CIMETRIX INC - 10-Q Quarterly Report

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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 September 30, 2002

|_| 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 November 14, 2002: Common stock, par value $.0001 - 24,116,593

CIMETRIX INCORPORATED
FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2002

INDEX

PART I Financial Information

Item 1. Financial Statements

a) Consolidated Condensed Statements of Operations.........................3
b) Consolidated Condensed Balance Sheets...................................4
c) Consolidated Condensed Statements of Cash Flows.........................5
d) Notes to Consolidated Condensed Financial Statements....................7

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................12

Item 3. Quantitative and Qualitative Disclosures About Market Risk...........22

Item 4. Controls and Procedures..............................................22

PART II Other Information

Item 1. Legal Proceedings....................................................22

Item 2. Changes in Securities................................................23

Item 3. Defaults Upon Senior Securities......................................23

Item 4. Submission of Matters to a Vote of Security Holders..................23

Item 5. Other Information....................................................23

Item 6. Exhibits and Reports on Form 8-K.....................................24

Signatures....................................................................25

Certifications................................................................26

-2-

PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
CIMETRIX INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and share amounts)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- --------------------------
2002 2001 2002 2001
---- ---- ---- ----

NET SALES $ 636 $ 654 $ 2,067 $ 3,161
---------- ---------- ----------- -----------

OPERATING EXPENSES
Cost of sales 163 118 470 492
Selling, marketing and customer support 435 518 1,292 1,409
Research and development 335 448 1,094 1,462
General and administrative 427 525 1,478 1,442
---------- ---------- ------------- -------------

Total operating expenses 1,360 1,609 4,334 4,805
---------- ---------- ------------- -------------

INCOME (LOSS) FROM OPERATIONS (724) (955) (2,267) (1,644)
----------- ----------- -------------- --------------

OTHER INCOME (EXPENSES)
Interest income 10 31 47 192
Interest expense (71) (67) (209) (201)
Other Gain/(Loss) - (3) (49) (8)
---------- ----------- -------------- --------------

Total other income (expense) (61) (39) (211) (17)
----------- ----------- -------------- --------------

INCOME (LOSS) BEFORE INCOME TAXES (785) (994) (2,478) (1,661)

CURRENT INCOME TAX EXPENSE
(BENEFIT) - - - -

NET INCOME (LOSS) $ (785) $ (994) $ (2,478) $ (1,661)
=========== =========== ============ ============

BASIC INCOME (LOSS) PER
COMMON SHARE $ (.03) $ (.04) $ (.10) $ (.07)
===== ===== ===== =====

DILUTED INCOME (LOSS) PER
COMMON SHARE $ (.03) $ (.04) $ (.10) $ (.07)
===== ===== ===== =====

WEIGHTED AVERAGE SHARES
OUTSTANDING, BASIC 24,054,000 24,026,000 24,035,000 24,114,000
========== ========== ========== ==========

WEIGHTED AVERAGE SHARES
OUTSTANDING, DILUTED 24,054,000 24,026,000 24,035,000 24,114,000
========== ========== ========== ==========

See notes to consolidated condensed financial statements

-3-

-6-

CIMETRIX INCORPORATED
NOTES TO CONSOLIDATED 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
accounting principles generally accepted in the United States of America.
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, 2001. 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 three
and nine month periods ended September 30, 2002 are not necessarily
indicative of the results that can be expected for the entire year ending
December 31, 2002. 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, 2001.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The
Company has significant liabilities in the form of Senior Notes payable
that came due September 30, 2002 (See Note 4 - Senior Notes, below).
Payment in full of the Senior Notes would substantially decrease the amount
of working capital available to fund ongoing operations. Historically, the
Company has not demonstrated the ability to generate sufficient cash flows
from operations to satisfy these liabilities and sustain operations. These
factors may indicate the Company's inability to continue as a going
concern.

The Company's continuation as a going concern is dependent on its
ability to generate sufficient income and cash flow to meet its obligations
on a timely basis and to obtain additional financing as may be required.
The Company is actively seeking options to obtain additional capital and
financing in the form of a new offering of Senior Notes (See Note 4 -
Senior Notes, below).

NOTE 3 - STOCK OPTIONS AND WARRANTS

As of September 30, 2002 and November 14, 2002, the Company had a
significant number of derivative securities outstanding, in the form of
stock options and warrants representing a potential total of 4,003,250 and
4,736,250 shares of common stock, respectively, which are summarized in the
following table with detail of each in the subsequent tables.

Strike # Outstanding # Outstanding
Description Price September 30, November 14,
2002 2002
---------------------------------------------------------------------------
1998 Stock Option Plan $1.00-3.50 3,310,000 3,310,000
Directors Stock Option Plan $1.00-3.50 579,000 579,000
Warrants $0.35-1.00 114,250 847,250
--------- ---------
Total Options and Warrants 4,003,250 4,736,250

-7-

1998 Incentive Stock Option Plan as of September 30, 2002 and November 14, 2002
- -------------------------------------------------------------------------------

As of September 30, 2002, there were issued and outstanding to the
Company's employees, options for the purchase of 3,310,000 shares of the
Company's common stock, under the Company's 1998 Incentive Stock Option
Plan as amended. The following table summarizes the quantity and exercise
prices of the options.

Option
Price Quantity
------------------------------
$1.00 2,022,500
$2.50 877,500
$3.00 360,000
$3.50 50,000
------
Total Options 3,310,000

Approximately 452,000 of the shares underlying these outstanding
options are registered for resale, pursuant to a Form S-3 Registration
Statement, which became effective December 9, 1998. A total of 4,000,000
shares of common stock have been reserved for issuance under the plan. The
existing options will begin to expire in December 2002 and continue to
expire through November 2006.

