UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 4, 1998
[ ] 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: 0-22632
ASANT<E'> TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0200286
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
821 Fox Lane
San Jose, CA 95131
(Address of principal executive offices, including zip code)
Registrant's Telephone No., including area code: (408) 435-8388
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
As of April 4, 1998 there were 9,221,968 shares of the Registrant's Common
Stock outstanding.
<PAGE2>
ASANT<E'> TECHNOLOGIES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1: Financial Statements:
Unaudited Condensed Balance Sheets -
April 4, 1998, and September 27, 1997 3
Unaudited Condensed Statements of Operations - Three
and six months ended April 4, 1998
and March 29, 1997 4
Unaudited Condensed Statements of Cash Flows - Three
and six months ended April 4, 1998 and
March 29, 1997 5
Notes to Unaudited Condensed Financial Statements 6-7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
PART II. OTHER INFORMATION
Item 1: Legal Proceedings 12
Item 4: Submission of Matters to a Vote of
Security Holders 12
Item 5: Other Information 12
Item 6: Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE3>
PART I. Financial Information
Item 1. Financial Statements
Asant<e'> Technologies, Inc.
Unaudited Condensed Balance Sheets
(in thousands)
April 4, September 27,
1998 1997
--------- -------------
Assets
Current assets:
Cash and cash equivalents $12,195 $12,931
Short-term investments - -
Accounts receivable, net 5,088 8,313
Receivable from stockholder 0 0
Inventory 11,249 12,080
Other current assets 4,903 4,096
-------- -------
Total current assets 33,435 37,420
Property and equipment, net 2,581 2,768
Other assets 231 379
-------- -------
Total assets $36,247 $40,567
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,792 $ 5,835
Accrued expenses 4,581 4,858
Payable to stockholder 0 0
------- -------
Total current liabilities 11,373 10,693
Long-term obligations, less current
portion 0 0
Stockholders' equity:
Common stock 26,698 26,361
Retained earnings (deficit) (1,824) 3,513
------- -------
Total stockholders' equity 24,874 29,874
------- -------
Total liabilities and stockholders'
equity $36,247 $40,567
======= =======
The accompanying notes are an integral part of these Unaudited Condensed
Financial Statements.
<PAGE4>
ASANT<e'> TECHNOLOGIES, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Six months ended
April 4, March 29, April 4, March 29,
1998 1997 1998 1997
Net sales $10,083 $21,187 $27,603 $38,667
Cost of sales 7,469 13,654 17,855 24,377
------- ------- ------- -------
Gross profit 2,614 7,533 9,748 14,290
Operating expenses:
Sales and marketing 5,141 4,274 9,660 8,400
Research and development 2,104 1,877 3,723 3,634
General and administrative 1,026 812 1,917 1,581
------- ------ ------ ------
Total operating expenses 8,271 6,963 15,300 13,615
------- ------ ------ ------
Income (loss) from operations (5,657) 570 (5,552) 675
Interest & other income, net 150 152 303 290
------ ------ ------ ------
Income (loss) before income taxes (5,507) 722 (5,249) 965
Provision for income taxes 0 274 88 366
------ ------ ------ ------
Net income (loss) $(5,507) $ 448 $(5,337) $ 599
======= ====== ======= ======
Net income (loss) per share $(0.60) $0.05 $(0.58) $0.07
======= ====== ======= ======
Weighted average common shares
and equivalents:
Basic 9,194 8,978 9,168 8,925
======= ====== ====== ======
Diluted 9,194 9,132 9,168 9,134
The accompanying notes are an integral part of these Unaudited Condensed
Financial Statements
<PAGE5>
ASANT<e'> TECHNOLOGIES, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Six months ended
April 4, March 29,
1998 1997
Cash flows from operating activities:
Net income (loss) $ (5,337) $ 599
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 582 470
Changes in operating assets and liabilities:
Accounts receivable, net 3,225 (513)
Inventory 831 2,748
Prepaid and other assets (807) 416
Accounts payable 957 (2,398)
Accrued expenses (277) 39
-------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (826) 1,361
-------- -------
Cash flows from investing activities:
Purchases of property and equipment (395) (531)
Other assets 148 (105)
-------- ------
NET CASH USED IN INVESTING ACTIVITIES (247) (636)
Cash flows from financing activities:
Net proceeds from issuance of common stock 337 651
-------- -----
NET CASH PROVIDED BY FINANCING ACTIVITIES 337 651
-------- -----
Net increase (decrease) in cash and cash equivalents (736) 1,376
Cash and cash equivalents, beginning of period 12,931 12,693
-------- ------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,195 $ 14,069
======== ========
Supplemental disclosures of cash flow information:
Interest paid during the year $ 0 $ 4
======== ========
Income taxes paid (refunded) during the year $ 107 $ (966)
======== ========
The accompanying notes are an integral part of these Unaudited Condensed
Financial Statements.
