Back to GetFilings.com
1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] 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.)
100 N. TAMPA ST., TAMPA, FLORIDA 33602
(Address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (813)226-1818
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR
VALUE $.0001
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the common stock held by non-affiliates of
the registrant as of March 20, 1997 was $74,574,630.
The number of shares outstanding of the registrant's common stock as of
March 20, 1997 was 18,151,428.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to shareholders
in connection with the Annual Meeting of Shareholders to be held May 31, 1997
are incorporated by reference into Part III.
================================================================================
2
CIMETRIX INCORPORATED
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
INDEX
PART I
Item 1. Business ............................................ 1
Item 2. Properties........................................... 12
Item 3. Legal Proceedings.................................... 12
Item 4. Submission of Matters to a Vote of Security Holders.. 13
PART II
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters......................... 13
Item 6. Selected Financial Data.............................. 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 15
Item 8. Financial Statements and Supplementary Data.......... 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures................ 40
PART III
Item 10. Directors and Executive Officers of the Registrant... 40
Item 11. Executive Compensation............................... 40
Item 12. Security Ownership of Certain Beneficial Owners and
Management.......................................... 40
Item 13. Certain Relationships and Related Transactions....... 40
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K................................. 40
Signatures...................................................... 41
3
PART I
ITEM 1. BUSINESS
(A) GENERAL DEVELOPMENT OF BUSINESS
Cimetrix Incorporated ("Cimetrix" or the "Company") was incorporated under
the laws of the State of Utah on December 23, 1985. In September, 1990, Cimetrix
merged with a newly incorporated Nevada company effectively changing its
domicile to Nevada.
In October, 1989, Cimetrix began developing and marketing software products
that control the motion of automated manufacturing devices by entering into an
exclusive license agreement with Brigham Young University ("BYU"). The license
agreement granted Cimetrix the rights to develop and market robot inaccuracy
compensation techniques developed in conjunction with an off-line programming
system (known as ROBLINE) and an accuracy enhancing calibration technique (known
as ROBCAL). Effective July 5, 1995, the Company purchased the technology that
was then being licensed from BYU, referred to as ROBLINE and ROBCAL.
ROBLINE and ROBCAL, together with other technology developed by the
Company, have enabled the Company to develop the Cimetrix Open Development
Environment ("CODE") which includes "open architecture" standards based,
operating systems software and controller hardware that allow manufacturing
engineers to replace cumbersome proprietary systems with open systems when
designing automated workcells. The Company's products are designed to allow the
customer to select "best of class" automation components and to help reduce
costs and time involved in designing, implementing and maintaining automation
systems.
On June 7, 1994, Cimetrix formed a subsidiary, Cimetrix (USA) Incorporated
which was organized under the laws of the State of Florida. In July, 1994
Cimetrix acquired 20,000,000 shares of the common stock of Cimetrix (USA)
Incorporated in exchange for the transfer of substantially all of the assets of
Cimetrix and the assumption of $635,000 of convertible promissory notes payable.
Cimetrix (USA) Incorporated subsequently sold shares of its common stock to
private investors resulting in an approximate 12% minority interest. Effective
August 31, 1995, Cimetrix purchased the minority interest in Cimetrix (USA)
Incorporated by exchanging one share of Cimetrix common stock for one share of
Cimetrix (USA) Incorporated common stock held by the minority shareholders.
Simultaneously, effective August 31, 1995, Cimetrix (USA) Incorporated was
merged into Cimetrix.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company operates in only one business segment.
(C) NARRATIVE DESCRIPTION OF BUSINESS
GENERAL
Cimetrix is the developer of the world's first open architecture, standards
based, personal computer (PC) software for controlling machine tools, robots and
electronics industry equipment that operates on the factory floor. Cimetrix
software products are based on standard computer platforms (Intel Pentium CPU
with ISA/PCI bus and Motorola PowerPC with VME bus) and run on standard
operating systems (UNIX and Windows NT).
-1-
4
Cimetrix believes that manufacturing companies will increasingly demand
open architecture, PC-based controllers on the equipment that they purchase,
transforming the worldwide controller market from proprietary solutions to open
architecture, PC-based solutions.
Cimetrix software is currently operational in production installations on a
wide variety of general industrial robots, CNC machine tools and specialized
electronics industry assembly and surface mount technology (SMT) machines.
THE INDUSTRIAL MOTION CONTROLLER MARKET
The worldwide market for industrial motion control is comprised of four
distinct segments: electronics, machine tools, industrial robots and high-end
programmable logic controllers (PLCs). All four segments utilize some form of
computerized motion controller technology to run automated mechanisms.
Electronics Industry
The electronics industry is not only one of the largest, but is among the
fastest growing industrial sectors using automated manufacturing technology. The
electronics market consists of a variety of vertical niches, including
semiconductor wafer fabrication, semiconductor back end, printed circuit board
assembly (Surface Mount Technology), electronic component and disk drive
assembly. The products of the companies involved in these processes represent
"leading edge" technology and many manufacturers have had to develop
specialized, proprietary equipment that operate in "clean room" environments.
Automation equipment developed by the electronics industry is very expensive,
with individual mechanisms costing up to $500,000 each, versus $30,000 to
$100,000 for general industrial robots.
Since many electronics assembly end-users have been forced to develop
"in-house" manufacturing technology for specialized applications, they have
typically used internally developed, PC-based or UNIX-based controllers written
in C/C++ code. The Company believes that end-users are in need of a standard,
low cost open architecture set of tools to enable them to efficiently develop
specialized control applications quickly. Responding to this, the United States
segment of the industry has formed an association known as NEMI (National
Electronics Manufacturing Initiative). One of the NEMI teams has produced and
released a specification on "Low Cost Controller APIs" aimed at defining an
industry standard for Open Architecture Application Programming Interface
("API"). Cimetrix has been significantly involved in the development of this
specification. As worldwide applications for computer chip technology continue
to expand, the variety and volume of automation equipment in the electronics
assembly industry is expected to continue to grow rapidly.
Machine Tool Industry (CNC Controllers)
Machine tools consist of metal cutting machines such as milling machines,
lathes, machining centers, grinders, and lasers; and metal forming equipment
such as press brakes, turret punches and tube benders. These machine tools,
which are used by a wide variety of manufacturers, utilize a computer numerical
control, or CNC type controller. Despite the PC revolution that has taken place
over the past decade, the underlying technology and software for machine tool
controllers has changed very little during the same period. Most major machine
tool manufacturers purchase proprietary controllers from several CNC controller
vendors. The interest level of tool manufacturers in open architecture CNCs is
very high. The proprietary CNC manufacturers are developing ways to configure
the graphical user interface of the CNC so they appear to be open. However,
none of the CNC manufacturers has developed a true open architecture
controller that runs on a PC.
-2-
5
Robotics Industry
Industrial robots are used for tasks that are tedious, repetitive and
exhausting for humans and typically are employed to reduce the costs and improve
the quality of highly labor-intensive tasks. Industrial robots are multi-axis
manipulators used for welding, painting and material handling applications. The
automotive industry is the primary end-user of robots. Other end-users include
the aerospace, steel, heavy equipment and electronics industries. To date,
attempts by robot manufacturers to diversify sales outside the automotive sector
have been only moderately successful, principally because the early products
have been costly and difficult to use.
Driven by its high labor costs, Japan is the dominant user of robots in
manufacturing, with the United States second. Few industries outside of Japan
and the automotive sector have adopted robot technology because it is currently
expensive to implement. Nearly all robot controllers are proprietary devices
manufactured by the major industrial robot vendors which are supplied with their
own robot systems as a complete, proprietary solution. These robot controllers
are only compatible with robots supplied by the same vendor, and in many cases,
are only compatible with specific robot models of that vendor. These systems
represent an enormous technology investment "legacy," and are difficult and time
consuming to program, configure, implement and modify.
Programmable Logic Controllers(PLC)
Discrete control units such as those that run conveyers or equipment using
sensors and on/off controls were historically controlled by bulky mechanical
relays that lacked reliability in the dusty environment of the factory floor.
Over time, PLCs replaced banks of relays. The growth of the PLC industry is
driven by increasing product functionality and better price/performance to the
end-user. The Company believes that high-end PLCs are being replaced by PC-based
solutions which are more flexible and which can increase the PLC's
functionality.
THE MOVEMENT TOWARDS AN OPEN ARCHITECTURE CONTROLLER
Over the past 15 years, the primary driver for the revolution in and
proliferation of office technology was the standardization of the PC's operating
system, processors and buses. Expensive hardware components became commodities,
with powerful software applications delivering value to the system. The Company
believes this movement to standards-based systems is beginning in manufacturing.
Currently, the automation control industry consists of a heterogeneous,
complex environment of vendor-specific machines and proprietary control systems
which are limited in function and expensive to use. Motion controllers were
originally developed without the benefit of the powerful PCs available today.
Robot and controller vendors were forced to develop motion controllers
internally, creating an environment in which each vendor's system remains
incompatible with the programming and interface methods of the others. As a
result, companies today have factory floors with islands of automation,
including robots, machine tools and sensors, each separated by vendor-specific
hardware peripherals, operating systems and programming languages. The
proprietary nature of these systems constrains the design of optimal workcells
and prevents end-users from managing the factory floor as a coordinated and
unified technology platform. The current environment significantly constrains
overall flexibility, responsiveness and productivity. Proprietary control
systems create numerous constraints for end-users including:
- High initial cost for the equipment, high maintenance costs and high
training costs
- Inability to deploy, redeploy and easily integrate components (no
"mixing and matching")
- Duplicative development and implementation programming required by
each vendor
- Inflexible technology development dictated by vendors (legacy
technology)
-3-
6
Cimetrix is uniquely positioned to become an industry leader in providing
software for both the general manufacturing industries that currently use
machine tool CNC-style controllers, robot controllers, and certain "high-end"
PLC controllers, as well as the electronic industries that are currently using
in-house developed controllers. Manufacturing industries are taking a proactive
role in demanding a switch from proprietary controllers to standard, open
architecture solutions.
ENABLING TECHNOLOGIES DRIVE THE SOLUTION
The current environment of multiple, vendor-specific technology platforms
emerged from the machine tool industry at a time when PCs were too slow and
lacked the power and flexibility required for motion control operations. Vendors
developed motion controllers with proprietary hardware platforms, operating
systems and assembly code programming languages that often locked end-users into
older slower processors. The software tools on these controllers are constrained
by older, legacy hardware and proprietary operating platforms. Hardware upgrades
for simple items, such as expanded memory, can cost ten times that of equivalent
PC upgrades.
- PC technology has now advanced so significantly that today's low cost
PCs have several times more processing power than many higher cost
proprietary controllers.
- The rapid growth and acceptance of PC technology has facilitated a
similar increase in the development of software applications.
- Modern operating systems such as WindowsNT and UNIX offer features
such as multi-tasking, multi-threading, prioritized processing,
symmetrical multi-processors and real-time capabilities, which set the
stage for a common software solution for machine motion control.
- New and advanced motion control servo cards, machine vision processor
cards and I/O cards are now available from a variety of vendors for
use on standard hardware platforms in the industrial environment.
THE CIMETRIX SOLUTION
Cimetrix software is the only software that currently provides all of the
following advantages:
1. LOWER HARDWARE COSTS. Because Cimetrix software products are based on
standard computer platforms (Intel Pentium CPU with ISA/PCI bus and
Motorola PowerPC with VME bus) and run on standard operating systems
(UNIX and WindowsNT), Cimetrix customers benefit from the tremendous
price/performance advantage of the PC platform. In addition, the open
architecture of Cimetrix software enables Cimetrix customers to "mix
and match" components to obtain the optimal motion card, I/O subsystem
and vision system for the application.