Directors Stock Option Plan as of September 30, 2002 and November 14, 2002
- --------------------------------------------------------------------------

As of September 30, 2002, there were issued and outstanding options
for the purchase of 579,000 shares of the Company's common stock, under the
Company's Director Stock Option Plan. The following table summarizes the
quantity and exercise prices of the options.

Option
Price Quantity
$1.00 225,000
$2.50 258,000
$3.50 96,000
------
Total Options 579,000

Approximately 162,000 of these options are registered for resale,
pursuant to the Form S-3 Registration Statement discussed earlier in this
note. In May 2002, 219,000 of the above options, which are held by former
Board of Directors of the Company, were extended for an additional five
years beyond their original expiration dates. The directors and former
directors options begin to expire in January 2003 and continue to expire
through January 2012.

Warrants
- --------

The following table summarizes the quantity and exercise price of
outstanding warrants.

Strike # Underlying Shares # Underlying Shares
Description Price September 30, 2002 November 14, 2002
- --------------------------------------------------------------------------------
2001 Series Warrants $1.00 114,250 114,250
2002 Series Warrants $0.35 0 733,000
------- -------
Total Warrants 114,250 847,250

-8-

The Company also had 1997 Series Warrants issued November 1997 to
purchasers of the Company's 10% Senior Notes due September 30, 2002. A
total of 3,306 warrants were issued, with each warrant entitling the holder
to purchase 250 shares of common stock at $2.50 per share, or a total of
826,500 shares. All of the 1997 Series Warrants expired on September 30,
2002, none having been exercised, and have been excluded from the above
table.

The 2001 Series Warrants were issued November 2001 to purchasers of
the Company's 10% Senior Notes due September 30, 2004, discussed below in
Note 4 - Senior Notes. A total of 457 warrants were issued, with each
warrant entitling the holder to purchase 250 shares of common stock at
$1.00 per share, or a total of 114,250 shares. These warrants became
exercisable anytime after November 1, 2001 and on or before September 30,
2004, provided the shares issuable have been registered under the
Securities Act of 1933, as amended, and either registered or qualified for
an exemption under any applicable state securities laws. The Company
intends to use its best efforts to prepare and file a Registration
Statement with the Securities and Exchange Commission to register the
shares issuable pursuant to the exercise of the 2001 Series Warrants. To
date, none of the 2001 Series Warrants have been exercised. The 2001 Series
Warrants will expire on September 30, 2004.

The 2002 Series Warrants were issued October 2002 to purchasers of the
Company's 12% Senior Notes due September 30, 2005, discussed below in Note
4-Senior Notes. A total of 1,466 warrants were issued, with each warrant
entitling the holder to purchase 500 shares of commons stock at $0.35 per
share, or a total of 733,000 shares. These warrants became exercisable
anytime after October 1, 2002 and on or before September 30, 2005, provided
the shares issuable have been registered under the Securities Act of 1933,
as amended, and either registered or qualified for an exemption under any
applicable state securities laws. The Company intends to use its best
efforts to prepare and file a Registration Statement with the Securities
and Exchange Commission to register the shares issuable pursuant to the
exercise of the 2002 Series Warrants. To date, none of the 2002 Series
Warrants have been exercised. The 2002 Series Warrants will expire on
September 30, 2005.

NOTE 4 - SENIOR NOTES

As of September 30, 2002, and November 14, 2002, the Company had
$2,681,000 and $ 2,459,000 of debt in the form of Senior Notes,
respectively, which are summarized in the following table with the detail
of each explained below.

$ Outstanding $ Outstanding
Description September 30, November 14,
2002 2002
---------------------------------------------------------------------------
10% Senior Notes due September 30, 2002 $2,224,000 $982,000
10% Senior Notes due September 30, 2004 457,000 11,000
10% Senior Notes due September 30, 2005 - 1,466,000
---------- ----------
Total Senior Notes Outstanding $2,681,000 $2,459,000

10% Senior Notes due September 30, 2002
---------------------------------------

In November 1997, the Company issued approximately $3.3 million of 10%
Senior Notes due September 30, 2002. Interest on the Senior Notes has been
paid on April 1 and October 1 of each year since issuance. Approximately
$600,000 of the Senior Notes were retired June 1998 in exchange for common
stock of the Company, leaving an outstanding principal balance of
$2,681,000. An additional $457,000 was retired as of April 30, 2002, in
exchange for new notes due September 30, 2004, which notes are discussed
below, leaving a principal balance of $2,224,000 due September 30, 2002.
Subsequent to the end of the quarter, another $1,242,000 of the notes were
retired. Of this amount, $744,000 was exchanged for new notes due September
30, 2005, with the remaining amount of $498,000 being paid out in cash.
(See Notes due September 30, 2005 discussed below) leaving a principal
unpaid balance of $982,000, as of the time of the filing of this report.

-9-

The certificates representing the $982,000 are currently involved with
a Receivership established by the United States District Court for the
District of Columbia in 2000 in the case of The Securities and Exchange
Commission v. Paul A. Bilzerian et al. (Civil Action No. 89-1854 (SSH)).
The Company has requested that the Receivership accept 50% payment of its
$110,000 note and roll over 50% of the $110,000 into a new note due
September 30, 2005. There has been indication that the Receiver would seek
approval to accomplish the foregoing, however formal action has yet to be
consummated. With respect to two other notes ($500,000 and $372,000
respectively) totaling $872,000, an arrangement for 50% payment and 50%
roll over has not been accepted at this point. However, these notes are
under the jurisdiction of the court. With respect to the $372,000 note, the
Receiver intends to seek approval from the court to approve payment of 50%
of the note and to roll over the other 50% into a new note due September
30, 2005. At present, at the request of the Receiver, a temporary
restraining order is in place, which includes preventing taking steps to
effect payment demand of the aforesaid notes so as to be able to resolve
the matter of payment and roll over. The Company would be able to pay 50%
of all three of the aforesaid notes. The temporary restraining order
entered on November 4, 2002 has been extended to November 18, 2002 and the
Receiver has filed a motion to further extend the temporary restraining
order.

