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, 1997
/ / 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 6, 1997
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(Common Stock, $.01 par value) 28,679,185
<PAGE>
SIMTEK CORPORATION
INDEX
For Quarter Ended September 30, 1997
PART 1. FINANCIAL INFORMATION
Page
ITEM 1 ----
Balance Sheets as of September 30, 1997 and
December 31, 1996 3
Statements of Operations for the three months and nine
months ended September 30, 1997 and 1996 4
Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996 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, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 1,151,137 $ 964,456
Accounts receivable - trade, net........................................ 897,935 593,378
Inventory, net ......................................................... 400,424 327,221
Prepaid expenses and other.............................................. 16,122 25,850
------------------------------------------
Total current assets................................................ 2,465,618 1,910,905
EQUIPMENT AND FURNITURE, net............................................... 209,525 229,008
------------------------------------------
TOTAL ASSETS............................................................... $ 2,675,143 $ 2,139,913
==========================================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable:
ZMD................................................................. $ 384,797 $ 290,957
Other............................................................... 134,440 212,279
Accrued expenses........................................................ 510,191 349,654
Accrued wages........................................................... 221,475 222,136
Accrued vacation payable................................................ 59,034 86,444
Payable to ZMD.......................................................... 130,153 130,153
------------------------------------------
Total current liabilities........................................... 1,440,090 1,291,623
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 2,000,000 shares
authorized and none issued and outstanding ......................... -- --
Common stock, $.01 par value, 40,000,000 shares authorized,
28,679,185 and 28,506,685 shares issued and outstanding
September 30, 1997 and December 31, 1996, respectively.............. 286,792 285,067
Additional paid-in capital.............................................. 29,752,328 29,730,728
Accumulated deficit..................................................... (28,804,067) (29,167,505)
------------------------------------------
Shareholder's equity.................................................... 1,235,053 848,290
------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $ 2,675,143 $ 2,139,913
==========================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES.................................................. $ 1,582,536 $ 1,550,000 $ 4,884,297 $ 3,519,718
Cost of sales......................................... 905,393 935,889 2,827,961 2,204,409
--------------------------------------------------------------------
GROSS MARGIN............................................... 677,143 614,111 2,056,336 1,315,309
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE:
Design, research and development...................... 204,858 251,364 870,899 726,238
Administrative........................................ 132,612 160,491 276,036 364,026
Marketing............................................. 183,095 156,519 586,759 420,723
--------------------------------------------------------------------
Total selling, general and administrative
expenses..................................... 520,565 568,374 1,733,694 1,510,987
INCOME (LOSS) FROM OPERATIONS.............................. 156,578 45,737 322,642 (195,678)
--------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income, net.................................. 12,667 5,232 39,711 11,756
Other income (expense), net........................... (1,546) (531) 2,705 11,776
--------------------------------------------------------------------
Total other income (expense)...................... 11,121 4,701 42,416 23,532
--------------------------------------------------------------------
NET INCOME (LOSS) BEFORE TAXES............................. 167,699 50,438 365,058 (172,146)
Provision for income taxes............................ 1,620 -- 1,620 --
--------------------------------------------------------------------
NET INCOME (LOSS).......................................... $ 166,079 $ 50,438 $ 363,438 $ (172,146)
====================================================================
NET INCOME (LOSS) PER COMMON SHARE......................... $ 0.01 $ * $ 0.01 $ (.01)
====================================================================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING....................................... 28,571,328 26,980,464 28,571,328 26,980,464
====================================================================
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,
-------------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) after income taxes............................. $ 363,438 $ (172,146)
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization.............................. 94,629 107,598
Gain on disposal of equipment.............................. -- 330
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable.................................... (304,557) (481,078)
Inventory.............................................. (73,203) (171,708)
Prepaid expenses and other ............................ 9,728 (4,741)
Increase (decrease) in:
Accounts payable....................................... 16,001 343,653
Accrued expenses....................................... 132,466 170,669
---------------------------------------
Net cash provided by (used in) operating activities........... 238,502 (207,423)
---------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of equipment and furniture.............................. (75,146) (3,901)
---------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock Options........................................ 23,325 1,470
Proceeds from research and development arrangement............... -- 378,551
---------------------------------------
Net cash provided by financing activities..................... 23,325 380,021
---------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................................... 186,681 168,697
---------------------------------------
CASH AND CASH EQUIVALENTS, beginning of period........................ 964,456 311,872
---------------------------------------
CASH AND CASH EQUIVALENTS, end of period.............................. $ 1,151,137 $ 480,569
=======================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<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-KSB 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-KSB
filed on March 19, 1997 for fiscal year 1996.
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.
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<PAGE>
SIMTEK CORPORATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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RESULTS OF OPERATIONS:
Simtek Corporation ("Simtek" or the "Company") recorded net product
sales of $1,582,536 for the third quarter of 1997 and $4,884,297 for the nine
months ended September 30, 1997 up from the $1,550,000 recorded for the third
quarter 1996 and the $3,519,718 for the nine months ended September 30, 1996.
The product sales were from the Company's 4 kilobit, 16 kilobit, 64 kilobit and
256 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. One
distributor and one direct customer of the Company's nvSRAM products account for
more than 47% of the Company's net sales for the third quarter 1997.
In the third quarter 1997, the Company purchased commercial 64
kilobit and 256 kilobit nvSRAM finished units based on 0.8 micron technology
from Zentrum Mikroelektronik Dresden GmbH ("ZMD"), sales from these products
accounted for approximately 61% of the Company's revenue for the third quarter
1997. The balance of the Company's revenue for the third quarter 1997, was
primarily from the sales of 64 kilobit high end industrial, military devices and
16 kilobit devices built on 1.2 micron technology wafers purchased from
Chartered Semiconductor Manufacturing Plc. of Singapore ("Chartered").
