expense (5) (7) (6) (7)
----------- ----------- ------------- -------------
NET INCOME (LOSS) 26% 1% (2)% 5%
------------ ----------- ------------- -------------
</TABLE>
Results of Operations
Three and Six Months Ended June 30, 2000 Compared to Three and Six Months Ended
June 30, 1999
Net Sales
Net sales increased by $653,000, or 70%, to $1,587,000 for the three
months ended June 30, 2000 from $934,000 for the three months ended June 30,
1999. Net sales for the three months ended June 30, 2000 consisted of sales of
software (83%), engineering services (9%), and support and training (8%). Net
sales for the same period in 1999 consisted of sales of software (80%),
engineering services (5%), and support and training (15%). The increase in
overall sales is a result of an increase in software sales.
Net sales increased by $391,000, or 20%, to $2,345,000 for the six
months ended June 30, 2000 from $1,954,000 for the six months ended June 30,
1999. Net sales for the six months ended June 30, 2000 consisted of sales of
software (73%), engineering services (16%), and support and training (11%). Net
sales for six months ended June 30, 1999, consisted of sales of software (80%),
engineering services (7%), and support and training (13%). The increase is
primarily due to an increase in software and services revenues.
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<PAGE>
Major Customers
Sales to major customers that exceeded 10 percent of net sales are approximately
as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
Company A * 145 * 324
Company B * 116 * 261
Company C 52 * 37 *
Company D * 435 * 867
* Less than 10 percent for the period
Cost of Sales
Cost of sales increased by $21,000, or 131%, to $37,000 for the three
months ended June 30, 2000 from $16,000 for the comparable period in 1999. Cost
of sales increased by $40,000, or 129%, to $71,000 for the six months ended June
30, 2000 from $31,000 for the comparable period in 1999. This increase is
attributable to cost of sales related to the sale of engineering services. As
service revenue increases, related cost of sales increase.
Selling, Marketing and Customer Support
Selling, marketing and customer support costs increased by $86,000, or
46%, to $275,000 for the three months ended June 30, 2000 from $189,000 for the
comparable period in 1999. Selling, marketing and customer support costs
increased by $123,000, or 32%, to $504,000 for the six months ended June 30,
2000 from $381,000 for the comparable period in 1999. These increases are due to
the addition of sales personnel to cover new areas in Europe and in the
Semiconductor market place. The European market place is expected to yield
additional motion control software sales, while the Semiconductor market place
is expected to yield additional communications software sales.
Research and Development
Research and development expenses increased by $69,000, or 19%, to
$435,000 for the three months ended June 30, 2000 from $366,000 for the
comparable period in 1999. Research and development expenses increased by
$195,000, or 26%, to $935,000 for the six months ended June 30, 2000 from
$740,000 for the comparable period in 1999. These increases are due to the
increased personnel costs associated with the newly acquired IEC 1131 and GEM
software products that were purchased in the fourth quarter of 1999. These costs
are expected to remain at their present levels throughout the remainder of 2000.
The Company will continue to make significant investments in research and
development and expects to incur research and development expenses of
approximately $2.0 million during 2000. Research and development expenses
include only direct costs for wages, benefits, materials and education of
technical personnel. All indirect costs such as rents, utilities, depreciation
and amortization are reflected in general and administrative costs.
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<PAGE>
General and Administrative
General and administrative expenses increased by $120,000, or 40%, to
$419,000 for the three months ended June 30, 2000 from $299,000 for the
comparable period in 1999. General and administrative expenses increased by
$228,000, or 38%, to $827,000 for the six months ended June 30, 2000 from
$599,000 for the comparable period in 1999. These increases are due to the
increase in amortization expense.
General and administrative expenses include all direct costs for
administrative and accounting personnel, all rents and utilities for maintaining
company offices. These costs also include all indirect costs such as
depreciation of fixed assets and amortization of intangible assets, such as
capitalized software and technology. Amortization and depreciation expense for
the three months ended June 30, 2000, was $209,000, or 50% of all general and
administrative expenses, compared to $70,000, or 20%, for the same period in
1999. Amortization expense increased due to the addition of approximately
$6,000,000 in intangible technology assets, being amortized over a 12 year
period, resulting in an additional $500,000 of expense annually. All other
general and administrative costs declined compared to the prior year.