10% Senior Notes due September 30, 2004
---------------------------------------

In an effort to preserve its working capital, on October 8, 2001, the
Company made an offer to its 10% Senior Noteholders, to exchange their 10%
Senior Notes due September 30 2002 for 10% Senior Notes due September 30,
2004. These notes were not registered with the Securities and Exchange
Commission nor with any state securities commission. The offer of
replacement notes was made in reliance upon statutory exemptions available
under the Securities Act of 1933 and under applicable state securities
laws.

Any Noteholder exchanging Senior Notes due September 30, 2002 for
Senior Notes due September 30, 2004 also received at no additional
consideration one common stock purchase warrant for each $1,000 principal
amount of Senior Notes due 2002 that was exchanged. Each warrant entitles
the holder to purchase 250 shares of the Company's common stock for $1.00
per share. See Note 3 - Stock Options and Warrants, above. The warrants
that were issued in connection with the Senior Notes due September 30, 2004
represent 114,250 potential shares, with any unexercised warrants expiring
September 30, 2004. These warrants are exercisable anytime after November
1, 2001 and on or before September 30, 2004 as a whole, in part, or in
increments.

The offer to exchange the Senior Notes due September 30, 2002 was
extended from the original date of February 28, 2002 until April 30, 2002.
As of that date, $457,000 of these Senior Notes had been exchanged for
Senior Notes due September 30, 2004, leaving a principal balance of
$2,224,000 due September 30, 2002. Of the $457,000 of Senior Notes that
were exchanged, approximately $18,000 of the face value was attributable to
the value of the warrants issued. Therefore, the face value of these Senior
Notes on the Company's balance sheet is $444,000. This $18,000 is being
amortized as additional interest expense over the life of the Senior Notes,
resulting in approximately an additional $600 of interest expense monthly.

-10-

Subsequent to the end of the quarter, $446,000 of the total $457,000
of notes due September 30, 2004 were exchanged for notes due September 30,
2005, leaving a principal balance due of $11,000 on the 2004 notes.

12% Senior Notes due September 30, 2005
---------------------------------------

Because a sufficient number of Noteholders did not accept the
Company's offer to exchange their 10% Senior Notes due September 30, 2002
for 10% Senior Notes due September 30, 2004, the Company has undertaken a
new Senior Note offering. On June 26, 2002, the Company issued a
confidential Private Placement Memorandum for an offering of an aggregate
principal amount of a minimum of $500,000 and a maximum of $5,000,000 in
unsecured 12% Senior Notes Due September 30, 2005, at 100% of face value,
coupled with warrants to purchase 500 shares of the Company's common stock
for each $1,000 principal amount of Senior Notes purchased, with the
warrants expiring on September 30, 2005. The securities are being offered
to existing noteholders in exchange for their current notes, and to new
investors. The offering is being made directly by the Company on a best
efforts basis and is not being underwritten. The new Senior Note offering
was to close no later than August 31, 2002, but has extended by the Company
until November 30, 2002, to allow the Receivership appointed by the United
States District Court for the District of Columbia additional time to
consider whether or not to participate in the offering.

These Senior Notes are not being registered with the Securities and
Exchange Commission nor with any state securities commission. The Company
is relying upon an exemption from registration available under Regulation
D, Rule 506, promulgated under the Securities Act of 1933 and also upon
statutory exemptions available under the Securities Act of 1933 and under
applicable state securities laws.

At the time of the filing of this document a total of $1,466,000 had
been received by the Company from investors in this offering either in cash
or exchanged Senior Notes. The proceeds of the offering will first be used
to retire the Senior Notes Due September 30, 2002. Thereafter, proceeds, if
any, will be used for working capital and other general corporate purposes.

Any Noteholder exchanging Senior Notes due September 30, 2002 or 2004
for Senior Notes due September 30, 2005 also received at no additional
consideration one common stock purchase warrant for each $1,000 principal
amount of Senior Notes due 2002 that was exchanged. Each warrant entitles
the holder to purchase 500 shares of the Company's common stock for $0.35
per share. See Note 3 - Stock Options and Warrants, above.

-11-

NOTE 5 - EARNINGS PER SHARE

A reconciliation of the shares used in the computation of the Company's
basic and diluted earnings per common share is as follows (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
---- ---- ---- ----

Weighted average common shares

outstanding 24,054 24,026 24,035 24,114
Dilutive effect of :
Stock options -- -- -- --
Warrants -- -- -- --
------ ------ ------ ------
Weighted average common shares
outstanding, assuming dilution 24,054 24,026 24,035 24,114
------ ------ ------ ------

Weighted average common shares outstanding, assuming dilution, would
normally include the incremental shares that would be issued upon the
assumed exercise of stock options and warrants (see Note 3 - Stock Options
and Warrants and Note 4 - Senior Notes). However, during the three and nine
months ended September 30, 2002, stock options and warrants to exercise
4,003,250 shares were excluded from the calculation of diluted earnings per
share because they were antidilutive. These options and warrants could be
dilutive in the future.

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 third quarter of 2002. 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 third quarter data of 2002 and 2001.

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 of Products

The Company is the developer of the world's first open architecture,
standards-based, personal computer (PC) software for controlling motion-oriented
equipment that operates on the factory floor. The Company introduced its first
motion control products (CODE) in 1989, and has developed considerable expertise
through working with demanding original equipment manufacturer (OEM) customers.

