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, 2000
[ ] 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
--- ---
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 August 11, 2000
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(Common Stock, $.01 par value) 44,465,164
<PAGE>
SIMTEK CORPORATION
INDEX
For Quarter Ended June 30, 2000
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
------ ----
Balance Sheets as of June 30, 2000 and
December 31, 1999 3
Statements of Operations for the three months and six
months ended June 30, 2000 and 1999 4
Statements of Cash Flows for the six months ended
June 30, 2000 and 1999 5
Notes to Financial Statements 6-7
ITEM 2
Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-10
PART II. OTHER INFORMATION
ITEM 1 Legal Proceedings 11
ITEM 2 Changes in Securities 11
ITEM 3 Defaults upon Senior Securities 11
ITEM 4 Matters Submitted to a Vote of Securities Holders 11
ITEM 5 Other Information 11
ITEM 6 Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
BALANCE SHEETS
(unaudited)
ASSETS
------
June 30, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 2,809,413 $ 2,180,611
Certificate of deposit, restricted...................................... 300,000 400,000
Accounts receivable - trade, net........................................ 1,805,077 1,146,626
Inventory, net ......................................................... 1,138,309 983,820
Prepaid expenses and other.............................................. 37,789 36,117
---------------------------------
Total current assets................................................ 6,090,588 4,747,174
EQUIPMENT AND FURNITURE, net............................................... 601,756 496,483
LONG TERM INVESTMENT....................................................... 1,640,625 -
OTHER ASSETS............................................................... - 49,425
---------------------------------
TOTAL ASSETS............................................................... $ 8,332,969 $ 5,293,082
=================================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable ....................................................... $ 1,100,115 $ 814,502
Accrued expenses........................................................ 504,109 169,168
Accrued wages........................................................... 221,967 228,307
Accrued vacation payable................................................ 101,526 83,688
Obligation under capital leases......................................... 45,235 51,115
Short term debt......................................................... 20,000 31,142
Payable to ZMD.......................................................... - 130,153
---------------------------------
Total current liabilities........................................... 1,992,952 1,508,075
---------------------------------
CONVERTIBLE DEBENTURES..................................................... - 1,500,000
NOTES PAYABLE.............................................................. - 100,000
OBLIGATION UNDER CAPITAL LEASES............................................ 177,882 190,544
---------------------------------
Total liabilities................................................... 2,170,834 3,298,619
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,
43,215,164 and 31,955,226 shares issued and outstanding
at June 30, 2000 and December 31, 1999, respectively................ 432,151 319,552
Additional paid-in capital.............................................. 33,192,031 29,811,519
Accumulated deficit..................................................... (27,462,047) (28,136,608)
--------------------------------
Shareholder's equity.................................................... 6,162,135 1,994,463
--------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $ 8,332,969 $ 5,293,082
================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES.................................................. $3,208,657 $2,135,723 $5,932,467 $3,620,227
Cost of sales........................................ 2,026,800 1,330,332 3,611,534 2,223,189
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GROSS MARGIN............................................... 1,181,857 805,391 2,320,933 1,397,038
OPERATING EXPENSES:
Design, research and development...................... 367,251 379,308 770,556 749,981
Administrative........................................ 218,009 111,530 357,918 226,517
Marketing............................................. 280,826 249,568 535,780 450,259
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Total Operating Expenses.......................... 866,086 740,406 1,664,254 1,426,757
INCOME FROM OPERATIONS..................................... 315,771 64,985 656,679 (29,719)
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OTHER INCOME (EXPENSE):
Interest income, net.................................. 28,430 (13,456) 28,044 (25,400)
Other income (expense), net........................... (1,092) (25,105) 1,438 (21,444)
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Total other income (expense)...................... 27,338 (38,561) 29,482 (46,844)
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NET INCOME (LOSS) BEFORE TAXES............................. 343,109 26,424 686,161 (76,563)
Provision for income taxes............................ 6,000 - 11,600 -
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NET INCOME (LOSS).......................................... $ 337,109 $ 26,424 $ 674,561 $ (76,563)
==================================================================
BASIC AND DILUTED EPS...................................... $ 0.01 $ * $ 0.02 $ *
==================================================================
BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING............................................... 38,467,964 31,955,226 38,467,964 31,955,226
EFFECT OF DILUTIVE OPTIONS................................. 2,441,032 987,504 5,206,918 -