2. INCREASED SOFTWARE RELIABILITY. The Cimetrix CIMServer component is
the same software that is used to control machine tools, industrial
robots and electronics industry equipment. Since this core software
has been thoroughly tested in production installations across many
industries, there is increased reliability and lower risk when
developing a controller for a new application.
-4-
7
3. REDUCED APPLICATION DEVELOPMENT TIME. The Cimetrix CIMServer utilizes
an extensive library of APIs to access the underlying Cimetrix motion
control algorithms, which enable application developers to program at
very high levels using the programming languages of their choice.
Cimetrix customers estimate this reduces development efforts for new
applications by approximately 50%.
4. REDUCED TIME TO MARKET. The unique Cimetrix CIMServer contains two
nearly two identical versions: (i) an off-line simulation version with
output to a video driver (CIMulation), and (ii) an on-line version
with output to motion control equipment (CIMControl). Unlike existing
systems, simulation and control are achieved with the same application
software and API set, enabling concurrent engineering and reduced time
to market. Cimetrix customers estimate the ability to develop, test
and debug an entire application in simulation mode prior to any
hardware becoming available reduces the overall time to market by
approximately 50%.
5. CUSTOMERS CONTROL THEIR OWN DESTINY. Cimetrix software provides all of
the software source code hooks for Cimetrix customers to implement
their own custom software or algorithms. This ensures that Cimetrix
customers control their own destiny and are able to develop
specialized or proprietary software to differentiate their products.
STRATEGY AND CUSTOMERS
Cimetrix has targeted three key audiences for the commercialization of its
products:
1. End-User Production Installations
2. OEM Customers Through Pilot Projects
3. Systems Integrators to Service Additional End-Users
The first step of the Cimetrix strategy was the installation of Cimetrix
software to continuous (i.e., 24 hours a day, 7 days a week) production
environments across a wide variety of applications. Cimetrix targeted strategic
end-users promoting open architecture standards for their own manufacturing and
production systems. Cimetrix obtained contracts to provide open architecture
controller solutions for specific projects for end-user customers. These initial
end-user installations, which typically range from 1 to 25 controllers, provide
valuable reference accounts that can validate the benefits of Cimetrix's open
architecture technology. These end-user customers also provide strong
recommendations and endorsements to their strategic equipment suppliers to make
arrangements with the Company to utilize Cimetrix software.
The second step of the Cimetrix strategy is to work closely with strategic
OEM customers that build CNC Machine Tools, Industrial Robots and Electronics
Assembly/SMT equipment. Cimetrix has identified the leading machine suppliers in
these markets that produce over one thousand machines per year and represent the
highest volume sales channel for Cimetrix. The control software for these
customers is a critical decision that affects the future of their companies.
Accordingly, Cimetrix has developed an OEM customer sales cycle that involves a
pilot project undertaken in cooperation with the OEM customer to validate that
Cimetrix software can effectively control the OEM customer's machine as well as
provide the anticipated benefits. Cimetrix is currently in various stages of the
OEM sales cycle with several leading OEM customers in the CNC Machine Tool,
Industrial Robots and Electronic Assembly/SMT markets.
-5-
8
The third step of the Cimetrix strategy is to use systems integrators to
meet the needs of additional end-user customers. Cimetrix is utilizing this
approach to re-direct the Cimetrix systems integration staff to work directly
with leading OEM customers. Cimetrix has now established a small, but growing
network of systems integrators across the United States and Canada, with
expertise in Machine Tools, Robotics and Electronics Assembly.
PRODUCT LINE OVERVIEW
The Company's product suite is called the CIMETRIX OPEN DEVELOPMENT
ENVIRONMENT (CODE), which is an integrated suite of software tools designed to
run on PCs that enables rapid off-line controller programming, applications
development, simulation and debugging of automated workcells, as well as the
seamless implementation of workcell control. CODE runs on the WindowsNT Platform
as well as several variations of the UNIX operating system, including Lynx, a
hard real-time operating system (OS). Unlike any other systems available today,
CODE makes concurrent engineering possible because simulation and control are
accomplished using the same application program, thereby dramatically reducing
application development and implementation times. CODE's multi-platform
capability enables users to choose from the entire spectrum of computer
suppliers, resulting in "best of class" hardware and software configurations.
The core component of the CODE architecture is the CIMServer. There are two
nearly identical versions of the CIMServer, an off-line simulation version with
output to a video drive (CIMulation) and an on-line control version with output
to motion control and I/O control card drivers for controlling machines
(CIMControl). In both versions, the CIMServer communicates with and coordinates
application programs, communicates with the actual or simulated physical
devices, performs motion planning, maintains the workcell model and provides I/O
services between the controller and the workcell sensors and actuators. Unlike
existing systems, simulation and control are achieved with the same software,
enabling concurrent engineering and reduced implementation time. This technology
has been packaged into a set of standard products consisting of the core
products and a variety of supporting products.
- CIMulation: A version of the CIMServer in which workcell operation is
simulated on a graphical workstation. The graphical simulation
provides the programmer with an off-line, virtual workcell, viewed as
a three dimensional solid or wire frame graphical model with
fully-functional kinematics. All application programs can be directly
transported for use with CIMControl. CIMulation includes CODE API
which is a standard C/C++ library of over 400 function calls used for
automation application development. Functions are provided for motion
control, machine vision, I/O control, off-line collision checking and
other common workcell operations. Also included is CIMTools which is a
collection of general purpose applications which provide the standard
user interface to the CODE System. In addition to C/C++ the CODE API
is provided for Visual Basic and Borland's Delphi, two popular rapid
application development environments for WindowsNT.
- CIMControl A version of the CIMServer which allows on-line mechanism
and I/O control through off-the-shelf servo and I/O control cards. It
turns any standards-based computer (PC or VME) into an open
architecture controller. Unlike competing, proprietary workcell
controller software, CIMControl's client/server architecture
simultaneously can drive several, dissimilar types of mechanisms, such
as robots and machine tools, manufactured by different vendors.
CIMControl also includes the CODE API and CIMTools.
-6-
9
CIMulation and CIMControl are separate versions of the same CODE Server.
Applications developed using the CODE API run the same with either server
seamlessly. No complex translation is required from workcell design and
simulation to workcell control because applications run in the native CODE
Environment.
- CIMCNC: CIMCNC includes CIMControl, an RS 274 D Code interpreter,
and specialized interfaces for milling and punching operations.
By combining CIMControl and the CNC API set with a CNC Supplier's
machine specific software and Graphic User Interface ("GUI"),
world class Open Architecture CNC can be quickly completed.
- CIMBuilder: A software tool designed to simplify and accelerate
the development of robotics and general purpose machine control
applications which encapsulates the CODE API. CIMBuilder uses a
point-and-click programming methodology and incorporates a GUI
builder, allowing entire application programs to be created
easily by filling in blanks in command templates. These
programming commands are translated into the TCL language
automatically to run in CIMulation or CIMControl.
- CIMVision: A collection of software interfaces that simplifies
the process of incorporating machine vision functionality into a
CODE-based control solution. CIMVision provides two ways of
integrating machine vision functionality including command
templates and API.
- CIMCal: A library of C/C++ functions and extensions to CIMBuilder
which provides two significant enhancements to a CODE-based
control system. First, CIMCal allows system developers to
determine mechanism tool and sensor positions and orientation
relative to each other and other system locations. Second, CIMCal
provides patented algorithms for improving the accuracy of the
mechanism.
- CIMTune: A graphical tool for the setup, testing and tuning of
control systems. CIMTune can be used either stand-alone or in
conjunction with a Cimetrix Server. When used with a server,
CIMTune will automatically construct a default servo model of a
mechanism from the kinematic model. This model provides a
simplified visual representation that aids users in a variety of
testing, setup and monitoring activities.
- GEM EQUIPMENT MANAGER AND GEM HOST MANAGER: GEM is a standard for
communications between manufacturing equipment and the factory's
host computer. Equipment builders have been reluctant to provide
GEM-compliant technology because of the difficulty in obtaining
GEM compliance. Without GEM Manager, it takes end-users between
six months and two years to add GEM to their equipment.
Recognizing the need to simplify this process, one of the
Company's customers urged Cimetrix to develop a comprehensive
tool set for implementing the GEM standard. The resulting
products, GEM Equipment Manager and GEM HOST Manager have broad
application not only for CODE-based controllers but for many
other types of factory equipment. These products enable GEM
compliance in a matter of weeks.
GEM Equipment Manager provides easy-to-use, graphical tools for
configuring, testing and administering all standard requirements,
including the communication process and process state model. GEM
HOST Manager provides a standard API to link the communication
process with application programs at the host level.
-7-
10
The Company continues to invest heavily in research and development to
continue to build its leading position in open architecture controllers and open
systems automation products. Cimetrix's goal is to build its API set into the
most complete and robust open architecture API available. New product
developments are prioritized and scheduled based on customer input and ongoing
evaluations of new software technologies as they apply to the Cimetrix business
model. After end-user or OEM requirements are documented, manpower estimates are
established and new products are scheduled for release. This process is
documented in the Cimetrix Software Quality Standards. Major new developments
for 1997 will be to improve the Motion and I/O interface to allow easier
integration of new servo cards and tuning packages, to upgrade to WindowsNT 4.0
and to further adapt Cimetrix APIs to conform to and drive worldwide standards.
In addition, Cimetrix will be starting an aggressive program for Cimetrix CNC
products and continue to develop easier ways to interface Cimetrix software
products and third party motion controllers to customers' machines.
COMPETITION
The manufacture and sale of automation technology is a highly competitive
industry. Cimetrix believes that its competition is divided into four (4)
groups: robot manufacturers, machine tool controller manufacturers, simulation
developers, and electronics assembly equipment manufacturers.
There are several robot manufacturers who design and sell proprietary
controllers and software for their robots. Most of these companies are much
larger than Cimetrix, including Adept Technologies, Asea Brown Boveri Group
(ABB), Fanuc, Kawasaki, Kuka Welding, Mitsubishi Electric, Nachi, Panasonic,
Sankyo, Seiko, Sony, Staubli, Yamaha, and Yaskawa Electric(Motoman), and have
significantly greater resources than the Company. While their hardware is
generally considered very good, management believes the competition's software
and controllers are limited in their applications because of the closed,
proprietary design. While the Company will not be manufacturing robot devices in
direct competition with these companies, its controllers and software will
directly compete with their proprietary controllers. Management believes the
Company's products are generally less expensive than the competing products, and
that the Company's products generally permit greater flexibility of function and
ease of use.
There are two or three other manufacturers of robot controllers that claim
to have "open architecture" design (i.e., useable with robots made by different
manufacturers). Management believes that they are not "open architecture"
designs. Management believes the most popular of these, made by Adept
Technologies, Inc. ("Adept"), uses a closed, proprietary computer language that
is translatable into other proprietary languages, but that is not easily
expandable. This can make modification of the controller's functions
difficult. Additionally, management understands that it is difficult for
Adept's controllers to interface across a local area network.
