Filed by Be Incorporated
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12(b)
under the Securities Exchange Act of 1934
Subject Company: Be Incorporated
Commission File No. 000-26387
On October 25, 2001, Be Incorporated held the following conference call to
discuss its financial results for the third quarter of 2001 and matters related
to the Special Meeting of Stockholders scheduled for November 12, 2001
[Participants:
Moderator = Conference Call Moderator
J.Gassee = Jean-Louis Gassee, President and CEO of Be, Inc
P. Berndt = P.C. Berndt, CFO of Be, Inc
Others as identified within the transcript]
Moderator Ladies and gentlemen, thank you for standing by. Good morning,
good afternoon, good evening and welcome to Be Incorporated's
Investor conference call. At this time all phone lines are muted
or in a listen-only mode; however, after our presentation today
there will be opportunities for questions and we certainly
encourage your participation at that time. As a reminder today's
call is being recorded for replay purposes. Please stay on line
at the conclusion of today's conference. I'll be giving out that
replay information.
With that being said, here with our opening remarks is your host,
Be Incorporated's President and Chief Executive Officer, Mr.
Jean-Louis Gassee. Please go ahead, sir.
J. Gassee Thank you, Brent. Good morning to the West Coast and good
afternoon to the rest of our beloved country. On behalf of Be
Incorporated I would like to cordially welcome all of you to our
third quarter's results teleconference. Joining me today we have
Steve Sakoman, our Chief Operating Officer; and P.C. Berndt, our
Chief Financial Officer.
Today's call has two purposes. First, sharing financial results
from Q3 2001, and even more importantly, discuss the resolutions
currently under consideration by our shareholders and answer any
questions to assist our shareholders in their decision making
process. Our financial results are available on our Web site at
www.be.com for those of you who'd like to follow along during
this call.
Now I would like to turn over the conference call to P.C Berndt,
our CFO, who will briefly discuss the financial results for the
quarter.
P. Berndt Thank you, Jean-Louis. Before getting into the details of the
quarter I would like to make the following disclaimer. During the
course of this conference call we may make forward-looking
statements based on current expectations. Forward-looking
statements pertain to future events and are subject to risks and
uncertainties. The company's actual results may differ materially
from results discussed in any forward-looking statements. Any
such forward-looking statements are expressly qualified in their
entirety by the risk factors and other cautionary statements
included in Be Incorporated's definitive proxy statement's filed
October 9, 2001 and it's annual report on Form 10K for the year
ended December 31, 2000 and other public filings with the
Security and Exchange Commission.
With that bit of housekeeping out of the way, I'd now like to
present some details for the most recently completed quarter,
ended September 2001. Regarding the income statement, the net
loss for the third quarter of 2001 was $2.7 million or $0.07 per
share compared to a net loss of $6.4 million or $0.18 per share
for the same period in 2000 and a net loss of $3.9 million or
$0.11 per share in the second quarter of 2001.
I would like to provide you with a bit of detail on revenues and
operating expenses. Revenues for the third quarter of this year
were $1.1 million. Revenues for the same period last year were
$68,000 and revenues for the second quarter of this year were
$715,000. The revenues for this quarter were primarily
attributable to fees received from Palm for consulting services
performed under a funding agreement that was entered into
contemporaneously with the execution and delivery of the asset
purchase agreement.
Cost of revenues for the third quarter of this year were $1.8
million. Included in the cost of revenues are about $981,000
associated with the costs, primarily payroll, of providing
consulting services to Palm under the funding agreement. Also
included in the cost of revenue is a charge of $539,000, due to
the write-off of purchased technology agreements previously
capitalized. This was done in accordance with SFAS 121, which
requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the
book value of the asset may not be recoverable, and that is the
case under the current circumstances. The remaining of cost of
revenues is attributable to normal amortization and other
expenses.
Taking a look at operating expenses, our operating expenses for
the third quarter of 2001, and this is excluding restructuring
charges and non-cash expenses associated with the amortization of
deferred compensation. Those operating expenses were $2.6
million, or approximately $900,000 per month. This is down 37%
from the second quarter of 2001 and is down 40% for the same
period of 2000.