In 2000, the Company introduced two new product families using the latest
in software technologies. Both products complement the Company's CODE motion
control family of products. CIMConnect is a next generation design for enabling
production equipment in the electronics industries to communicate data to the
factory's host computer using the SECS/GEM SEMI (Semiconductor Equipment and
Materials International) standard. CIM300 is a family of seven software products
that reduces the time required to connect new 300mm semiconductor tools to each
other and host computers into a factory by using the new SEMI 300mm standards.
Customers find CIM300 to be a technically stronger solution than competitive
products.
-12-

On October 23, 2001, Cimetrix introduced CODE 6 with Core Motion after six
months of field beta testing at customer sites. A press tour to major industry
publications was launched resulting in many online and print copies of the new
product. CODE 6 with Core Motion is the result of 18 months of research and
development effort resulting in new technology to move motion control from
proprietary motion boards onto the PC. This can result in up to a 50% savings in
hardware costs for our OEM customers and positions us for the evolution to
network based drives. This release also contains many new features such as
conveyor tracking and enhanced calibration routines.

Significant Accounting Policies

Management's discussion and analysis of the Company's financial condition
and results are based upon financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The following accounting policies significantly affect the way the
financial statements are prepared.

Revenue Recognition

The Company derives revenues from three primary sources: 1) sales of
software, 2) sales of application engineering services and 3) sales of technical
support services. Software sales are derived from the sale of the Company's
off-the-shelf software packages in the machine control and communications
product lines. Machine control products include items such as CODE 6.0(TM),
CIMControl(TM), and CIMulation(TM). Communications products include items such
as CIM300(TM), GEM Host Manager(TM) and CIMConnect(TM). Application engineering
sales are derived from the sale of services to design, develop and implement
custom software applications. Support sales are fixed annual contracts that
provide access to technical support personnel for help in the operation or
de-bugging of our software products.

Before the Company will recognize any revenue, the following criteria
must be met:

1) Evidence of a financial arrangement or agreement must exist between
the Company and its customer. Purchase orders and signed OEM contracts
are two examples of items accepted by the Company to meet this
criterion.

2) Delivery of the products or services must have occurred. We treat
either physical or electronic delivery as having met this criterion.

3) The price of the products or services is fixed and measurable. It is
the policy of the Company to provide our customers a 30-day right to
return. However, because the amount of returns has been insignificant,
the Company recognizes revenue immediately upon the sale. If the
number of returns were to increase substantially, the Company would
establish a reserve based on a percentage of sales to account for any
such returns.

4) Collectibility of the sale is reasonably assured, receipt is probable.
Collectibility of a sale is determined on customer by customer basis.
Typically the Company sells to large corporations which have a
demonstrated ability to pay. If it is determined that a customer may
not have the ability to pay, revenue is deferred until the payment is
collected.

-13-

If a sale involves a bundled package of software, support and services at a
discounted price, revenue is allocated to each element based on the respective
list price of each. Assuming all of the above criteria have been met, revenue
from the software portion of the package is recognized immediately. Revenue from
material support contracts is recognized ratably over the term of the support
contract, which is generally 12 months. Revenue from services is recognized upon
delivery of major project milestones. Standard payment terms for sales are net
30 (net 45 - 60 for foreign customers). On occasion extended payment terms will
be offered. Revenues from sales with terms greater than net 90 days are
generally recognized as payments become due.

Allowance for Doubtful Accounts

The Company maintains a reserve for doubtful accounts, which is for
estimated losses resulting from uncollectible accounts receivable. Generally the
Company records an allowance for doubtful accounts based on a percentage of
overall sales. In addition if collectibility becomes doubtful on any receivable,
a reserve is set up for the entire amount.

Statement of Operations Summary

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 nine months ended, September 30, 2002 and 2001, respectively:

-14-

Results of Operations

Three and Nine Months Ended September 30, 2002 Compared to the Three and Nine
Months Ended September 30, 2001

Net Sales Net sales decreased by $18,000, or 3%, to $636,000, for the three
months ended September 30, 2002, from $654,000, for the three months ended
September 30, 2001. Net sales for the three months ended September 30, 2002,
consisted of sales of software (38%), engineering services (37%), and support
and training (25%). Net sales for the same period in 2001 consisted of sales of
software (57%), engineering services (22%), and support and training (21%).

The decrease in third quarter sales was primarily the result of a drop in
software revenues. Sales to the Company's OEM customers in the robot, SMT and
semiconductor markets continue to be negatively impacted by the current economic
slowdown. However, during the period ended September 30, 2002, the Company
entered into contracts with two new significant OEM customers, who selected the
Company's software.

Net sales decreased by $1,094,000 or 35%, to $2,067,000 for the nine months
ended September 30, 2002, from $3,161,000 for the nine months ended September
30, 2001. Net sales for the nine months ended September 30, 2002, consisted of
sales of software (48%), engineering services (29%), and support and training
(23%). Net sales for the same period in 2001 consisted of sales of software
(73%), engineering services (16%), and support and training (11%).

The decrease in year-to-date sales was primarily the result of a drop in
software revenues. Sales have been significantly below forecast since the second
quarter of 2001, due to a slowdown in the electronics industry. The electronics
industry has been very cyclical in nature with periods of double-digit growth
followed by periods of little or no growth. At the present time, orders for new
equipment in the robot, SMT and semiconductor markets, which would include the
runtime licenses of the Company's software products, remain significantly below
prior periods. Because of this, the Company's software sales consist primarily
of development licenses to OEM customers. As new equipment orders increase,
runtime license revenue is expected to increase. Competitive pressures may also
be contributing to the drop in revenues, but this decrease is not quantifiable.

While the Company cannot predict market conditions for subsequent quarters,
it continues to market its products aggressively in order to broaden its
customer base. Management hopes but has not seen any indication that the
electronics industry is starting to recover and that orders for new equipment
will increase.

