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 September 30, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
SIMTEK CORPORATION
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(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 November 11, 1996
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(Common Stock, $.01 par value) 26,988,311
<PAGE>
SIMTEK CORPORATION
INDEX
For Quarter Ended September 30, 1996
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
----
Balance Sheets as of September 30, 1996 and
December 31, 1995 3
Statements of Operations for the three months and
nine months ended September 30, 1996 and 1995 4
Statements of Cash Flows for the nine months ended
September 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>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
BALANCE SHEETS
ASSETS
------ September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Current Assets:
Cash................................................................ $ 480,569 $ 311,872
Accounts receivable - trade, net.................................... 669,319 210,047
Accounts receivable - other......................................... 32,878 11,072
Inventory, net ..................................................... 399,959 228,251
Prepaid expenses and other.......................................... 24,030 19,289
--------------------------------------------
Total Current Assets............................................ 1,606,755 780,531
Equipment and furniture, net........................................... 240,649 344,676
--------------------------------------------
Total Assets.................................................... $ 1,847,404 $ 1,125,207
============================================
LIABILITIES AND SHAREHOLDERS'
EQUITY
-----------------------------
Current Liabilities:
Accounts payable.................................................... $ 620,930 $ 277,277
Accrued expenses.................................................... 278,005 153,593
Accrued wages....................................................... 206,475 161,475
Accrued vacation payable............................................ 80,213 78,956
Exchangeable notes.................................................. 378,551 -
--------------------------------------------
Total Liabilities............................................... 1,564,174 671,301
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $1.00 par value, 2,000,000 shares
authorized and none issued and outstanding at
September 30, 1996 and December 31, 1995........................ - -
Common stock, $.01 par value, 40,000,000 shares authorized,
26,988,311 and 26,978,311 shares issued and outstanding
September 30, 1996 and December 31, 1995........................ 269,883 269,783
Additional paid-in capital.......................................... 29,497,514 29,496,144
Accumulated deficit................................................. (29,484,167) (29,312,021)
---------------------------------------------
Shareholder's equity................................................ 283,230 453,906
--------------------------------------------
Total Liabilities and Shareholders' Equity...................... $ 1,847,404 $ 1,125,207
============================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Commission income............................ $ 1,810 $ - $ 8,556 $ -
Product sales, net........................... 1,550,000 375,150 3,519,718 1,301,433
------------------------------------------------------------------------------
Total Income............................ 1,551,810 375,150 3,528,274 1,301,433
Cost of product sales....................... 935,889 483,330 2,204,409 1,616,832
------------------------------------------------------------------------------
Gross Margin............................ 614,111 (108,180) 1,315,309 (315,399)
Operating Expenses:
Design, research and development........ 251,364 324,560 726,238 1,067,052
Administrative.......................... 160,491 128,434 364,026 450,404
Marketing............................... 156,519 133,429 420,723 416,667
------------------------------------------------------------------------------
Total operating expenses............. 568,374 586,423 1,510,987 1,934,123
------------------------------------------------------------------------------
Profit (loss) from operations........ 47,547 (694,603) (187,122) (2,249,522)
-------------------------------------------------------------------------------
Other income (expense):
Royalty income.......................... - - - 600,000
Interest income......................... 5,232 4,038 11,756 21,491
Other income (expense), net............. (2,341) (168) 3,220 5,941
------------------------------------------------------------------------------
Total other income (expense)......... 2,891 3,870 14,976 627,432
------------------------------------------------------------------------------
Net profit (loss)............................ $ 50,438 $ (690,733) $ (172,146) $ (1,622,090)
===============================================================================
Net loss per common share.................... $ * $ (0.03) $ (.01) $ (0.08)
===============================================================================
Weighted average number of shares
outstanding............................. 26,980,464 21,396,468 26,980,464 21,396,468
==============================================================================
* Less than one cent per share.
The accompanying notes are an integral part of these financial statements.
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................... $ (172,146) $ (1,622,090)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization................................... 107,598 155,282
Loss on disposal of assets...................................... 330 -
Decrease (increase) in accounts receivable...................... (481,078) 140,550
Decrease (increase) in inventory............................... (171,708) 208,040
Decrease (increase) in prepaid expenses and other .............. (4,741) 30,226
Increase (decrease) in accounts payable, net of amount
converted to equity............................................ 343,653 207,839
Prepaid royalty receipts........................................ - (300,000)
Increase in accrued expenses, accrued vacation and
accrued wages.................................................. 170,669 83,830
---------------------------------------
Net cash used in operating activities......................... (207,423) (1,096,323)
----------------------------------------
Cash flows from investing activities:
Purchase of equipment and furniture................................ (3,901) (9,755)
----------------------------------------
Net cash used in investing activities........................... (3,901) (9,755)
----------------------------------------
Cash from financing activities:
Proceeds from research and development arrangement................. - 65,491
Proceeds from exercising of stock options.......................... 1,470 -
Proceeds from exchangeable notes................................... 378,551 275,000
---------------------------------------
Net cash provided by financing activities....................... 380,021 340,491
---------------------------------------
Net increase (decrease) in cash and cash equivalents............ 168,697 (765,587)
----------------------------------------
Cash, beginning of period............................................. 311,872 848,989
---------------------------------------
Cash, end of period................................................... $ 480,569 $ 83,402
=======================================
Supplemental cash flow information:
Research and development arrangement to stock...................... - $ 750,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
-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 $1,550,000 for the third quarter
of 1996 and $3,519,718 for the nine months ended September 30, 1996 up from the
$375,150 recorded for the third quarter 1995 and the $1,301,433 for the nine
months ended September 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. Two distributors of the Company's nvSRAM
products and one direct customer accounted for more than 62% of the Company's
net sales for the third quarter 1996. In addition, the Company reported
approximately $1,810 in commissions earned from the sales of Zentrum
Mikroelektronik Dresden GmbH ("ZMD") SRAM's and DRAM's in the third quarter 1996
and approximately $8,556 for the nine months ended September 30, 1996. For the
nine months ended September 30, 1995, the Company also reported $600,000 in
prepaid royalties from previously licensed products.