Research and development expenses for the quarter totaled $1.4
million. This is down 39% from the second quarter of this year
and is down 33% from the same period last year. Two-thirds of
these expenses are compensation-related. The remainder of the
expenses are comprised of the allocation of facilities, expenses
and payments under ongoing contracts.
Sales and marketing expenses for the quarter totaled $110,000;
this is down 80% from the second quarter of 2001 and is down 92%
from the same period last year. The decrease is attributable to
the cessation of sales and marketing activities and their
respective resources during the second quarter, given the current
market conditions at that time and the decisions that the
business made.
General and administrative expenses for the quarter totaled $1.1
million. This is down 18% from the second quarter of 2001; it is
actually up 27% from the same period last year. I want to be
perfectly clear on why there is an increase. Over 50% of these
G&A expenses are attributable to legal, accounting and other
professional fees directly related to the proposed Palm
transaction. The remainder is comprised primarily of compensation
expense, insurance expense and the allocation of facilities
expenses.
Turning to the balance sheet, in terms of assets, our primary
asset is cash. We had approximately $2.1 million in cash as of
September 30, 2001. This is a net decrease in cash for the third
quarter of $2.8 million. We also have approximately $577,000 of
prepaid assets. Most of this is prepaid liability insurance and
some miscellaneous prepaid assets, including prepaid licensing
agreements. We also have approximately $250,000 of property,
equipment and other assets.
In terms of liabilities, we have accrued expenses of $621,000.
Over half of this amount is accrued vacation. Technology license
obligations total $675,000 and there is several hundred thousand
dollars of other liabilities. Taking the roughly $3 million in
assets and the roughly $1.5 million in liabilities, leaves
stockholder equity currently at $1.5 million.
At this time I want to make, as long as we're talking about our
financials and our cash situation, I want to make an additional
comment on cash and the transaction that has proposed itself. Our
cash, as of the end of the third quarter, was $2.1 million and
currently our expenses exceed our revenues about $375,000 per
month on average. This is made up of compensation for those
individuals that are not part of the funding agreement with Palm,
our rent and other operating expenses, and ongoing license
obligations that we continue to meet to remain in compliance with
the asset purchase agreement. So you may think with $2.1 million
and $375,000 per month of excess expenses that we have five to
six months of cash remaining. That is not the case. We have a
$1.2 million insurance obligation to be paid at the beginning of
December. If you take this into consideration, more accurately we
have two to three months from the end of the third quarter of
cash remaining. Given that we will need to have closed the
transaction by the end of November, early December at the latest,
or we will be out of cash.
I want to turn briefly to how the proceeds from the transaction
will be used. For those of you that have received a proxy
statement, this can be found on page 56. We'll be receiving $11
million in Palm stock, and what we've tried to do here is
highlight the uses of some of those proceeds. Two point four
million goes to third party as a result of pre-existing
obligation. These are things like our obligation under our
current lease for our office space, existing contracts that we
have that are not being assumed by Palm that we still have a
legal obligation to pay, and several other things along those
lines. Approximately $750,000 will go to Lehman Brothers as a
result of the completion of the asset sale. This is part of the
contract that we signed with them for their professional services
related to assisting us in seeking alternatives and financial
partners over the past several months, particularly back in May,
June and July.
Approximately $2.25 million in connection with lump sum severance
payments and continued group health insurance benefits. I will
come back to this. Approximately $580,000 in additional incentive
bonuses paid to certain designated employees, including certain
executive officers. I will come back to that in just a moment.
Then approximately $1.2 million for liability insurance after
cessation of operations. That is the insurance obligation that I
mentioned earlier. If you add those up, that's basically $7.2
million in obligations, $11 million in, so if you make the
subtraction, that's $3.8 million that we believe stockholders
could receive over time in liquidation.
Given that, I want to make a few more comments. First, regarding
the change of controls. There's a brief description on page 53 of
the proxy, but there are only a couple points I want to make.
These change of controls are standard practice for businesses.