Machine tools consist of metal-forming equipment, such as press brakes,
turret punches and tube benders, and metal cutting machines, such as milling
machine equipment, lathes and lasers, and are used by a wide variety of
manufacturers. Machine tools utilize a computer numerical control, or CNC-type
controller. Despite the PC revolution that has taken place over the past decade,
the underlying technology and software for machine tool controllers has changed
very little during the same period. Most major machine tool manufacturers
purchase proprietary controllers from several CNC control system vendors,
including Allen-Bradley, Fanuc, Mitsubishi, Siemens, and Toshiba.
Cimetrix has identified at least three major competitors in the field of
robot software simulation development and robot accuracy correction, including
Deneb Robotics, Inc., Silma (subsidiary of Adept), and Technomatics. While these
three companies market systems which are competitive on a stand-alone basis for
simulation, management believes they are unable to match the Company's ability
to achieve both simulation and control with the same program, enabling
concurrent engineering and reduced implementation time. Management also believes
that other simulation companies do not have the same flexibility of off-line
programming or precision robot control in their products as compared to the
Company's products.
-8-
11
The final group of competitors is composed of electronics assembly
equipment manufacturers who supply controllers with their electronics assembly
equipment. This group includes Fuji, Panasonic, Universal Instruments, Siemens,
and numerous others.
Management believes that most, if not all, of the Company's competitors
currently have greater financial resources and market presence than Cimetrix.
Accordingly, these competitors may be able to compete very effectively on
pricing and to develop technology to increase the flexibility of their products.
Further, each of these competitors has already established a share of the market
for their products, and may find it easier to limit market penetration by the
Company because of the natural tie-in of their controllers and software to their
mechanisms. Management is uninformed as to whether any of these competitors are
presently developing additional technology that will directly compete with the
Company's product offerings.
SALES AND MARKETING
The Company's sales and marketing team targets three primary markets:
Electronics Assembly/SMT, Robotics, and CNC Machine Tools. The sales and
marketing team is responsible for identifying key end-user customers and the
top-tier OEM machine suppliers in each primary market. The Company's direct U.S.
sales force is coordinated by an Executive Vice President of Sales and Marketing
and four supporting regional sales managers. Each salesperson is responsible for
pursuing potential customer leads in his or her territory and for qualifying
customer relationships. International sales and marketing responsibilities are
addressed by the Executive Vice President of Sales and Marketing. The Company's
sales offices are located in Los Angeles, Milwaukee, Detroit and Boston.
OPERATIONS
The Company's operations are conducted through three principal teams:
Software Development, Applications and Technical Services. These teams are
responsible for defining and developing new products, performing initial product
integrations with key OEMs and all aspects of customer support and
manufacturing. The Company's strategy is to develop standard software products
that have been thoroughly tested and deliver/support these products using major
OEMs as the key channel to market. A comprehensive Software Quality Program and
rigid coding standards are key to the development process.
The Software Development team is responsible for producing Quality Software
Products on time. All products are managed by releases and follow the Cimetrix
Software Quality Standards. Skill-sets on this team include Computer Science and
Mechanical Engineering professionals. The functionality included in new releases
is jointly established by the Marketing and Sales team and the Chief Engineer.
The Applications team is responsible for the initial integration of
Cimetrix software with an OEM's machine or mechanism. Working closely with sales
professionals, they verify the OEM's requirements and design and integrate
Cimetrix software using standard products in a defined period. Skill-sets on
this team include servo tuning, inverse kinematics design, vision, software,
interface board design, wiring, systems integration, and program management.
-9-
12
The Technical Services team supports Cimetrix customers and development
engineers and performs some minor manufacturing activities. Their activities
include:
- Twenty-four hour technical support on the entire Cimetrix
product line.
- Customer training, including monthly training sessions in Utah as well
as customer-site training. The Company's comprehensive training
modules are typically 2 to 3-day courses, depending on the product. In
1996, twenty-four training sessions were held for various Cimetrix
products. This schedule will grow to approximately fifty courses in
1997. Typical attendees include technical and evaluation personnel
from end-users, OEMs and systems integrators.
- Full documentation of all applications, which will be available on
CD-ROM in the second quarter of 1997.
- Software Quality and Systems testing so that the Technical Services
team is the "first customer" of any new products or releases. A
comprehensive configuration management system ensures proper release
methods.
- Manufacturing fulfills orders and performs some minor assembly of
hardware components. The Company assembles some PCs (CX3000) for use
with first time OEM integrations and for occasional purchase by
systems integrators. Most major components of the Company's
controllers, such as CPU boards, motion control boards and computer
chassis are off-the-shelf products manufactured by a variety of
vendors. Certain other low volume components are designed by Cimetrix
and outsourced to various suppliers. These products are primarily
interface boards which simplify wiring and safety circuits when
Cimetrix controllers are connected to customer mechanisms. Cimetrix's
new location in the Salt Lake City area has increased the
manufacturing space to approximately 12,000 square feet, which has
enabled the Company to expand and accelerate its initial OEM software
integration operations.
INTELLECTUAL PROPERTY RIGHTS
The open architecture controller technology upon which the Company's
software is based was developed from 1984 to 1989 by a team of BYU engineers
led by Dr. W. Edward Red, Dr. Steven Sorensen, and Dr. Xuguang Wang. In 1989,
Cimetrix signed an exclusive license with BYU for the development of these
technologies for commercial purposes. Shortly thereafter, Dr. Sorensen and Dr.
Wang joined Cimetrix. Effective July 5, 1995, Cimetrix purchased from BYU all
the rights, title, interest and benefit from this intellectual property. To
date, more than 250 man-years have been invested in the development of
Cimetrix's open architecture software technology.
The technology purchased from BYU, along with other technology developed
internally, is proprietary in nature. The Company has obtained two patents on
certain aspects of the technology, issued in May 1989 and March 1994,
respectively. In addition, the Company has registered its entire CODE software
system with the Copyright Office of the United States, and will continue to
timely register any updates to current products or any new products. For the
most part, other than the two patents and the copyright registrations, the
Company relies on confidentiality and non-disclosure agreements with its
employees and customers, appropriate security measures, and the encoding of its
software to protect the proprietary nature of its technology. No cost has been
capitalized with respect to the patents.
MAJOR CUSTOMERS, BACKLOG AND FOREIGN SALES
Approximately 34% and 14% of the Company's revenues during the year ended
December 31, 1996 were from a Japanese OEM and Sandia National Labs,
respectively. No other single customer accounted for more than 10% of the
Company's revenues during 1996. The Company had four customers, AT&T (16%),
Cybex Technologies (10%), Hewlett-Packard (26%) and Motorola (29%), which
individually were 10% or more of the Company's revenues during the year ended
December 31, 1995 and which together accounted for approximately 81% of the
Company's total revenue during 1995. Although the Company values its
relationships with all of its customers, the Company does not believe the loss
of any single customer would have a material adverse impact on the Company.
At December 31, 1996, the Company's backlog of orders from customers where
products will be shipped or application engineering services will be performed
during 1997 was approximately $450,000. The Company expects to fulfill
substantially all of these backlog orders during the first six months of 1997.
In addition, the Company has signed support service agreements which should
generate approximately $150,000 in revenues over the term of the agreements,
principally 1997.
During the year ended December 31, 1996, approximately 43% of the
Company's revenues were from companies based in foreign countries, principally
Japan. The Company is in the process of establishing a sales office in Japan.
PERSONNEL
The Company currently has 52 employees, 33 of which are involved in the
technical development of products, 2 in manufacturing, 9 in sales and marketing,
and 8 in administrative and clerical. None of the employees of the Company are
represented by a union or subject to a collective bargaining agreement, and
Cimetrix considers its relations with its employees to be favorable.
-10-
13
EXECUTIVE OFFICERS
PAUL A. BILZERIAN, President, Chief Executive Officer and Director, age 46,
has been involved in Cimetrix in various capacities since 1994. Mr. Bilzerian
has been involved in more than $10 billion dollars of corporate transactions
and financing. He has a B.S. Degree from Stanford University and a Masters
Degree in Business Administration from Harvard University.
DAVID P. FAULKNER, Executive Vice President of Operations, age 41, joined the
Company in August 1996. Mr. Faulkner was previously employed as the Manager of
PLC Marketing, Manager of Automotive Operations and District Sales Manager for
GE Fanuc Automation, a global supplier of factory automation computer equipment
specializing in programmable logic controllers, factory software and computer
numerical controls from 1986-1996. Mr. Faulkner has a B.S. Degree in
Electrical Engineering and a Masters Degree in Business Administration from
Rensselaer Polytechnic Institute.
ROBERT H. REBACK, Executive Vice President of Sales and Marketing, age 37,
joined Cimetrix as Vice President of Sales in January 1996 and was promoted to
Executive Vice President of Sales and Marketing in January, 1997. Mr. Reback was
the District Manager of Fanuc Robotics' West Coast business unit from 1994-1995.
From 1985-1993 he was Director of Sales/Account Executives for Thesis, Inc., a
privately-owned supplier of factory automation software and was previously a
Senior Automation Engineer for Texas Instruments. Mr. Reback has a B.S. Degree
in Mechanical Engineering and a M.S. Degree in Industrial Engineering from
Purdue University.
DAVID L. REDMOND, Executive Vice President, Chief Financial Officer and
Director, age 45, joined Cimetrix as Executive Vice President and Chief
Financial Officer in February, 1997. He has been a Director of Cimetrix since
September, 1995. Mr. Redmond was Executive Vice President and Chief Financial
Officer of Pharmacy Corporation of America ("PCA") from 1995-1997. From
1991-1995, he was Senior Vice President and Chief Financial Officer of Pharmacy
Management Services, Inc., a publicly-held company which was acquired by PCA in
June, 1995. Mr. Redmond spent approximately 16 years with KPMG Peat Marwick,
including 6 years as Partner in Charge of KPMG's High Technology Practice in
Florida. He was also a member of KPMG's High Technology Group. Mr. Redmond is a
Certified Public Accountant and has a B.S. Degree in Accounting from the
University of North Dakota.
ANDREA J. BERRY, Vice President of Human Resources, age 41, joined Cimetrix in
November, 1996. From 1990 to 1993 Ms. Berry was a consultant with Organizational
Dynamics, Inc., an international company which assisted organizations with
continuous quality and self-managed work team implementation. She was previously
employed for several years by TEAC America, Inc. as Corporate Manager, Human
Resources and Organization Development. Ms. Berry has a B.A, Degree in History
from the University of California at Irvine and a M.A, Degree in Human
Resources and Organization Development from the University of San Francisco.
RONALD E. HAIR, Vice President of Technical Services, age 40 , joined Cimetrix
in March, 1996. Mr. Hair served as the Director in Information Systems at Evans
and Sutherland Computer Corporation, where he worked from 1982-1996. Mr. Hair
has a B.S. Degree in Computer Graphics from Brigham Young University ("BYU").
NORMAN J. IBRAHIM, Vice President of Sales, age 43, joined Cimetrix in June,
1996 as Midwest Manager of Sales. He was promoted to Vice President of Sales in
January, 1997. Mr. Ibrahim was the Vice President of Sales for Framework
Technologies, an Allan Bradley Technology spin-off, from 1994-1996. From
1993-1994 he was East Coast Sales Manager of Thesis, Inc. His previous
responsibilities include various marketing and sales degree positions at
Honeywell, Measurex Systems and Mentor Graphics. Mr. Ibrahim has a B.S. Degree
in Chemical Engineering from the University of Washington.
-11-
14
DR. STEVEN SORENSEN, Vice President and Chief Engineer, age 36, has worked for
Cimetrix during the past five years. Prior to joining Cimetrix, Dr. Sorensen
was an Associate Professor at BYU, where he received his Ph.D. in Mechanical
Engineering. Dr. Sorensen has been working to develop the Cimetrix
technology for the past ten years and is one of the principal architects of
many of the Company's most important products.