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DILUTIVE SHARES OUTSTANDING................................ 40,908,996 32,942,730 43,674,882 31,955,226
==================================================================
* Less Than $.01 per share
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended June 30,
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2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................................ $ 674,561 $ (76,563)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization.............................. 119,650 96,043
Increase (decrease) in net change of reserve accounts...... 366,491 (40,211)
Deferred financing fees.................................... 1,865 5,595
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable.................................... (738,263) (458,145)
Inventory.............................................. (170,027) 220,866
Prepaid expenses and other ............................ (12,863) 3,728
Increase (decrease) in:
Accounts payable....................................... 285,613 248,345
Accrued expenses....................................... 75,298 (59,428)
----------------------------------
Net cash provided by (used in) operating activities........... 602,325 (59,770)
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CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of equipment and furniture ............................. (224,923) (79,992)
Interest received on certificate of deposit...................... - (4,630)
Payments on capital lease obligation............................. (18,542) -
Decrease (increase) in restricted cash........................... 100,000 (250,000)
----------------------------------
Net cash used in investing activities............................ (143,465) (334,622)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options........................................ 281,084 34,266
Payments on notes payable........................................ (111,142) (13,595)
Proceeds from line of credit and notes........................... - 84,713
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Net cash provided by financing activities..................... 169,942 105,384
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................................... 628,802 (289,008)
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CASH AND CASH EQUIVALENTS, beginning of period........................ 2,180,611 2,234,062
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CASH AND CASH EQUIVALENTS, end of period.............................. $2,809,413 $1,945,054
==================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Conversion of debenture into shares of common stock, net
of deferred financing costs related to the debenture.......... $1,441,249 $ -
Equity investment in WebGear, Inc................................ $1,640,625 $ -
Conversion of payable to ZMD into shares of common stock......... $ 130,153 $ -
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE>
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 7, 2000 for fiscal year 1999 and Simtek Corporation's Form 8-K/A
Amendment #1 filed on July 24, 2000.
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. Results of operations for the interim periods are not necessarily
indicative of the results of operations for the full fiscal year.
2. LINE OF CREDIT:
In March 2000, Simtek Corporation ("Simtek" or the "Company") renewed its
revolving line of credit for another year in the amount of $250,000, thereby
reducing it by $100,000 since December 31, 1999. At the time of renewal, the
$100,000 certificate of deposit required for this line of credit was released.
3. EQUITY:
In February and March 2000, Renaissance Capital Group of Dallas, Texas
("Renaissance") converted the $1,500,000 debenture into 7,692,308 shares of the
Common Stock. Renaissance sold 5,692,308 of these shares under Rule 144 in the
first quarter of 2000.
In March 2000, the Company filed a Form SB-2 registration statement to
register 3,547,385 shares of Common Stock owned by Zentrum Mikoelectronik
Dresden Gmbh ("ZMD") and an additional 551,964 shares that ZMD is entitled to if
they request the conversion of the $130,153 payable to them into shares of
Common Stock. This registration statement became effective on April 7, 2000.
Prior to the filing of the registration statement, ZMD sold 4,000,000 shares
under Rule 144. On April 12, 2000, ZMD notified the Company of its desire to
convert the $130,513 into 551,964 shares of the Company's Common Stock. Prior to
the sale of these shares, ZMD owns approximately 13% of the Company's Common
Stock.
In May 2000, the Company acquired Integrated Logic Systems, Inc.
("Integrated"). Simtek issued 3,000,000 shares of its Common Stock in exchange
for all outstanding shares of all classes of Integrated stock. Integrated
designs and sells metal programmed gate array integrated circuits.
On June 16, 2000, the Company acquired 1,875,000 shares of the common stock
of WebGear, Inc., a California corporation ("WebGear"), in return for 1,250,000
shares of the Company's common stock. The shares of WebGear stock that the
Company acquired represents approximately 9% of WebGear's issued and outstanding
shares of common stock as of June 16, 2000. On June 16, 2000, the closing price
for Simtek's common stock was $1.3125 per share. WebGear is engaged in the
design, development, sales and support of high technology networking and
communications products for the personal computer market.
On July 31, 2000, the Company acquired Macrotech Semiconductor
("Macrotech"). Simtek issued 1,250,000 shares of its Common Stock in exchange
for all outstanding shares of all classes of Macrotech stock. Macrotech designs
and sells metal programmable standard cells, which are an extension of the metal
programmed gate array integrated circuits that Integrated manufactures.