They serve the interest of shareholders, so that when
transactions arrive, whether it's an acquisition, some type of
merger, or some type of sale, the entire management team, which
typically is put at risk, is incented to facilitate the
transaction and act in the best interest of shareowners. In the
case of Be, our change of controls are reasonably conservative,
they've been in place since the IPO in mid '99 or at the time of
hiring of the given executives that they cover. They're not
something that was put in place and related directly to the
current transaction under consideration. So I just wanted people
to make sure that they understood the purpose of change of
controls, that they are a standard business practice, they serve
the interest of stockholders. Ours are relatively conservative
and have been in place for quite some time.
Related to other compensation that has potential to be used from
the proceeds of the transaction, the activities related to this
transaction have taken place for the past five months. The
engineers and management team members who have remained with Be
over this period are critical for the success of the transaction.
In the absence of the engineers the deal is off, they must go
with the technology. But if there is no close of the transaction,
the engineers do not have offers with Palm. The deal must close
for those offers to be valid. In the absence of the management
team members who remain, the company would have lacked the
capacity and professional expertise to negotiate terms and move
the transaction forward. Most likely the company would have been
forced into bankruptcy if the engineers and management team
members who have remained with Be over this period did not stay
until the closing of the transaction. By staying with Be during
this period the engineers and management team members who have
remained are incurring a great deal of personal risk by remaining
loyal to Be and not pursuing their career options outside of Be.
Our directors needed to take actions necessary to increase the
probability of the successful transaction and all these
compensation arrangements are only paid if the transaction is
successful.
That being said regarding the proceeds, there may be some desire
to understand what would happen to the existing cash we have. As
I stated, we had $2.1 million as we opened the fourth quarter.
I've just described what would happen to the $11 million less the
$7.2 million to end up with $3.8 million. The $2.1 million that's
remaining would primarily be used for operating expenses until
closing. I highlighted what operating expenses are. We will have
those for October and November, and if need be into December.
Accrued expenses that will take place in the fourth quarter,
including the settling of professional fees for the transaction.
Then the transaction costs to convert the stock in the open
market, as well as any taxes due. So we are hopeful that the $2.1
million will be sufficient to handle all of those expenses.
At this time I'd like to turn the meeting back over to Jean-Louis
for some more comments related to the stockholder resolutions.
J. Gassee Thank you, P.C., and let me address these items. First, we have
two resolutions for shareholder consideration. The first
resolution is the sale of substantially all of these intellectual
property and other technology assets to Palm for $11 million in
Palm stock. Second, we need approval for the dissolution of Be
Incorporated. Upon closing, the Palm stock we receive will be
immediately sold in the open market for cash. That cash will be
used to satisfy outstanding liabilities and obligations and the
remainder will be returned to our shareholders.
Second, the board of directors is recommending a vote for both
resolutions. We acknowledged this is not the results anyone
involved, shareholders, management, employees, would have
preferred, but it is the best alternative available. Over the
last 12 months we have pursued strategic partnerships, numerous
financial alternatives and potential acquirers. We literally have
scoured the planet in Asia, Europe and the USA for all of these
opportunities. As we know, the financial markets have been
extremely difficult and particularly tight for companies at our
stage of the business life cycle and the business climate has not
been conducive to new business development efforts. The result is
Palm is the only company which continued to express an interest.
In this situation the benefits to our shareholders are about the
fact that getting $0.10 per share is definitely better than
nothing and to the extent this is relevant, the technology will
continue, albeit in a different form. It is our belief that this
deal offers the greatest likelihood for the technology to survive
and our engineers responsible for development will have the
opportunity to keep working on it. Our hope is that the engineers
and the technology find a new home, everybody will see a new
opportunity for our technology to reach the broadest access to
use in the marketplace.
Thirdly, the most likely alternative if the transaction is not
approved is bankruptcy protection. We do not have the cash to
continue operating or seeking financing and we will not attempt
to reorganize under Chapter 11. There are no funds to make such
an attempt. There is no reasonable expectation it would result in
a viable, ongoing business, and we would have already tried a
reorganization if we believed it would have saved the company and
as a result shareholder assets.
The expectation is nothing in the bankruptcy scenario would be
returned to our shareholders and the bankruptcy trustee would
evaluate and determine the best value for all remaining assets.
