Notice of Special Meeting

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30 January 2020, Fremont, California – Pivotal Systems Corporation (ASX: PVS, ‘Pivotal’ or the ‘Company’) advises the dispatch of the attached Notice of Special Meeting of Shareholders and Proxy Statement to security holders of the Company (both holders of fully paid shares of common stock (Shares) and Chess Depositary Interests (CDIs)) (together Shareholders) for its meeting to be held at 4 pm on 12 February 2020 PST (11 am on 13 February 2020 (Sydney time)).

The CDI Voting Form is attached with this Notice of Special Meeting.

THIS RELEASE DATED 30 JANUARY 2020 (PST) HAS BEEN AUTHORISED FOR LODGEMENT TO ASX BY THE BOARD OF DIRECTORS OF PIVOTAL SYSTEMS.

For More Information, Please Contact:

Investor Relations/Media contact (Australia):

Dr Thomas Duthy
Nemean Group tduthy@pivotalsys.com
+61 402 493 727

ASX Representative:
Naomi Dolmatoff
Company Matters Pty Ltd Naomi.Dolmatoff@companymatters.com.au

Media Contact (US):
Rob Haralson
Anzu Partners rhh@anzupartners.com

About Pivotal
Pivotal Systems Corporation (ARBN 626 346 325), is a company incorporated in Delaware, USA, whose stockholders have limited liability. Pivotal Systems provides the best-in-class gas flow monitoring and control technology platform for the global semiconductor industry. The Company’s proprietary hardware and software utilizes advanced machine learning to enable preventative diagnostic capability resulting in an order of magnitude increase in fab productivity and capital efficiency for existing and future technology nodes. For more information on Pivotal Systems Corporation, visit https://www.pivotalsys.com/.

Pivotal Announces US$13 Million Revenue Based Preferred Stock Financing

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Fremont, California; 30 January 2020 (PST) — Pivotal Systems Corporation (“Pivotal” or the “Company”) (ASX: PVS), today announces the signing of a definitive Preferred Stock Investment Agreement between Pivotal and Anzu Industrial RBI USA LLC, a fund organized by Anzu Partners LLC (Anzu), which provides the Company up to US$13 million in additional funding required to grow and expand the business.
Anzu is a venture capital and private equity firm that invests in breakthrough industrial technologies and currently manages approximately US$350 million in capital commitments. Anzu was an investor into Pivotal in 2016 and remains the Company’s second largest shareholder with 12.1% of the issued capital.

The funding of US$13 million is available to be drawn down by the Company in two tranches: an initial funding of US$10 million for the issue of 10,000 RBI Preferred Stock within ten business days of closing and a subsequent optional tranche of US$3 million for the issue of 3,000 RBI Preferred Stock which is available in conjunction with the replacement of the Company’s Bridge Bank senior term loan line of credit (as announced to ASX on 28 August 2019). Each RBI Preferred Stock will have an issue price of US $1,000 per share. Please refer to the Appendix 3B accompanying this announcement for further details of the terms of the RBI Preferred Shares.

Revenue Based Redeemable Preferred Stock (RBI Preferred Stock) are an alternative source of financing versus ordinary equity and debt financing structures. Pivotal has carefully considered a range of additional financing alternatives for the Company and believes the proposed transaction with Anzu is in the best interests of Pivotal shareholders, with unanimous Board support. Beyond typical contractual covenants pertaining to liquidation of the Company, there are no other financial covenants, no personal guarantees from founders or investors, no warrant or option coverage and the issue of RBI Preferred Stock is non-dilutive to current common stock / CDI holders. The parties intend to treat the RBI Redeemable Preferred Stock as preferred equity for financial and tax purposes.

The issue of RBI Preferred Stock to Anzu is subject to Pivotal shareholder approval for the purpose of ASX Listing Rule 10.11 and for the purpose of Delaware General Corporation Law in order to amend the Company’s Certificate of Incorporation. The Company has separately lodged with ASX today a Notice of Special Meeting seeking approval of the financing by shareholders at a Special Meeting of shareholders to be held at 4:00pm Wednesday, 12 February 2020 (11:00am (Sydney Time) 13 February 2020) at the offices of Pivotal Systems Corporation, 48389 Fremont Blvd, Suite 100 Fremont, CA 94538 USA. Mr David Michael, Managing Director of Anzu and a Non-Executive Director of Pivotal, has been excluded from Board considerations on the issue of RBI Preferred Stock to Anzu and David Michael has also abstained from making any recommendations to shareholders as to whether to approve the resolutions being sought in the Notice of Special Meeting. In addition, in accordance with ASX Listing Rule requirements, Anzu will be excluded at the shareholders meeting from voting on Item 2 in the Notice of Special Meeting which relates to ASX Listing Rule 10.11 approval.