In the third quarter 1997, the Company increased its gross margins as
a percent of revenue from approximately 40% for the third quarter 1996 to
approximately 43% for the third quarter 1997. The Company also saw an increase
in its gross margins as a percent of revenue from approximately 37% for the nine
months ended September 30, 1996 to approximately 42% for the nine months ended
September 30, 1997. These increases in gross margin are due to the Company
shipping 64 kilobit commercial product based on 0.8 micron technology as
compared to shipping 64 kilobit commercial product based on 1.2 micron
technology in the same periods in 1996. The Company continued to ship its high
end industrial and military business from product built on 1.2 micron
technology.
Selling, general and administrative expenses saw a decrease for the
third quarter 1997 as compared to the third quarter 1996. This decrease was due
primarily to better cost controls. Selling, general and administrative expenses
saw a dollar increase for the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996. However, these expenses decreased
when viewed as a percent of net revenue from 35% for the nine months ended
September 30, 1997 as compared to 43% for the nine months ended September 30,
1996. The dollar increase was due primarily to increased advertising, printing,
sales commissions and basic overhead.
The Company recorded a net income of $166,079 in the third quarter of
1997 and a net income of $363,438 for the nine months ended September 30, 1997
as compared to a net income of $50,438 for the third quarter of 1996 and a net
loss of $172,146 for the nine months ended September 30, 1996. This was because
of increased product sales, increased gross margins and better internal cost
controls.
The change in cash flows from operating activities was primarily a
result of the change in net income (loss) and the change in cash flows from
investing activities was due primarily to the purchase of certain equipment used
in the manufacture of the Company's products.
FUTURE RESULTS OF OPERATIONS
The Company's ability to remain profitable will depend primarily on
its ability to continue reducing manufacturing costs and to increase net product
sales by increasing the availability of existing products and by the
introduction of new products. In the third quarter 1997, the Company continued
to ship small quantities of its 256 kilobit nvSRAM products based upon 0.8
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<PAGE>
SIMTEK CORPORATION
micron technology. The Company anticipates shipping production volumes of this
product in the fourth quarter 1997. The Company is currently working with ZMD to
decide which derivative nvSRAM product to develop next.
As of September 30, 1997, the Company's backlog of unshipped customer
orders expected to be filled within the next six months was approximately
$1,000,000. About 11% of this backlog is due to delinquencies from lack of the
Company's 256 kilobit product. The Company believes that the majority of this
delinquency will be filled in the fourth quarter of 1997. 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
ZMD continues to own approximately 30% of the Company's Common Stock
and may not exceed 30% without approval of Simtek's Board of Directors.
The Company may require additional capital to fund production and
marketing of its 0.8 micron 256 kilobit nvSRAM 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. However, the Company filed an S-3 Registration
Statement, that became effective on October 14, 1997, to register the shares
underlying the warrants that were shown outstanding as of December 31, 1996 in
the Company's Form-10KSB. This may make possible the raising of capital by the
exercising of some or all of these warrants. Simtek's Board of Directors passed
a resolution on October 24,1997 extending the exercise date of the warrants that
were to expire on October 26, 1997 to May 31, 1998. The terms and conditions of
all the other warrants remain the same.
-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 11.1 - Computation of per share earnings
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Form 8-K filed July 7, 1997 announcing "First Quarter 1997
Interim Report to Shareholders" and a press release "Simtek
Corporation Appoints Chief Operating Officer"
Form 8-K filed July 31, 1997 announcing "Simtek Announces
Financial Results for the Second Quarter of 1997"
Form 8-K filed September 5, 1997 announcing "Second Quarter 1997
Interim Report to Shareholders"
-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 6, 1997 By /s/ RICHARD L. PETRITZ
------------------------
RICHARD L. PETRITZ
Chief Executive Officer and
Chief Financial Officer (acting)
November 6, 1997 By /s/ DOUGLAS MITCHELL
---------------------
DOUGLAS MITCHELL
Chief Operating Officer and Executive
Vice President
-10-
SIMTEK CORPORATION
Exhibit 11.1
<TABLE>
<CAPTION>
Computation of Per Share Earnings
---------------------------------
SHARES WEIGHTED AVG
BALANCE DAYS FROM SHARE SHARES OF
DATE ISSUED INCREASE OUTSTANDING 1/1/97 DAYS COMMON STOCK
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jan 1, 1997 -- 28,506,685 155 4,418,536,175
June 5, 1997 50,000 28,556,685 1 28,556,685
June 6, 1997 45,000 28,601,685 13 371,821,905
June 19, 1997 25,000 28,626,685 27 772,920,495
July 15, 1997 50,000 28,676,685 64 1,835,307,840
September 17, 1997 2,500 28,679,185 13 372,829,405
Balance 9/30/97 28,679,185 273 7,799,972,505 28,571,328
============================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,151,137
<SECURITIES> 0
<RECEIVABLES> 1,091,191
<ALLOWANCES> (193,256)
<INVENTORY> 400,424
<CURRENT-ASSETS> 2,465,618
<PP&E> 1,730,713
<DEPRECIATION> (1,521,188)
<TOTAL-ASSETS> 2,675,143
<CURRENT-LIABILITIES> 1,440,090
<BONDS> 0
0
0
<COMMON> 286,792
<OTHER-SE> 29,752,328
<TOTAL-LIABILITY-AND-EQUITY> 2,675,143
<SALES> 4,884,297
<TOTAL-REVENUES> 4,884,297
<CGS> 2,450,501
<TOTAL-COSTS> 2,827,961
<OTHER-EXPENSES> 1,733,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 844
<INCOME-PRETAX> 365,058
<INCOME-TAX> 1,620
<INCOME-CONTINUING> 363,438
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 363,438
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