DR. XUGUANG WANG, Vice President of Strategic Programs, age 33, has worked for
Cimetrix during the past six years. Dr. Wang has been working to develop the
Cimetrix technology for the past ten years. He received his Ph.D. in
Mechanical Engineering from BYU and is an expert in computer graphics, robot
kinematics, control tool and sensor calibration and robot accuracy enhancement
compensation.
ITEM 2. PROPERTIES
The Company sold its 18,500 square foot facility in Provo, Utah during
September, 1996 and leased the space back from the purchaser until February 28,
1997. Cimetrix signed a five year lease effective March 1, 1997 and moved on
that date to a facility at 6979 S. High Tech Drive in Midvale, Utah (about six
miles south of Salt Lake City). The new facility consists of 32,000 square feet,
of which approximately 20,000 square feet is office and engineering space and
approximately 12,000 is manufacturing and storage space. Pursuant to their
decision to subcontract most of the manufacturing of hardware to outside
vendors, management considers the existing manufacturing facilities and
non-manufacturing facilities to be sufficient to accommodate the anticipated
growth of the Company for the immediate future.
The Company leases 4,754 square feet in Tampa, Florida for its
administrative office. The lease expires on June 30, 2000. The Company also
leases approximately 800 square feet for sales offices in Boston, Milwaukee and
Los Angeles pursuant to short-term leases expiring within the next 12 months.
ITEM 3. LEGAL PROCEEDINGS
The Company filed a lawsuit on February 8, 1996 and an amended complaint on
March 7, 1997 against W. Keith Seolas ("Seolas"), a former director of the
Company, and members of his family. The lawsuit, styled Cimetrix Incorporated v.
Waldron Keith Seolas et al., pending in the Fourth Judicial Court of Utah
County, Utah seeks declaratory relief and a determination of the validity of the
issuance of approximately 2,000,000 shares of the Company's common stock to
Seolas and his family members.
Seolas filed a separate action on April 26, 1996 and an amended complaint
on March 17, 1997 in the United States District Court for Utah, against the
Company. In his lawsuit, styled Waldron Keith Seolas et al. v. Cimetrix
Incorporated, Seolas alleges fraud by the Company in connection with the return
of approximately 200,000 shares of the Company's common stock by Seolas to the
Company in 1994. The Company believes that it has strong defenses to Seolas'
claims and intends to vigorously defend them. The Company's counsel believes the
claims against the Company are without merit.
Other than as stated above, the Company is not a party to any material
pending legal proceedings and, to the best of its knowledge, no such proceedings
by or against the Company have been threatened. To the knowledge of management,
there are no material proceedings pending or threatened against any director or
executive officer of the Company, whose position in any such proceeding would be
adverse to that of the Company.
-12-
15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
Company's last quarter of the fiscal year ended December 31, 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock of the Company is being quoted on the National Association
of Securities Dealers, Inc.'s OTC Bulletin Board under the symbol "CMXX". The
table below sets forth the high and low bid prices of the Company's common stock
for each quarter during the past two fiscal years. The quotations presented
reflect inter-dealer prices, without retail markup, markdown, or commissions,
and may not necessarily represent actual transactions in the common stock.
Fiscal Year 1996 High Bid Low Bid
----------------- -------- -------
First quarter $15.75 $9.75
Second quarter $11.25 $6.50
Third quarter $ 7.63 $5.25
Fourth quarter $ 8.38 $5.50
Fiscal Year 1995 High Bid Low Bid
----------------- -------- -------
First quarter $ 6.37 $4.25
Second quarter $ 6.25 $3.50
Third quarter $ 6.12 $3.75
Fourth quarter $10.25 $4.37
On March 20, 1997, the closing quotation for the common stock on the OTC
Bulletin Board was $5.875 per share. Potential investors should be aware that
the price of the common stock in the trading market can change dramatically over
short periods as a result of factors unrelated to the earnings and business
activities of the Company.
On March 20, 1997, there were 18,151,428 shares of common stock issued and
outstanding, held by approximately 1,500 beneficial shareholders.
The Company has not paid dividends with respect to its common stock. There
are no restrictions on the declaration or payment of dividends set forth in the
Articles of Incorporation of Cimetrix or any other agreement with its
shareholders. Management anticipates retaining any potential earnings for
working capital and investment in growth and expansion of the business of the
Company and does not anticipate paying dividends on the common stock in the
foreseeable future.
-13-
16
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of Cimetrix is not covered by an
opinion of independent auditors and should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in Item 7 of this Form 10-K and the financial statements and
notes thereto included in Item 8 of this Form 10-K.
STATEMENTS OF OPERATIONS DATA
Year ended December 31,
-------------------------------------------------------
1996 1995 1994 1993 1992
------- -------- ------- -------- --------
(in thousands, except per share data)
Revenues $ 2,396 $ 664 $ 463 $ 1,142 $ 330
Operating Expenses:
Cost of revenues 1,342 446 297 727 124
Selling, marketing and
customer support 1,494 947 217 115 59
Research and development 1,179 930 198 507 316
General and administrative 1,577 1,231 1,217 857 710
Compensation - stock options 685 -- -- -- --
------- ------- ------- ------- -------
Total operating expenses 6,277 3,554 1,929 2,206 1,209
------- ------- ------- ------- -------
Loss from Operations (3,881) (2,890) (1,466) (1,064) (879)
Net Loss $(3,455) $(2,544) $(1,145) $(1,074) $ (881)
======= ======= ======= ======= =======
Loss per Common Share $ (.19) $ (.16) $ (.08) $ (.07) $ (.05)
======= ======= ======= ======= =======
Dividends per Common Share -- -- -- -- --
======= ======= ======= ======= =======
BALANCE SHEET DATA
Current assets $ 4,220 $ 3,268 $ 3,835 $ 230 $ 69
Current liabilities 1,344 338 1,451 857 479
Working capital 2,876 2,930 2,384 (627) (410)
Total assets 9,227 9,722 5,632 356 223
Total long-term debt 296 338 44 41 41
Stockholders' equity (decifit) 7,631 9,071 3,613 (535) (297)
-14-
17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth the percentage of cost and expenses to net
revenues derived from the Company's Statements of Operations for each of the
three preceding fiscal years.
Year Ended December 31,
---------------------------------
1996 1995 1994
---- ---- ----
Net revenues 100.0% 100.0% 100.0%
----- ----- -----
Operating expenses:
Cost of revenues 56.0 67.2 64.1
Selling, marketing and customer support 62.3 142.6 46.9
Research and development 49.3 140.0 42.8
General and administrative 65.8 185.4 262.8
Compensation - stock options 28.6 - -
----- ----- -----
Total operating expenses 262.0 535.2 416.6
----- ----- -----
Loss from operations (162.0) (435.2) (316.6)
Interest income, net of expense 2.3 22.0 7.8
Other income (expenses) 15.5 0.1 (0.7)
----- ----- -----
Loss before minority interest and (144.2) (413.1) (309.5)
extraordinary item
Minority interest in loss - 30.0 21.6
----- ------ ------
Loss before extraordinary item (144.2)% (383.1)% (287.9)%
Extraordinary item - - 40.6
----- ----- ------
Net Loss (144.2)% (383.1)% (247.3)%
====== ====== ======
NET REVENUES
Net revenues for the three fiscal years ended December 31, 1996, 1995, and
1994 were approximately $2,396,000, $664,000, and $463,000, respectively. Net
revenues for 1996 included approximately $1.4 million of software revenues,
$680,000 of hardware revenues and the remainder from applications engineering
and support agreements. Revenues for 1995 represented sales of products to
customers for testing and evaluation and approximately 56% of revenues during
1995 were from the sale of hardware products. Revenues for 1994 represented
periodic purchases of "beta site" prototype equipment by a few selected
customers. For the year ended December 31, 1994, the Company was a "development
stage" enterprise as defined by generally accepted accounting principles.
-15-
18
COST OF REVENUES
The Company's cost of revenues as a percentage of net revenues for the
years ended December 31, 1996, 1995, and 1994 are approximately 56%, 67%, and
64%, respectively. The cost of revenues decreased significantly in 1996
because the revenues from software products as a percentage of total revenues
increased from approximately 27% of revenues during 1995 to approximately 58%
of revenues during 1996. The percentage of hardware sales to total revenues
decreased from approximately 56% during 1995 to approximately 28% during 1996.
The cost of revenues from software revenue is less than 25% while the cost of
revenues from hardware sales varies from 50% to 80%. The cost of revenues for
1995 and 1994 also reflect management's decision to keep gross profit margins
narrow in order to encourage potential buyers to become acquainted with the
products offered.
SELLING, MARKETING AND CUSTOMER SUPPORT
Selling, marketing and customer support expenses have increased
significantly each year from approximately $217,000 in 1994, to approximately
$947,000 in 1995, and to approximately $1,494,000 in 1996. Selling, marketing
and customer support expenses in 1996 and 1995 reflect the hiring and related
travel expenses of full-time marketing and sales personnel, the development of
product brochures and other marketing material and the costs related to the
Company's representation at trade shows.
RESEARCH AND DEVELOPMENT
Research and development expenses have continued to increase from
approximately $198,000 in 1994, to approximately $930,000 in 1995, and to
approximately $1,179,000 in 1996. The Company's extensive effort to develop
its products for WindowsNT and the continued development of GEM represented the
majority of the research and development expenditures during 1996.
GENERAL AND ADMINISTRATIVE
General and administrative expenses have increased from approximately
$1.2 million per year during 1995 and 1994 to approximately $1.6 million
during 1996. The primary increases in general and administrative expenses in
1996 when compared to 1995 and 1994 are approximately $263,000 in legal expenses
related primarily to the Seolas litigation, approximately $150,000 in investment
banking fees paid to Cowen & Company and amortization of goodwill related to
the merger of Cimetrix (USA) Incorporated into Cimetrix effective August 31,
1995, which amortization was approximately $217,000 during 1996 compared to
approximately $72,000 during 1995.
COMPENSATION - STOCK OPTIONS
During 1996, the Company recorded, in accordance with APB 25, the
compensation cost related to all options granted during 1996 and any currently
outstanding options that have been previously granted to employees.
Additionally, the Company has expensed that portion of the compensation cost
related to employee services rendered during 1996. Employee services are
assumed to be rendered over the two year vesting period of the options.
Compensation expense recorded during 1996 was approximately $685,000.
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), which is effective for the Company's fiscal year
ending December 31, 1996. FAS 123 encourages, but does not require, companies
to recognize compensation expense based on the fair value of grants of stock,
stock options and other equity investments to employees. Although expense
recognition for employee stock-based compensation is not mandatory, FAS 123
requires that companies not adopting must disclose the pro forma effect on net
income and earnings per share. The Company will continue to apply prior
accounting rules and make pro forma disclosures in 1997.
GAIN ON DISPOSITION OF ASSETS
The Company sold its facility in Provo, Utah in September, 1996 and
recognized a gain of approximately $352,000. The Company had gains from the
sale of various other assets of approximately $8,000 during 1996.
MINORITY INTEREST IN LOSS FROM OPERATIONS OF SUBSIDIARY
The Company's loss in the operations of its subsidiary, Cimetrix (USA)
Incorporated was reduced by $199,000 in 1995 and $100,000 in 1994 to reflect
the share of the loss attributable to the minority interest of Cimetrix (USA)
Incorporated. Cimetrix (USA) Incorporated was merged into Cimetrix effective
August 31, 1995.