In the third quarter 1996, the Company continued to see an increase in
0.8 micron product availability from ZMD. The sales of 0.8 micron product
accounted for approximately 50% of the Company's revenue in the third quarter
1996. This increase in product availability along with shipments of the
Company's 1.2 micron product accounted for the Company having a positive gross
margin of $614,111 in the third quarter 1996 and a positive gross margin of
$1,315,309 for the nine months ended September 30, 1996 as compared to negative
gross margins of $108,180 for the third quarter of 1995 and $315,399 for the
nine months ended September 30, 1995. Management of the Company believes that if
product availability continues from ZMD and the current yields on the 1.2 micron
process continues, the Company will continue to operate at a positive gross
margin.
Operating expenses of $568,374 in the third quarter of 1996 and
$1,510,987 for the nine months ended September 30, 1996 decreased as compared to
$586,423 in the third quarter of 1995 and $1,934,123 for the nine months ended
September 30, 1995. These decreases were due to a decreased headcount and better
cost controls.
The Company recorded a net profit of $50,438 in the third quarter of
1996 and a net loss of $172,146 for the nine months ended September 30, 1996 as
compared to net loss of $690,733 for the third quarter of 1995 and a net loss of
$1,622,090 for the nine months ended September 30, 1995. The decreases in net
loss were because of increased product sales, better gross margins and decreased
operating expenses.
FUTURE RESULTS OF OPERATIONS
The Company's ability to continue to be profitable will depend
primarily on its ability to continue reducing manufacturing costs and increase
net product 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.
-7-
<PAGE>
SIMTEK CORPORATION
As of September 30, 1996, the Company's backlog of unshipped customer
orders expected to be filled within the next twelve months has decreased to
approximately $2,145,000 from the approximate $2,450,000 at the end of second
quarter 1996. This decrease in backlog was due primarily to the Company being
able to ship product against delinquent orders. The backlog or $2,145,000 at
September 30, 1996 compares to an approximate backlog of $1,558,000 that existed
at September 30, 1995. The increase in backlog from September 30, 1996 to
September 30, 1995 is due to customers who have designed the nvSRAM into their
applications have begun placing production orders and to the continued shortage
of product over the last twelve 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
In the third quarter 1996, the Company received no monies from ZMD
under the Cooperation Agreement it entered into 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 nine
months ended September 30, 1996, ZMD has paid Simtek $378,551 of which ZMD has
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 revenue generated from
sales of products will last through the end of 1996. The Company may require
additional capital in the first quarter 1997 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 - None
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 99.1 - Computation of per share earnings
(b) Reports on Form 8-K
On July 19, 1996, the Company filed a Form 8-K, reporting under Item
5, that disclosed a press release dated July 15, 1996 and the 1996
Interim Report.
-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)
November 11, 1996 By /s/Richard L. Petritz
--------------------------------------
RICHARD L. PETRITZ
Chief Executive Officer and
Chief Financial Officer (acting)
-10-
Exhibit 99.1
<TABLE>
<CAPTION>
SIMTEK CORPORATION
Computation of Per Share Earnings
---------------------------------
SHARES WEIGHTED AVG
BALANCE DAYS FROM SHARE SHARES OF
DATE ISSUED INCREASE OUTSTANDING 1/1/96 DAYS COMMON STOCK
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jan 1, 1996 - 26,978,311 215 5,800,336,865
Aug. 2, 1996 10,000 26,988,311 59 1,592,310,349
------------------------------------------------------------------------
Balance 9/30/96 10,000 26,988,311 274 7,392,647,214 26,980,464
===============================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 FOR
SIMTEK CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 480,569
<SECURITIES> 0
<RECEIVABLES> 873,283
<ALLOWANCES> (203,964)
<INVENTORY> 399,959
<CURRENT-ASSETS> 1,606,755
<PP&E> 1,637,308
<DEPRECIATION> (1,396,658)
<TOTAL-ASSETS> 1,847,404
<CURRENT-LIABILITIES> 1,564,174
<BONDS> 0
0
0
<COMMON> 269,883
<OTHER-SE> 29,497,514
<TOTAL-LIABILITY-AND-EQUITY> 1,847,404
<SALES> 3,519,718
<TOTAL-REVENUES> 3,528,274
<CGS> 1,934,771
<TOTAL-COSTS> 2,204,409
<OTHER-EXPENSES> 1,510,987
<LOSS-PROVISION> 4,967
<INTEREST-EXPENSE> 3,737
<INCOME-PRETAX> (172,146)
<INCOME-TAX> 0
<INCOME-CONTINUING> (172,146)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172,146)
<EPS-PRIMARY> .00<F1>
<EPS-DILUTED> .00<F1>
<FN>
<F1>LESS THAN 1 CENT PER SHARE.
</FN>
</TABLE>