<PAGE6>
ASANT<E'> TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. INTERIM CONDENSED FINANCIAL STATEMENTS
The Unaudited Condensed Financial Statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. In the opinion of management, the financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair statement of the financial position,
operating results and cash flows for those periods presented. These
unaudited condensed financial statements should be read in conjunction with
the financial statements and notes thereto for the year ended September 27,
1997, included in the Company's 1997 Annual Report on Form 10-K. Certain
prior period balances have been reclassified to conform with current period
presentation.
The results of operations for interim periods are not necessarily
indicative of the results that may be expected for the entire year.
2. BASIC AND DILUTED NET INCOME PER SHARE
The Company adopted SFAS 128, "Earnings per Share", during the quarter
ended December 27, 1997, and retroactively restated all prior periods.
Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed using the weighted average number of common and common equivalent
shares outstanding during the period. Common equivalent shares of 6,000
and 154,000 for the quarters ended April 4, 1998, and March 29, 1997, and
85,000 and 388,000 for the six months ended April 4, 1998, and March 29,
1997, respectively, consist of the incremental common shares issuable upon
the exercise of stock options (using the treasury stock method). Common
equivalent shares are excluded from the computation if their effect is
antidilutive.
3. INVENTORY
Inventory is stated at the lower of standard cost, which approximates
actual cost (on a first-in, first-out basis) or market, and consisted of
the following at:
April 4, September 27,
1998 1997
----------------- -----------------
(in thousands)
Raw materials and component parts $ 5,286 $3,065
Work-in-process 988 2,220
Finished goods 4,975 6,795
--------- ---------
$11,249 $12,080
====== ======
<PAGE7>
4. BANK BORROWINGS
In March 1998, the Company renewed its line of credit with the bank The
Company's bank line of credit provides for maximum borrowings of $5
million, limited to a certain percentage of eligible accounts receivable,
and bears interest at the bank's base rate. Covenants under the line
require the Company to maintain certain minimum levels of liquidity, net
worth and financial ratios, restrict amounts of capital spending, dividends
and stock repurchases, and require the Company to maintain certain levels
of quarterly profitability. No borrowings were made under the line of
credit agreement in fiscal year 1997 through April 4, 1998. As of April 4,
1998, the Company was not in compliance with all such covenants.
5. INCOME TAXES
The Company has net deferred tax assets of approximately $2.3 million which
management believes are more likely than not to be realized. Realization
is dependent on generating sufficient taxable income in future periods.
The amount of deferred tax assets considered realizable could be reduced in
the future, resulting in a charge to net income, if estimates of future
taxable income in the carryforward period are reduced.
6. LEGAL PROCEEDINGS
From time to time the Company is subject to legal proceedings and claims in
the ordinary course of business, including claims of alleged infringement
of trademarks and other intellectual property rights.
On September 13, 1996, a complaint was filed by Datapoint Corporation
against the Company and six other companies individually and as purported
representatives of a defendant class of all manufacturers, vendors and
users of Fast Ethernet-compliant, dual protocol local-area network
products, for alleged infringement of United States letters Patent Nos.
5,077,732 and 5,008,879. The complaint seeks unspecified damages in excess
of $75,000 and permanent injunctive relief. The Company has filed a
response to the complaint denying liability. The case has been
consolidated, for purposes of claim interpretation only, with similar cases
filed against several other defendants, which include, among others, Intel
Corporation, IBM Corporation, Cisco Systems, Bay Networks, and Sun
Microsystems. Plaintiff has served claim charts purporting to set forth
its basis for its claims that products compliant with an IEEE standard
infringe its patents. On April 16, 1998, the Special Master appointed by
the court issued a report agreeing, in most material respects, with the
defendants' interpretation of the alleged patent claims. If, after a
comment period, the court adopts the Special Master's analysis, defendants
will argue that products compliant with the IEEE standard do not infringe
Datapoint's patents.
7. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income." SFAS 130 establishes standards for reporting
comprehensive income and its components in a financial statement.
Comprehensive income, as defined, includes all changes in equity (net
assets) during a period from non-owner sources. Examples of items to be
included in comprehensive income, which are excluded from net income,
include foreign currency translation adjustments and unrealized
gains/losses on available for sale securities. During the three and six
months ended April 4, 1998 and March 29, 1997, the Company had no changes
in equity from non-owner sources.
<PAGE8>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion, other than the historical financial information, may
consist of forward-looking statements that involve risks and uncertainties,
including quarterly fluctuations in results, the timely availability of new
products, including new switch products, the impact of competitive products
and pricing, and the other risks set forth from time to time in the
Company's SEC reports, including this report on Form 10-Q for the quarter
ended April 4, 1998, and the Company's Annual Report on Form 10-K for the
fiscal year ended September 27, 1997. Actual results may vary
significantly.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
RESULTS OF OPERATIONS
Net sales for the second quarter of fiscal 1998 were approximately $10.1
million, an decrease of approximately $11.1 million, or 52%, from net sales of
approximately $21.2 million for the second quarter of fiscal 1997. Net sales
for the first six months of 1998 decreased by approximately 29% to $27.6
million compared to $38.7 million in the first half of 1997. This sales
decrease was due primarily to four factors; a softness in sales of network
systems products in the industry in general which caused distributors to
tighten up on inventory levels in the channel, delays in sales to Kindergarten
through 12{th} grade schools affected by the slow implementation of the
governments new "E-Rate" educational subsidy program, a decline in Apple
adapter card products, and a decline in sales to OEM customers. Although sales
to the Company's principal distributors were down significantly, sales from its
distributors to end user customers were at near normal levels. During the
quarter, prices continued to be affected by competitive pricing pressures and
the Company continued to reduce costs to slow the effects of falling prices.
In the second quarter of fiscal 1998, OEM sales accounted for approximately
$0.7 million, or 6.9% of total sales. This compares to approximately $6.7
million, or 31.6% of total sales, for the second quarter of fiscal 1997.
Management anticipates that sales of 10/100 "Fast Ethernet" products will
increase as a percentage of total sales, and OEM sales will remain fairly
constant as a percentage of total sales in the next quarter.
Sales outside the United States accounted for approximately 27% of net sales
for the second quarter of fiscal 1998, and was approximately 23% for the first
six months of 1998. These percentages compare to 18% and 22% for both the
second quarter and first six months of fiscal 1997, respectively. This
increase was due in part to the decrease in OEM sales during the second
quarter, which are reported with domestic sales, and to softer than expected
domestic sales in the second quarter.
The Company's gross profit as a percentage of net sales decreased to 26% for
the second quarter of fiscal 1998 from 36% in the second quarter of fiscal
1997. The second quarter margin was negatively affected by both the large
amount of market pricing declines experienced by the Company and the computer
and networking industries, and was also negatively affected by the Company's
reduced sales levels. For the first six months of 1998, the gross profit
percentage decreased to approximately 35% from 37% for the first six months of
fiscal 1997, due primarily to the decreased sales levels in the second quarter
of fiscal 1998.
<PAGE9>
Sales and marketing expenses increased by approximately $0.9 million, or 20%,
in the second quarter of fiscal 1998 compared to the second quarter of fiscal
1997, and increased by approximately $1.3 million in the first six months of
1998 compared to the first six months of 1997. As a percentage of sales, these
expenses were 51% in the second quarter of fiscal 1998 and 35% in the first six
months of 1998, compared with 20% and 22% in the second quarter and first six
months of fiscal 1997, respectively. The increases in sales and marketing
expenditures were due primarily to increases in advertising, tradeshow, product
collateral, outside service related costs, and provisions for delinquent
accounts. In the quarter ended April 4, 1998, the Company reduced its sales
force in order to reduce its fixed costs. The Company believes that sales and
marketing expenses overall will decrease slightly for the remainder of fiscal
1998, although certain components related to selling activities will remain
constant, or increase slightly
Research and development expenses increased by approximately $0.2 million, or
12%, in the second quarter of fiscal 1998 compared to the second quarter of
fiscal 1997 and increased by approximately $0.1 million in the first six
months of fiscal 1998 compared with the first six months of fiscal 1997. The
year-over-year increase was due to increases in prototype materials, and
outside consulting services. The higher spending in these areas resulted from
increased product development activities for the Company's recently announced
10/100 switch ASIC, incremental software related development expenses, and
higher recruitment related expenses. The Company expects that future spending
on research and development will decrease slightly in absolute dollars for the
remainder of fiscal 1998.
