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
Commission File Number: 0-220-20
CASTELLE
(Exact name of Registrant as specified in its charter)
California 77-0164056
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3255-3 Scott Boulevard, Santa Clara, California 95054
(Address of principal executive offices, including zip code)
(408) 496-0474
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK,
NO PAR VALUE
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 of the Registrant's Common Stock outstanding as of August
6, 2000 was 4,741,060.
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CASTELLE
Form 10-Q
Table of Contents
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements:
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Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Quantitative and Qualitative Disclosure about Market Risk 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit 27.1 - Financial Data Schedule E-1
Exhibit 99.1 - Press Release dated July 27, 2000 E-2
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1
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Part I - Financial Information
Item 1. Financial Statements
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CASTELLE AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
June 30, 2000 December 31, 1999
(unaudited) (audited)
---------------------- ---------------------
Assets:
Current assets:
<S> <C> <C>
Cash and cash equivalents $4,636 $4,714
Restricted cash 125 125
Accounts receivable, net of allowances for doubtful
accounts of $268 in 2000 and $493 in 1999 1,914 1,525
Inventories, net 1,426 1,411
Prepaid expense and other current assets 165 262
---------------------- ---------------------
Total current assets 8,266 8,037
Property, plant & equipment, net 311 387
Other assets, net 70 78
---------------------- ---------------------
Total assets $8,647 $8,502
====================== =====================
Liabilities & Shareholders' Equity:
Current liabilities:
Long-term debt, current $ 39 $ 98
Accounts payable 1,228 1,336
Accrued liabilities 2,932 3,048
---------------------- ---------------------
Total current liabilities 4,199 4,482
---------------------- ---------------------
Total liabilities 4,199 4,482
---------------------- ---------------------
Shareholders' equity:
Common stock, no par value:
Authorized: 25,000 shares
Issued and outstanding: 4,740 and 4,641, respectively 29,025 29,002
Deferred compensation (41) (67)
Accumulated deficit (24,536) (24,915)
---------------------- ---------------------
Total shareholders' equity 4,448 4,020
---------------------- ---------------------
Total liabilities & shareholders' equity $8,647 $8,502
====================== =====================
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See accompanying notes to condensed consolidated financial statements.
2
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CASTELLE AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended Six months ended
................................. .................................
June 30, 2000 July 2, 1999 June 30, 2000 July 2, 1999
---------------- --------------- --------------- ----------------
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Net sales $ 3,760 $ 3,738 $ 7,860 $ 8,206
Cost of sales 1,308 1,753 2,957 4,602
---------------- --------------- --------------- ----------------
Gross profit 2,452 1,985 4,903 3,604
---------------- --------------- --------------- ----------------
Operating expenses:
Research and development 489 948 994 1,632
Sales and marketing 1,332 2,005 2,644 3,859
General and administrative 416 494 882 953
Amortization of intangible assets -- -- -- 40
---------------- --------------- --------------- ----------------
Total operating expenses 2,237 3,447 4,520 6,484
---------------- --------------- ---------------- ----------------
Income (loss) from operations 215 (1,462) 383 (2,880)
Interest income, net 45 25 52 55
Other expense (49) (23) (49) (46)
---------------- --------------- --------------- ----------------
Income (loss) before provision for income taxes 211 (1,460) 386 (2,871)
Provision for income taxes -- -- 6 --
---------------- --------------- --------------- ----------------
Net income (loss) $ 211 $(1,460) $ 380 $(2,871)
================ =============== =============== ================
Earnings per share:
Net income (loss) per common share - basic $ 0.04 $ (0.31) $ 0.08 $ (0.64)
Shares used in per share calculation - basic 4,732 4,663 4,696 4,499
Net income (loss) per common share - diluted
$ 0.04 $ (0.31) $ 0.07 $ (0.64)
Shares used in per share calculation - 5,077 4,663 5,189 4,499
diluted
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See accompanying notes to condensed consolidated financial statements.
3
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CASTELLE AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six months ended
......................................
