SmartKem (NASDAQ:SMTK)
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Simtek Corporation (NASDAQ:SMTK), the inventor, pioneer, and world’s
premier supplier of nonvolatile static random access memory (nvSRAM)
integrated circuits, today announced its financial results for the
period ended March 31, 2008.
Financial Results
Revenue for the first quarter of 2008 was $7.3 million, consisting
entirely of product revenue, compared to $7.9 million for the first
quarter of 2007, which included last-time buys of the company’s
legacy ZMD product of approximately $600,000. Excluding this last-time
buy revenue, revenue for Q108 was in line with revenue a year ago. Gross
margin was 43% for the quarter compared to 44% a year ago, reflecting
product mix and higher costs related to lower yields on certain 1
megabit silicon wafers. The Company reported ex-item net loss for the
first quarter of $1.6 million, or $0.10 per share, compared to an
ex-item profit of $235,000, or $0.02 per share in Q107. For the quarter,
ex-item income excludes the effects of stock options and amortization of
acquisition related costs. Included in the first quarter ex-item loss is
a $600,000 investment in AgigA Tech, the Company’s
newly created subsidiary, as well as costs associated with the Cypress
acquisition offer. On a GAAP basis, Simtek reported a net loss for the
quarter of $2.5 million or $0.15 per share compared to a loss of
$490,000, or $0.03 per share for the comparable 2007 period. The
increased loss is attributable to lower revenue and increased research
and development expenditures.
“In light of challenging economic conditions
across multiple geographic markets and some end-markets, we are pleased
with the consistent strength in our core business in the first quarter
and believe revenue to be in line with industry trends,”
stated Harold A. Blomquist, Simtek president and chief executive
officer. “During the quarter we experienced
modest growth in revenue and bookings in the North American, Pacific
Rim, and Asian markets. Sales to our storage customers are strong and
gaining momentum, while shipments to Europe were weak compared to prior
periods as we worked through both the last-time buys early in the year,
and a build-up of inventory in the channel. Pull-through demand from our
European customers appears to be healthy as we look to the remainder of
the year. We continued to solidify and enhance our positions in our
target markets, securing 39 new design wins in the first quarter, up
from 30 in the same quarter last year. During the quarter we saw several
new design wins for the 4 megabit product in storage and industrial
control applications, and we began accepting pre-production purchase
orders for 4 Megs during the quarter.”
“We achieved several significant milestones
during the quarter including launching AgigA Tech, a majority owned
subsidiary created to focus on the development and commercialization of
our low-cost, high density nvRAM solutions; identification of new and
potentially significant application areas for nvSRAMs; steady gains in
Asian design activity; and the announcement of our 8 megabit nvSRAM. We
also completed a new tape out of our 4 megabit product, with design
improvements aimed at optimizing manufacturability and anticipate
production qualification in the middle of the year, followed by modest
revenue in the back half of 2008,” concluded
Blomquist.
Evaluation of Strategic Alternatives
In April 2008, the company received a proposal from Cypress
Semiconductor Corporation to acquire Simtek for $2.20 per share in cash.
After reviewing the proposal, along with its independent financial and
legal advisors, Simtek's Board of Directors rejected the offer, stating
that the Cypress proposal significantly undervalues the combination of
Simtek's core business in nvSRAM and its subsidiary AgigA Tech through
which Simtek is developing breakthrough high-density non-volatile RAM
solutions. At that time, the Board indicated that it would continue to
explore various strategic alternatives in order to maximize long-term
value for Simtek stockholders and that it would vigorously resist any
attempted acquisition at a price that doesn't adequately value the
Company and its growth opportunities. This evaluation is ongoing and
developments will be disclosed as the Board deems appropriate.
Ex-Item Earnings
Simtek reports net income or loss in accordance with GAAP and
additionally uses ex-item financial measures which are adjusted from the
most directly comparable GAAP financial measures to exclude charges
related to non-cash, unusual or non-recurring expenses the Company may
incur from time to time, in order to provide additional comparative
information between periods. Management believes that these ex-item
measures are important to investor understanding of the Company’s
disclosures regarding past, current and future operating results.
Following is reconciliation(a) of the Ex-item
financial measures to the most comparable GAAP financial measures, in
thousands of dollars, except per share amounts:
(Amounts in thousands, except per share amounts)(Unaudited)
Three Months Ended March 31, 2008
Three Months Ended March 31, 2007
Net Loss, as reported
($2,455
)
($490
)
Adjusted-GAAP items:
Amortization of Non-compete Agreement
445
446
Costs associated with employee stock options
392
279
Ex-item Net Income (Loss)
($1,618
)
$
235
Per Share Data:
Net Loss, as reported
($0.15
)
($0.03
)
Adjusted-GAAP items:
Amortization of Non-compete Agreement
$
0.03
$
0.03
Costs associated with employee stock options
$
0.02
$
0.02
Ex-item Net Income (Loss) Per Share
($0.10
)
$
0.02
(a) pursuant to the requirements of Regulation G.