General and administrative expenses increased by approximately $0.2 million, or
26%, in the second quarter of fiscal 1998 compared to the second quarter of
fiscal 1997 and increased by approximately $0.3 million in the first six months
of fiscal 1998 compared with the first six months of fiscal 1997. As a
percentage of net sales, these expenses were 10% for the second quarter of
fiscal 1998 and were 7% for the first six months of fiscal 1998, as compared
with 4% for both the second quarter and first six months of fiscal 1997. The
increase in general and administrative expenses in absolute dollars in fiscal
1998 is primarily related to higher accounting, legal, outside consulting
services, and one time costs related to the Company's reduction in force. The
Company expects that future spending will decrease in absolute dollars during
the remainder of fiscal 1998.
As a result of the Company's loss in the quarter ended April 4, 1998, and
expected loss for fiscal 1998, the Company expects to have no provision for
income taxes in fiscal 1998. See Notes to the Unaudited Condensed
Financial Statements.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company operates in a rapidly changing and growing industry, which is
characterized by vigorous competition from both established companies and
start-up companies. The market for the Company's products is extremely
competitive both as to price and capabilities. The Company's success
depends in part on its ability to enhance existing products and introduce
new high technology products. The Company must also bring its products to
market at competitive price levels. Unexpected changes in technological
standards, customer demand and pricing of competitive products could
adversely affect the Company's operating results if the Company is unable
to effectively and timely respond to such changes. The industry is also
dependent to a large extent on proprietary intellectual property rights.
From time to time the Company is subject to legal proceedings and claims in
the ordinary course of business, including claims of alleged infringement
<PAGE10>
of patents, trademarks and other intellectual property rights. Consequently
from time to time the Company will be required to prosecute or defend against
alleged infringements of such rights.
The Company is dependent upon information systems for all phases of its
operations including production, distribution and accounting. Since some
of the Company's older programs recognize only the last two digits of the
year in any date (e.g., "98" for "1998"), some software may fail to operate
in 1999 or 2000 if the software is not reprogrammed or replaced (the "Year
2000 Problem"). The Company believes that its suppliers, distributors, and
customers also have Year 2000 problems which could affect the Company. The
Company is in process of developing a plan to determine the impact of the
Year 2000 Problem on its operations. It is not possible, at present, to
quantify the overall cost of this work, or the financial effect of the Year
2000 Problem if it is not resolved on a timely basis. However, the Company
believes at present that the cost of addressing the Year 2000 Problem will
not have a material effect on the Company's financial position, liquidity,
or results of operations.
The Company's success also depends to a significant extent upon the
contributions of key sales, marketing, engineering, manufacturing, and
administrative employees, and on the Company's ability to attract and
retain highly qualified personnel, who are in great demand. None of the
Company's key employees are subject to a non-competition agreement with the
Company. Unless vacancies are promptly filled, the loss of current key
employees or the Company's inability to attract and retain other qualified
employees in the future could have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company is subject to various risks associated with international
operations including currency exchange rate fluctuations, changes in costs
of labor and material, reliability of sources of supply and general
economic conditions in foreign countries. Unexpected changes in foreign
manufacturing or sources of supply, fluctuations in monetary exchange rates
and changes in the availability, capability or pricing of foreign suppliers
could affect the results of the Company's operations.