-6-
<PAGE>
SIMTEK CORPORATION
NOTES TO FINANCIAL STATEMENTS
4. GEOGRAPHIC CONCENTRATION:
Sales by location for the three months ended June 30, 2000 and 1999 were as
follows (as a percentage of sales):
2000 1999
North America 36% 51%
Europe 23% 15%
Far East and Japan 41% 34%
A significant portion of the shift in sales to both Europe and the Far East
is a result of international manufacturing performed by subcontractors for
companies based in North America.
-7-
<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 $3,208,657 for the second quarter of 2000 and $5,932,467 for the six months
ended June 30, 2000 up from the $2,135,723 recorded for the second quarter 1999
and the $3,620,227 for the six months ended June 30, 1999. The product sales
were from the Company's 4 kilobit, 16 kilobit, 64 kilobit and 256 kilobit nvSRAM
product families and metal programmed gate array integrated circuits. The
increase in net sales for the three months and six months ended June 30, 2000
were primarily due to large customers placing production orders of the Company's
nvSRAM products worldwide. Sales of the Company's metal programmed gate array
integrated circuits accounted for approximately 7% of the Company's revenue for
the six months ended June 30, 2000. Two distributors and one direct customer of
the Company's nvSRAM products account for approximately 54% of the Company's net
sales for the second quarter 2000. Products sold to distributors are re-sold to
various end customers.
During the second quarter 2000, the Company purchased wafers built on 0.8
micron technology from Chartered Semiconductor Manufacturing Plc. of Singapore
("Chartered") to support sales of its nvSRAM products. Sales of metal programmed
gate array products were supported with 0.5 micron wafers purchased from United
Microelectronics Corp. ("UMC") of Taiwin.
The Company saw minimal changes in gross margin percentages in the three
and six months ended June 30, 2000 as compared to the same periods in 1999.
Total other operating expenses saw an increase of approximately $125,000 in
the three months ended June 30, 2000 as compared to the three months ended June
30, 1999. Research and Development saw a decrease of approximately $12,000, due
primarily to a reduced headcount. Administration saw an increase of
approximately $106,000, which was due to an approximate increase of $30,000 in
payroll and benefits, an approximate increase in travel of $4,000 and an
approximate $72,000 increase in legal, audit and consulting fees related to the
acquisition of Integrated and costs associated with the filing for Form SB-2.
Sales saw an increase of approximately $31,000, which was due to increased sales
commissions which are based on net revenues.
Total other operating expenses saw an increase of approximately $322,000 in
the six months ended June 30, 2000 as compared to the six months ended June 30,
1999. Research and Development saw an approximate increase of $22,000, which was
related to an approximate $34,000 increase in employer taxes due to taxation
requirements on the exercise of stock options that occurred in the first three
months of 2000 and an approximate $12,000 decrease in payroll costs that
occurred in the second quarter of 2000. Administration saw an approximate
$131,000 increase in the six months ended June 30, 2000 as compared to the six
months ended June 30, 1999. This increase was primarily to an approximate
$85,000 increase in legal, audit and consulting fees. Approximately $13,000 of
the increase occurred in the first quarter of 2000 and $72,000 in the second
quarter of 2000. There was an increase of approximately $42,000 in payroll,
$12,000 in the first three months of 2000 which was related to employer taxes on
stock options and $30,000 from the second quarter 2000. Sales expenses saw an
approximate $86,000 increase in the six months ended June 30, 2000 as compared
to the six months ended June 30, 1999. This increase was primarily due to an
increase of approximately $54,000 in sales commissions and approximately $32,000
was related to increased headcount and employer taxes due to taxation
requirements on the exercise of stock options.
The Company recorded a net income of $337,109 in the second quarter of 2000
and a net income of $674,561 for the six months ended June 30, 2000 as compared
to a net income of $26,424 for the three months ended June 30, 1999 and a net
loss of $76,563 for the six months ended June 30, 1999. This increase was due to
increased product sales.
-8-
<PAGE>
SIMTEK CORPORATION
The change in cash flows from operating activities was primarily a result
of a net income, and increase in accounts receivable, inventory and reserves,
these increases were offset with an increase in accounts payable and accrued
expenses. The change in cash flows from investing activities was due to the
purchase of equipment used in the testing of the Company's nvSRAM products and
the purchase of hardware and software used in the design of the Company's nvSRAM
products, this increase was offset by a decrease in the Company's restricted
cash requirements. The change in cash flows from financing activities was due to
the exercise of stock options and payments of notes payable acquired in the
Integrated acquisition.