June 30, 2000 July 2, 1999
----------------- ------------------
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Cash flows from operating activities:
Net Income (Loss) $ 380 $ (2,871)
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Loss on disposal of fixed assets -- 37
Depreciation and amortization 164 276
Provision for doubtful accounts and sales returns 166 (1,149)
Provision for excess and obsolete inventory (21) 1,146
Compensation expense related to grant of stock options 26 26
Changes in assets and liabilities:
Accounts receivable (555) 2,380
Inventory 6 415
Prepaid expenses and other current assets 97 93
Accounts payable (108) (340)
Accrued liabilities (116) 214
----------------- ------------------
Net cash provided by operating activities 39 227
----------------- ------------------
Cash flows from investing activities:
Purchase of property and equipment (89) (115)
Increase (decrease) in other assets 8 (33)
----------------- ------------------
Net cash (used in) investing activities (81) (148)
----------------- ------------------
Cash flows from financing activities:
Repayment of notes payable (59) (48)
Proceeds from collection of notes receivable for stock -- 11
Proceeds from issuances of common stock, net of
repurchases 23 2
----------------- ------------------
Net cash (used in) financing activities (35)
(36)
----------------- ------------------
Net increase (decrease) in cash and cash equivalents (78) 44
Cash and cash equivalents at beginning of period 4,714 3,924
----------------- ------------------
Cash and cash equivalents at end of period $4,636 $ 3,968
================= ==================
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See accompanying notes to condensed consolidated financial statements.
4
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CASTELLE AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation:
The accompanying unaudited consolidated financial statements include the
accounts of Castelle and its wholly owned subsidiaries in the United
Kingdom and the Netherlands, and have been prepared in accordance with
generally accepted accounting principles. All intercompany balances and
transactions have been eliminated. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation of the Company's financial position,
results of operations and cash flows at the dates and for the periods
indicated have been included. The result of operationS for the interim
period presented is not necessarily indicative of the results for the year
ending December 31, 2000. Because all of the disclosures required by
generally accepted accounting principles are not included in the
accompanying consolidated financial statements and related notes, they
should be read in conjunction with the audited consolidated financial
statements and related notes included in the Company's Form 10-K for the
fiscal year-ended December 31, 1999. The year ended condensed balance
sheet data was derived from our audited financial statements and does not
include all of the disclosures required by generally accepted accounting
principles. The income statements for the periods presented are not
necessarily indicative of results that we expect for any future period, nor
for the entire year.
2. Net Income/(Loss) Per Share
Basic net income/(loss) per share is computed by dividing net income/(loss)
available to common shareholders by the weighted average number of common
shares outstanding for that period. Diluted net income/(loss) per share
reflects the potential dilution from the exercise or conversion of other
securities into common stock that were outstanding during the period.
Shares that are potentially dilutive consist of incremental common shares
issuable upon exercise of stock options and warrants. In March 2000,
warrants to purchase 133,332 shares of common stock were exercised
whereby the holders of these warrants, netted, in cash-less exchanges,
68,997 shares of common stock.There are warrants to purchase 100,000 shares
of common stock outstanding, which have a strike price of $8.40 and
expire in December 2000. These warrants are not included in the diluted
share calculation.
5
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Basic and diluted earnings per share are calculated as follows for the
second quarter and first six months of 2000 and 1999:
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(in thousands, except per share amounts)
......................................................
Three months ended Six months ended
.......................... ..........................
June 30, July 2, June 30, July 2,
2000 1999 2000 1999
-------------------------- --------------------------
Basic:
<S> <C> <C> <C> <C>
Weighted average common shares outstanding 4,732 4,663 4,696 4,499
=========================== ==========================
Net income/(loss) $ 211 $ (1,460) $ 380 $ (2,871)
=========================== ==========================
Net income/(loss) per common share - basic $0.04 $ (0.31) $0.08 $ (0.64)
=========================== ==========================
Diluted:
Weighted average common shares outstanding 4,732 4,663 4,696 4,499
Common equivalent shares from stock options
and warrants 345 -- 493 --
--------------------------- --------------------------
Shares used in per share calculation - diluted 5,077 4,663 5,189 4,499
=========================== ==========================
Net income/(loss) $ 211 $ (1,460) $ 380 $ (2,871)
=========================== ==========================
Net income/(loss) per common share - diluted $0.04 $ (0.31) $0.07 $ (0.64)
=========================== ==========================
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The calculation of diluted shares outstanding for the three months ended July 2,
1999 excludes 27,201 stock options to purchase the Company's common stock, as
their effect was antidilutive in the period. The calculation of diluted shares
outstanding for the six months ended July 2, 1999 excludes 21,967 stock options
to purchase the Company's common stock, as their effect was antidilutive in
the period. At June 30, 2000 warrants to purchase 100,000 shares of the
Company's common stock were excluded, because their exercise price is greater
than the average common stock market price for the period.