The adoption of 10/100 Mbps and 100 Mbps Ethernet technology (100BASE-T, or
"Fast-Ethernet") has become a standard networking topology in the
networking and computer industries. This standard has been adopted widely
by end-user customers because of its ability to increase the efficiency of
LANs and because of its ease of integration into existing 10BASE-T
networks. Because of the importance of this standard, the Company has
focused its ongoing research and development activities on introducing
future products incorporating 100BASE-T technology. The Company realizes
the importance of bringing more 10BASE-T (10 Mbps) switching and 100BASE-T
switching to market in order to complement its existing 100BASE-T shared
products. In that regard, the Company's future operating results may be
dependent on the market acceptance and the rate of adoption of this new
technology, and on timely product release.
The Company commits to expense levels, including manufacturing costs,
investing in advertising and promotional programs, based in part on
expectations as to future net sales levels. If future net sales levels in
a particular quarter do not meet the Company's expectations or the Company
does not bring new products timely to market, the Company may not be able
<PAGE11>
to reduce or reallocate such expense levels on a timely basis, which could
adversely affect the Company's operating results. There can be no
assurance that the Company will be able to achieve profitability on a
quarterly or annual basis in the future.
The Company's target markets include end-users, value-added resellers
(VARs), systems integrators and OEMs. Due to the relative size of the
customers in some of these markets, particularly the OEM market, sales in
any one market could fluctuate dramatically on a quarter to quarter basis.
In summary, the Company's net sales and operating results in any particular
quarter may fluctuate as a result of a number of factors, including
competition in the markets for the Company's products, delays in new
product introductions by the Company, market acceptance of new products
incorporating 100BASE-T by the Company or its competitors, changes in
product pricing, material costs or customer discounts, the size and timing
of customer orders, distributor and end-user purchasing cycles, variations
in the mix of product sales, manufacturing delays or disruptions in sources
of supply, and economic conditions and seasonal purchasing patterns
specific to the computer and networking industries. The Company's future
operating results will depend, to a large extent, on its ability to
anticipate and successfully react to these and other factors.
Successfully addressing the factors discussed above is subject to various
risks discussed in this report, as well as other factors which generally
affect the market for stocks of high technology companies, will affect the
price of the Company's stock and could cause such stock prices to fluctuate
over relatively short periods of time.
LIQUIDITY AND CAPITAL RESOURCES
At April 4, 1998, the Company had approximately $12.2 million of cash and
cash equivalents, and working capital of approximately $22.1 million. In
March 1998, the Company renewed its line of credit with the bank.
Covenants under the Company's line of credit require the Company to
maintain certain minimum levels of liquidity, net worth and financial
ratios, restrict amounts of capital spending, dividends and stock
repurchases, and require the Company to maintain certain levels of
quarterly profitability. No borrowings have been made under the line of
credit agreement in fiscal year 1997 through April 4, 1998. As of April 4,
1998, the Company was not in compliance with all such covenants.
The Company believes that current cash and cash equivalents are sufficient
to fund its operations and meet anticipated capital requirements for fiscal
1998.
<PAGE12>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company is subject to legal proceedings and claims in
the ordinary course of business, including claims of alleged infringement
of trademarks and other intellectual property rights.
On September 13, 1996, a complaint was filed by Datapoint Corporation
against the Company and six other companies individually and as purported
representatives of a defendant class of all manufacturers, vendors and
users of Fast Ethernet-compliant, dual protocol local-area network
products, for alleged infringement of United States letters Patent Nos.
5,077,732 and 5,008,879. The complaint seeks unspecified damages in excess
of $75,000 and permanent injunctive relief. The Company has filed a
response to the complaint denying liability. The case has been
consolidated, for purposes of claim interpretation only, with similar cases
filed against several other defendants, which include, among others, Intel
Corporation, IBM Corporation, Cisco Systems, Bay Networks, and Sun
Microsystems. Plaintiff has served claim charts purporting to set forth
its basis for its claims that products compliant with an IEEE standard
infringe its patents. On April 16, 1998, the Special Master appointed by
the court issued a report agreeing, in most material respects, with the
defendants' interpretation of the alleged patent claims. If, after a
comment period, the court adopts the Special Master's analysis, defendants
will argue that products compliant with the IEEE standard do not infringe
Datapoint's patents.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders of the Company, held February 24, 1998 in
San Jose, California, the stockholders (i) elected six directors to serve on
the Company's Board of Directors, and (ii) ratified the Company's appointment
of Price Waterhouse LLP as independent accountants.