Major Customers

Sales to two non-affiliated customers accounted for 17% and 13% of the
Company's revenues for the three months ended September 30, 2002, respectively.
Sales to two different non-affiliated customers accounted for 22% and 13%,
respectively, of the Company's revenues for the three months ended September 30,
2001. No other single non-affiliated customer accounted for 10% or more of the
Company's revenues for the three months ended September 30, 2002 and 2001,
respectively.

-15-

No single non-affiliated customer accounted for 10% or more of the
Company's revenues for the nine months ended September 30, 2002, and September
30, 2001, respectively.

Sales to Aries, Inc., the Company's Japanese affiliate, accounted for 3%
and 12% of the Company's revenues for the three months ended September 30, 2002
and 2001, respectively. Sales to Aries accounted for 9% and 15% of the Company's
revenues for the nine months ended September 30, 2002 and 2001, respectively.

Export sales were approximately 34% and 49% of the Company's revenues for
the three months ended September 30, 2002 and 2001, respectively. Export sales
were approximately 37% and 46% for the nine months ended September 30, 2002 and
2001, respectively. All export sales were made in US dollars.

Export sales to countries that exceeded 10 percent of net sales were as
follows:

Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------------- -----------------

Japan 12% 18% 18% 20%
Switzerland * 22% * *
Germany * * * 16%
All others 22% 9% 19% 10%
---------------
* Less than 10%

Cost of Sales

Cost of sales increased by $45,000, or 38%, to $163,000 for the three
months ended September 30, 2002, from $118,000 for the comparable period in
2001. This increase was attributable to the sale of engineering services and the
re-sale of interface boards developed to accompany the Company's motion control
software.

Cost of sales decreased by $22,000, or 4%, to $470,000 for the nine months
ended September 30, 2002, from $492,000 for the comparable period in 2001. This
decrease is within normal operating fluctuations.

While the Company's focus is on the sale of software products, it also
provides application and integration services to its customers that want to
purchase a complete turnkey system. These services are performed both internally
and through resellers and distributors and the costs related to these services
are accounted for as cost of sales.

Selling, Marketing and Customer Support

Selling, marketing and customer support costs decreased by $83,000, or 16%,
to $435,000 for the three months ended September 30, 2002, from $518,000 for the
comparable period in 2001. The same expenses decreased by $117,000, or 8%, to
$1,292,000 for the nine months ended September 30, 2002, from $1,409,000 for the
comparable period in 2001. These decreases were due to the consolidation of
operations from the Company's semiconductor division, which was located in Los
Gatos, California into its Salt Lake City, Utah headquarters in March 2002, and
the reduction in the number of sales and marketing personnel. The Company
continues to invest in general corporate marketing and outside public relations
services in an effort to expand the Company's customer base.

Selling, marketing and customer support expenses reflect the direct payroll
and related travel expenses of the Company's sales, marketing and customer
support staff, the development of product brochures and marketing material,
press releases, and the costs related to the Company's representation at
industry trade shows.

-16-

Research and Development

Research and development expenses decreased by $113,000, or 25%, to
$335,000 for the three months ended September 30, 2002, from $448,000 for the
comparable period in 2001. These same expenses also decreased by $368,000, or
25%, to $1,094,000 for the nine months ended September 30, 2002, from $1,462,000
for the comparable period in 2001. These decreases were due to a reduction in
the number of software development personnel. As the Company's products have
matured, emphasis has moved from development and software enhancements to
providing services and support to customers as they prepare for and begin to
ship the Company's products on their equipment.

While shifting the Company's emphasis, significant investment in research
and development is still required for maintenance to existing products. The
Company expects to incur research and development expenses of approximately
$1,400,000 during 2002, compared to approximately $1,900,000 during 2001.
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.

General and Administrative

General and administrative expenses decreased by $98,000, or 19%, to
$427,000 for the three months ended September 30, 2002, from $525,000 for the
comparable period in 2001. This decrease resulted from a reduction in
depreciation, amortization, and legal expenses.

General and administrative expenses increased by $36,000, or 2%, to
$1,478,000 for the nine months ended September 30, 2002, from $1,442,000 for the
comparable period in 2001. This increase was due in part to additional reserves
taken for bad debt, which beginning in 2002, were classified as General and
Administrative Expenses rather than as a Cost of Sales expense. Such reserves
have been accrued due to the slow economy. This increase was also due in part to
a one-time expense of $43,190 for the extension of the expiration dates of
219,000 stock options that are held by former Board of Directors of the Company
(See Note 3 - Stock Options and Warrants, to the Consolidated Condensed
Financial Statements above). All other general and administrative expenses,
taken as a whole, decreased slightly for the year, and are considered within
normal operating fluctuations.

It is important to note that General and Administrative expenses include
all direct costs for administrative and accounting personnel, and 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 nine months ended September 30, 2002 was
approximately $329,000, or 22%, of all general and administrative expenses,
compared to $558,000, or 39%, for the same period in 2001. This decrease was
attributable to the write-off of technology assets at December 31, 2001.

-17-

Other Income (Expenses)

Interest income decreased by $21,000, or 68%, to $10,000 for the three
months ended September 30, 2002, from $31,000 for the comparable period in 2001.
Interest income also decreased by $145,000, or 76%, to $47,000 for the nine
months ended September 30, 2002, from $192,000 for the comparable period in
2001. These decreases were due to a reduction in the Company's cash reserves
that were used to fund operations, and a reduction in the rate of interest the
Company earned on its cash reserves, due to market conditions and an overall
drop in interest rates.

