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, 2000
[ ] 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)
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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 May 5, 2000
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(Common Stock, $.01 par value) 38,256,589
<PAGE>
SIMTEK CORPORATION
INDEX
For Quarter Ended March 31, 2000
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
-----
Balance Sheets as of March 31, 2000 and
December 31, 1999 3
Statements of Operations for the three months ended
March 31, 2000 and 1999 4
Statements of Cash Flows for the three months ended
March 31, 2000 and 1999 5
Notes to Financial Statements 6
ITEM 2
Management's Discussion and Analysis of Results of
Operations and Financial Condition 7-9
PART II. OTHER INFORMATION
ITEM 1 Legal Proceedings 10
ITEM 2 Changes in Securities 10
ITEM 3 Defaults upon Senior Securities 10
ITEM 4 Matters Submitted to a Vote of Securities Holders 10
ITEM 5 Other Information 10
ITEM 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 11
2
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<TABLE>
<CAPTION>
SIMTEK CORPORATION
BALANCE SHEETS
ASSETS
------ March 31, 2000 December 31, 1999
---------------- -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................... $ 2,213,386 $ 2,173,592
Certificate of deposit, restricted...................................... 300,000 400,000
Accounts receivable - trade, net........................................ 1,561,823 1,050,219
Inventory, net ......................................................... 1,001,879 916,692
Prepaid expenses and other.............................................. 93,705 33,802
-------------- -------------
Total current assets................................................ 5,170,793 4,574,305
EQUIPMENT AND FURNITURE, net............................................... 440,803 440,654
OTHER ASSETS............................................................... - 49,425
-------------- -------------
TOTAL ASSETS............................................................... $ 5,611,596 $ 5,064,384
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable........................................................ $ 813,266 $ 731,651
Accrued expenses........................................................ 182,739 155,479
Accrued wages........................................................... 221,638 223,012
Accrued vacation payable................................................ 88,253 83,688
Obligations under capital lease......................................... 44,216 51,115
Payable to ZMD.......................................................... 130,153 130,153
-------------- -------------
Total current liabilities........................................... 1,480,265 1,375,098
CONVERTIBLE DEBENTURES..................................................... - 1,500,000
OBLIGATIONS UNDER CAPITAL LEASES........................................... 189,580 190,544
-------------- -------------
Total liabilities................................................... 1,669,845 3,065,642
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,
37,918,520 and 28,955,226 shares issued and outstanding at
March 31, 2000 and December 31, 1999, respectively.................. 379,185 289,552
Additional paid-in capital.............................................. 31,346,651 29,793,041
Accumulated deficit..................................................... (27,784,085) (28,083,851)
------------- ------------
Shareholder's equity.................................................... 3,941,751 1,998,742
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $ 5,611,596 $ 5,064,384
============= ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF OPERATIONS
For the quarters ended March 31,
--------------------------------
2000 1999
---- ----
<S> <C> <C>
NET SALES.................................................................. $2,513,393 $1,368,637
Cost of sales........................................................ 1,493,186 819,396
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GROSS MARGIN............................................................... 1,020,207 549,241
OPERATING EXPENSES:
Design, research and development...................................... 357,625 312,926
Administrative........................................................ 139,258 106,348
Marketing............................................................. 222,948 187,743
---------- ----------
Total Operating expenses.......................................... 719,831 607,017
INCOME (LOSS) FROM OPERATIONS.............................................. 300,376 (57,776)
---------- ----------
OTHER INCOME (EXPENSE):
Interest income (expense), net........................................ 2,811 (10,019)
Other expense, net.................................................... 2,181 (592)
---------- ----------
Total other income (expense)...................................... 4,992 (10,611)
---------- ----------
NET INCOME (LOSS) BEFORE TAXES............................................. 305,368 (68,387)
Provision for income taxes............................................ 5,600 -
---------- ----------
NET INCOME (LOSS).......................................................... $ 299,768 $ (68,387)
========== ==========
NET INCOME PER COMMON SHARE:
Basic................................................................. $ .01 $ *
========== ==========
Diluted............................................................... $ .01 $ *
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic................................................................. 32,050,904 28,828,448
