UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
__X__ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
______ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
SIMTEK CORPORATION
- --------------------------------------------------------------------------------
(Exact name small business issuer as specified in its charter)
Colorado 84-1057605
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1465 Kelly Johnson Blvd. Suite 301; Colorado Springs, Colorado 80920
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(Address of principal executive offices)
(719) 531-9444
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(issuer's telephone number)
N/A
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Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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______
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
- --------------------------------------------------------------------------------
(Common Stock, $.01 par value) 26,978,311
<PAGE>
SIMTEK CORPORATION
INDEX
For Quarter Ended June 30, 1996
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
----
Balance Sheets as of June 30, 1996 and
December 31, 1995 3
Statements of Operations for the three months and
six months ended March 31, 1996 and 1995 4
Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 5
Notes to Financial Statements 6
ITEM 2
Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-8
PART II. OTHER INFORMATION
ITEM 1 Legal Proceedings 9
ITEM 2 Changes in Securities 9
ITEM 3 Defaults upon Senior Securities 9
ITEM 4 Matters Submitted to a Vote of Securities Holders 9
ITEM 5 Other Information 9
ITEM 6 Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
SIMTEK CORPORATION
BALANCE SHEETS
ASSETS December 31,
------ June 30, 1996 1995
------------- -------------
Current Assets:
Cash......................................... $ 357,890 $ 311,872
Accounts receivable - trade, net............. 455,830 210,047
Accounts receivable - other.................. 31,608 11,072
Inventory, net .............................. 214,761 228,251
Prepaid expenses and other................... 33,864 19,289
------------------------------
Total Current Assets..................... 1,093,953 780,531
Equipment and furniture, net.................... 267,160 344,676
------------------------------
Total Assets............................. $ 1,361,113 $ 1,125,207
==============================
LIABILITIES AND SHAREHOLDERS'
----------------------------
EQUITY
------
Current Liabilities:
Accounts payable............................. $ 315,257 $ 277,277
Accrued expenses............................. 163,709 153,593
Accrued wages................................ 191,475 161,475
Accrued vacation payable..................... 80,799 78,956
Exchangeable notes........................... 378,551 -
------------------------------
Total Liabilities........................ 1,129,791 671,301
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $1.00 par value,
2,000,000 shares authorized
and none issued and
outstanding at June 30,
1996 and December 31, 1995............... - -
Common stock, $.01 par value, 40,000,000
shares authorized, 26,978,311 shares
issued and outstanding at June 30,
1996 and December 31, 1995............... 269,783 269,783
Additional paid-in capital................... 29,496,144 29,496,144
Accumulated deficit.......................... (29,534,605) (29,312,021)
------------------------------
Shareholder's equity......................... 231,322 453,906
------------------------------
Total Liabilities and
Shareholders' Equity.................. $ 1,361,113 $ 1,125,207
==============================
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Commission income.................... $ 2,464 $ - $ 6,747 $ -
Product sales, net................... 1,158,624 391,863 1,969,718 926,283
---------------------------------------------------------------
Total Income.................... 1,161,088 391,863 1,976,465 926,283
Cost of product sales............... 712,707 543,893 1,268,519 1,133,503
--------------------------------------------------------------
Gross Margin.................... 445,917 (152,030) 701,199 (207,220)
Operating Expenses:
Design, research
and development............... 227,524 372,275 474,875 742,492
Administrative.................. 78,111 156,917 203,535 321,970
Marketing....................... 137,838 148,934 264,204 283,238
---------------------------------------------------------------
Total operating expenses..... 443,473 678,126 942,614 1,347,700
--------------------------------------------------------------
Profit (loss) from
operations................. 4,908 (830,156) (234,668) (1,554,920)
---------------------------------------------------------------
Other income (expense):
Royalty income.................. - 600,000 - 600,000
Interest income................. 3,124 6,557 6,524 17,453
Other income (expense), net..... 4,090 3,075 5,560 6,109
--------------------------------------------------------------
Total other income
(expense).................. 7,214 609,632 12,084 623,562
--------------------------------------------------------------
Net profit (loss).................... $ 12,122 $ (220,524) $ (222,584) $ (931,358)
===============================================================
Net loss per common share............ $ (0.00) $ (0.01) $ (.01) $ (0.04)
===============================================================
Weighted average number of shares
outstanding..................... 26,978,311 21,193,669 26,978,311 21,193,669
===============================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
SIMTEK CORPORATION
STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1996 1995
---- ----
Cash flows from operating activities:
Net loss........................................... $(222,584) $(931,358)
Adjustments to reconcile net loss
to net cash used
in operating activities:
Depreciation and amortization................... 77,760 105,969
Decrease (increase) in
accounts receivable............................ (266,319) 142,059
Decrease in inventory.......................... 13,490 303,896
Decrease (increase) in prepaid
expenses and other ............................ (14,575) 31,380
Increase (decrease) in accounts
payable, net of amount
converted to equity............................ 37,980 (32,625)
Prepaid royalty receipts........................ - (300,000)
Increase in accrued expenses,
accrued vacation and accrued wages........... 41,959 97,183
----------------------
Net cash used in operating activities......... (332,289) (583,496)
-----------------------
Cash flows from investing activities:
Purchase of equipment and furniture................ (244) (9,755)
-----------------------
Net cash used in investing activities........... (244) (9,755)
-----------------------
Cash from financing activities:
Proceeds from research and
development arrangement........................... - 65,491
Proceeds from exchangeable notes................... 378,551 -
----------------------
Net cash provided by
financing activities........................... 378,551 65,491
----------------------
Net increase (decrease) in cash
and cash equivalents........................... 46,018 (527,760)
-----------------------
Cash, beginning of period............................. 311,872 848,989
----------------------
Cash, end of period................................... $ 357,890 $ 321,229
======================
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
SIMTEK CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The financial statements included herein are presented in accordance
with the requirements of Form 10-QSB and consequently do not include all of the
disclosures normally made in the registrant's annual Form 10-K filing. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in Simtek Corporation's Annual Report and Form 10-K
filed on March 27, 1996 for fiscal year 1995.
In the opinion of management, the unaudited financial statements
reflect all adjustments of a normal recurring nature necessary to present a fair
statement of the results of operations for the respective interim periods. The
year-end balance sheet data was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles.
-6-
<PAGE>
SIMTEK CORPORATION
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
------------------------------------------------------------------------
RESULTS OF OPERATIONS:
Simtek recorded net product sales of $1,158,624 for the second
quarter of 1996 and $1,969,718 for the six months ended June 30, 1996 up from
the $391,863 recorded for the second quarter 1995 and the $926,283 record for
the six months ended June 30, 1995. The product sales were from the Company's 4
kilobit, 16 kilobit and 64 kilobit nvSRAM product families. These increases were
due to increased customer acceptance of nvSRAM products from various markets
including telecommunications, industrial control, military and office automation
and better product availability due to increased yields. One distributor of the
Company's nvSRAM products and one direct customer accounted for more than 41% of
the Company's net sales for the second quarter 1996. In addition, the Company
reported approximately $2,460 in commissions earned from the sales of Zentrum
Mikroelektronik Dresden GmbH ("ZMD") SRAM's and DRAM's in the second quarter
1996 and approximately $6,700 for the six months ended June 30, 1996. For the
six months ended June 30, 1995, the Company also reported $600,000 in prepaid
royalties from previously licensed products.
The Company continued to see an increase in yields on its 1.2 micron
process at Chartered Semiconductors Pte. Ltd. ("Chartered") in the second
quarter 1996 and also began to ship its first 0.8 micron units from ZMD in late
June 1996. This yield increase and the shipment of 0.8 micron product accounted
for the Company having a positive gross margin of $445,917 in the second quarter
of 1996 and a positive gross margin of $701,199 for the six months ended June
30, 1996 as compared to negative gross margins of $152,030 for the second
quarter of 1995 and $207,220 for the six months ended June 30, 1995. Management
of the Company believes that if Chartered continues to maintain the current
yields on the 1.2 micron process along with the 0.8 micron product the Company
is currently receiving from ZMD, the Company will continue to operate at a
positive gross margin.
Operating expenses of $443,473 in the second quarter of 1996 and
$942,614 for the six months ended June 30, 1996 decreased as compared to
$678,126 in the second quarter of 1995 and $1,347,700 for the six months ended
June 30, 1995. These decreases were due to a decreased headcount and better cost
controls.
The Company recorded a net profit of $12,122 in the second quarter of
1996 and a net loss of $222,584 for the six months ended June 30, 1996 as
compared to net loss of $220,524 for the second quarter of 1995 and a net loss
of $931,358 for the six months ended June 30, 1995. The decreases in net loss
were because of increased product sales, better gross margins and decreased
operating expenses.
In the second quarter 1996, the Company received $169,060 from ZMD
under the Cooperation Agreement it entered into in September 1995. ZMD has the
right to convert all financing paid in 1996 into shares of the Simtek's Common
Stock, at the average share price of the quarter that the monies were paid.
However, ZMD's total equity will not exceed 30% without approval of Simtek's
Board of Directors.