Mr John Hoffman, Chairman and CEO of Pivotal Systems said “The RBI Redeemable Preferred Stock issue provides Pivotal with the financial flexibility it requires to meet the goals and objectives of our expanding customer base as the momentum within our business experienced in the latter part of the fourth quarter extends into 2020, commensurate with a sustained recovery in the semiconductor sector, globally. We eagerly await shareholder approval for this important transaction.”

The Board, having considered a range of financing alternatives including debt and equity offerings, concluded that the financing provided by the issue of RBI Preferred Stock to Anzu (rather than financing provided by a lender that is not a Listing Rule 10.1 party) is the best option for the Company in its current circumstances for various reasons including in particular (a) repayment / redemption obligations of the RBI Preferred Stock are linked to the revenue generated by the Company and that the Company has flexibility to redeem all RBI Preferred Stock at any time, and (b) the issue of RBI Preferred Stock is non- dilutive whereas issuing additional equity to other investors would typically require additional dilution as a result of issuing additional common stock / CDIs.

Shareholders should carefully read the Notice of Special Meeting for further explanatory details of the terms and structure of the financing and the RBI Preferred Stock.

THIS RELEASE DATED 30 JANUARY 2020 (PST) HAS BEEN AUTHORISED FOR LODGEMENT TO ASX BY THE BOARD OF DIRECTORS OF PIVOTAL SYSTEMS.

– ENDS –

For further information, interview and photos:
Investor Relations & Media (Australia):
Dr Thomas Duthy Nemean Group tduthy@pivotalsys.com +61 402 493 727

ASX Representative:
Naomi Dolmatoff
Company Matters Pty Ltd Naomi.Dolmatoff@companymatters.com.au

If investors wish to subscribe to Pivotal Systems’ email alert service for ASX Announcements, please follow this link.

Safe Harbor Statement
This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding expected growth rates, expected product offerings, product development, marketing position and technical advances. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and information currently available to management and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The Company’s management believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or the ASX Listing Rules. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events and developments to differ materially from our historical experience and our present expectations or projections.

About Pivotal Systems Corporation (ASX: PVS)
Pivotal Systems Corporation (ARBN 626 346 325), is a company incorporated in Delaware, USA, whose stockholders have limited liability. Pivotal provides the best-in-class gas flow monitoring and control technology platform for the global semiconductor industry. The Company’s proprietary hardware and software utilizes advanced machine learning to enable preventative diagnostic capability resulting in an order of magnitude increase in fab productivity and capital efficiency for existing and future technology nodes. For more information on Pivotal Systems Corporation, visit https://www.pivotalsys.com/.

Pivotal Systems Corporation December 2019 Quarter Update

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Fremont, CA ; 30 January 2020 — Pivotal Systems Corporation (“Pivotal” or the “Company”) (ASX: PVS), a leading provider of innovative gas flow control (GFC) solutions to the semiconductor industry, is pleased to release a Quarterly update and Appendix 4C Report for the period ending 31 December 2019.
Key highlights

  • During the quarter, Pivotal made solid customer and product progress:
    • Successfully passed an audit from a major Japanese Original Equipment Manufacturer
      (OEM) and manufacturing audits at facilities in Shenzhen, China and Fremont, California
    • Received first ever production order from same Japanese OEM
    • Repeat order from large Chinese Integrated Device Manufacturer (IDM) and maintained
      100% Market share at this IDM
    • Successfully qualified the standard GFC with a Korean Etch OEM and received first order o First orders from new Sales representative in Japan
    • Qualified at large European foundry and received first order
    • Multiple repeat orders in Taiwan
    • Multiple repeat orders in the USA
    • First ever quarter where Pivotal received orders from all targeted geographic regions.
  • Unaudited Revenue of US$6.4 million for Q4 2019 was up significantly on the third quarter, driven by an overall increase in demand for Pivotal’s proprietary range of GFCs
  • Net cash outflows from operating and investing activities of US$3.4 mil reflects higher shipment related costs and continued investment in R&D.
  • Backlog (confirmed orders not yet shipped) at 31 December 2019 was US$3.1 million
  • Momentum in semiconductor sector recovery continues.