In this context we believe it is unlikely the technology will
survive in bankruptcy. In it's current state BeOS and BeIA
technology is not transferable without also transferring many
third party licenses. In bankruptcy there are no remaining funds
to retain Be engineers and Be would not be able to fund the
efforts to remove third party code from the source.
It is also unclear whether the bankruptcy trustee could hire
anyone to continue that activity or even have the legal right to
allow someone access to third party code or would determine the
source code with third party code removed would have enough value
to offset the expense of cleaning it up or would find it valuable
to negotiate with all third parties to transfer such licenses in
order to prepare the code for licensing to a third party at
auction. At this point it is unlikely any "savior" deals,
including a better offer from Palm, would be forthcoming if the
transaction we're presenting to our shareholders is not approved.
Last but not least, not voting is the same as a vote against the
resolution. It is very important our shareholders vote as soon as
possible and definitely prior to November the 12th, even if
against, because it lets us know if we should continue to pursue.
Let me reiterate, if the proposed transaction is not approved,
then it is most likely that we'll go into bankruptcy. This
presents a much greater risk for our technology to die and there
are no other offers and there's no time for a revised offer or
other alternative scenarios, because we don't have funding for
that.
So let me now address the question that has been aired in many
forums on potential liquidation. Our board of directors has the
fiduciary responsibility to maximize shareholder value. In
circumstances like these they must ensure they have investigated
all potentially valuable assets. In addition to technology, a
trained and assembled work force and its fixed assets, furniture,
fixtures, equipment, etc., the board is in the process of
investigating the validity and value of any potential litigation
claims as assets of the company. These include anti-trust claims
against Microsoft.
At this time no course of action has been decided. Because of
Be's cash position it cannot fund it's own lawsuit at this point,
therefore Be's only chance to pursue any of these potential
claims is through a contingency fee arrangement with a
plaintiff's law firm. As you can imagine, a law firm willing to
fund a very expensive lawsuit must complete it's own assessment
of the validity of the claims and their potential value prior to
making such a commitment. We are in that stage right now,
presenting facts and evidence to such law firms so they can make
a decision to move forward or not. If the Palm transaction is not
approved it is unclear whether the bankruptcy trustees would
attempt to pursue these potential assets, or whether a
plaintiff's firm, working on contingency, would be willing to
pursue a case after Be employees have completely dispersed. The
principal witnesses and facilitators of such a lawsuit are
currently Be employees. If bankruptcy is forced, those
individuals in new positions may have conflicting obligations,
making pursuit of the action more difficult.
Let me summarize. Number one, there are two resolutions for
stockholder consideration. Number two, our board of directors is
recommending a vote FOR both resolutions. Number three, the most
likely alternative if not approved means bankruptcy protection,
and number four, not voting is the same as a vote against the
resolutions and definitely we need your vote prior to November
12th. Thank you.
P. Berndt We'll be happy to entertain any questions at this time.
Moderator Very good, thank you. Representing Hamilton SunStrand we go to
the line of Steven Miken. Please go ahead.
S.Miken Hello. I approve of the first resolution of the asset sale to
Palm. I think that's very good. I've got a problem with the plan
for dissolution though. The idea of selling all the Palm stock
more than that's necessary and distributing cash to us
stockholders, I'm forced to take a loss on all my stock. Why not
sell off only as much Palm stock as is necessary, that is the
$7.2 million, to cover obligations and liabilities and distribute
the rest to us Be stockholders?
P. Berndt I think that's a fair question. The quick answer is market risk.
The dissolution process takes a while. I won't even venture what
it is, but I will tell you that it's more than one business day
on the market. Palm stock, as well as just about every stock out
there, trades every day, sometimes more than ten million shares a
day, and it goes up and down. So converting all of their shares
to cash and then being able to deal with that cash and have that
cash available for distribution or distributions, depending on
how the process plays out, and I'll just use a time, let's just
say a period of X number of months. When you get cash at the end
of that period of time, let's just say the $0.10 a share, you are
free to go into the market and buy Palm stock at that point at
the price that it is. Now that price could be higher, lower or
the same as what we get the Palm stock at back here in 2001. So
we did not want to be in the business of investing in Palm stock.
