May 02, 2002 Minneapolis, MN
CyberOptics Corporation (Nasdaq:CYBE) today announced that it has acquired from Avanti Optics Corporation, in consideration for a $1.5 million term loan, the right to manufacture and distribute manual and semi-automated equipment for the assembly of surface mountable optical components, based on a new surface mount optical technology that is currently under development by Avanti.
Steven M. Quist, chief executive officer, commented: "Current manufacturing processes employed by the photonics industry are extremely labor-intensive and inefficient, resulting in low production yields. In response, Avanti is developing a breakthrough technology, called Surface Mount Optics(TM), that will potentially enable scalable, low-cost photonics manufacturing. Having the right to manufacture and distribute equipment based upon this exciting technology could open a new and potentially significant market for CyberOptics."
The $1.5 million term loan, which is secured by all of Avanti's intellectual property assets, will automatically convert to equity upon the closing of Avanti's next round of financing. The Company currently owns approximately 12% of Avanti, a development-stage company that Steven K. Case, Ph.D., the chairman of CyberOptics, launched in 2000 to develop and market automation systems for manufacturing high-precision fiber optic components for broadband telecommunications systems. In early 2001, the Company also obtained the right from Avanti to pursue a photonics component inspection system. The Company has been conducting marketing and application studies on this system for the past year.
Under terms of the transaction, Avanti will complete the development of a photonics assemby workstation prototype for CyberOptics, which will be built to the specific requirements of an initial customer for Avanti's surface mount optics technology. Following delivery of the prototype, CyberOptics will complete development of a commercial product.
Avanti's chief executive officer is Steven K. Case, who is also chairman and founder of CyberOptics. The transaction was approved by a special committee of the CyberOptics board of directors, composed of members who are independent of the Company's relationship with Avanti.
The Company anticipates a non-operating pretax charge of approximately $600,000 in the second quarter of 2002 ending June 30 to record losses of Avanti consistent with CyberOptics' ownership percentage under the equity method of accounting. These losses are being incurred by Avanti as it develops its surface mount optics technology.
Continuing, Quist said: "This transaction is part of a larger effort to prepare CyberOptics for the eventual upturn in the electronics marketplace. Supported by cash and investments of approximately $24.8 million at the end of this year's first quarter ended March 31, we are developing new generations of system and sensor products, with the goal of further strengthening our competitive position in CyberOptics' targeted markets."
Cautionary Statement:
The ability of CyberOptics to capitalize on the rights it has obtained from Avanti is subject to uncertainties and risks, including the risk that Avanti might not complete development of the Surface Mount Optics technology on which the assembly machine to which CyberOptics has obtained rights is based; the risk that Avanti might not complete development of a prototype assembly machine that gives rise to CyberOptics' rights; the risk that CyberOptics and Avanti may not find a customer interested in purchasing an assembly machine even if Avanti is successful in developing its Surface Mount Optics technology; and the risk that Avanti may not find a market for the optical modules that the assembly machine is designed to place. Further, Avanti is a developmental stage company with few assets and it is likely that it will not be in a position to repay the term loan unless it obtains additional financing.
About CyberOptics
CyberOptics Corporation, a recognized worldwide leader in optical technology, designs and manufactures a growing range of yield and throughput enhancement tools for the SMT electronic assembly equipment and semiconductor fabrication equipment markets.