========== ==========
Diluted.............................................................. 35,427,048 28,828,448
========== ==========
- -----------------
Less Than $.01 per share
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
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<TABLE>
<CAPTION>
SIMTEK CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
--------------------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................... $ 299,768 $ (68,387)
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization.............................. 47,900 33,294
Increase (decrease) in net change of reserve
accounts.............................................. 68,951 (28,245)
Deferred financing fees.................................... 1,865 2,798
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable.................................... (547,452) (118,238)
Inventory.............................................. (109,248) (34,979)
Prepaid expenses and other ............................ (71,094) 5,339
Increase (decrease) in:
Accounts payable....................................... 81,614 35,333
Accrued expenses....................................... 21,408 (12,455)
----------- ------------
Net cash used in operating activities......................... (206,288) (185,540)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and furniture.............................. (48,049) (1,742)
Interest received on certificate of deposit...................... - (1,888)
Payments on capital lease obligation............................. (7,863) -
Increase in restricted cash...................................... - (250,000)
Reduction of certificate of deposit.............................. 100,000 -
----------- -----------
Net cash provided by (used in) investing activities.............. 44,088 (253,630)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options........................................ 201,994 34,266
----------- ------------
Net cash provided by financing activities..................... 201,994 34,266
----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................................... 39,794 (404,904)
----------- ------------
CASH AND CASH EQUIVALENTS, beginning of period........................ 2,173,592 2,149,820
----------- -----------
CASH AND CASH EQUIVALENTS, end of period.............................. $ 2,213,386 $ 1,744,916
=========== ===========
SUPPLEMENTAL NON-CASH INFORMATION:
Conversion of debenture into shares of common stock, net
of deferred financing costs related to the debenture............ $ 1,441,249 -
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
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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 7, 2000 for fiscal year 1999.
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.
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.
4. GEOGRAPHIC CONCENTRATION:
Sales by location for the three months ended March 31, 2000 and 1999 were
as follows (as a percentage of sales):
2000 1999
North America 48% 61%
Europe 16% 16%
Far East and Japan 36% 23%
6
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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 recorded net product sales of $2,513,393 for the first
quarter of 2000 up from the $1,368,637 recorded for the first quarter 1999. The
product sales were from the Company's 4 kilobit, 16 kilobit, 64 kilobit and 256
kilobit nvSRAM product families. The increase in sales was due primarily to
sales in Japan and certain other areas of the far east and sales in the European
market returning and surpassing previous sales levels. The increase to previous
sales levels and the increase in sales to the North American market was due to
large customers ordering production volumes. Sales of the Company's high end
industrial and military products remained equal for the three months ended March
31, 2000 as compared with the three months ended March 31, 1999. Three
distributors of the Company's nvSRAM products account for more than 47% of the
Company's net sales for the first quarter 2000. Products sold to distributors
are re-sold to various end customers.
During the first 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 commercial and industrial products. Sales
of devices built with wafers purchased from Chartered accounted for
approximately all of the Company's revenue in the first three months ended March
31, 2000.
The Company saw no change in gross margins percentages in the first quarter
2000 as compared to the first quarter 1999.
Total other operating expenses saw an increase of approximately $113,000 in
the three months ended March 31, 2000 as compared to the three months ended
March 31, 1999. Research and Development saw the largest increase of
approximately $45,000, which was due primarily to an approximate $34,000
increase in employer taxes due to taxation requirements on the exercise of stock
options, an approximate $29,000 in repair and maintenance costs for certain
pieces of equipment and a software maintenance contract. Research and
Development did see an approximate $18,000 decrease in costs associated with
yield improvement development on its 256 kilobit and 64 kilobit products. Sales
and Marketing saw an increase of approximately $35,000, which was due to an
approximate $12,000 increase in employer taxes due to taxation requirements on
the exercise of stock options and an approximate $23,000 increase in sales
commissions which are based on net revenues. Administration saw an approximate
$33,000 increase. Of this increase approximately $12,000 was related to employer
taxes due to taxation requirements on the exercise of stock options.