It is a vehicle for us to receive fair value and compensation for
the assets that we're selling and it is an exposure to market
risk that I don't believe we should expose our stockholders to.
To the extent that they are interested in owning Palm stock, when
they do receive the distribution per share to them, they'll be
free to go into the market and buy it at the current market
price.
S. Miken Okay, I was worried about the tax consequences of doing it that
way and also the fact that dumping 11 million shares of stock on
the market at one time would probably drive the stock down, would
it not?
P. Berndt I think that's another very good question. I'll be quite honest
and say it is. It has been a bit of a concern for me. It is less
so recently, because their volume and transaction volume has
actually increased a great deal. I've been watching their daily
trading volume and it has gone up a great deal. We will be
working with one of the top trading desks on Wall Street to
facilitate this. We have been talking to them for many, many
weeks. So we will sell into the market in a manner such that it
maximizes the value of the shares to us, it minimizes the impact
of the selling pressure on Palm's shares overall, and I'm
reasonable comfortable that we will be able to sell into the
market without too much of a detrimental effect.
The truth is there is some market risk here; you never know what
could happen on a given day. So you're right, but as far as on a
normal trading day, their trading volume, they've probably
already done six to seven million shares today. They've had days
as high as 17 million. At their current price we'll probably see
it between four and five million. The people we'll be using are
very experienced traders and over a period of a couple of days,
even though people will know it'll be coming, I think we'll be
able to handle without too much liquidity issues.
S. Miken Okay, thank you.
Moderator Thank you, sir. Next we go the line of Luigi Gionelli with CPU
Sales. Please go ahead.
L.Gionelli Hello. How are you doing? My question is about the possible
Microsoft lawsuit. Do you think that you'll be coming with the
decision before the 12th on how you stand, if you plan or plan
not to sue them? If so, if we vote yes on both issues and the
company sells it's assets and dissolves and then afterwards you
decide to sue Microsoft, do the Be shareholders still have a
right to any money that comes in from that? Does that make sense?
P. Berndt Yes, let's just recap your question. Will we have a decision by
the 12th? The second question... and the last question was will
Be shareholders take care of that. Will, if after we dissolve,
will Be shareholders be participated in that? Is that right,
those are the two questions?
L. Gionelli Right. That's essentially it. Because you need, in order to
follow through the deal, both situations have to go, the
dissolving and the sale of the assets, correct?
P. Berndt We have to have your approval to pursue a plan of dissolution.
Let me answer your questions in order. I do not believe that by
November 12th we will have a definitive picture on the subject
that you're discussing. It just takes time, and as we described
it, to some extent it is out of our hands, given our financial
position. We have pursued, contacted and had discussions with
appropriate contingency law firms, law firms that operate on
contingency. It is under consideration by them on the validity of
a potential claim and the value of a potential claim. They will
need to decide, because it is a business pursuit of theirs, on
whether it is something they want to pursue. That takes time.
Obviously they are not operating on our timetable; they're
operating on their timetable. We've pushed them as hard as we
can, but I don't believe by November 12th we'll have a definitive
action on that matter.
That being said, the fiduciary responsibility of the board of
this company remains after the transaction as well, and so
whatever is determined and whatever course of action is pursued,
it will be in the interest of the stockholders. That's why we
can't answer with a definitive answer on how it will take place.
It could take many forms. All of these are assuming that
something is pursued, but the interest of the shareowners at that
time, the shareowners of record at the time that we make the
decision and announce it, will be protected and taken care of and
it will be structured as appropriate for the actions that will be
taken. Does that your question? I want to make sure I answer.
L.Gionelli I think you did. So in other words if the plan goes through and
the sale does happen, and after the sale Be decides to file a
lawsuit, the shareholders will still take part in any profits or
any money incoming from that point on?
P. Berndt Yes? Anything that is done is going to be done to the benefit of
shareowners. And it will be structured appropriately.
L.Gionelli Okay, it was only because when I was reading the proxy, it
sounded like if we voted yes for the dissolution that we also
give up any rights from Be of anything that happens afterwards.
Did I read that incorrectly?