December 2019 Quarter Cash Flow

The Company finished the Q4 2019 quarter with a cash balance of US$5.4 million which included a US$2.8 million balance drawn against the term loan with Bridge Bank. There are currently no borrowings against the US$7.0 million revolving line of credit.

Cash receipts from customers for the period were US$3.1million, resulting from lower shipments during Q3.

Cash payments for Product Manufacturing were US$4.8 million due to the increase in quarterly shipments relative to Q3 and certain cost increases while we temporarily transition select manufacturing activities back to Fremont. Pivotal continued to invest in product development with US$0.6 million in capitalized costs incurred during the quarter.

As commented on previously, Pivotal has made this investment in response to four customer-led product initiatives, along with increased inventory build of the new High Flow GFC and the new High Temperature GFC (also called the Remote GFC). During Q4 the Company experienced an increase in demand from IDM and OEM customers that had qualified the Standard GFC, the High Temperature GFC and the High Flow GFC products.

Product update

Sales of the standard low flow GFC, commonly used for etch applications, continued its strong momentum as it was sold into all targeted markets as a retrofit in the 4th Quarter of 2019. This is a first-time event for the Company.

The Company successfully completed its High Temperature GFC qualification with a leading Japanese OEM during the quarter. Pivotal GFCs are now qualified at all three of the major OEMs for either etch or deposition applications.

The Smartstik architecture was used by Pivotal as part of the qualification process at the Korean Etch OEM and is currently in trials with a leading Chinese Etch OEM. The SmartStik architecture provides a live demonstration of the standard GFC’s industry leading performance in both speed and accuracy, while also demonstrating the ability of the OEM to effectively eliminate redundant hardware required by older technology pressure based MFCs utilized by our competitors. SmartStik continues to demonstrate a method for etch OEMs to improve process tool performance and potentially reduce costs.

PVS conducted live demonstrations of the Standard GFC, running on SmartStik, at Semicon Japan in December and conducted Executive Technology Reviews with leading Japanese OEMs.

The recently introduced Flow Ratio Controller (three channel) continues to perform well in production at a leading Korean IDM. Pivotal will begin testing a new version of the FRC (two channel) at a leading US OEM in Q1 2020. Additionally, Pivotal expects to launch the three channel FRC in the first half of 2020.

Operations Update

Fourth quarter full-time headcount remained flat at 45 employees.

During the quarter, Pivotal made excellent progress in temporarily transitioning certain manufacturing activities to Fremont and laying the groundwork for backfilling capacity in Korea. This resulted in final product transformation activities and product shipments from Pivotal’s Fremont facility. The Fremont facility has sufficient capacity to meet expected customer demand for Pivotal’s GFCs commensurate with continued improvement in the semiconductor manufacturing equipment sector for the 1H2020. Pivotal is currently establishing a new “transformation” center in Korea and expects to activate this new factory in 1H2020.

Pivotal is on schedule to establish a repair and upgrade center in Korea. The facility, which will be operated (but not owned) by Pivotal is expected to commence operations in Q1 2020 and will provide both repair and software upgrades to both IDM and OEM customers globally. As noted previously, Pivotal’s large global installed base continually has an increasing number of units coming out of warranty. Pivotal therefore expects the repair and software upgrade business to grow in scale over the short to medium term.

As indicated to the market on 20 January 2020, fourth quarter revenues were impacted by approximately US$0.825 million due to a shipment of Pivotal GFCs being shipped from our third-party contract manufacturer to Pivotal later than the committed shipment date. During the quarter, Pivotal experienced an increase in lead times from its contract manufacturer as their end customer demand also increased. At this time, Pivotal has returned to being 100% on time to committed customer deliveries and we continue to monitor our supply chain as we grow the business.

Industry Update

According to SEMI®1, global semiconductor manufacturing equipment sales are expected to increase 5.5% to US$60.8 billion in 2020. SEMI expects the 2020 equipment market recovery to be fueled by advanced logic and foundry, new projects in China, and, to a lesser extent, memory. SEMI expects further expansion into 2021 with revenues climbing to US$66.8 billion as leading device manufacturers invest in sub-10nm process equipment.