EXTRAORDINARY ITEM
The Company recorded an extraordinary item of $188,000 in 1994
relating to the forgiveness of debt, net of taxes.
-16-
19
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $2,876,000 of working capital at
December 31, 1996, compared with approximately $2,930,000 and approximately
$2,384,000 at the end of fiscal years 1995 and 1994, respectively. The
increase in working capital in fiscal year 1996 was primarily attributable to
the sale of the Company's facility in Provo, Utah, which generated
approximately $1.2 million in cash, and the exercise of stock options, which
generated approximately $1.6 million in cash. These increases in cash during
1996 were offset by approximately $2.0 million in negative cash flow from
operations and approximately $130,000 for purchases of property and equipment.
The working capital increase in fiscal year 1995 was primarily attributable to
$4 million received from the sale of common stock. The Company's future
liquidity will continue to be dependent on its operating cash flow and
management of trade receivables and inventories. Management believes that the
Company's working capital is sufficient to maintain its current and immediately
foreseeable levels of operations.
The Company had negative cash flow from operating activities of
approximately $2.0 million for fiscal year 1996 compared to approximately $2.9
million for fiscal year 1995 and approximately $1.8 million for fiscal year
1994. Negative cash flow from operations for 1996 was approximately equal to
the Company's net loss minus depreciation and amortization and the compensation
expense for stock options. Negative cash flows from operations in 1995 and
1994 are approximately equal to the Company's net loss minus amortization and
depreciation plus increases in receivables and inventories.
The Company anticipates that capital expenditures for fiscal year
1997, primarily for computer equipment, will be approximately $200-300,000.
Management believes that the Company has sufficient funds to meet its capital
expenditure requirements for 1997.
IMPACT OF INFLATION
The Company has not been adversely affected by inflation as
technological advances and competition within the software industry have
generally caused prices of the products sold by the Company to decline.
Management believes that any price increases could be passed on to its
customers, as prices charged for hardware by the Company are not set by
long-term contracts.
-16-
20
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Board of Directors
CIMETRIX INCORPORATED
We have audited the accompanying balance sheets of Cimetrix
Incorporated at December 31, 1996 and 1995 and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1996, 1995, and 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements audited by us present fairly,
in all material respects, the financial position of Cimetrix Incorporated as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for the years ended December 31, 1996, 1995 and 1994 in conformity with
generally accepted accounting principles.
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
February 26, 1997
-17-
21
CIMETRIX INCORPORATED
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
December 31,
------------------------
1996 1995
---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 2,785 $ 2,345
Accounts receivable, net 617 68
Inventories 533 619
Prepaid expenses and other current assets 285 236
-------- --------
Total current assets 4,220 3,268
PROPERTY AND EQUIPMENT, net 614 1,732
CAPITALIZED SOFTWARE COSTS, NET 707 758
TECHNOLOGY, NET 715 767
GOODWILL, NET 2,971 3,188
OTHER ASSETS -- 9
-------- --------
Total Assets $ 9,227 $ 9,722
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 44 $ 42
Accounts payable 671 174
Accrued expenses 459 122
Customer deposits 170 --
-------- --------
Total current liabilities 1,344 338
DEFERRED TAX LIABILITY, net -- 18
LONG-TERM DEBT, net of current portion 252 296
-------- --------
Total Liabilities 1,596 652
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock; 100,000,000 shares
authorized, $.0001 par value; 18,121,428
and 18,456,103 shares issued and
outstanding, respectively 2 2
Additional paid-in capital 18,406 16,156
Accumulated deficit (10,543) (7,088)
Unearned compensation - stock options (234) --
-------- --------
Total Stockholders' Equity 7,631 9,070
-------- --------
$ 9,227 $ 9,722
======== ========
The accompanying notes are an integral part of these financial statements
-18-
22
CIMETRIX INCORPORATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Years Ended
December 31,
---------------------------------
1996 1995 1994
---- ---- ----
NET REVENUE $ 2,396 $ 664 $ 463
---------- ---------- ----------
OPERATING EXPENSES:
Cost of revenues 1,342 446 297
Selling, marketing and customer support 1,494 947 217
Research and development 1,179 930 198
General and administrative 1,577 1,231 1,217
Compensation expense 685 -- --
---------- ---------- ----------
Total operation expense 6,277 3,554 1,929
---------- ---------- ----------
LOSS FROM OPERATIONS (3,881) (2,890) (1,466)
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest income 108 172 68
Interest expense (52) (26) (32)
Other income (expense) 10 1 (3)
Gain (Loss) on disposition of asset 360 -- --
---------- ---------- ----------
Total other income (expense) 426 147 33
---------- ---------- ----------
LOSS BEFORE MINORITY INTEREST, INCOME
TAXES AND EXTRAORDINARY ITEMS (3,455) (2,743) (1,433)
LESS MINORITY INTEREST IN LOSS FROM
OPERATIONS OF SUBSIDIARY -- (199) (100)
---------- ---------- ----------
LOSS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (3,455) (2,544) (1,333)
CURRENT INCOME TAX EXPENSE (BENEFIT) -- -- --
DEFERRED INCOME TAX EXPENSE (BENEFIT) -- -- --
---------- ---------- ----------
LOSS BEFORE EXTRAORDINARY ITEM (3,455) (2,544) (1,333)
EXTRAORDINARY ITEM:
Gain on debt forgiveness net of
income taxes -- -- 188
---------- ---------- ----------
NET LOSS $ (3,455) $ (2,544) $ (1,145)
========== ========== ==========
LOSS PER COMMON SHARE:
Loss from operations $ (.19) (.16) (.09)
Extraordinary item -- -- .01
---------- ---------- ----------
LOSS PER COMMON SHARE: $ (.19) $ (.16) $ (.08)
========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 18,516,791 16,264,682 14,207,648
========== ========== ==========
The accompanying notes are an integral part of these
financial statements.
-19-
23
CIMETRIX INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Common Stock Additional
----------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
BALANCE, December 31, 1993 16,578,876 $ 2 $ 2,861 $(3,399) $ (536)
Net effect of subsidiary's capitalization,
including contributions by minority
shareholders -- -- 5,041 -- 5,041
Cancellation of shares previously issued
during 1991, valued at $14,812 (2,963) -- (15) -- (15)
Shares issued to employees per service
agreement, valued at $.0001 per share 116,667 -- -- -- --
Shares issued for cash, $5.00 per share 53,566 -- 268 -- 268
Issuance of shares to shareholders who
previously paid $5.00 per share 558,761 -- -- -- --
Cancellation of shares previously issued
to former officers, directors and other
related parties (2,798,223) -- -- -- --
Net loss for the year ended December 31, 1994 (1,145) (1,145)
---------- ------- ------- ------ -------
BALANCE, December 31, 1994 14,506,684 2 8,155 (4,544) 3,613
[Continued]
-20-
24
CIMETRIX INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE ACCOUNTS)
[Continued]
Common Stock Additional
------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- -------- ---------- ----------- -----
Shares issued for technology, valued
at $3.75 per share 120,000 -- 450 -- 450
Shares issued to acquire minority
interest in former subsidiary
2,829,419 -- 4,067 -- 4,067
Net effect of merger of minority
interest -- -- (487) -- (487)
Stock issued through private placement
memorandum, $4.00 per share, net of
offering costs of $28,553 1,000,000 -- 3,971 -- 3,971
Net loss for the year ended
December 31, 1995 (2,544) (2,544)
---------- ------- -------- ------- ------
BALANCE, December 31, 1995 18,456,103 $ 2 $ 16,156 $(7,088) $9,070
[Continued]
-21-
25
CIMETRIX INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE ACCOUNTS)
[Continued]
Common Stock Additional Unearned
---------------------- Paid-in Accumulated Compensation
Shares Amount Capital Deficit Stock Options Total
------ ------ ---------- ----------- ------------- -----
Stock options exercised, at $2 - $5 per share 340,325 -- 1,081 -- -- 1,081
Warrants exercised at $2.00 per share 125,000 -- 250 -- -- 250
Cancellation of shares returned by
former directors (800,000) -- -- -- -- --
Compensation - Stock Options 919 (234) 685
Net loss for the year ended December 31, 1996 -- -- -- (3,455) -- (3,455)
---------- ------- -------- --------- --------- -------
BALANCE, December 31, 1996 18,121,428 $ 2 $ 18,406 $ (10,543) $ (234) $ 7,631
========== ======= ======== ========= ========= =======
The accompanying notes are an integral part of these
financial statements.
-22-
26
CIMETRIX INCORPORATED
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(in thousands)
For the Years Ended
December 31,
--------------------------------------------------
1996 1995 1994
---------------- ------------------- -----------
CASH FLOWS TO OPERATING ACTIVITIES:
Net Loss $(3,455) $(2,544) $(1,145)
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization and depreciation 635 390 72
Loss (gain) on disposition of assets (360) 3 3
Compensation related to stock options 685 -- --
Extraordinary items - debt forgiveness -- -- (188)
Minority interest in operation of subsidiary -- (199) (100)
Non-cash expense -- 24
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (549) (22) 61
(Increase) decrease in inventory 86 (321) (250)
(Increase) decrease in prepaid expenses (57) (110) (108)
(Increase) decrease in other assets 9 1 --
Increase (decrease) in accounts payable 497 (174) 50
Increase (decrease) in accrued expenses 337 32 (236)
Increase (decrease) in customer deposits 170 -- --
----------- ----------- -----------
Total Adjustments 1,453 (400) (672)
----------- ----------- -----------
Net Cash Flow Used by Operating
Activities (2,002) (2,944) (1,817)
----------- ----------- -----------
CASH FLOWS TO INVESTING ACTIVITIES:
Payments for capitalized software costs (122) (341) (520)
Purchase of real estate property (198) -- --
Proceeds from disposal of real estate property 453 -- --
Purchase of property and equipment, net of retirements (134) (638) (1,213)
Payments for other assets, net (20) (4) (2)
Proceeds from disposal of property 1,174 -- --
----------- ----------- -----------
Net Cash Flow Used by Investing Activities 1,153 (983) (1,735)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from capitalization of subsidiary -- -- 5,000
Proceeds from issuance of common stock 1,331 4,000 268
Payments of stock offering costs - (29) --
Payments for capital lease obligations, net (20) (10) (9)
Proceeds from notes payable (22) -- 1,745
Payments for notes payable - (1,052) (130)
Proceeds from payable - related party - -- 42
Decrease in deferred tax liability - -- --
----------- ----------- -----------
Net Cash Flow Provided by
Financing Activities 1,289 2,907 6,916
----------- ----------- -----------
(continued)
-23-
27
CIMETRIX INCORPORATED
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Continued)
For the Years Ended
December 31,
-----------------------------------------------
1996 1995 1994
------------ ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 440 (1,020) 3,364
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 2,345 3,365 1
------- --------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,785 $ 2,345 $3,365
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 52 $ 26 $ 10
Income taxes $ -- -- $ --
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
FOR THE YEAR ENDED DECEMBER 31, 1996:
Compensation Expense of approximately $685,000 was recognized for all
currently outstanding and unexercised options.
FOR THE YEAR ENDED DECEMBER 31, 1995:
In July, 1995, the Company purchased the technology it had been licensing
from Brigham Young University by issuing 120,000 shares of common stock
valued at $3.75 per share, and signing an agreement to make 10 annual
payments of $50,000 cash. A note payable of $343,765 was recorded to
reflect the discounted present value of the 10 annual payments.