3. Inventory:
Inventory is stated at the lower of standard cost (which approximates cost
on a first-in, first-out basis) or market. Inventory details are as follows
(in thousands):
June 30, December 31,
2000 1999
---------------------------------
Raw material $ 280 $ 136
Work in process 223 300
Finished goods 923 975
---------------------------------
Total inventory $ 1,426 $ 1,411
=================================
4. Revenue Recognition:
Product revenue is recognized upon shipment if a signed contract exists,
the fee is fixed or determinable, collection of the resulting receivables
is probable and product returns are reasonably estimable.The Company enters
into agreements with certain of its distributors which permit limited stock
rotation rights.These stock rotation rights allow the distributor to return
products for credit but require the purchase of additional products of
equal value. Revenues subject to stock rotation rights are reduced by
management's estimates of anticipated exchanges. Provisions for estimated
warranty costs and anticipated retroactive price adjustments are recorded
at the time products are shipped. The Company recognizes revenue from
the sale of extended warranty contracts ratably over the period of the
contracts.
5. Segments Disclosure:
The Company has adopted SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," which is effective for fiscal years
beginning after December 31, 1997. SFAS No. 131 supersedes SFAS No. 14, "
Financial Reporting for Segments of a Business Enterprise." SFAS No. 131
changes current practice under SFAS No. 14 by establishing a new framework
on which to base segment reporting and introduces requirements for interim
reporting of segment information. The Company has determined that it
operates in one segment.
6. Comprehensive Income:
Comprehensive income is the change in equity from transactions and other
events and circumstances other than those resulting from investments by
owners and distributions to owners. There are no significant components of
comprehensive income excluded from net income, therefore, no separate
statement of comprehensive income has been presented.
7
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7. New accounting pronouncements:
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Standards No.133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities," which establishes
accounting and reporting standards for derivative instruments and for
hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measures those instruments at fair value. Changes in fair value shall be
recognized currently in earnings. Management believes the impact of
SFAS No. 133 will not have a material impact on the financial position
or results of operations of the Company. The company will adopt SFAS
No. 133 as amended by SFAS 137 "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133" for its third quarterly filing of fiscal 2000.
In December 1999 the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial
Statements" which provides guidance on the recognition, presentation
and disclosure of revenue in financial statements filed with the SEC. SAB
101 outlines the basic criteria that must be met to recognize revenue and
provides guidance for disclosures related to revenue recognition policies.
The Company will adopt SAB 101 for its first quarterly filing of fiscal
2001. Management believes the impact of SAB 101 will not have a material
impact on the financial position or results of operations of the Company.
In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an interpretation
of APB Opinion No.25" ("FIN 44"). This Interpretation clarifies (i) the
definition of employee for purposes of applying APB Opinion No. 25, (ii)
the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequence of various modifications to the
terms of the previously fixed stock option or award, and (iv) the
accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions in
this Interpretation cover specific events that occur after either December
15, 1998, or January 12, 2000. To the extent that FIN 44 covers events
occurring during the period after December 15, 1998, or January 12, 2000,
but before the effective date of July 1,2000, the effects of applying this
Interpretation are recognized on a prospective basis from July 1, 2000.
The company believes that the adoption of FIN 44 will not have a material
effect on the company's financial positions or results of operation. The
company is currently evaluating the impact of the remaining provisions of
FIN 44 on its positions and the results of operations.
8
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This Management's Discussion and Analysis contains forward-looking statements
that involve risks and uncertainties. The Company's operating results may vary
significantly from quarter to quarter due to a variety of factors, including
changes in the Company's product and customer mix, constraints in the Company's
manufacturing and assembling operations, shortages or increases in the prices
of raw materials and components, changes in pricing policy by the Company or its
competitors, a slowdown in the growth of the networking market, seasonality,
timing of expenditures and economic conditions in the United States, Europe and
Asia. Words such as "believes," "anticipates," "expects," "intends" and similar
expressions are intended to identify forward-looking statements, but are not the
exclusive means of identifying such statements. Readers are cautioned that the
forward-looking statements reflect management's analysis only as of the date
hereof, and the Company assumes no obligation to update these statements. Actual
events or 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 the risks and uncertainties discussed herein, as well as
other risks set forth under the caption "Risk Factors" in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999. The following
discussion should be read in conjunction with the Financial Statements and
the Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and
in the Company's Form 10-K for the fiscal year ended December 31, 1999.
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Consolidated Statements of Operations - As a Percentage of Net Sales
Three months ended Six months ended
................................ ................................
