<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 8, 1996
Dense-Pac Microsystems, Inc.
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
0-14843 33-0033759
(Commission File Number) (IRS Employer Identification No.)
7321 Lincoln Way, Garden Grove, California 92641
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 898-0007
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
Rule 135c Notice
Pursuant to Rule 135c, attached hereto as Exhibit 99.1 and incorporated
herein by reference is a copy of a press release dated February 28, 1996
regarding a completed private offering.
Cautionary Statement
Attached as Exhibit 99.2 and incorporated herein by reference is a press
release dated February 8, 1996 regarding the Company's SuperSIMM product.
Set forth below are various factors which have affected the Company's
operations and financial results, and in the future could cause actual results
to differ materially from those contemplated by forward-looking statements made
by the Company in the February 8, 1996 press release or otherwise.
Loss History and Limited Liquidity
In the years ended February 28, 1993 and 1995, the Company incurred net
losses of $265,000 and $2,740,000, respectively. The loss in fiscal year 1995
was primarily due to pre-production costs associated with the Company's second
generation stack products and a one-time charge of $1.7 million in connection
with the discontinuation of certain product lines. Although the Company reported
net income of $1,265,000 in the nine month period ended November 30, 1995, there
can be no assurance that the Company will not incur losses in the future. The
Company has historically operated with limited cash resources which has
restricted its research and development efforts, product marketing and growth in
general.
Product Development and Technological Change
The semiconductor and memory module industries are characterized by rapid
technological change and are highly competitive with respect to timely product
innovation. The Company's memory products are subject to obsolescence or price
erosion because semiconductor manufacturers are continuously introducing chips
with the same or greater memory density as the Company's modules. As a result,
memory products typically have a product life of only three to five years. The
Company's future success depends on its ability to develop new products and
product enhancements to keep up with technological advances and to meet customer
needs. Any failure by the Company to anticipate or respond adequately to
technological developments and customer requirements, or any significant delays
in product development or introduction, could have a material adverse effect on
the Company's financial condition and results of operations. For example,
pre-production delays associated with the second generation Dense-Stack product
line caused the Company to lose its source of acceptable SRAM die because the
supplier discontinued production of the die that the second generation product
had been designed for. The Company believes that the second generation
technology remains valid and it will
2
<PAGE> 3
redesign this product to incorporate new die technology when market conditions
are appropriate. There can be no assurance that the Company will be successful
in its product development or marketing efforts, or that the Company will have
adequate financial or technical resources for future product development and
promotion.
Uncertainty of Market Acceptance or Profitability of New Products
The introduction of the SuperSIMM product or other new products which the
Company may introduce in the future will require the expenditure of funds for
research and development, tooling, manufacturing processes, inventory and
marketing. In order to achieve high volume production of the SuperSIMM product,
the Company will have to make substantial investments in inventory and expand
its production capabilities. The Company has limited marketing capabilities and
resources and is dependent upon internal sales and marketing personnel and a
network of independent sales representatives for the marketing and sale of its
products. There can be no assurance that the SuperSIMM product or future new
products will achieve market acceptance, result in increased revenues, or be
profitable. Such products could also be subject to technological obsolescence or
price erosion resulting from competition.
Parts Shortages and Dependence on Suppliers
The semiconductor industry is characterized by periodic shortages of parts
which have in the past and may in the future negatively affect the Company's
operations. The Company is dependent on a limited number of suppliers for
semiconductor devices used in its products, but it has no long-term supply
contracts with any of them. Due to the cyclical nature of the semiconductor
industry and competitive conditions, there can be no assurance that the Company
will not experience difficulties in meeting its supply requirements in the
future. Any inability to obtain adequate deliveries of parts, either due to the
loss of a supplier or industry-wide shortages, could delay shipments of the
Company's products, increase its cost of goods sold and have a material adverse
effect on its business, financial condition and results of operations.