Effective August 31, 1995, the Company purchased the interest held by
minority shareholders in the Company's subsidiary by issuing 2,829,419
restricted shares of Cimetrix in exchange for an equal number of shares of
the subsidiary, Cimetrix (USA) Incorporated, held by those minority
shareholders. The subsidiary was then merged into the Cimetrix, effective
August 31, 1995. The effect of the purchase of the minority interest was to
create "excess cost over acquired net assets" in the amount of $3,260,646
that was recorded by the Company. This amount is being amortized on a
straight line basis over 15 years.
FOR THE YEAR ENDED DECEMBER 31, 1994:
In accordance with the terms of a settlement agreement, the Company
canceled 2,963 shares of common stock previously issued for services
rendered.
The Company issued 116,667 shares of common stock to employees for services
rendered, valued at $.0001 per share .
The Company issued 558,761 shares valued at $.0001 per share to
shareholders who had previously paid $5.00 per share, in order to give
those shareholders an average $2.00 per share basis.
-24-
28
CIMETRIX INCORPORATED
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Continued)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES (CONTINUED):
FOR THE YEAR ENDED DECEMBER 31, 1994 (CONTINUED):
Related party accounts payable of $242,270 net of related party accounts
receivable of $120,068 were forgiven. Automobiles accounted for as capital
leases with a net book value of $3,651 were assumed by former officers.
Trade payables amounting to $62,334 were forgiven by vendors.
The Company entered into a lease for telephone equipment costing $53,127.
$635,000 of notes payable with their related interest of $23,834 were
converted into common shares of the subsidiary.
Former officers, directors and other related parties returned 2,798,223
common shares valued at $.0001 per share for cancellation.
-25-
29
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND PRINCIPLES OF CONSOLIDATION - Cimetrix Incorporated
("Cimetrix" or the "Company") was organized under the laws of the State of
Utah on December 23, 1985. In September, 1990, Cimetrix merged with a newly
incorporated Nevada company, effectively changing its domicile to that
state. Cimetrix (USA) Incorporated, a former wholly-owned subsidiary of
Cimetrix, was organized under the laws of the State of Florida on June 7,
1994. In July, 1994, Cimetrix acquired 20,000,000 shares of the common
stock of Cimetrix (USA) Incorporated in exchange for the transfer of
substantially all of the assets of Cimetrix, and the assumption of
$635,000 of convertible promissory notes payable. Cimetrix (USA)
Incorporated subsequently sold shares of its common stock to private
investors resulting in an approximate 12% minority interest. Effective
August 31, 1995, Cimetrix purchased the minority interest in Cimetrix
(USA) Incorporated by exchanging one share of Cimetrix common stock for
one share of Cimetrix (USA) Incorporated stock held by the minority
shareholders. In all, 2,829,419 common shares of Cimetrix were issued to
the minority shareholders in exchange for their stock in Cimetrix (USA)
Incorporated. Simultaneously, Cimetrix (USA) Incorporated was merged into
Cimetrix, effective August 31, 1995, leaving Cimetrix as the surviving
single entity. From June 7, 1994 to August 31, 1995, the financial
statements included the results of Cimetrix and Cimetrix (USA)
Incorporated, adjusted for minority interests.
REVENUE RECOGNITION - Revenue from sales to distributors, OEMs, and
end-users is recognized when related products are shipped. Revenue from
software maintenance, service, and support contracts is recognized ratably
over the contract period. Provisions are recorded for returns. The Company
has had no bad debt experience; therefore, no allowance for doubtful
accounts has been established.
TELEPHONE SUPPORT - Telephone support costs are included in sales and
marketing.
CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows,
the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31,
1996, the Company had cash equivalents of $1,493,388 invested in commercial
paper maturing in January, 1997, which are readily convertible into cash
and are not subject to significant risk from fluctuation in interest rates;
there were cash equivalents of approximately $2,019,927 at December 31,
1995. At December 31, 1996 and 1995, the Company and cash of $58,459 and
$98,855, respectively, in excess of federally insured amounts in its bank
accounts.
INVENTORIES - Inventories are stated at the lower of cost or market. Cost
is determined by the first-in, first-out method. Inventories at December
31, 1996 and 1995 are summarized as follows (in thousands):
1996 1995
-------- --------
Parts and supplies $ 211 $ 226
Work in process 128 108
Finished goods 194 285
------ ------
$ 533 $ 619
====== ======
Inventories are pledged as collateral for the Company's revolving line of
credit.
-26-
30
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost and
depreciated using the straight-line method over the estimated useful
lives of the related assets. The estimated lives are as follows:
Buildings, 30 years; leasehold improvements, the lease term; computer
equipment and other, three to seven years.
SOFTWARE DEVELOPMENT COSTS - Certain software development costs are
capitalized when incurred in accordance with Financial Accounting
Standards Board (FASB) Statement No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed."
Capitalization of software development costs begins upon the
establishment of technological feasibility. Costs incurred prior to
the establishment of technological feasibility are expensed as
incurred. The Company also expenses hardware design and prototype
expenses as incurred as research and product development costs. The
establishment of technological feasibility and the ongoing assessment
of recoverability of capitalized software development costs requires
considerable judgment by management with respect to certain external
factors, including, but not limited to, technological feasibility,
anticipated future gross revenues, estimated economic life and changes
in software and hardware technologies.
Amortization of capitalized software development costs is provided on
a product-by-product basis at the greater of the amount computed using
(a) the ratio of current gross revenues for a product to the total of
current and anticipated future gross revenues or (b) the straight-line
method over the remaining estimated economic life of the product. As
of December 31, 1996, the unamortized portion of capitalized software
development costs was $707,264. Amortization of software development
costs was $172,400, $104,000, and $0 for the fiscal years ended
December 31, 1996, 1995, and 1994.
GOODWILL - Goodwill reflects the excess of the costs of purchasing
the minority interest of Cimetrix (USA) Incorporated over the fair
value of the related net assets at the date of acquisition (August 31,
1995), and is being amortized on the straight line basis over 15
years. Amortization expense charged to operations for 1996 and 1995
was 217,380 and $72,460, respectively. At December 31, 1996, the
accumulated amortization is $289,840.
-27-
31
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
INCOME TAXES - The Company records income taxes in accordance with
Statement of Financial Account Standards No. 109, "Accounting for
Income Taxes." Under the asset and liability method of accounting for
income taxes of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date.
NET LOSS PER COMMON SHARE - Loss per share of common stock is computed
on the basis of the weighted average number of common shares
outstanding during the periods presented. Fully diluted loss per share
is not presented, except for extraordinary items, because its effect
is anti-dilutive. Dilutive common equivalent shares consist of stock
options and warrants.
ACCOUNTING ESTIMATES - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimated.
RECLASSIFICATIONS - Certain reclassifications have been made for
consistent presentation.
-28-
32
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 and 1995 consisted of the
following (in thousands):
1996 1995
------ ------
Land $ -- $ 155
Buildings and improvements -- 752
Office equipment 227 213
Furniture and fixtures 208 203
Software 78 42
Equipment 495 426
Automobiles 13 --
Residential Real Estate -- 203
------ ------
$1,021 $1,994
Accumulated depreciation 407 262
------ ------
$ 614 $1,732
====== ======
Depreciation expense for the years ended December 31, 1996, 1995 and
1994 was approximately $189,000, $187,000 and $72,000, respectively.
On various occasions, the Company has entered into various leases
for office equipment. Based on the provisions of Statement No. 13,
issued by the Financial Accounting Standards Board, many of these
leases meet the criteria of a capital lease. At December 31, 1996 and
1995 the cost of the assets amounted to $63,114, with accumulated
depreciation of $27,789 and $15,166, respectively. Depreciation expense
for the year ended December 31, 1996 and 1995 was $12,623 and $12,419,
respectively.
Future minimum lease payments under the capital lease obligations as of
December 31, 1996, for each of the next five years and in the aggregate
are as follows:
1997 $ 21,060
1998 2,865
1999 -
2000 -
2001 -
Thereafter -
--------
Total 23,925
Less: Amount representing interest (2,162)
--------
Present value of future minimum lease payments 21,763
Less: Current portion (19,104)
--------
Long-term portion $ 2,659
========
-29-
33
NOTE 3 - PREPAID LICENSE AGREEMENTS
Pursuant to an agreement dated July 26, 1995, which incorporated
provisions of a 1994 agreement , the Company entered into a
license/royalty agreement with a provider of real-time development
licenses which allowed the Company to resell real-time development
licenses to its customers. The Company has prepaid for development
licenses and this prepayment will be amortized until licenses and
services from the provider have been consumed. At December 31, 1996
and 1995, the amortized prepayment was $130,235 and $164,829,
respectively, and is included in Prepaid Expenses and Other Current
Assets on the Company's Balance Sheet. The agreement also provides
the Company with the option, expiring on July 25, 1998, to purchase
all existing development operating system source code from the
provider.
NOTE 4 - TECHNOLOGY
Effective July 5, 1995, the Company purchased the technology that was
then being licensed from Brigham Young University (BYU), referred to as
ROBLINE and ROBCAL. The Company purchased all rights, title, interest
and benefit in and to the intellectual property for cash payments of
$50,000 per year for ten years which were discounted using an
incremental borrowing rate of 9.5% per annum and has been recorded as a
note payable of $343,765, plus 120,000 shares of previously unissued,
restricted common stock of the Company valued at $3.75 per share , for
a total purchase value of $793,765. The technology is being amortized
on a straight-line basis over 15 years. Amortization expense was
$52,800 and $26,459 for the years ended December 31, 1996 and 1995,
respectively.
NOTE 5 - PATENTS AND COPYRIGHTS
The technology purchase from BYU, along with other technology developed
internally, is proprietary in nature. The Company has obtained two
patents on certain of the technology, issued in May 1989, and March
1994, respectively. In addition, the Company has registered its entire
CODE software system products with the Copyright Office of the United
States, and will continue to timely register any updates to current
products or any new products. For the most part, other than the two
patents and the copyright registrations, the Company relies on
confidentiality and nondisclosure agreements with its employees and
customers, appropriate security measures, and the encoding of its
software in order to protect the proprietary nature of its technology.
No cost has been capitalized with respect to the patents.
NOTE 6 - LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 consisted of the following (in
thousands):
1996 1995
------ ------
Note payable to BYU................................... $272 $294
Capital lease obligations.............................. 24 44
--- ----
296 338
--- ----
Less current maturities............................... 44 42
--- ----
Total................................................. $252 $296
==== ====
In connection with the purchase of the technology from BYU discussed in
Note 4, the Company agreed to make payments of $50,000 each year for
ten years. This stream of payments was discounted using an incremental
borrowing rate of 9.5% per annum, and was recorded as a note payable
with a beginning balance of $343,765.
The Company entered into a $5,000,000, variable rate revolving line of
credit with a bank on October 3, 1996. The terms of this line of credit
are substantially the same as the line of credit existing at December
31, 1995 and which expired on October 31, 1996. The line provides
for interest at the rate of one half of one percent over the prime
rate of the bank. The line expires on April 30, 1997. Interest
payments are to be paid monthly, and any outstanding principal
balance is to be paid in full on April 30, 1997. At December 31, 1996,
no funds have been borrowed against the line. The amount available
under the revolving line of credit is calculated based upon a formula
of eligible current assets, including cash, receivables and
inventories which serve as collateral for amounts borrowed.