FUTURE RESULTS OF OPERATIONS
The Company's ability to become profitable will depend primarily on
its ability to continue reducing manufacturing costs and increase net product
-7-
<PAGE>
SIMTEK CORPORATION
sales by increasing the availability of existing products and by the
introduction of new products. The Company believes that the Cooperation
Agreement entered into with ZMD in September 1995 has now enabled the Company to
begin selling its 64 kilobit nvSRAM products based on 0.8 micron technology and
that it will continue to in the future. The Company also believes that the joint
task force created with ZMD will expedite the introduction and production of its
256 kilobit nvSRAM products based on 0.8 micron technology.
As of June 30, 1996, the Company's backlog of unshipped customer
orders expected to be filled within the next twelve months has grown to
approximately $2,450,000 from $1,716,000 at the end of first quarter 1996. This
compares to a backlog $1,038,757 that existed at June 30, 1995. The increase in
backlog from June 30, 1996 to June 30, 1995 is due to customers who have
designed the nvSRAM into their applications have begun placing production orders
and to a shortage of product over the last nine months. Orders are cancelable
prior to 30 days before the scheduled shipping date and, therefore, should not
be used as a measure of future product sales.
LIQUIDITY AND CAPITAL RESOURCES
Under the Cooperation Agreement entered into with ZMD in September
1995, ZMD has the right to convert all financing into shares of Common Stock.
During 1995, ZMD converted $907,000 into 5,182,857 shares of Common Stock at a
price of $0.175 per share. ZMD may convert all monies paid in 1996 to Simtek in
shares of Common Stock at the average share price of the quarter they were paid.
In the six months ended June 30, 1996, ZMD has paid Simtek $378,551 of which ZMD
has not notified the Company of its intent to convert. However, ZMD cannot
exceed 30% ownership without approval of Simtek's Board of Directors.
Management of the Company anticipates that the proceeds from the ZMD
Cooperation Agreement entered into in September 1995 and revenue generated from
sales of products will last through the end of the third quarter of 1996. The
Company may require additional capital in the fourth quarter 1996 to fund
production and marketing of its 0.8 micron 256 kilobit nvSRAM products and the
development of other new products. The Company does not have any commitments for
such additional capital as of the date of this report.
-8-
<PAGE>
SIMTEK CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - All Class A Warrants (2,694,774) expired on
March 6, 1996 with none having been exercised.
Item 3. Defaults upon Senior Securities - None
Item 4. Matters Submitted to a Vote of Securities Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
Exhibit A - Computation of per share earnings.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
On May 1, 1996, the Company filed a Form 8-K, reporting under Item
5, that disclosed a press release dated May 1, 1996.
-9-
<PAGE>
SIMTEK CORPORATION
SIGNATURES
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.
SIMTEK CORPORATION
(Registrant)
Dated: July 31, 1996 By /s/ RICHARD L. PETRITZ
------------------------------------
RICHARD L. PETRITZ
Chief Executive Officer and
Chief Financial Officer (acting)
-10-
<PAGE>
SIMTEK CORPORATION
Exhibit A
Computation of Per Share Earnings
---------------------------------
SHARES WEIGHTED AVG
BALANCE DAYS FROM SHARE SHARES OF
DATE ISSUED INCREASE OUTSTANDING 1/1/96 DAYS COMMON STOCK
- --------------------------------------------------------------------------------
Jan 1, 1996 - 26,978,311 182 4,910,052,602
--------------------------------------------------------------
Balance 6/30/96 26,978,311 182 4,910,052,602 26,978,311
==================================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIMTEK
CORPORATION'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 357,890
<SECURITIES> 0
<RECEIVABLES> 631,215
<ALLOWANCES> (175,385)
<INVENTORY> 214,761
<CURRENT-ASSETS> 1,093,953
<PP&E> 1,637,086
<DEPRECIATION> (1,369,926)
<TOTAL-ASSETS> 1,361,113
<CURRENT-LIABILITIES> 1,129,791
<BONDS> 0
0
0
<COMMON> 269,783
<OTHER-SE> 29,496,144
<TOTAL-LIABILITY-AND-EQUITY> 1,361,113
<SALES> 1,969,718
<TOTAL-REVENUES> 1,976,465
<CGS> 1,094,485
<TOTAL-COSTS> 1,268,519
<OTHER-EXPENSES> 942,614
<LOSS-PROVISION> 2,679
<INTEREST-EXPENSE> 3,685
<INCOME-PRETAX> (222,584)
<INCOME-TAX> 0
<INCOME-CONTINUING> (222,584)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222,584)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