Interest expense increased by $4,000, or 6%, to $71,000 for the three
months ended September 30, 2002, from $67,000 for the comparable period in 2001.
Interest expense also increased by $8,000, or 4%, to $209,000, for the nine
months ended September 2002, from $201,000 for the comparable period in 2001.
All interest expense is attributable to the Company's Senior Notes, with
interest expense accrued monthly and being payable April 1 and October 1 of each
year. This increase was due in part to the amortization of bond discount, that
is attributable to the 457 warrants issued with the Senior Notes due 2004,
resulting in additional interest expense per month over the life of the
securities and in part to the interest accrued on the new 12% Senior Notes
subscribed, but not yet issued. (See Note 4 - Senior Notes, to the Consolidated
Condensed Financial Statements above.)

Other gains/(losses) increased $41,000, or 513%, to $49,000 for the nine
months ended September 30, 2002, from $8,000 for the comparable periods in 2001.
This increase was due in part to the disposal of marketable securities. The
Company's marketable securities are held in conservative bond funds and can
fluctuate values from time to time. The Company believes that its current
marketable securities will increase in value and its unrealized gains will
offset any realized losses.

Other Items

The Company is involved in a legal action, which began April 12, 2002,
which is discussed in Item 1. Legal Proceedings of Part II, below in this
report.

Liquidity and Capital Resources

The Company's future liquidity is uncertain due to the following factors:

First, approximately $982,000 of the Company's 10% Senior Notes that
matured on September 30, 2002 still remain unpaid. While the Company has entered
into negotiations with the holders of the notes to invest some or all of the
amount due in the Company's new 12% Senior Note offering (See Note 4 - Senior
Notes, to the Consolidated Condensed Financial Statements above), the final
disposition of these notes has not been determined. While the notes have not yet
been presented to the Company for redemption, payment in full may be required.

Second, a contingent liability exists which amount is not estimable at the
present time, but will be known in December of 2002. As part of the settlement
of the Manley litigation, which litigation is discussed in Part I, Item 3, Legal
Proceedings, of the Company's Annual Report on Form 10-K, for the fiscal year
ended December 31, 2001, the Company may be required to purchase up to 80,000
shares of Cimetrix common stock from the Manleys at $2.80 per share, or a
maximum total repurchase cost of $224,000, beginning on December 1, 2002. The
Manleys also have the right to require the Company to redeem these shares at an
earlier date if the Company's average daily cash balance, computed on a monthly
basis, is at or below $1,250,000 or if Paul A. Bilzerian, who formerly served as
president and a director of the Company, becomes an officer, director, employee
or agent of the Company prior to December 31, 2002. Neither of the above
conditions has occurred at the time of the filing of this document. The $224,000
potential repurchase cost is reflected on the Company's balance sheet after the
liabilities section but before the stockholders' equity, as redeemable common
stock.

-18-

While management believes that the Company does have sufficient working
capital to maintain its current level of operations for the remainder of fiscal
2002, and into 2003, it does not have sufficient capital to maintain its current
level of operations and also retire the remaining balance of $982,000 of its 10%
Senior Notes and pay $224,000 to the Manleys. Payment of these two debts would
consume almost all of the Company's working capital and it may not be able to
continue operations. Management's was able to raise $1,466,000 of additional
financing through its private offering of 12% Senior Notes due September 30,
2005. Of this amount, $368,000 was received in cash from investors and
$1,098,000 was received through the exchange of Senior Notes. It is critical to
the Company's cash flow that the Company succeed in negotiating the remaining
$982,000 balance of its 10% Senior Notes. This would free up working capital
that is needed to fund operations if the Company's operating results do not
improve.

At September 30, 2002, the Company had cash and other current assets of
$2,329,000, and current liabilities of $2,018,000, resulting in working capital
of $311,000, as compared to working capital of $1,308,000 at December 31, 2001.
This decrease in working capital of $997,000 was due to the use of working
capital to fund operations through September 30, 2002.

On September 30, 2002 the Company entered into a convertible note purchase
agreement in the amount of $500,000, with Tsunami Network Partners Corporation,
a Japanese corporation. Subsequent to the end of the quarter, on October 7,
2002, the Company received the $500,000. The terms of the agreement provide for
a short- term loan with a principal amount of $500,000 at a rate of 6 3/4 %
annum, with principal and interest due on March 31, 2003, or earlier in the
event of default on the note. The conversion feature of the note provides that
the note shall be converted into fully paid nonassessable shares to be
determined by dividing all of the principal and accrued interest due on the note
at March 31, 2003 by the average per share closing sales price of the Common
Stock of the Company on the OTC Electronic Bulletin Board during the period from
January 1, 2003 to March 31, 2003. However, the price for which the note shall
be converted shall not exceed $0.75 or be less than $0.35 per share.

Future liquidity will also be dependent upon the Company's ability to
generate cash flow from operations. Since inception, the Company has generated
an operating deficit, making its liquidity dependent on obtaining external
financing through debt or equity securities. The current operating deficit makes
obtaining working capital through traditional bank loans or credit lines more
difficult, however management continues to explore options to raise working
capital.

Cash used in operating activities for the nine months ended September 30,
2002 was $1,141,000 compared to cash used in operating activities of $706,000,
for the same period in 2001. The negative cash flow year to date resulted
primarily from the net loss from operations of $2,478,000. The Company's trade
receivables also decreased by $1,081,000 to $631,000 for the nine months ended
September 30, 2002, from $1,712,000 at December 31, 2001, due to the collection
of such receivables, low sales volume, and additional reserves for bad debt.

Cash provided by investing activities for the period ended September 30,
2002 was $607,000, compared to cash provided by investing activities of $155,000
for the same period in 2001. This increase resulted from the sale of marketable
securities held for investment.