-30-
34
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No.
109 Accounting for Income Taxes [FASB 109] during 1993. FASB 109
requires the Company to provide a net deferred tax asset or liability
equal to the expected future tax benefit or expense of temporary
reporting differences between book and tax accounting and any
available operating loss or tax credit carryforwards. At December
31, 1996 and 1995, the total of all deferred tax assets was
approximately $4,315,000 and $3,309,000 and the total of the deferred
tax liabilities was approximately $342,000 and $347,000. The amount
of and ultimate realization of the benefits from the deferred tax
assets for income tax purposes is dependent, in part, upon the tax
laws in effect, the Company's future earnings, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the deferred tax assets,
the Company has established a valuation allowance of $3,973,000 and
$2,962,000 as of December 31, 1996 and 1995, which has been offset
against the deferred tax assets. The net change in the valuation
allowance during the year ended December 31, 1996, was $1,012,000.
The Company has available at December 31, 1996, unused tax operating
loss carryforwards of approximately $10,558,000 which may be applied
against future taxable income and which expire in various years
beginning 2004 through 2011.
The components of income tax expense from continuing operations for
the years ended December 31, 1996 and 1994 consist of the following
(in thousands):
December 31,
------------------------------------------------
1996 1995 1994
--------- ---------- ---------
Current income tax expense:
Federal $ - $ - $ -
State - - -
----------- ----------- ----------
Net current tax expense - - -
----------- ----------- ----------
Deferred tax expense (benefit) arising from:
Excess of tax over financial accounting depreciation $ (6) $ 120 228
Deferred income (68) -
Accrual of vacation wages payable (6) (18) -
Net operating loss carryforwards (932) (1,159) (722)
Valuation allowance 1,012 1,057 494
----------- ----------- ----------
Net deferred tax expense $ - $ - $ -
----------- ----------- ----------
-31-
35
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES [CONTINUED]
Deferred income tax expense results primarily from the reversal of
temporary timing differences between tax and financial statement
income. There is no portion of current or deferred tax expense that is
required to be allocated to the extraordinary item.
A reconciliation of income tax expense at the federal statutory rate
to income tax expense at the Company's effective rate is as follows:
Year Ended December 31,
-------------------------------
1996 1995 1994
---- ---- ----
Computed tax at the expected federal statutory rate 34.00% 34.00% 34.00%
Excess of tax over financial accounting depreciation (2.42) (1.24) (.87)
State income taxes, net of federal income tax benefits 6.00 6.00 6.00
Other (.60) (.22) 1.93
Compensation (7.93) - -
Forgiveness of debt - - 4.04
Net operating loss carry forward .22 (.02) (5.37)
Valuation allowance (29.27) (38.52) (39.73)
------- ------ ------
Effective income tax rates 00.00% 00.00% 00.00%
======= ====== ======
The temporary differences gave rise to the following deferred tax
asset (liability) at December 31, 1996 and 1995 (in thousands):
December 31,
--------------------------
1996 1995
------------ ----------
Excess of book over tax accounting depreciation (342) $ (348)
Deferred income 68 -
Accrual of vacation wages payable 24 18
NOL carryforwards 4,223 3,291
The deferred taxes are reflected in the balance sheet as follows
(in thousands):
Year Ended December 31
-----------------------------
1996 1995
---- ----
Short term asset (liability) $ - $ 18
Long term asset (liability) $ - $ (18)
-32-
36
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - MINORITY INTEREST
On July 31, 1994, the Company's subsidiary, Cimetrix (USA)
Incorporated, sold (by private placement memorandum) 2,500,000 shares
of its common stock at $2.00 per share for total cash proceeds of
$5,000,000. The sale of the common stock, along with the conversion of
$635,000 of convertible notes payable to the subsidiary's common
stock, created a 12.4% minority interest in the subsidiary.
In July, 1995, the shareholders of the Company's subsidiary approved a
merger of the subsidiary into the Cimetrix through the exchange of one
share of the Company's restricted common stock for each of the
2,829,419 shares of the subsidiary's common stock held by the minority
interest shareholders. The merger was effective August 31, 1995, and
left Cimetrix as the sole surviving entity. The purchase of the
minority interest by Cimetrix created "excess of cost over acquired
net assets" of $3,260,646 which is being amortized over 15 years.
NOTE 9 - BENEFIT PLAN
The Company has a defined contribution 401(k) Retirement Savings Plan
covering substantially all of the Company's employees who are at least
21 years old and who have completed 3 months of service. Employees may
contribute at least 1%, but not more than 15% of their salary to the
plan. The Company will match 50% of the employee's contribution to the
plan up to a maximum of 2% of the employees annual pay. The employees
will vest in the employer's contribution over a five year period. For
the years ended December 31, 1996, 1995 and 1994, the Company
contributed $19,006, $16,284 and $5,685, respectively, to the plan.
NOTE 10 - EXTRAORDINARY ITEM
The Company negotiated a forgiveness of certain related party payables
and receivables during 1994. Related party payables forgiven exceeded
related party receivables forgiven by approximately $126,000.
Additionally, new management succeeded in negotiating forgiveness of
approximately $62,000 in lease, royalty, and other trade payables. The
net forgiveness of payables has been treated as an extraordinary item
in these financial statements.
NOTE 11 - SIGNIFICANT CUSTOMERS
Approximately 34% and 14% of the Company's revenues during the
year ended December 31, 1996 were attributable to a Japanese OEM and
Sandia National Labs, respectively. No other single customer accounted
for more than 10% of the Company's revenues during 1996. During the
year ended December 31, 1995, the Company had four significant
customers, AT&T (16%), Cybex Technologies (10%), Hewlett-Packard (26%)
and Motorola (29%), which individually were 10% or more of the
Company's revenues during the year ended December 31, 1995 and which
together accounted for approximately 81% of the Company's total
revenue during 1995. During 1994, 90% of the Company's total revenues
came from four significant customers. Although the Company values its
relationships with all of its customers, the Company does not believe
the loss of any single customer would have a material adverse impact
on the Company.
-33-
37
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - CONTINUING OPERATIONS
During its existence, the Company has incurred operating losses from
inception totaling of approximately $10,543,000 including
$(3,455,000), $(2,544,000), and $(1,145,000) during the years ended
December 31, 1996, 1995 and 1994, respectively. Net cash used by
operations amounted to approximately $2,021,000, $2,944,000 and
$1,817,000 during the same periods.
Historically, the Company has raised the required financing for
its activities through the sale of the Company's common shares and
from short-term borrowing. During 1996, the Company used these same
methods in raising what management believes will be sufficient cash
funds to finance the projected cash requirements through 1997 when
accompanied by projected sales revenues. In March, 1995, the Company
sold 1,000,000 of its common shares at a price of $4.00 per share
raising a total of approximately $3,971,000 in cash. Additionally,
the Company has arranged with a financial institution a
$5,000,000 line of credit. Borrowings against this line are secured by
certain current assets of the Company including cash. Management of
the Company believes that at December 31, 1996, the Company is capable
of financially meeting the demands inherent as normal sales continue
to develop during 1996.
Because of the cash position of the Company at December 31, 1996, the
accompanying financial statements do not contain any adjustments
relating to the recoverability and classification of recorded asset
amounts or the amount and classification of liabilities that might be
necessary, should the Company be unable to achieve profitable
operations and generate sufficient working capital to fund operations
and pay or refinance its current obligations.
NOTE 13 - STOCK OPTIONS AND WARRANTS
On December 21, 1994 the Board of Directors adopted effective
immediately, subject to shareholder approval at the annual meeting of
shareholders conducted in July, 1995, a stock option plan under which
options may be granted to officers, employees, directors and others.
The plan specifically replaces all prior option agreements between the
Company, its employees and its consultants. A total of 1,993,816
shares of common stock have been reserved for issuance under the plan.
Options granted under the plan are exercisable at a price not less
than the fair market value of the shares at the date of the grant, one
half of the options granted will vest on the first anniversary date of
the date of grant, and the remaining one half will vest on the second
anniversary date of grant. The option period and exercise price will
be specified for each option granted, as determined by the Board of
Directors, but in no case shall the option period exceed five years
from the date of grant, and the exercise price cannot be less than one
half the market price of the Company's common shares on the date of
grant.
-34-
38
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - STOCK OPTIONS AND WARRANTS [CONTINUED]
On March 21, 1994 the Company entered into a separate consulting
agreement with its current President, granting him warrants to
purchase 6,000,000 restricted common shares for a cash payment of
$1,000,000. The warrants are irrevocable and exercisable for a
period of five years. At December 31, 1996, none of the warrants
have been exercised.
During July, 1994, in connection with conversion of three notes
payable into common shares of the subsidiary, the Company issued
warrants to purchase up to an aggregate of 317,500 shares of common
stock of the Company upon payment of $2.00 per share. The warrants are
exercisable until April 29, 1997. During 1996, warrants for 125,00
shares were exercised. The remaining warrants to purchase 192,500 are
outstanding at December 31, 1996.
On September 12, 1994, the Board of Directors approved the issuance
of stock warrants to members of its advisory panel. Each panel
member was granted warrants to purchase 50,000 restricted shares at an
exercise price of $3.00 per share for a period of five years. At the
time of the grant, there was no trading marker for either the
Company's common shares or for warrants on those shares, although the
Company had received a price of $2.00 per share for common stock of
the Company's privately-owned, sole subsidiary. Consequently, no
compensation has been recorded in connection with the granting of
these warrants. As of December 31, 1996, none of the warrants granted
to members of the advisory panel have been exercised.
During the periods presented in the accompanying financial statements
the Company has granted options under the 1994 Employee Stock Option
Plan (the Plan). The Corporation has adopted the disclosure-only
provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no
compensation cost has been recognized under SFAS No. 123 for the Plan
in the accompanying financial statements. Had compensation cost for
the Company's stock option plan and agreements been determined based
on the fair value at the grant date for awards in 1996 and 1995
consistent with the provisions of SFAS No. 123, the Company's net
earnings and earnings per share would have been reduced to the pro
forma amounts indicated below (in thousands, except per share data):
1996 1995
--------------- --------------
Net Loss As reported $ (3,455) $ (2,544)
Proforma $ (3,514) $ (2,551)
Loss per As reported $ (.19) $ (.16)
common share Proforma $ (.19) $ (.16)
The fair value of each option granted is estimated on the date granted
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants during the period ended
December 31, 1996 and 1995: risk-free interest rates of 6.0% and 6.4%,
expected dividend yield of zero, expected life of 5 and 5 years, and
expected volatility 89% and 94%.