The vote for nominated directors was as follows:
NOMINEE FOR AGAINST
Jeff Yuan-Kai Lin 7,809,163 51,808
Wilson Wong 7,825,363 34,808
Michael D. Kaufman 7,825,354 34,817
Edmond Y. Tseng 7,809,163 51,008
Cyrus Y. Tsui 7,561,363 298,808
David K. Lam 7,809,163 51,008
The vote for ratifying the appointment of Price Waterhouse LLP was as follows:
FOR AGAINST ABSTAIN
7,828,396 26,775 5,000
<PAGE13>
ITEM 5. OTHER INFORMATION
On February 12, 1998, Mr. Yen Chang joined the Company as the Vice
President of Engineering. In this position, Mr. Yen will have primary
responsibility for the Company's engineering and product development
activities.
On March 2, 1998, Mr. Maciej Kranz joined the Company as the Vice President
of Marketing. In this position, Mr. Kranz will have primary responsibility
for the Company's marketing activities.
On April 3, 1998, Mr. Ron Volkmar joined the Company as the Vice President
of Sales. Mr. Volkmar will have primary responsibility for the Company's
North American sales activities.
On May 1, 1998, Mr Paul Smith resigned from his position as Senior Vice
President of Marketing and Sales.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits:
10.9 Ninth Modification To The Loan & Security Agreement dated
July 20, 1993
(b.) Reports on Form 8-K: None
<PAGE13>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 15, 1998 ASANT<E'> TECHNOLOGIES, INC.
(Registrant)
By: ROBERT A. SHEFFIELD
Robert A. Sheffield
Vice President, Finance and
Chief Financial Officer
(Authorized Officer and Principal Financial Officer)
EXHIBIT 10.9
MODIFICATION TO LOAN & SECURITY AGREEMENT
This Ninth Modification to Loan & Security Agreement (this
"Modification") is entered into by and between Asant<e'> Technologies, Inc.
("Borrower") and Comerica Bank-California ("Bank") as of this 13{th} day of
January 1998, at San Jose, California.
RECITALS
H. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Loan & Security Agreement (Accounts &
Inventory) (the "Agreement") dated July 20, 1993.
I. Borrower has requested, and Bank has agreed, to modify the
Agreement as set forth below.
AGREEMENT
For good and valuable consideration, the parties agree as set forth
below:
INCORPORATION BY REFERENCE. The Agreement as modified hereby and
the Recitals are incorporated herein by this reference.
Section 3.1 This Agreement shall remain in full force and effect
until January 31, 1999, or until terminated by notice by
Borrower. Notice of such termination by Borrower shall be
effectuated by mailing of a registered or certified letter
not less than thirty (30) days prior to the effective date
of such termination, addressed to the Bank at the address
set forth herein and the termination shall be effective as
of the date so fixed in such notice. Notwithstanding the
foregoing, should Borrower be in default of one or more of
the provisions of this Agreement, Bank may terminate this
Agreement at any time without notice. Notwithstanding the
foregoing, should either Bank or Borrower become insolvent
or unable to meet its debts as they mature, or fail,
suspend, or go out of business, the other party shall have
the right to terminate this Agreement at any time without
notice. On the date of termination all Obligations shall
become immediately due and payable without notice or
demand; no notice of termination by Borrower shall be
effective until Borrower shall have paid all Obligations to
Bank in full. Notwithstanding termination, until all
Obligations have been fully satisfied, Bank shall retain
its security interest in all existing Collateral and
Collateral arising thereafter, and Borrower shall continue
to perform all of its Obligations.
SECTION 6.17
(b) A Tangible Net Worth in an amount not less than
$26,400,000.00. The Tangible Net Worth is set at
$26,400,000.00 beginning with September 27, 1997 and will
increase by seventy five percent (75%) of NPAT (quarterly)
and one hundred percent (100%) of any new equity raised.
LEGAL EFFECT. Except as specifically set forth in this Modification,
all of the terms and conditions of the Agreement remain in full force and
effect.
INTEGRATION. This is an integrated Modification and supersedes all
prior negotiations and agreements regarding the subject matter hereof. All
amendments hereto must be in writing and signed by the parties.
WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
ASANT<E'> TECHNOLOGIES, INC. COMERICA BANK-CALIFORNIA
BY: By: /S/ MARY BETH SUHR
Mary Beth Suhr
Title: Vice President