P. Berndt I believe you did. The thing here, and for everyone on the call,
because I think that this is a good point for people to
understand. We are selling assets of the company, albeit the
majority of the assets of the company, but we still exist as a
company until we officially dissolve, so post-closing of this
transaction, and hopefully the approval of these two resolutions.
The approval is for the plan of dissolution, the board will
continue to pursue, but as part of that and as part of their
obligation to maximize value for shareowners, a decision will be
needed to reach on any potential litigation claims, but those are
still for the benefit of shareowners and will be pursued
accordingly. A good question.
L.Gionelli Okay. I have one more question about BeOS, if I could. Reading
through the news groups and the forms and everything, people
mention that there could be another version of BeOS6, or 5.4,
whatever you want to call, and Gold release. Is there any
validity to that? If it is, will Palm be taking that and doing
something with it or will that stay with Be in case this whole
transaction does go through?
P. Berndt I will give you a very simple answer. BeOS as well as BeIA
technology is the assets that are being sold to Palm. We are not
going to comment on what Palm is going to do or not do with those
assets. That's a question that needs to be directed to Palm.
L. Gionelli So the entire BeOS everything, OS and everything else, is going
right to Palm?
P. Berndt This company, after the asset purchase, will have no capability
to do anything with BeOS, because we will no longer own it.
L. Gionelli Okay, great. I wish you guys the best of luck.
P. Berndt Thank you very much for the questions.
Moderator Thank you, Mr. Gionelli. Next we go to the line of Antoine
Pierri, who is a private investor. Please go ahead.
A. Pierri Hi,...and thank you for all this information. I guess my two
questions were just asked, but I'd like to reiterate pretty major
point for all the shareholders, which would be about their rights
in case of a lawsuit. So my questions would be as such. First,
what would be the timetable for the dissolution of Be
Incorporated after the deal goes through? How many months do you
think that would happen after the deal goes through? Second, say
the lawsuit is started a year after dissolution, will the present
shareholder which will have been past shareholders then be
contacted? How will they be contacted and how will the process
happen in order for them to get the benefits of the lawsuit in
case it happened to be won? Thank you and sorry I didn't mean to
repeat the question, but just to clarify. Thank you.
J.Gassee Well thank you, sir. As the previous caller, you pose an
extremely important and valid question and we appreciate this
opportunity to reiterate and clarify our position. Any such
action, if implemented, will be targeted at benefiting our
shareholders. So timetables, we cannot comment on the specific
timetables, but the principal stated earlier remains that such
action, if implemented, would be in the name and for the benefit
of our shareholders.
P.Berndt Let me add to that. As far as the time frame goes, the
dissolution will be pursued with all due haste. What I mean by
that is there are notification requirements to give people an
opportunity that may have claims against the company that we're
not aware of, etc. So there are just plain statutory timing
considerations, but we will operate as quickly within that as we
possibly can to conclude the affairs of Be Incorporated.
In the event that there is deemed to be validity and value in the
pursuit of potential litigation claims, depending on the
circumstances, there will be some type of record date,
shareholder of record date that will be established. When that
decision is made, that is when the person needs to be a
shareholder of Be Incorporated. So just as we had a record date
for these resolutions here, there will be some date of record
that will be, in the future quite honestly, that will establish
what you're asking. At that point there may be some type of trust
that's set up, there may be the company continues, all those
kinds of things. That's what I meant by structure. Whatever
structure's appropriate to pursue whatever is being pursued
related to those potential litigation claims, will be set up and
a date of which record of shareholders, because people trade
every day, we have several hundred thousand shares that trade
hands every day, now there will be a date of record that will be
established related to those claims. At this point in time that
is just something that is under consideration and we've
established a date of record for these particular things.
A.Pierri Okay, thank you. A quick follow up to this. How do you think, I
don't know if the Be Web site might still be up when that
happens, but how would we be made aware of any potential benefits
to us, say years from the dissolution?