A summary of the status of the options granted under the Company's
Plan and other agreements granting stock warrants at December 31,
1996, 1995 and 1994, and changes during the years then ended is
presented below:
December 31, 1996 December 31, 1995 December 31, 1994
---------------------------- ------------------------- ----------------------------
Weighted Average Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
------ -------------- ------ -------------- ------ ---------------
Outstanding at
beginning of
period 8,493,166 $ 1.03 8,121,166 $ .82 - -
Granted 669,500 $ 7.83 543,000 $ 4.89 8,121,166 $ .82
Exercised (465,325) $ 2.86 - - - -
Forfeited (593,453) $ 3.36 (171,000) $ (2.42) - -
Expired - - - - - -
--------- ---------- --------- ---------- --------- --------
Outstanding at
end of period 8,103,888 $ 1.32 8,493,166 $ 1 .03 8,121,166 $ .82
--------- ---------- --------- ---------- --------- --------
Weighted average
fair value of
options granted
during the year 669,500 $ .73 543,000 $ .42 N/A N/A
--------- ---------- --------- ---------- --------- --------
A summary of the status of the options outstanding under the Company's
stock option plans and other agreements granting stock warrants at
December 31, 1996 is presented below:
Options Outstanding Options Exercisable
---------------------------------------------------- ----------------------------
Range of Weighted-Average Weighted-Average Weighted-Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Life Price Exercisable Price
- -------------- ----------- ---------------- ---------------- ---------- ----------------
$0.17 6,000,000 2.2 years $ 0.17 6,000,000 $ 0.17
$2.00 - $ 3.00 1,196,388 2.5 years $ 2.84 1,196,388 $ 2.84
$4.00 - $ 5.00 315,000 3.7 years $ 4.81 85,000 $ 4.94
$7.00 - $10.00 592,000 4.5 years $ 8.05 - $ -
- --------------- --------- --------- --------- --------- --------
8,103,388 7,281,388
The stock options outstanding under the 1994 Employee Stock Option
Plan at December 31, 1996 are 1,460,888. A total of 340,325 shares
have been exercised under the Plan. Shares available for grant under
the Plan are 192,603 at December 31, 1996.
-35-
39
40
41
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
A summary of the status of the options outstanding under the Company's
stock option plan and other agreements granting stock warrants at
December 31, 1996 is presented below:
Options Outstanding Options Exercisable
---------------------------------------------------- ----------------------------
Range of Weighted-Average Weighted-Average Weighted-Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Life Price Exercisable Price
- -------------- ----------- ---------------- ---------------- ---------- ----------------
$0.17 6,000,000 2.2 years $ 0.17 6,000,000 $ 0.17
$2.00 - $ 3.00 1,196,388 2.5 years $ 2.84 1,196,388 $ 2.84
$4.00 - $ 5.00 315,000 3.7 years $ 4.81 85,000 $ 4.94
$7.00 - $10.00 592,000 4.5 years $ 8.05 - $ -
- --------------- --------- --------- --------- --------- --------
8,103,388 7,281,388
NOTE 14 - STOCKHOLDERS' EQUITY
In August, 1996, two former directors returned 800,00 shares of issued
and outstanding common stock to the Company.
On August 11, 1995, the Board of Directors of the Company gave final
approval to a merger between Cimetrix Incorporated, and its majority
owned subsidiary, Cimetrix (USA) Incorporated, which was completed
effective August 31, 1995. Under the merger, the minority interest
shareholders of the subsidiary received one share of common stock of
the Company for each share of subsidiary common stock that they own.
This resulted in the issuance of 2,829,419 shares of restricted common
stock of the Company and the recording of excess of cost over acquired
net assets of $3,260,646. Subsequent to the merger, all business of the
Company is being conducted through Cimetrix Incorporated, a Nevada
corporation.
Effective July 5, 1995, the Company issued 120,00 shared of previously
unissued restricted common stock valued at $3.75 per share for the
purchase of technology from BYU.
On March 31, 1995, the Company closed a private placement offering in
which 1,000,000 shares of restricted common stock were sold at $4.00
per share for gross proceeds of $4,000,000. Attorneys' fees and
brokerage commissions associated with the offering totaled
approximately $28,553.
In February, 1994, the Company issued to three of its employees a total
of 116,667 shares of previously unissued restricted common stock valued
at $.0001 per share pursuant to a previous action of the Board of
Directors in 1993.
During 1994, the Company sold 53,566 restricted common shares at $5.00
per share for total cash proceeds of $267,830. Subsequently, the Board
of Directors approved the issuance of 558,761 additional restricted
shares to all shareholders who had previously purchase shares from the
Company at $5.00 per share during the periods from 1990 through 1994.
The additional issuance was intended to reduce the average cost of a
share to $2.00 per share for those who had previously paid $5.00 per
share.
Pursuant to agreements with the Company in 1994, certain former
officers and directors agreed to return 2,2798,223 shares held by them
for cancellation.
-36-
42
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 15 - VOTING RIGHTS ASSIGNED TO PRESIDENT
On March 21, 1994, and later amended in June, 1994 and August, 1995,
certain former officers and directors of the Company entered into a
proxy agreement wherein they assigned the voting rights of their common
stock (current voting control of approximately 26.0%) to the current
President of the Company. The proxy agreement has a term expiring on
December 31, 1998 and is irrevocable.
NOTE 16 - RELATED PARTY TRANSACTIONS
During the years ended December 31, 1996 and 1995, the Company paid
consulting fees of approximately $50,000 each year and provided the
use of a furnished home to a corporation controlled by the current
President of the Company.
On July 31, 1994, the Company purchased a building contract for a cash
payment of $75,000. The contract provided for the construction of the
new facility now occupied by the Company. The purchase price was paid
to a partnership in which the current President of the Company was a
partner.
In connection with the voting rights of the former officers and
directors being assigned by proxy to the President of the Company, the
Company entered into agreements with certain former officers and
directors wherein 2,798,223 shares of the Company's common stock were
returned and cancelled. The former officers and directors released the
Company from obligations payable to them totaling $242,270. The Company
indemnified the former officers and directors for their past services
rendered, and released them from certain obligations payable to the
Company totaling $120,068. Prior to this simultaneous release of
obligations, a relative of one of the directors made non-interest
bearing cash advances to the Company totaling $32,900. All related
party payables and receivables were forgiven by the action noted above,
and as of December 31, 1994, the balance of related party receivables
and payables was zero.
NOTE 17 - COMMITMENTS AND CONTINGENCIES
-37-
43
CIMETRIX INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 17 - CONTINGENCIES [CONTINUED]
PRODUCT WARRANTIES - The Company provides certain product warranties
to customers including repair or replacement for defects in materials
and workmanship of hardware products. The Company also warrants that
software and firmware products will conform to published
specifications and not fail to execute the Company's programming
instructions due to defects in materials and workmanship. In addition,
if the Company is unable to repair or replace any product to a
condition warranted, within a reasonable time, the Company will
provide a refund to the customer. As of December 31, 1996 and 1995, no
provision for warranty claims has been established since the Company
has not incurred substantial sales from which to develop reliable
estimates. Also, no refunds have been paid to any customer as of
December 31, 1996. Management believes that any allowance for warranty
would be currently immaterial to the financial condition of the
Company.
LITIGATION - The Company filed a lawsuit on February 8, 1996 and an
amended complaint on March 7, 1997 against W. Keith Seolas ("Seolas"),
a former director of the Company, and members of his family. The
lawsuit, styled Cimetrix Incorporated v. Waldron Keith Seolas, et al.,
pending in the Fourth Judicial Court of Utah County, Utah seeks
declaratory relief and a determination of the validity of the issuance
of approximately 2,000,000 shares of stock to Seolas and his family
members.
Seola filed a separate action on April 26, 1996 and an amended
complaint on March 17, 1997 in the United States District Court for
Utah, against the Company. In his lawsuit, styled Waldron Keith Seolas
et al. v. Cimetrix Incorporated, Seolas alleges fraud by the Company
in connection with the return of approximately 200,000 shares by
Seolas to the Company in 1994. The Company believes that it has strong
defenses to Seolas' claims and intends to vigorously defend them.
Counsel believes the claims against the Company are without merit.
Other than as stated above, the Company is not a party to any material
pending legal proceedings and, to the best of its knowledge no such
proceedings by or against the Company have been threatened. To the
knowledge of the Company's management, there are no material
proceedings
COMMON STOCK ISSUANCES - Subsequent to year-end, an additional
30,000 shares of common stock were issued pursuant to employee stock
options exercised at $3 per share.
OPERATING LEASES AGREEMENTS - The Company signed a five year lease
effective March 1, 1997 for its office and engineering space in Utah.
The lease requires monthly lease payments of $20,078 during the
term of the lease. The Company also signed a lease for the
administrative space in Tampa, Florida effective April, 1997 and
expiring June 30, 2000. This Florida lease requires monthly payments
of $6,933. The minimum monthly payments under these leases for the
next five years are as follows (in thousands):
1997 $ 263
1998 324
1999 324
2000 283
2001 241
Thereafter 40
------
$1,475
======
-38-
44
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
None.
PART III
ITEMS 10-13
Pursuant to General Instruction G(3) of Form 10-K, the information required
by Items 10-13 of Form 10-K (except for the information regarding executive
officers who are not directors of the Company, which is included as a
Supplemental Item under Part I of this Report) is incorporated by reference from
the information included in the Proxy Statement under the headings "Ownership of
Common Stock", "Election of Directors" and "Executive Compensation" and "Related
Party Transactions". The Proxy Statement will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of
the fiscal year covered by this report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules
The financial statements of Cimetrix as set forth under Item 8 are
filed as part of this report.
Financial statement schedules have been omitted since they are either
not required, not applicable, or the information is otherwise included
in the financial statements and notes thereto.
The independent auditors' report with respect to the above-listed
financial statements appears on page 17 of this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of fiscal
1996.
(c) Exhibit Listing
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Articles of Incorporation (1)
3.1 Articles of Merger of Cimetrix (USA) Incorporated
with Cimetrix Incorporated (6)
3.2 Bylaws (1)
10.1 Proxy Agreements between Dastrup, Seolas and family,
and Bilzerian transferring voting rights to
Bilzerian (4)
10.2 Consulting and option agreement between Cimetrix and
Paul A. Bilzerian to resolve management difficulties
(4)
-39-
45
(c) Exhibit Listing (cont.)
EXHIBIT NO. DESCRIPTION
----------- -----------
10.3 Indemnity agreement between Cimetrix and former
officers and directors of
Cimetrix for return of shares and release from
related payables/receivables (5)
10.4 Technology Sale and Purchase Agreement between
Cimetrix and Brigham Young University (6)
10.5 Stock Option Plan of Cimetrix Incorporated (2)
10.6 Supplementary Consulting Agreement between Cimetrix
and Bicoastal Holding Company for services of Paul
A. Bilzerian (3)
23. Independent Auditors' Consent
27. Financial Data Schedule
- ---------------------
(1) Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year
Ended December 31, 1993.
(2) Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year
Ended December 31, 1994.
(3) Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year
Ended December 31, 1995.
(4) Incorporated by reference to the Quarterly Report on Form 10-QSB For The
Quarter Ended March 31, 1994.
(5) Incorporated by reference to the Quarterly Report on Form 10-QSB For The
Quarter Ended June 30, 1994.
(6) Incorporated by reference to the Quarterly Report on Form 10-QSB For The
Quarter Ended September 30, 1995.
-40-
46
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on March 20,
1997.
CIMETRIX INCORPORATED
By: /s/ DAVID L. REDMOND
----------------------------
DAVID L. REDMOND,
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on March 20, 1997.
SIGNATURE CAPACITY
--------- --------
/s/ PAUL A. BILZERIAN
- ------------------------------- President, Chief Executive Officer and
PAUL A. BILZERIAN Director (as Director and Principal
Executive Officer
/s/ DAVID L. REDMOND
- ------------------------------- Executive Vice President, Chief Financial
DAVID L. REDMOND Officer and Director (as Director,
Principal Financial and Accounting
Officer)
/s/ DOUGLAS A. DAVIDSON
- ------------------------------- Director
DOUGLAS A. DAVIDSON
/s/ PAUL A. JOHNSON
- ------------------------------- Director
PAUL A. JOHNSON
/s/ DR. RON LUMIA
- ------------------------------- Director
DR. RON LUMIA
-41-