-19-

The Company has not been adversely affected by inflation but does believe
that technological advances and competition within the software industry have
generally caused prices of the products sold by the Company to decline. The
Company's software represents a small portion of our customer's product costs
and therefore management remains optimistic that demand for the Company's
products will continue. However, there are continued economic risks inherent in
foreign trade, because sales to foreign customers accounted for 34% and 39% of
the Company's net sales for the three months ended September 30, 2002 and 2001,
respectively.

Factors Affecting Future Results

Third quarter revenues decreased slightly compared to the prior year,
coming in below the Company's target revenue, which was expected to increase
over second quarter. The economic slowdown continues and has led to significant
delays in the placement of orders by the Company's OEM customers. As the
end-user customers have cut back on capital equipment expenditures, the
Company's OEM customers have also cut back on their orders for the Company's
software products. Because of this, Management continues to invest heavily in
sales and marketing efforts in order to expand its customer base. Management
remains hopeful that these new customers will provide the needed revenues to
sustain operations.

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.

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.

Certain Risk Factors

Statements regarding the future prospects of the Company must be evaluated
in the context of a number of factors that may materially affect its financial
condition and results of operations. Disclosure of these factors is intended to
permit the Company to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act Of 1995. Most of these factors have
been discussed in prior filings by the Company with the Securities and Exchange
Commission. Although the Company has attempted to list several of the factors
that it is currently aware may have an impact on its operations, other factors
may in the future prove to be important and the following list should not be
considered comprehensive.

-20-

Lack of Liquidity

The Company's liquidity is uncertain due to $982,000 of Senior Notes that
are presently due but unpaid and a $224,000 contingent liability, each of which
is discussed earlier in Liquidity and Capital Resources. Since inception, the
Company has generated an operating deficit, making its liquidity dependent on
obtaining external financing through debt or equity securities. See "Liquidity
and Capital Resources".

Risk of Default on Senior Notes Due September 30, 2002

There is a significant risk that the Company will not be able to pay the
remaining balance of $982,000 on the 10% Senior Notes due September 30, 2002.
(See Note 4-Senior Notes, to the Consolidated Condensed Financial Statements
above.) While the remaining balance of Senior Notes has not been presented to
the Company for redemption, payment in full may be required. This default could
cause the Company to become insolvent and may force the Company to consider
seeking bankruptcy protection under Federal bankruptcy law. This default could
also cause other material, adverse problems to the Company and could result in
our shareholders and noteholders receiving nothing in return for their
investment in the Company.

Operating Losses, Accumulated Deficit

The financial statements of the Company for the nine months ended September
30, 2002, reflect a net loss of $2,478,000, and an accumulated deficit of
$26,586,000. As of that date, the Company had working capital of $311,000.
Losses have resulted principally from costs incurred in connection with research
and development and the selling and marketing of the Company's software
products. CODE motion control software was introduced commercially in October
1995. The Company's communications products, GEM, CIMConnect and CIM300 were
introduced during 1997, 2000, and 2000 respectively. The likelihood of success
of the Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection with
the development of new products and the competitive environments in the industry
in which the Company operates. There can be no assurance that the Company will
not encounter substantial delays and unexpected expenses related to research,
development, production, marketing or other unforeseen difficulties.

Dependence Upon Major Customers

A large percentage of the Company's sales is to only a few customers. (See
"Major Customers" under Item 2, Management's Discussion and Analysis, "Results
of Operations".) The loss of any customer's business could have a material
adverse effect on the Company. Additionally, the quantity of each customer's
business with the Company depends substantially upon market acceptance of the
customer's products that utilize the Company's software products and upon the
development cycle of the customer's products. The nature of the Company's
business is such that it will likely continue to have few customers accounting
for a significant portion of its business.

Risk of Technological Changes

The markets for the Company's products are new and emerging and as such
these markets are characterized by rapid technological change, evolving
requirements, developing industry standards, and new product introductions. The
dynamic nature of these markets can render existing products obsolete and
unmarketable within a short period of time. Accordingly, the life cycle of the
Company's products is difficult to estimate. The Company's future success will
depend in large part on its ability to enhance its products and develop and
introduce, on a timely basis, new products that keep pace with technological
developments and emerging industry standards and gain a competitive advantage.
Dependence Upon Key Personnel

-21-

The Company is highly dependent on the services of its key managerial and
engineering personnel, including, Robert H. Reback, President and CEO, David P.
Faulkner, Executive Vice President and Managing Director of Machine Control
Products, Michael D. Feaster, Vice President of Software Development and Steven
K. Sorensen, Vice President and Chief Engineer. The loss of any member of the
Company's senior management team could adversely affect the Company's business
prospects. The Company does not maintain key-man insurance for any of its key
management personnel.

For a more complete discussion of risk factors, the reader should refer
to the Company's Annual Report filed on Form 10-K, for the period ended December
31, 2001, filed March 31, 2002.

ITEM 3. 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, and lines of
credit, is not material.

ITEM 4. CONTROLS AND PROCEDURES
- -------------------------------

(a) Evaluation of disclosure controls and procedures.

Based on their evaluations as of a date within 90 days of the filing date
of this report, the principal executive officer and principal financial officer
of the Company have concluded that the Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act) are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC.

(b) Changes in internal controls.

There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION
---------------------------

ITEM 1. LEGAL PROCEEDINGS
- --------------------------

Litigation with Steven D. Hausle, et al,

On April 12, 2002, Steven D. Hausle, Daniel J. Garnett M.D., Stephanie A.
Garnett, Axcient Corporation, and Ronald Tripiano, as plaintiffs, filed suit
against the Company, Robert H. Reback and Randall A. Mackey, as defendants, in
United States District Court, Northern District of California, San Jose
Division, Case Number C02-01769. The complaint alleges breach of oral and
written contract, fraud, negligent misrepresentation, breach of privacy, unfair
competition, wrongful termination, negligence and shareholder derivative claims
for breach of fiduciary duties, constructive fraud, negligence, and seeks
injunctive and declaratory relief. The plaintiffs are demanding $16,000,000 and
a jury trial.

