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
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