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
second quarter ended June 30, 2007.
First Six-Months 2007 Highlights
Product revenue of $15.9 million, a 43% increase year-over-year
Gross product margin increased to 48.0% compared to 28.1% a year ago
Ex-item profit of $863,000 versus an ex-item loss of $540,000 a year
ago
Ex-item EPS of $0.05 compared to a loss of ($0.04) a year ago
90 new design wins in the first six-months of 2007
Signed 2 new Asian distribution agreements
Shipped initial evaluation samples for 4 megabit product to multiple
beta customers
Financial Results
Total revenue for the second quarter of 2007 was $8.1 million,
consisting entirely of product revenue, representing a 25% increase over
product revenue of $6.4 million in Q206. The Company reported ex-item
net income for the second quarter of $628,000, or $0.04 per share,
compared to an ex-item loss of $(519,000), or a loss of $(0.04) per
share in Q206. The 2006 net loss includes the benefit of the $483,000 of
royalty revenue received from Cypress Semiconductor. The Company
recognized no royalty revenue in the 2007 period. Ex-item income
excludes the effects of stock options, amortization of acquisition
related costs, and contractual milestone payments to Cypress
Semiconductor to be paid from the restricted cash account. On a GAAP
basis, the Company reported a net loss for the 2007 period of $(816,000)
or $(0.05) per share compared to a loss of $(1.5) million or $(0.10) per
share for the comparable 2006 period.
For the first six months ended June 30, 2007, total revenue increased to
$15.9 million, consisting entirely of product revenue, which represented
a 43% increase over product revenue of $11.2 million reported in the
same period a year ago. The Company reported ex-item net income for the
first six months of $863,000, or $0.05 per share, compared to an ex-item
loss of $(540,000), or $(0.04) loss per share a year ago. The 2006 net
loss includes the benefit of the $1.5 million of royalty revenue
received from Cypress Semiconductor. There was no such revenue in the
2007 period. On a GAAP basis, the Company reported a net loss for first
six months of 2007 of $(1.3) million or $(0.08) per share compared to a
loss of $(2.4) million or $(0.16) per share for the comparable 2006
period.
Financial Discussion
“We are pleased with the significant
improvements we made in the first six months of 2007,”
said Harold Blomquist, Simtek president and CEO. “In
the first half of the year we increased revenues 43%, improved our gross
margins significantly with a stronger mix of higher margin products,
signed 2 new Asian distribution agreements, and made significant headway
in our joint development project with Cypress Semiconductor for our 4
Megabit product. We also recorded 90 new design wins during first half
of the year, expanding our potential reach into more non-storage markets
and new geographic locations and creating a stronger product mix with
greater overall growth potential. We believe our continued new design
momentum in the first half of the year is a positive barometer of future
product revenue for Simtek.”
Mr. Blomquist continued, “During the quarter
we made significant progress on the new product front with the initial
tape out of our 4 Megabit nvSRAM product, as well as first orders of
this product from our beta customers, which we announced today. We
continue to believe the 4 Megabit product line will be a key growth
driver for us in the near future as it addresses very large markets that
were previously unavailable to Simtek. We are very pleased with the
positive response we have received from all of our beta customers as
they are all major players in their respective markets. We anticipate
going into full production on the 4 Megabit product in the first quarter
of 2008.”
Outlook for 2007
“While we were pleased with the first half
results, they still fell slightly short of our expectations in certain
areas. We continued to see a slower return to normal ordering patterns
from our server customer base during the first two months of the second
quarter, with strong improvements coming in the last month of the
quarter. Orders have remained strong in July and while we are optimistic
that this strength will continue into the back half of the year, we
continue to remain cautious as we approach the third quarter and feel it
is appropriate to be more conservative in our guidance for 2007,”
concluded Mr. Blomquist.
For 2007, Simtek is revising its product revenue guidance to be in the
range of $36 to $40 million, representing 26% to 40% top line growth
respectively. Simtek does not expect any royalty revenue in 2007. Gross
margins are projected to increase to approximately 50% by the end of
2007. Ex-item profit for 2007 is expected to be in the range of
$0.17-$0.25 per share.