Approximately $13,000 was due to increased legal and audit costs associated with
the filing of Form SB-2 and the balance of $8,000 was due primarily to increased
travel and investor relation costs.
The Company recorded a net income of $299,768 in the first quarter of 2000
as compared to a net loss of $68,387 for the first quarter of 1999. This
increase was due to increased product sales.
The change in cash flows from operating activities was primarily a result
of an increase in accounts receivable and inventory, which were both related to
the increase in product sales, and an increase in prepaid expenses and other
assets which was related to a receivable outstanding. The increases in operating
activities were offset primarily by net income, an increase in depreciation,
reserves, and accounts payable and accrued expenses. The change in cash flows
from investing activities was primarily from the release of the certificate of
deposit that was required as collateral for the Company's line of credit and the
purchase of equipment required to test the Company's 64 kilobit and 256 kilobit
nvSRAM's. The change in cash flows from financing activities was due to the
exercise of stock options.
7
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SIMTEK CORPORATION
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. The Company is currently
deciding which new or derivative product it will develop next.
As of March 31, 2000, the Company had received purchase orders expected to
be filled within the next six months of approximately $3,250,000. 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 the first quarter 2000, employees and one director of the Company
exercised 1,270,986 stock options into shares of the Company's Common Stock for
net proceeds to the Company of $201,944.
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.
YEAR 2000
The information provided below constitutes a "Year 2000 Readiness
Disclosure" for purposes of the Year 2000 Information and Readiness Disclosure
Act.
The Year 2000 ("Y2K") problem arises from the use of a two-digit field to
identify years in computer programs, e.g., 85=1985, and the assumption of a
single century, the 1900s. Any program so created may read or attempt to read,
"00" as the year 1900. There are two other related issues which could also, lead
to incorrect calculations or failure, such as (i) some systems' programming
assigns special meaning to certain dates, such as 9/9/99 and (ii) the year 2000
is a leap year. Accordingly, some computer hardware and software including
programs embedded within machinery and parts needed to be modified prior to the
year 2000 in order to remain functional. To address the issue, the Company
8
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SIMTEK CORPORATION
created an internal task force to assess its state of readiness for possible
"Year 2000" issues and take the necessary actions to ensure Year 2000
compliance. The task force evaluated internal business systems, production
equipment, software and other components which affect the Company's products,
and the Company's vulnerability to possible "Year 2000" exposures due to
suppliers' and other third parties' lack of preparedness for the year 2000.
We have experienced no major difficulties to date, however, we may not know
if there are other problems for several months into the year 2000.
9
<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 February 25, 2000; press release announcing
"Simtek Announces Financial Results for 1999"
10
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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, 2000 By /s/ Douglas Mitchell
---------------------
DOUGLAS MITCHELL
Chief Executive Officer, President
and Chief Financial Officer (acting)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED IN
ITS ENTIRETY TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,213,386
<SECURITIES> 300,000
<RECEIVABLES> 1,627,541
<ALLOWANCES> 65,718
<INVENTORY> 1,001,879
<CURRENT-ASSETS> 5,170,793
<PP&E> 2,332,662
<DEPRECIATION> 1,891,860
<TOTAL-ASSETS> 5,611,596
<CURRENT-LIABILITIES> 1,480,265
<BONDS> 0
0
0
<COMMON> 379,185
<OTHER-SE> 3,941,751
<TOTAL-LIABILITY-AND-EQUITY> 5,611,596
<SALES> 2,513,393
<TOTAL-REVENUES> 2,513,393
<CGS> 1,493,186
<TOTAL-COSTS> 1,493,186
<OTHER-EXPENSES> 357,625
<LOSS-PROVISION> (2,181)
<INTEREST-EXPENSE> 30,515
<INCOME-PRETAX> 305,368
<INCOME-TAX> 5,600
<INCOME-CONTINUING> 299,768
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 299,768
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