P. Berndt I think that that's a fair question. These are all very good
questions, so I'm glad you're asking them. We live in a great
country and there are a lot of just plain disclosure and
reporting requirements for things like this. Just as we had to,
and wanted to, quite honestly, put out the proxy material that
relates to these resolutions. Your ownership of this company is
registered, a variety of different ways people have it
registered, but there are services that are involved. Just as we
were able to get you the proxy this time, we'd be able to get you
whatever the relevant information is in the future if you were
still a shareowner. There are daily records and that's why you
establish a certain date and there's lists and addresses and all
that kind of stuff and that's why you have brokers and you
register yourself and those kind of things. So we will find you
and communicate clearly, consistently, and hopefully concisely,
on what our plans are related to your ownership interest in the
company.
A. Pierri Thank you so much. Thank you very, very much.
Moderator Thank you, sir. Next we'll go to the line of a share hold, Mr.
Anthony Richards. Please go ahead.
A. Richard Yes, I invested in the technology of...and BeOS and now it seems
like Palm is taking that technology and kind of keeping me out in
the cold when I already had my investment in this end. I guess
what I'm saying is when they take the technology, buy the
technology, do whatever, it leaves me holding like maybe 90% loss
and them getting the technology and I'm going to be on the
outside watching that technology grow. I feel like we should at
least have an opportunity to maybe get some stock in the platform
solutions group, if that's where they're going to put it, so we
can have an opportunity to grow with it. I don't see how they can
take that technology that I invested in and use that and make
that grow and make money off it and not allow me to have shares
in that part of that software or platform.
P. Berndt Before I comment, do you have a specific question or do you just
want me to comment on that?
A. Richards I would like to know if it's possible to renegotiate so it would
be more fair to the shareholders, like myself, who invested and
believed in the technology, and as it is now I really can't say
that I'll vote, I have 50,000 shares, that I'll vote for it. Not
that that's a lot, but I can do that, but I feel as though there
could be a better deal made for the shareholders.
J. Gassee Sir, let me just ask a question, did you write to the board of
directors?
A. Richard Yes I did.
J. Gassee Okay, I saw your message, sir, and I want to thank you for
bringing your perspective to the board's attention.
A.Richard Could I make another comment? I just have a lot of comments I'd
like to make, because I feel like I put a lot of my hard earned
money into it and I just feel like I'd like to talk about it.
P. Berndt Let me comment on what you've already said. One, this is not the
result anyone involved here, stockholders, the management team or
the employees, would have preferred, but in our judgment, dealing
with it every day and motivated to maximize shareholder value, it
is the best alternative available. The purchase price agreed to
with Palm was reached over a period of several months of arguably
difficult negotiations in a difficult business environment. We
would have liked to remain an independent, thriving company.
Unfortunately, we were not able to find funding, even using
several professional advisers. We were not able to secure
strategic partners because new business development efforts sort
of were pulled way back as people were letting products go.
There's been nothing wrong with the technology; it's just been a
very difficult financing and business environment. It is in our
judgment that this is the best offer available.
As far as renegotiating the offer, I don't believe that that is
an option at this point in time. Certainly I understand your
feelings of disappointment and you certainly every right to vote
against the resolutions. We brought these resolutions to the
shareowners because we thought, quite honestly, something was
better than nothing. If this is voted down, it's nothing. If you
have 50,000 shares, hopefully $5,000 is something. I understand
that 90% of your investment has been dissipated. Our effort has
been to try and return something to shareholders, the best that
we can, and so we're putting forth the deal that we believe that
we believe is the best, and quite honestly it's the only deal
that we have.
So I appreciate your comments. I hope you understand that I
empathize with your comments, quite honestly, but I would
encourage you to give due consideration to the spectrum of the
arguments to vote for these resolutions as well as the ....
J.Gassee If I may, sir, and again thanking you again for giving us the
opportunity to try to solve this. Let me add my perspective as a
founder and a shareholder. I put money in the company at every
stage, the seed money, various rounds of financing; even I bought
shares in the IPO. I have probably something around 10% of the
company's shares and I never sold a share, so in terms of seeing
the loss to our shareholders, I certainly have reason to see it
from my own perspective.
With this said, we tried Asia, Europe, Pacific; this is the deal
we could find. We have a board of directors, which is composed of
professional venture investors, business executives, a very
respected attorney in the business area as well. So much to my
personal regret, this is what we have. Our board of directors
proposes this. You mentioned your investment in the technology. I
certainly empathize with this personally and if we don't get this
deal approved, among other things, and very importantly still,
the technology dies. That's what's going to happen if we don't
get this deals approved. Thank you.