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:
Unaudited
Three Months
Six Months
(Amounts in thousands, except per share amounts)
2007
2006
2007
2006
Net loss, as reported
$
(816
)
$
(1,453
)
$
(1,306
)
$
(2,354
)
Ex-item Adjustments:
Amortization of non-compete agreement
445
446
890
894
Costs associated with employee stock options
264
159
544
278
Cypress milestone payments
735
329
735
642
Ex-item income (loss)
$
628
$
(519
)
$
863
$
(540
)
Per Share Data:
Net loss, as reported
$
(0.05
)
$
(0.10
)
$
(0.08
)
$
(0.16
)
Ex-item Adjustments:
Amortization of non-compete agreement
0.03
0.03
0.05
0.06
Costs associated with employee stock options
0.02
0.01
0.03
0.02
Cypress milestone payments
0.04
0.02
0.05
0.04
Ex-item income (loss)
$
0.04
$
(0.04
)
$
0.05
$
(0.04
)
(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 800-218-0713
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: 11093883#. 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.
CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in
thousands, except par value and share amounts)ASSETS
June 30, 2007
December 31, 2006
CURRENT ASSETS:
(Unaudited)
Cash and cash equivalents
$
3,147
$
4,522
Restricted investments
1,775
1,775
Accounts receivable - trade, net
4,910
5,537
Inventory, net
7,537
6,596
Prepaid expenses and other current assets
668
312
Total current assets
18,037
18,742
EQUIPMENT AND FURNITURE, net
1,445
1,239
DEFERRED FINANCING COSTS AND DEBT ISSUANCE COSTS
31
54
GOODWILL
992
992
NON-COMPETITION AGREEMENT, NET
6,235
7,126
OTHER ASSETS
113
89
TOTAL ASSETS
$
26,853
$
28,242
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
2,544
$
3,771
Accrued expenses
1,748
939
Accrued vacation payable
312
229
Accrued wages
133
814
Line of credit
798
681
Debentures, current
480
480
Total current liabilities
6,015
6,914
DEBENTURES, NET OF CURRENT
1,620
2,220
Total liabilities
7,635
9,134
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,
16,500,656 and 16,499,626 shares issued and outstanding at June 30,
2007 and 16,146,679 and 16,145,679 shares issued outstanding at
December 31, 2006
2
2
Additional paid-in capital
68,543
67,173
Treasury stock, at cost; 1,000 shares
(1
)
(1
)
Accumulated deficit
(49,505
)
(48,198
)
Accumulated other comprehensive income:
Cumulative translation adjustment
179
132
Total shareholders' equity
19,218
19,108
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
26,853
$
28,242
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(Amounts
in thousands, except share and per share amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2007
2006
2007
2006
REVENUE:
Product sales, net
$
8,082
$
6,443
$
15,949
$
11,186
Royalty revenue
-
483
-
1,518
Total revenue
8,082
6,926
15,949
12,704
Cost of sales
3,859
4,567
8,294
8,037
GROSS PROFIT
4,223
2,359
7,655
4,667
OPERATING EXPENSES:
Research and development costs
2,560
1,682
4,173
3,227
Sales and marketing
1,248
1,038
2,400
1,983
General and administrative
1,190
1,059
2,299
1,757
Total operating expenses
4,998
3,779
8,872
6,967
LOSS FROM OPERATIONS
(775
)
(1,420
)
(1,217
)
(2,300
)
OTHER INCOME (EXPENSE):
Interest income
47
36
96
76
Interest expense
(89
)
(74
)
(187
)
(134
)
Exchange rate variance
12
-
24
-
Other expense
2
5
1
4
Total other expense
(28
)
(33
)
(66
)
(54
)
LOSS BEFORE PROVISION FOR INCOME TAXES
(803
)
(1,453
)
(1,283
)
(2,354
)
Provision for income taxes
(13
)
-
(23
)
-
NET LOSS
$
(816
)
$
(1,453
)
$
(1,306
)
$
(2,354
)
NET LOSS PER COMMON SHARE:
Basic and diluted
$
(.05
)
$
(.10
)
$
(.08
)
$
(.16
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted
16,386,770
14,716,609
16,299,925
14,704,414