June 30, 2000 July 2, 1999 June 30, 2000 July 2, 1999
---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net sales 100% 100% 100% 100%
Cost of sales 35% 47% 38% 56%
---------------- -------------- ---------------- --------------
Gross profit 65% 53% 62% 44%
---------------- -------------- ---------------- --------------
Operating expenses:
Research and development 13% 25% 13% 20%
Sales and marketing 35% 54% 34% 47%
General and administrative 11% 13% 11% 12%
Amortization of intangible assets -- -- -- *
---------------- -------------- ---------------- --------------
Total operating expenses 59% 92% 58% 79%
---------------- -------------- ---------------- --------------
Income (loss) from operations 6% (39%) 5% (35%)
Interest income, net * * * *
Other income (expense), net * * * *
---------------- -------------- ---------------- --------------
Income (loss) before provision for
income taxes 6% (39%) 5% (35%)
Provision for income taxes -- -- * --
---------------- -------------- ---------------- --------------
Net income (loss) 6% (39%) 5% (35%)
================ ============== ================ ==============
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* Less than 1%
9
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Results of Operations
Net Sales
Net sales for the second quarter of 2000 were $3.8 million
compared to $3.7 million for the same period in 1999. The modest increase
was largely due to the Company's highest sales of the enhanced fax server
products of $214,000, or 7%, offset in part by the continued decline in the
sales of the print server products by $191,000, or 35%, mainly to customers
in the Asia Pacific Region.
Net sales were $7.9 million and $8.2 million for the first six
months of 2000 and 1999, respectively. The shortfall in sales was largely
due to the continued decline in demand for our print server product
line of $490,000, or 31%, mainly to customers in the Asia Pacific region
and a decrease in sales from the Traffic Software Object Fax line of
products of $74,000, which has since been discontinued. The reduction was
offset partially by an increase in the fax server product line of $220,000,
or 3%.
International sales in the second quarter of 2000 decreased to
$768,000 from $1 million for the same period in 1999, representing 20% and
28%, respectively, of total net sales. International sales for the first
six month of 2000 and 1999 were $1.9 million and $2.7 million, representing
25% and 33%,respectively, of total net sales. This decline in international
sale was mainly the result of reduced demand for the Company's print server
products.
Domestic sales in the second quarter of 2000 were $3 million, as
compared to $2.7 million in the same period in 1999. For the six months of
2000, domestic sales were $5.9 million, as compared to $5.5 million, an
increase of 7%, mostly in the fax server product line.
Gross Profit
Gross profit of $2.5 million, or 65% for the second quarter of
fiscal 2000 increased compared to $2 million, or 53% for the same period in
1999. The increase was primarily attributable to a higher percentage of
sales of fax server products, which yield higher margins.
Gross profits for the first six months of 2000 and 1999 were $4.9
million, or 62% and $3.6 million, or 44%, respectively. Excluding an excess
inventory provision of $1.1 million recorded in 1999, the gross margin in
the first six months of 1999 would have been $4.7 million, or 58%. This
provision was primarily associated with excess inventory of print server
products targeted for the Asian market and inventory of fax server products
made obsolete by the newer FaxPress models. The increase in gross profit
for the six months of 2000 was chiefly due to the higher shipments of the
fax server products.
Research & Development
Research and product development expenses were $489,000, or 13% of
net sales for the second quarter of 2000 as compared to $948,000, or 25% of
net sales for the same period in 1999. Research and product development
expenses for the first six months were $994,000, or 13% of net sales in
2000 as compared to $1.6 million, or 20% of net sales for the same period
in 1999. The decrease was mostly due to staff reductions by the Company
of $496,000 and the reduction of outside consulting expenses of $66,000.
10
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Sales & Marketing
Sales and marketing expenses were $1.3 million, or 35% of net
sales for the second quarter of 2000, as compared to $2 million, or 54% of
net sales for the same period in 1999. For the first six months of 2000,
the expenses were $2.6 million, or 34% of net sales, as compared to $3.9
million, or 47% of net sales for the same period in 1999. The decrease of
sales and marketing expenses was chiefly associated with lower sales
personnel costs of $524,000 and further controlling of promotional expenses
of $546,000.
General & Administrative
General and administrative expenses were $416,000, or 11% of
net sales for the second quarter of 2000, as compared to $494,000, or 13%
of net sales for the same period in 1999. The first six months expenses
were $882,000, or 11% of net sales in 2000, as compared to $953,000, or
12% of net sales for the same period in 1999. The reduction in expenses
was largely attributable to lower personnel-related expenses.