Dependence on Defense-Related Business
The Company has historically derived a substantial portion of its revenues
from defense-related contracts. As a result, the Company's business has been
impacted by reductions in the federal defense budget and will continue to be
subject to risks affecting the defense industry, including changes in
governmental appropriations and changes in national defense policies and
priorities. The Company has sought to reduce its dependence on defense-related
business by developing products with commercial applications, although such
products generally have lower margins than defense-related products.
3
<PAGE> 4
Patent Rights
The Company's ability to compete effectively is dependent on its
proprietary know-how, technology and patent rights. The Company holds U.S.
patents on certain aspects of its 3-D stacking technology and has applied for
additional patents. There can be no assurance that the Company's patent
applications will be approved, that any issued patents will afford the Company's
products any competitive advantage or will not be challenged or circumvented by
third parties, or that patents issued to others will not adversely affect the
development or commercialization of the Company's products.
Competition
Numerous memory companies are in the process of developing
three-dimensional products, including IBM, Irvine Sensors, Texas Instruments,
Mitsubishi, Motorola, Staktek, Cubic Memory and Thompson CSF in France. Many of
such companies have substantially greater financial, manufacturing and marketing
capabilities than the Company. The Company could also experience competition
from established and emerging computer memory companies. There can be no
assurance that the Company's products will be competitive with existing or
future products, or that the Company will be able to establish or maintain a
profitable price structure for its products.
Item 7. Financial Statements and Exhibits.
(c) The following Exhibits are filed herewith:
99.1 Press Release dated February 28, 1996.
99.2 Press Release dated February 8, 1996
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DENSE-PAC MICROSYSTEMS, INC.
Dated February 28, 1996 By /S/ William M. Stowell
------------------------
William M. Stowell,
Vice President-Finance
4
<PAGE> 1
DENSE-PAC MICROSYSTEMS
COMPLETES $4,500,000 PRIVATE PLACEMENT
February 28, 1996. Garden Grove, California. Dense-Pac Microsystems, Inc.
(NASDAQ: DPAC) announced today that the Company has completed the sale of
900,000 shares of common stock for an aggregate purchase price of $4,500,000
pursuant to a private placement which was not registered under the Securities
Act of 1933, as amended.
The proceeds from the offering will be used to finance inventory and
accounts receivable and to expand manufacturing capacity in connection with the
production of the SuperSIMM(TM) product line, and to provide working capital for
general corporate purposes.
Dense-Pac develops, manufactures and sells a broad line of high density
semi-conductor memory products for a variety of commercial, industrial and
aerospace applications. The shares of common stock sold in the offering may not
be offered or sold in the United States unless such shares are registered under
the Securities Act of 1933 or pursuant to an exemption from such registration
requirements.
EXHIBIT 99.1
<PAGE> 1
GARDEN GROVE, Calif. -- Feb. 8, 1996--Dense-Pac Microsystems, Inc.
(NASDAQ:DPAC) Thursday announced it has started production of its highly
anticipated one gigabit SuperSIMM(TM) memory board that through stacking
technology can quadruple memory without expanding memory space.
The company said it is initially manufacturing 15 to 20 boards a week, and
it expects to sharply increase production in the coming months.
James G. Turner, Dense-Pac's CEO, said current production fulfills a
recent $1,035,000 order and "more importantly fills multiple requests for sample
prototypes from some major companies that are considering incorporating the
SuperSIMM(TM) into new and existing product designs," Turner said.
"These high profile companies are sampling the SuperSIMM(TM) and third
generation technology for applications in workstations, a desktop computer,
printers, cameras, copiers and massive storage technologies."
"We are right on schedule with the introduction of the SuperSIMM(TM), and
judging by the reception that our prototypes have received, it will be a major
product for our company and should add significant value over the next year,"
Turner said.
Dense-Pac Microsystems, Inc. is a designer and manufacturer of proprietary
computer chip stacking technologies that allows the company's government and
commercial customers to pack huge amounts of memory into small spaces. Its
memory technology can be used in such diverse areas as space satellites and
space missiles, high performance auto engines, computers and telecommunications.
EXHIBIT 99.2
