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Simple Technology IPO Planned With $57.5-Million Goal

High tech: Santa Ana computer products maker's SEC filing says it will use stock sale's proceeds to trim debt and for working capital.


Simple Technology Inc., a Santa Ana maker of products that boost the memory capacity of computer systems, hopes to raise up to $57.5 million in its first public offering of stock, according to a document filed Wednesday with regulators.

The company did not disclose in its registration statement filed with the Securities and Exchange Commission how many shares it would sell or when the offering would be made. The document said the company would use the proceeds for debt repayment and working capital.

Company officials declined to comment, citing the so-called quiet period imposed by the SEC before and after any public stock offering.

Simple Technology, which was founded by three brothers in 1990, focuses on products designed to be added by computer users after they purchase their machines. The company also makes products to sell directly to large computer companies such as Mitsubishi Electronics America Inc. and Motorola Inc.

"[Memory products are] a booming industry, one we see hitting about $9 billion this year," said Jim Handy, an analyst who tracks the memory industry for the research firm Dataquest. Companies such as Simple perform well financially by managing their inventory well, he said. "They don't get caught with too much product [in their warehouses]."

Last year, Simple Technology earned $12.5 million on sales of $192.6 million, a turnaround from a $2.1-million loss on sales of $122.3 million in 1998.

Analysts attribute the growth to the company's expanding line of memory products and the increased demand because of Y2K upgrades and conversions.

The company, in its document, also said the 1999 earthquake in Taiwan created a "short-term supply shortage and substantial temporary price increase" in the cost of its products.

Simple Technology was built by brothers who immigrated from Iran: Chief Executive Manouch Moshayedi, 41; President Mike Moshayedi, 45, and Mark Moshayedi, 38, the chief operating and technical officer.

In the late 1980s, the two older brothers, both civil engineers, were involved in the housing market. Their younger brother, who has a bachelor's degree in electrical engineering from UC Irvine and a master's degree in business administration from Pepperdine University, persuaded the pair that they should leave the real estate world for high-tech.

Using $100,000 of their own savings, Mike and Manouch founded the company. Mark joined them two years later. Today, Mark heads up engineering development, Manouch oversees the business side and Mike handles sales and marketing.

Each makes a base salary of $440,000, according to the SEC document.

Simple Technology is owned by the Moshayedis along with Chief Financial Officer Dan Moses, 32, and company vice presidents Michael Hajeck, 39, Carl Swartz, 59, and Shane Mortazavi, 47.

The company has applied to have its stock traded on the Nasdaq National Market under the symbol STEC.

The company is embroiled in several patent conflicts, including a 1998 patent infringement lawsuit against Dense-Pac Microsystems Inc. in Garden Grove. The suit, filed in U.S. District Court in Santa Ana, accuses Dense-Pac of infringing on Simple Technology's 1996 patent for "stacking" three-dimensional memory products, allowing more memory to be crammed into a smaller space. The company is seeking an undisclosed amount in damages.

Dense-Pac later filed a countersuit against Simple Technology, accusing it of the same thing. It is seeking about $400,000 in damages, according to the SEC filing.

Both sides have denied the other's allegations. Dense-Pac officials could not be reached for comment Wednesday.

Last October, Micron Electronics sent a letter to Simple Technology warning the company to "refrain from the manufacture, sale or offer to sell" memory products it says infringe on Micron patents.

Micron, based in Idaho, has not filed suit against Simple Technology. The Orange County company is looking into the matter, according to its SEC document.

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