Other Income (expenses)
Interest income increased by $43,000, or 287% to $58,000 for the three
months ended June 30, 2000, from $15,000 for the comparable period in 1999.
Interest income increased by $45,000, or 141% to $77,000 for the six months
ended June 30, 2000, from $32,000 for the comparable period in 1999. Improved
operating results have allowed the Company to maintain a cash reserve. In
additional the Company raised an additional $4,250,000 in a private placement.
Cash reserves are invested in conservative money market fund accounts.
Interest expense remained constant at $67,000 for the three months
ended June 30, 2000, compared to the same period in 1999. Interest expense
decreased by $2,000, or 1%, to $134,000 for the six months ended June 30, 2000
from $136,000 for the comparable period in 1999. This decrease was attributable
to the retirement of a small portion of the Company's 10% Senior Notes.
Liquidity and Capital Resources
The Company had approximately $5.85 million of working capital at June
30, 2000, compared with approximately $1.71 million at December 31, 1999. This
increase was a result of the sale of 1,700,000 shares of the Company's common
stock in a Private Placement in the first quarter of 2000.
Cash used in investing activities for the period ended June 30, 2000
was $904,000 compared with $12,000 for the same period in 1999. Investment in
affiliates and advances on notes receivable accounted for the increase in the
current period. Cash provided by financing activities for the period ended June
30, 2000, was $4,283,000, compared to cash used in financing activities of
$361,000 for the same period in 1999. This increase is a result of the sale of
common stock discussed earlier in this section.
The Company's future liquidity will continue to be dependent on the
Company's operating cash flow and management of trade receivables. Management
believes that the Company's existing working capital is sufficient to maintain
its current and foreseeable levels of operations. Management also believes that
the Company has sufficient funds to meet its capital expenditure requirements
for 2000. The Company anticipates that capital expenditures for fiscal year
2000, primarily for computer equipment and software, will be approximately
$75,000, compared to $25,000 for 1999.
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Quantitative and Qualitative Disclosures about Market Risk
The Company has no activities in derivative financial or commodity
instruments. The Company's exposure to market risks, (i.e. interest rate risk,
foreign currency exchange rate risk, equity price risk) through other financial
instruments, including cash equivalents, accounts receivable, lines of credit,
is not material.
Factors Affecting Future Results
The Company's future operating results and financial condition are
difficult to predict and will be affected by a number of factors. The markets
for the Company's products are emerging and specialized, and the Company's
technology has been commercially available for a relatively short time.
Accordingly, the Company has limited experience with the commercial use and
acceptance of its products and the extent of the modifications, adaptations and
custom applications that are required to integrate its products and satisfy
customer performance requirements. There can be no assurance that the emerging
markets for industrial motion control that are served by the Company will
continue to grow or that the Company's existing and new products will satisfy
the requirements of those markets and achieve a successful level of customer
acceptance. Because of this, the Company continues to devote significant
research and development resources to improve its existing products and to the
development of new products.
Because of these and other factors, past financial performance is not
necessarily indicative of future performance, historical trends should not be
used to anticipate future operating results, and the trading price of the
Company's common stock may be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results and market conditions.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on May 20,
2000 with proxies for the meeting solicited by the Company's Board of Directors,
pursuant to Regulation 14A under the Securities and Exchange Act of 1934. The
matters voted on at the meeting were as follows: the election of directors.
There was not any proxy solicitation in opposition to management's proposals or
nominees for election as directors.
The proposal was approved and adopted by the margins indicated below:
1. To elect five directors to the Company's Board of Directors to serve for
one-year terms.
Number of Shares
For Against Withheld
Paul A. Bilzerian 18,171,242 1,200,000 22,180
Dr. Lowell K. Anderson 18,078,042 1,200,000 115,380
Dr. Ron Lumia 18,188,342 1,200,000 5,080
Randall A. Mackey 18,188,342 1,200,000 5,080
Bill Van Drunen 18,188,342 1,200,000 5,080
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended
June 30, 2000.
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SIGNATURE
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.
REGISTRANT
CIMETRIX INCORPORATED
Dated: August 14, 2000 By: /s/ Riley G. Astill
-----------------------
RILEY G. ASTILL
Vice President of Finance
and Chief Financial Officer
(Principal Financial and Accounting Officer)
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