“As expected, we saw the industry rebound in the 4th Quarter of 2019 and this growth is continuing into the 1H2020. At this time, we are highly optimistic about the business as we are working very closely with our OEM partners to meet their required shipments” stated PVS Chairman and CEO John Hoffman. “We continue to see the powerful advantages the semiconductor provides the global community especially in the areas of communications, AI, Biotech and Automotive”.

Post Quarter Events

On 20 January 2019 Pivotal announced unaudited second half revenues of US$7.3 million, resulting in Pivotal’s full year revenues for the year ended 31 December 2019 of approximately US$15.3 million (FY2018: US$20.2 million).

Today, Pivotal separately made an announcement to the ASX in relation to the signing of a definitive Redeemable Preferred Stock Purchase Agreement between Pivotal and Anzu Partners LLC (Anzu), which provides the Company up to US$13.0 million in additional funding to grow and expand the business.

The issue of Revenue-based redeemable “RBI” Preferred Stock to Anzu is subject to Pivotal shareholder approval under ASX Listing Rule 10.11. The Preferred Stock is redeemable by the Company based upon a percentage of revenue levels achieved. Shareholder documents were also lodged with the ASX today including a summary description of the terms of the RBI Preferred Stock as well as the details of the Special Meeting of shareholders to be held at the company offices in Fremont, Ca at 4:00 pm Pacific time on February 12th, 2020 to approve the financing.

Outlook

Pivotal’s growth strategy continues to focus on successfully leveraging established IDM customers’ acceptance of its GFC technology into new semiconductor processes while gaining increased acceptance by the major OEMs into new applications or tool sets. We continue to move positively towards our market penetration and fan out objectives for FY2020 based on the rapid acceptance of the High Flow GFC, the High Temperature GFC and the Flow Ratio Controller (FRC).

Investor Conference Call

A conference call will be held today at 9.00am AEDT, Friday 31 January 2019 with Mr. John Hoffman, Chairman and CEO and Mr. Timothy Welch, CFO. Pre-registration and dial-in details are available at the following link:

https://s1.c-conf.com/diamondpass/10003491-invite.html

Alternatively, you may dial in with the following details, shortly before the scheduled start time and provide the Conference ID to an operator.

Conference ID: 10003491

Participant Dial-in Numbers:
Australia Toll Free: 1800 908 299
Australia Local: +61 2 9007 8048
New Zealand: 0800 452 795
Canada/USA: 1855 624 0077
Hong Kong: 800 968 273
Japan: 006 633 868 000
China: 108 001 401 776
Singapore: 800 101 2702
United Kingdom: 0800 0511 453

THIS RELEASE DATED 30 JANUARY 2020 HAS BEEN AUTHORISED FOR LODGEMENT TO ASX BY THE BOARD OF DIRECTORS OF PIVOTAL SYSTEMS.
– ENDS –

For further information, interview and photos:
Investor Relations & Media (Australia):
Dr Thomas Duthy Nemean Group tduthy@pivotalsys.com +61 402 493 727
ASX Representative:
Naomi Dolmatoff
Company Matters Pty Ltd Naomi.Dolmatoff@companymatters.com.au
Media Contact (US):
Rob Haralson
ANZU Partners rhh@anzupartners.com

Trading Update & Quarterly Investor Conference Call Notification

Fremont, California and Sydney, Australia; 20 January 2020 — Pivotal Systems Corporation (“Pivotal” or the “Company”) (ASX: PVS), today provides a trading update and preliminary unaudited second half revenues for the period ended 31 December 2019 along with details of the December quarter Appendix 4C Cash Flow Report and Management Quarterly Update.

Unaudited second half revenues are expected to be approximately US$7.3 million, resulting in Pivotal’s full year revenues for the year ended 31 December 2019 of approximately US$15.3 million (FY2018: US$20.2 million).

Unaudited fourth quarter revenues of US$6.4 million were up significantly on the third quarter, driven by an overall increase in demand for Pivotal’s proprietary range of gas flow controllers (GFCs). This was driven by original equipment manufacturers (OEMs) increasing inventory levels as the semiconductor capital equipment sector cycle continues to rebound from an overall sector decline experienced throughout most of 2019.