Conference Call
Simtek management will host a conference call at 5:00 p.m. ET (2:00 p.m.
PT) today to discuss these results. The call can be accessed by dialing
800-218-8862 and giving the company name, "Simtek." Participants are
asked to call the assigned number approximately 10 minutes before the
conference call begins. A replay of the conference call will be
available two hours after the call for the following five business days
by dialing 800-405-2236 and entering the following pass code: 11113808#.
Also, the conference call together with supplemental financial
information will be available over the Internet at http://www.simtek.com
in the Investor Info area of the site or by going to http://www.mkr-group.com.
About Simtek Corporation
Simtek Corporation designs and markets high-speed nonvolatile
semiconductor memory products, for use in a variety of systems including
RAID servers, storage arrays, GPS navigational systems, industrial
controllers, robotics, copiers, avionics, metering, consumer, UPS, and
networking and broadcast equipment. Information on Simtek products can
be obtained from its web site: www.simtek.com;
email: information@simtek.com.
The company is headquartered in Colorado Springs, Colorado.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements predicting Simtek's future growth. These
forward-looking statements are inherently difficult to predict and
involve risks and uncertainties that could cause actual results to
differ materially, including, but not limited to, guidance and
projections of future performance including predictions of future
revenue, profitability, and expectations of the business environment in
which Simtek operates. For a detailed discussion of these and other risk
factors, please refer to Simtek's filings with the Securities and
Exchange Commission (SEC), including its Annual Report on Form 10-K and
subsequent Form 10-Q and Form 8-K filings.
SIMTEK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value and share amounts)
ASSETS
March 31, 2008
December 31, 2007
CURRENT ASSETS:
(Unaudited)
Cash and cash equivalents
$
3,737
$
4,387
Restricted investments
938
991
Accounts receivable - trade, net
4,289
5,222
Inventory, net
5,542
5,698
Prepaid expenses and other current assets
905
910
Total current assets
15,411
17,208
EQUIPMENT AND FURNITURE, NET
2,266
1,987
DEFERRED FINANCING COSTS AND DEBT ISSUANCE COSTS
7
15
GOODWILL
992
992
NON-COMPETITION AGREEMENT, NET
4,899
5,344
OTHER ASSETS
202
240
TOTAL ASSETS
$
23,777
$
25,786
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
2,514
$
2,827
Accrued expenses
1,315
943
Accrued vacation payable
392
357
Accrued wages
101
179
Line of credit
413
543
Obligation under capital leases
12
21
Debentures, current
480
480
Total current liabilities
5,227
5,350
DEBENTURES, NET OF CURRENT
1,620
1,620
Total liabilities
6,847
6,970
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 200,000 shares authorized, none
issued
-
-
Common stock, $.0001 par value; 30,000,000 shares authorized,
16,533,719 and 16,532,719 shares issued and outstanding at March 31,
2008 and 16,516,419 and 16,515,419 shares issued and outstanding at
December 31, 2007
2
2
Additional paid-in capital
69,880
69,453
Treasury stock, at cost; 1,000 shares
(1
)
(1
)
Accumulated deficit
(53,421
)
(50,966
)
Accumulated other comprehensive income:
Cumulative translation adjustment
470
328
Total shareholders' equity
16,930
18,816
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
23,777
$
25,786
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share amounts)
For the three months ended March 31,
2008
2007
REVENUE
Product sales, net
$
7,315
$
7,867
Total Revenue
7,315
7,867
Cost of sales
4,165
4,435
GROSS PROFIT
3,150
3,432
OPERATING EXPENSES:
Research and development costs
2,649
1,613
Sales and marketing
1,531
1,152
General and administrative
1,375
1,109
Total operating expenses
5,555
3,874
LOSS FROM OPERATIONS
(2,405
)
(442
)
OTHER INCOME (EXPENSE):
Interest income
24
49
Interest expense
(91
)
(98
)
Exchange rate variance
(54
)
12
Other expense
89
-
Total other expense
(32
)
(37
)
LOSS BEFORE PROVISION FOR INCOME TAXES
(2,437
)
(479
)
Provision for income taxes
(18
)
(11
)
NET LOSS
$
(2,455
)
$
(490
)
NET LOSS PER COMMON SHARE:
Basic and diluted
$
(.15
)
$
(.03
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted
16,533,529
16,211,671