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 March 31, 1998
/ / 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)
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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
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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 April 30, 1998
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(Common Stock, $.01 par value) 28,702,226
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SIMTEK CORPORATION
INDEX
For Quarter Ended March 31, 1998
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
----
Balance Sheets as of March 31, 1998 and
December 31, 1997 3
Statements of Income for the three months ended
March 31, 1998 and 1997 4
Statements of Cash Flows for the three months ended
March 31, 1998 and 1997 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
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<CAPTION>
SIMTEK CORPORATION
BALANCE SHEETS
ASSETS
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March 31, 1998 December 31, 1997
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 887,045 $ 1,475,599
Certificate of deposit.................................................. 100,000 -
Accounts receivable - trade, net........................................ 1,076,144 921,798
Inventory, net ......................................................... 903,082 641,264
Prepaid expenses and other.............................................. 210,122 17,960
------------------------------------------
Total current assets................................................ 3,176,393 3,056,621
EQUIPMENT AND FURNITURE, net............................................... 252,961 177,821
------------------------------------------
TOTAL ASSETS............................................................... $ 3,429,354 $ 3,234,442
==========================================
LIABILITIES AND SHAREHOLDERS'EQUITY
-----------------------------------
CURRENT LIABILITIES:
Accounts payable:
ZMD................................................................. $ 488,989 $ 716,716
Other............................................................... 351,169 173,325
Accrued expenses........................................................ 382,546 269,592
Accrued wages........................................................... 221,475 222,022
Accrued vacation payable................................................ 66,595 62,401
Payable to ZMD.......................................................... 130,153 130,153
------------------------------------------
Total current liabilities........................................... 1,640,927 1,574,209
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, 80,000,000 shares authorized,
28,702,226 and 28,679,185 shares issued and outstanding at
March 31, 1998 and December 31, 1997, respectively.................. 287,022 286,792
Additional paid-in capital.............................................. 29,755,271 29,752,328
Accumulated deficit..................................................... (28,253,866) (28,378,887)
-----------------------------------------
Shareholder's equity.................................................... 1,788,427 1,660,233
-----------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $ 3,429,354 $ 3,234,442
=========================================
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF INCOME
For the quarters ended March 31,
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1998 1997
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<S> <C> <C>
NET SALES.................................................................. $ 1,539,331 $ 1,765,518
Cost of sales........................................................ 809,211 1,088,231
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GROSS MARGIN............................................................... 730,120 677,287
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE:
Design, research and development...................................... 299,400 329,109
Administrative........................................................ 115,162 83,279
Marketing............................................................. 192,564 184,866
--------------------------------------
Total selling, general and administrative expenses................ 607,126 597,254
INCOME FROM OPERATIONS..................................................... 122,994 80,033
--------------------------------------
OTHER INCOME (EXPENSE):
Interest income, net.................................................. 14,417 12,244
Other income (expense), net........................................... (2,030) 5,503
--------------------------------------
Total other income (expense)...................................... 12,387 17,747
--------------------------------------
NET INCOME BEFORE TAXES.................................................... 135,381 97,780
Provision for income taxes............................................ 10,360 -
--------------------------------------
NET INCOME ................................................................ $ 125,021 $ 97,780
======================================
BASIC AND DILUTED EPS...................................................... $ 0.00 $ 0.00
======================================
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING.................................. 28,695,916 28,506,685
EFFECTIVE OF DILUTIVE OPTIONS.............................................. 2,142,302 1,287,256
--------------------------------------
DILUTIVE SHARES OUTSTANDING................................................ 30,838,218 29,793,941
======================================
The accompanying notes are an integral part of these financial statements.
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<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
----------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................... $ 125,021 $ 97,780
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization.............................. 34,736 29,985
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable.................................... (154,346) (19,368)
Inventory.............................................. (261,818) (162,492)
Prepaid expenses and other ............................ (192,162) 2,578
Increase (decrease) in:
Accounts payable....................................... (49,883) 425,870
Accrued expenses....................................... 116,601 14,084
---------------------------------------
Net cash provided by (used in) operating activities........... (381,851) 388,437
---------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of certificate of deposit............................... (100,000) -
Purchase of equipment and furniture.............................. (109,876) (844)
----------------------------------------
Net cash provided by investing activities........................ (209,876) (844)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options........................................ 3,173 -
---------------------------------------
Net cash provided by financing activities..................... 3,173 -
---------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................................... (588,554) 387,593
---------------------------------------
CASH AND CASH EQUIVALENTS, beginning of period........................ 1,475,599 964,456
---------------------------------------
CASH AND CASH EQUIVALENTS, end of period.............................. $ 887,045 $ 1,352,049
=======================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
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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 24, 1998 for fiscal year 1997.