A combination of existing and new customers resulted in the Company achieving bookings (new orders) during the quarter of US$5.1m. Total customer qualifications increased 24% versus the prior corresponding period (pcp) to 31 at the end of 2019. Pivotal is now qualified at all three of the major OEMs for either etch or deposition.

Fourth quarter revenues were impacted by approximately US$0.825 million due to a shipment of Pivotal GFCs being shipped from a third-party contract manufacturer to Pivotal later than the committed shipment date. During the quarter, Pivotal experienced an increase in lead times from its contract manufacturer as their end customer demand also increased. Revenue from the delayed shipments were subsequently recognized in January 2020.

New product development continued to be a focus for Pivotal, with leading-edge products including the high flow GFC and flow ratio controller (FRC) experiencing solid customer interest and conversion to sales during the December quarter. Pivotal expects to launch its new two channel FRC in the first half of 2020.

Pivotal will provide further details of the fourth quarter operating activities along with product development and customer initiatives with the December quarter Appendix 4C Cash Flow Report and Management Quarterly Update on Friday, 31 January 2020.

Immediately following the release, the Company will host an investor conference call at 9.00am AEDT on Friday, 31 January (2.00pm PST on Thursday, 30 January) with Mr. John Hoffman, Chairman and CEO and Mr. Timothy Welch, CFO.

Details of the call are set out below.

In order to pre-register for the conference call and avoid a queue when calling, please follow the link below. You will be given a unique pin number to enter when you call which will bypass the operator and give you immediate access to the event.

https://s1.c-conf.com/diamondpass/10003491-invite.html

Alternatively, you may dial in with the following details, shortly before the scheduled start time and provide the Conference ID to an operator.

Conference ID: 10003491
Participant Dial-in Numbers:
Australia Toll Free: 1800 908 299 Australia Local: +61 2 9007 8048 New Zealand: 0800 452 795 Canada/USA: 1855 624 0077 Hong Kong: 800 968 273
Japan: 006 633 868 000
China: 108 001 401 776 Singapore: 800 101 2702
United Kingdom: 0800 0511 453

THIS RELEASE DATED 20 JANUARY 2020 HAS BEEN AUTHORISED FOR LODGEMENT TO ASX BY THE BOARD OF DIRECTORS OF PIVOTAL SYSTEMS.
– ENDS –

For further information, interview and photos:

Investor Relations & Media (Australia):
Dr Thomas Duthy Nemean Group tduthy@pivotalsys.com +61 402 493 727

ASX Representative:
Naomi Dolmatoff
Company Matters Pty Ltd Naomi.Dolmatoff@companymatters.com.au

Media Contact (US):
Rob Haralson
ANZU Partners rhh@anzupartners.com

If investors wish to subscribe to Pivotal Systems’ email alert service for ASX Announcements, please follow this link.

Appendix 3G

Fremont, California and Sydney, Australia; 10 January 2020 — Pivotal Systems Corporation (“Pivotal” or the “Company”) (ASX: PVS) attaches an Appendix 3G in respect of the issue of unquoted options (“Options”) under its 2012 Equity Incentive Plan.

For the purposes of ASX Listing Rule 18.7, Pivotal recently discovered that the issue of Options, which occurred on 2 September 2019 (PST), had not been disclosed immediately to the ASX as required at that time due to an administrative oversight. The Company confirms that it has reviewed its internal practices and believes that its disclosure arrangements are adequate and are being enforced and that this is an isolated event which does not involve a material breach of the ASX Listing Rules.

THIS RELEASE DATED 9 JANUARY 2020 HAS BEEN AUTHORISED FOR LODGEMENT TO ASX BY THE BOARD OF DIRECTORS OF PIVOTAL SYSTEMS.

– ENDS –

Investor Relations & Media (Australia):
Dr Thomas Duthy
Nemean Group
tduthy@pivotalsys.com
+61 402 493 727

ASX Representative:
Naomi Dolmatoff
Company Matters Pty Ltd
Naomi.Dolmatoff@companymatters.com.au

Media Contact (US):
Rob Haralson
ANZU Partners
rhh@anzupartners.com

If investors wish to subscribe to Pivotal Systems’ email alert service for ASX Announcements, please follow this link.