Moderator Thank you, Mr. Richards. We'll next go to the line of Claude Lee,
who is a private investor. Please go ahead.
C.Lee I understand that Be will be listed on the Nasdaq until January
1, 2002 or December 31 or somewhere in there. My question is do
you think that a Microsoft lawsuit will be announced before that
date?
P. Berndt Let me clarify a couple of things. One, there are multiple
listing requirements for Nasdaq. Nasdaq suspended two of those;
however, we are not in compliance with another one of the
requirements, which is net tangible assets. There is a $4 million
requirement that we do not meet. So it is under review on if that
one will be suspended or not. To be quite honest, we are waiting
to hear back from them. However, the way it usually is handled is
that when we have our filing, which will probably be at the end
of October for our third quarter 10Q, they will notice that we
don't meet the $4 million requirement. They will in a period of
time give us notice, we will have, I think it's ten days to
respond. They will have some period to respond, but it's rather
quick. So if that course of action is pursued we actually could
be de-listed by the end of November. If they suspend it, it would
be January 1st, but we could be de-listed by the end of November.
My current understanding of Nasdaq listing requirements are that
the net tangible assets requirement has not been suspended. So
that would be my most likely scenario.
As far as whether we would or would not have announced anything
related to potential lawsuit by the end of the year, I won't make
any commitment to the timing, but it's possible. I'll just say
that. It's possible that we would have been able to get some
feedback from the law firms to find out if they're interested. So
does that answer your question? We could still be traded, by the
way. We'd be traded on the bulletin boards and not on Nasdaq
itself.
C. Lee Because the stock would take off if there was a lawsuit announced
before we got off of Nasdaq.
P.Berndt Again, the board will take whatever action is appropriate in
terms of structure and shareowner interest and all those things
to make sure that they benefit from the implications of the
lawsuit.
C. Lee Okay. All right, thank you.
Moderator Thank you, Mr. Lee. We go to Omni Cron's John Teagon now. Please
go ahead.
J.Teagon Good morning, gentlemen. As you probably know, Jean-Louis
probably knows this, there have been several requests to Be and
Palm to license BeOS and to BeIA to third parties. In assisting
Palm with the transition, do you know when those requests might
be answered?
J. Gassee That's a question that should be addressed to Palm.
T. Teagon Okay, thank you.
Moderator Thank you. At this point, Monsieur Gassee, our host panel, we
have no further questions. Please continue.
J. Gassee Well thank you very much. This concludes our conference call
addressing the third quarter results as well as the proposed
transaction to be voted on or before, preferably before, November
12th. Thank you very much.
Moderator Thank you. Ladies and gentlemen, your host is making today's
conference available for digitized replay for six days, starting
at 2:30 p.m. Pacific Daylight Time October 25th through 11:59
p.m. Pacific Standard Time October 31st. You may access AT&T's
Executive Replay Service by dialing toll free 800-475-6701 and at
the voice prompt enter today's conference ID of 608342.
That does conclude our investor conference for today. Thank you
very much for you participation as well as for using AT&T's
Executive Teleconference Service. You may now disconnect.
[End of Conference Call]
Stockholders of Be Incorporated are urged to read the proxy statement/prospectus
and any other relevant documents filed with the Securities and Exchange
Commission ("SEC") because they contain important information. You may obtain
the documents free of charge at the SEC's web site, http://www.sec.gov. In
addition, documents filed by Be Incorporated with the SEC can be obtained by
contacting Be Incorporated at the following address and telephone number:
Shareholder Relations, 800 El Camino Real, Menlo Park, California 94025,
telephone: (650) 462-4100. Please read the proxy statement/prospectus carefully
before making a decision concerning the dissolution of Be and the sale of Be
assets to ECA Subsidiary Acquisition Company, a wholly owned subsidiary of Palm,
Inc. Be, its officers, directors, employees and agents will be soliciting
proxies from Be stockholders in connection with the asset sale. Information
concerning the participants in the solicitation is set forth in the proxy
statement/prospectus.