Liquidity and Capital Resources
As of June 30, 2000, the Company had approximately $4.6 million of cash
and cash equivalents, and $4.7 million at December 31, 1999. However, working
capital increased to $4.1 million at June 30, 2000 from $3.6 million at December
31, 1999. The increase in working capital was primarily due to the Company's net
income for the first six months of 2000 and focus on controlling expenses.
The Company has a $3 million secured revolving line of credit with a
bank from which the Company may borrow 100% against pledges of cash at the
bank's prime rate and at June 30, 2000 had no borrowings under this line of
credit.
In December 1997,the Company entered into a loan and security agreement
with a finance company for an amount of $288,000. The amounts borrowed are
subject to interest of 10.11%, are repayable by December 2000, and are partially
collateralized by a certificate of deposit of $125,000, which is classified as
restricted cash on the Company's balance sheet. As of June 30, 2000, the
outstanding balance of the loan under this agreement was $39,000.
As of June 30, 2000, net accounts receivable were $1.9 million, up
from $1.5 million at December 31, 1999. The increase in net accounts receivable
was largely attributable to an increase in net sales in the first quarter and
slower collection in the second quarter resulting in a lengthening of the number
of days for which payment for sales is outstanding from 35 days at December
31, 1999 to 46 days at June 30, 2000.
Net inventory as of June 30, 2000 was $1.4 million, comparable to that
of December 31, 1999.
The Company did not make any material capital commitments during the
first six months ended June 30, 2000.
Although the Company believes that its existing capital resources,
anticipated cash flows from operations and available lines of credit will be
sufficient to meet its capital requirements at least through the next 12 months,
the Company may be required to seek additional equity or debt financing. The
timing and amount of such capital requirements cannot be determined at this time
and will depend on a number of factors, including demand for the Company's
existing and new products and the pace of technological change in the networking
industry. There can be no assurance that such additional financing will be
available on satisfactory terms when needed, if at all.
Management believes that, for the periods presented, inflation has not
had a material effect on the Company's operations.
11
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Other Matters
In compliance with the new Audit Committee structure and composition
requirements promulgated by the Nasdaq Stock Market, the Company has complied
with Marketplace Rules 4310(c)(26)(B) for SmallCap Issuers and has certified
that it has and that it will continue to have, an Audit Committee of at least
three members,comprised solely of independent directors, each of whom is able to
read and understand fundamental financial statements, or will become able to do
so within a reasonable period of time after his or her appointment. In addition,
the Company has established and will continue to require that, at least one
member of the Audit Committee must have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual's financial
sophistication.
The Company's Common Stock has been listed on the Nasdaq SmallCap
Market since April 1999. In order to maintain its listing on the Nasdaq SmallCap
Market, the Company must maintain total assets, capital and public float at
specified levels, and generally must maintain a minimum bid price of $1.00 per
share. If the Company fails to maintain the standard necessary to be quoted on
the Nasdaq SmallCap Market, the Company's Common Stock could become subject to
delisting. If the Common Stock is delisted, trading in the Common Stock could be
conducted on the OTC Bulletin Board or in the over-the-counter market in what is
commonly referred to as the "pink sheets." If this occurs, a shareholder will
find it more difficult to dispose of the Common Stock or to obtain accurate
quotations as to the price of the Common Stock. Lack of any active trading
market would have an adverse effect on a shareholder's ability to liquidate an
investment in the Company's Common Stock easily and quickly at a reasonable
price. It might also contribute to volatility in the market price of the
Company's Common Stock and could adversely effect the Company's ability to raise
additional equity or debt financing on acceptable terms or at all. Failure to
obtain desired financing on acceptable term could adversely affect the Company's
business, financial condition and results of operations. These and other risk
factors are discussed in more detail in the Company's Form 10-K for the fiscal
year ended December 31, 1999 under the section "Risk Factors."
12
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 10, 2000
(the "Annual Meeting").At the Annual Meeting, the Company's shareholders elected
four directors nominated by the Board of Directors by the votes indicated:
Nominee Votes in Favor Votes Withheld
Donald L. Rich 3,210,161 46,550
Peter R. Tierney 3,210,161 46,550
Scott C. McDonald 3,210,161 46,550
Robert Hambrecht 3,210,161 46,550
The proposal to ratify the selection of PricewaterhouseCoopers LLP as
the Company's independent accountants for the fiscal year ending December 31,
2000 was approved.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27.1 Financial Data Schedule
99.1 Press Release dated July 27, 2000
(b) Reports on Form 8-K
None
13
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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.
CASTELLE
By: /s/ Donald L. Rich Date: August 14, 2000
Donald L. Rich
President, Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive Officer and
Principal Finance and Accounting Officer)
14
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