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, by the introduction
of new products and by expanding its customer base. Additionally, market
conditions may make it more difficult to receive enough raw materials, processed
silicon wafers and support services to satisfy customer demand.
The Company is currently deciding which new or derivative product it will
develop next.
As of June 30, 2000, the Company had received purchase orders during
the second quarter expected to be filled within the next six months of
approximately $4,900,000. 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
In February and March 2000, Renaissance Capital Group of Dallas, Texas
converted the $1,500,000 debenture into 7,692,308 shares of the Company's Common
Stock. Renaissance sold 5,692,308 of these shares under Rule 144 in the first
quarter 2000.
In March 2000, the Company filed a Form SB-2 registration statement to
register 3,547,385 shares of Common Stock owned by Zentrum Mikoelectronik
Dresden Gmbh ("ZMD") and an additional 551,964 shares that ZMD is entitled to if
they request the conversion of the $130,153 payable to them into shares of
Common Stock. This registration statement became effective on April 7, 2000.
Prior to the filing of the registration statement, ZMD sold 4,000,000 shares
under Rule 144. On April 12, 2000, ZMD notified the Company of its desire to
convert the $130,513 into 551,964 shares of the Company's Common Stock. Prior to
the sale of these shares, ZMD owns approximately 13% of the Company's Common
Stock.
In March 2000, the Company renewed its revolving line of credit for another
year in the amount of $250,000 thereby reducing the line of credit by $100,000.
At the time of renewal, the $100,000 certificate of deposit required for this
line of credit was released. The line of credit is collateralized by
substantially all assets of the Company. The line of credit bears interest at
prime plus .75% on any outstanding balance. As of March 31, 2000, the Company
had no balance outstanding.
In May 2000, the Company acquired Integrated Logic Systems, Inc. Simtek
issued 3,000,000 shares of its Common Stock in exchange for all outstanding
shares of all classes of Integrated stock. Integrated designs and sells metal
gate array integrated circuits.
-9-
<PAGE>
SIMTEK CORPORATION
On June 16, 2000, the Company acquired 1,875,000 shares of the common stock
of WebGear, Inc., a California corporation ("WebGear"), in return for 1,250,000
shares of the Company's common stock. The shares of WebGear stock that the
Company acquired represents approximately 9% of WebGear's issued and outstanding
shares of common stock as of June 16, 2000. On June 16, 2000, the closing price
for Simtek's common stock was $1.3125 per share. WebGear is engaged in the
design, development, sales and support of high technology networking and
communications products for the personal computer market.
In July 2000, the Company filed a Form SB-2 registration statement to
register 1,500,000 shares of Common Stock owned by Integrated's sole
shareholder, Hugh Chapman, and 1,250,000 shares of Common Stock owned by
WebGear.
On July 31, 2000, the Company acquired Macrotech Semiconductor
("Macrotech"). Simtek issued 1,250,000 shares of its Common Stock in exchange
for all outstanding shares of all classes of Macrotech stock. Macrotech designs
and sells metal programmable standard cells, which are an extension of the metal
programmed gate array integrated circuits that Integrated manufactures.
During the first six months of 2000, employees and two directors of the
Company exercised 1,765,666 stock options into shares of the Company's Common
Stock for net proceeds to the Company of $281,084.
The Company may require additional capital to fund production and marketing
of any new products it may develop. The Company does not have any commitments
for such additional capital as of the date of this report.
-10-
<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 27 - Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed April 24, 2000 - "1999 Annual Report to Shareholders"
Form 8-K filed April 28, 2000 - "Simtek Announces Financial Results
for the First Quarter of 2000"
Form 8-K filed May 10, 2000 - "Simtek acquires Integrated Logic"
Form 8-K filed June 27, 2000 - "Simtek acquires 1,875,000 shares of
the common stock of Web Gear, Inc. in return for 1,250,000 shares of
common stock of Simtek.
-11-
<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)
August 11, 2000 By /s/ Douglas Mitchell
---------------------
DOUGLAS MITCHELL
Chief Executive Officer, President
and Chief Financial Officer (acting)
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