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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SIMTEK CORPORATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
-------------
RESULTS OF OPERATIONS:
Simtek Corporation ("Simtek" or the "Company") recorded net product
sales of $1,539,331 for the first quarter of 1998 down from the $1,765,518
recorded for the first quarter 1997. The product sales were from the Company's 4
kilobit, 16 kilobit, 64 kilobit and 256 kilobit nvSRAM product families. The
decrease was expected by management and was due primarily to market conditions,
however, the Company recorded a record bookings quarter of approximately $2
million of which approximately $925,000 shipped in the first quarter 1998. This
record bookings showed continued customer acceptance of nvSRAM products from
various markets including telecommunications, industrial control, military and
office automation and reflects improved product availability. Two distributors
and one direct customer of the Company's nvSRAM products account for more than
55% of the Company's net sales for the first quarter 1998. Products sold to
distributors are re-sold to various end customers.
In the first quarter 1998, the Company purchased wafers built on 1.2
micron technology from Chartered Semiconductor Manufacturing Plc. of Singapore
("Chartered") to support sales of its high end 64 kilobit industrial and
military devices and 16 kilobit commercial devices. The Company also purchased
wafers built on 0.8 micron technology from Chartered. Sales of devices built
with both types of wafers purchased from Chartered accounted for approximately
46% of the Company's revenue for the first quarter 1998. The balance of the
Company's revenue for the first quarter 1998, was primarily from the sales of
commercial 64 kilobit and 256 kilobit finished units purchased from Zentrum
Mikroelektronik Dresden GmbH ("ZMD").
The Company saw an increase of approximately 9% in gross margins in
the first quarter 1998 as compared to the first quarter 1997. The increase in
gross margin was due primarily to the Company shipping 64 kilobit and 256
kilobit commercial product based on 0.8 micron technology and the Company's
ability to maintain the yields and costs associated with building its product
from wafers purchased from Chartered.
Selling, general and administrative expenses saw a minimal increase
of approximately $10,000 for the first quarter 1998 as compared to the first
quarter 1997. Research and Development saw an approximate $29,000 decrease
primarily due to the expiration of certain leases and a decrease in depreciation
expense attributable to research and development. Administration saw the largest
increase of approximately $32,000 which was due to headcount increases. The
approximate $8,000 increase in Sales and Marketing was primarily due to
advertising.
The Company recorded a net income of $125,021 in the first quarter of
1998 as compared to a net income of $97,780 for the first quarter of 1997. The
increase in net income was due to increased gross margins.
The change in cash flows from operating activities was primarily a
result of an increase in accounts receivable, inventory and prepaid expenses.
The change in cash flows from investing activities was due to the purchases of
equipment related to the testing of the Company's 256 kilobit product built on
0.8 micron technology from wafers purchased from Chartered.
FUTURE RESULTS OF OPERATIONS
The Company's ability to remain 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. In the first quarter 1998, the Company began to
ship production orders of its 256 kilobit product based on 0.8 micron technology
to certain customers along with shipping smaller quantities to customers
interested in designing this product into its applications. The Company is
currently deciding which new or derivative product it will develop next.
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SIMTEK CORPORATION
As of March 31, 1998, the Company's backlog of unshipped customer
orders expected to be filled within the next six months was approximately
$1,074,000. 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.
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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 27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Form 8-K filed January 21, 1998; press release announcing "Simtek
Corporation Appoints Chief Executive Officer"
Form 8-K filed March 12, 1998; press release announcing "Simtek
Announces Financial Results for 1997; Shows Improved Profits and
Revenue Growth"
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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)
May 11, 1998 By /s/ Douglas Mitchell
---------------------
DOUGLAS MITCHELL
Chief Executive Officer and
President
May 11, 1998 By /s/ Richard L. Petritz
----------------------
RICHARD L. PETRITZ
Chief Financial Officer (acting)
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 887,045
<SECURITIES> 0
<RECEIVABLES> 1,076,144
<ALLOWANCES> 71,454
<INVENTORY> 903,082
<CURRENT-ASSETS> 3,176,393
<PP&E> 1,841,700
<DEPRECIATION> (1,588,739)
<TOTAL-ASSETS> 3,429,354
<CURRENT-LIABILITIES> 1,640,927
<BONDS> 0
0
0
<COMMON> 287,022
<OTHER-SE> 29,755,271
<TOTAL-LIABILITY-AND-EQUITY> 1,788,427
<SALES> 1,539,331
<TOTAL-REVENUES> 1,539,331
<CGS> 809,211
<TOTAL-COSTS> 1,416,337
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,030
<INTEREST-EXPENSE> 72
<INCOME-PRETAX> 135,381
<INCOME-TAX> 10,360
<INCOME-CONTINUING> 125,021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,021
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