In response to the complaint, the Company filed a motion to dismiss and/or
transfer. Messrs. Reback and Mackey also filed a motion to dismiss and/or
transfer. Although the court issued "Tentative Rulings" granting and denying
various aspects of the motions, a final ruling on the motions has yet to be
issued. The Company still believes the complaint is without merit and intends to
continue to vigorously defend the action. On May 16, 2002, the Company filed an
action in the United States District Court, District of Utah, Case Number
2-02CV-0484K asserting certain claims against Mr. Hausle and Axcient
Corporation. No response has been filed, as by agreement the date to respond
falls within a period after the court rules on the aforesaid motions in the
California case.

-22-

ITEM 2. CHANGES IN SECURITIES
- ------------------------------

On July 12, 2002, the Company entered into an agreement with Positio, Inc.,
which provides investor and public relations services for the Company, to pay
$4,500 per month of Positio's fees, in Company common stock. The agreement
extends from May through September 2002, for a total of $22,500 to be paid in
Company stock. The number of shares issued is based on the closing stock price
on the OTC Bulletin Board, on the 25th day of each month. Shares issued to
Positio for services under this agreement for the period May 2002 through
September 2002 are 92,080.

The shares being issued under this agreement have not been, and will not
be, registered with the Securities and Exchange Commission nor with any state
securities commission. The shares are restricted securities, issued under
statutory exemptions available under the Securities Act of 1933 and under
applicable state securities laws. This is an isolated transaction and is not a
public offering.

On September 30, 2002 the Company entered into a convertible note purchase
agreement in the amount of $500,000, with Tsunami Network Partners Corporation,
a Japanese corporation. The terms of the agreement provide for a short- term
loan with a principal amount of $500,000 at a rate of 6 3/4 % annum, with
principal and interest due on March 31, 2003, or earlier in the event of default
on the note. The conversion feature of the note provides that the note shall be
converted into fully paid nonassessable shares to be determined by dividing all
of the principal and accrued interest due on the note at March 31, 2003 by the
average per share closing sales price of the Common Stock of the Company on the
OTC Electronic Bulletin Board during the period from January 1, 2003 to March
31, 2003. However, the price for which the note shall be converted shall not
exceed $0.75 or be less than $0.35 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ----------------------------------------

There has been no legal default of the Company's Senior Notes. However see
Note 4 - Senior Notes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------

None

ITEM 5. OTHER INFORMATION
- --------------------------
None

-23-

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------

(a) Exhibit listing

The following exhibits are provided with this report:

Exhibit No. Description
- ----------- -----------
3.1 Articles of Incorporation (1)
3.2 Articles of Merger of Cimetrix (USA) Incorporated with Cimetrix
Incorporated (2)
3.3 Amended Bylaws
10.1 Lease with Capitol Properties Four, L.C. (3)
10.2 1998 Incentive Stock Option Plan (4)
10.3 Security Agreement with Michael and Barbara Feaster (5)
10.4 Employment Agreement with Robert H. Reback, President and Chief
Executive Officer (6)
10.5 Employment Agreement with David P. Faulkner, Executive Vice
President and Managing Director of Machine Control Products (6)
10.6 Employment Agreement with Michael D. Feaster, Vice President of
Software Development (6)
10.7 Employment Agreement with Steven K. Sorensen, Vice President and
Chief Technical Officer (6)
10.8 Employment Agreement with Riley G. Astill, Vice President of
Finance, Chief Financial Officer, Treasurer and Secretary (6)
10.9 Amendment 1 to 1998 Incentive Stock Option Plan (7)
10.10 Amendment 2 to 1998 Incentive Stock Option Plan (8)
10.11 Form of Indemnification Agreement with directors and officers (9)
10.12 Settlement Agreement and Mutual Release with Peter Manley and Jana
Manley (9)
10.13 Convertible Note Purchase Agreement and Convertible Note with
Tsunami Network Partners Corporation
99.1 Certificate of Cimetrix Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
99.2 Certificate of Cimetrix Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

--------------------------------------
(1) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
(2) Incorporated by reference to Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1995.
(3) Incorporated by reference from the Registration Statement on Form S-2,
File No. 333-60, as filed on July 2, 1997.
(4) Incorporated by reference to Proxy Statement on Schedule 14A dated
April 20, 1998.
(5) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, filed April 2, 2001.
(6) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002, filed May 15, 2002.
(7) Incorporated by reference to Proxy Statement on Schedule 14A dated
April 30, 2001, as filed on May 14, 2001.
(8) Incorporated by reference to Proxy Statement on Schedule 14A dated
April 30, 2002, as filed on April 30, 2002.
(9) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002, as filed on August 14, 2002.

(b) Reports on Form 8-K

On July 17, 2002, the Company filed an 8-K announcing the appointment of
Robert H. Reback, the Company's President and CEO, as a director of the Company.
Mr. Reback will remain as President and CEO and serve as a director until the
next shareholder's meeting at which directors are elected.

-24-

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.

REGISTRANT

CIMETRIX INCORPORATED

Dated: November 14, 2002 By: /s/ Robert H. Reback
---------------------
ROBERT H. REBACK
President and Chief Executive Officer
(Principal Executive Officer)

By: /s/ Riley G. Astill
----------------------------------------
RILEY G. ASTILL
Vice President of Finance, Treasurer
and Chief Financial Officer
(Principal Financial and Accounting Officer)

-25-

CERTIFICATIONS

I, Robert H. Reback, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cimetrix Incorporated

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the
registrant's board of directors:

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

-26-

I, Riley G. Astill, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cimetrix
Incorporated.

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the
registrant's board of directors:

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

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