UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
----------------------------------
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter ended September 30, 2005
OR
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-19027
SIMTEK CORPORATION
(Exact name of registrant as specified in its charter)
-------------------------------------------------
Colorado 84-1057605
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
4250 Buckingham Drive, Suite 100,
Colorado Springs, Colorado 80907
(Address of principal executive offices) (Zip Code)
(719) 531-9444
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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
The total number of shares of Common Stock issued and outstanding as of
November 8, 2005 was 70,884,492.
SIMTEK CORPORATION
INDEX
For the Quarter Ended September 30, 2005
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
----
Condensed Consolidated Balance Sheets as of September 30,
2005 (unaudited) and December 31, 2004 3
Unaudited Condensed Consolidated Statements of Operations
for the three months and nine months ended September 30,
2005 and 2004 4
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2005 and 2004 5
Notes to Condensed Consolidated Financial Statements 6-11
ITEM 2
Managements Discussion and Analysis of Financial Condition
and Results of Operations 12
ITEM 3
Quantitative and Qualitative Disclosures about Market Risk 19
ITEM 4
Controls and Procedures 20
PART 2. OTHER INFORMATION
ITEM 1 Legal Proceedings 21
ITEM 2 Unregistered Sales of Equity Securities and
Use of Proceeds 21
ITEM 3 Defaults Upon Senior Securities 21
ITEM 4 Submission of Matters to a Vote of Security Holders 21
ITEM 5 Other Information 21
ITEM 6 Exhibits 21
SIGNATURES 22
2
SIMTEK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
September 30, 2005 December 31, 2004
------------------ -----------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 2,302,954 $ 2,146,791
Restricted investments 2,845,000 --
Accounts receivable - trade, net 991,464 2,439,135
Inventory, net 1,346,358 1,869,842
Prepaid expenses and other current assets 246,304 85,221
Assets from discontinued operations -- 554,996
------------ ------------
Total current assets 7,732,080 7,095,985
EQUIPMENT AND FURNITURE, net 672,164 771,901
DEFERRED FINANCING COSTS 62,236 74,684
OTHER ASSETS 17,500 33,250
------------ ------------
TOTAL ASSETS $ 8,483,980 $ 7,975,820
============ ============
LIABILITES AND SHAREHOLDERS' EQUITY
-----------------------------------
CURRENT LIABILITIES:
Accounts payable $ 1,688,059 $ 2,054,337
Accrued expenses 1,143,410 357,033
Accrued vacation payable 121,884 159,690
Accrued wages 55,830 29,975
Obligation under capital leases 25,856 47,310
Liabilities of discontinued operations -- 325,524
Debentures, current 119,970 --
------------ ------------
Total current liabilities 3,155,009 2,973,869
DEBENTURES, NET OF CURRENT 2,880,030 3,000,000
OBLIGATIONS UNDER CAPITAL LEASES, NET OF CURRENT PORTION -- 13,024
------------ ------------
Total liabilities 6,035,039 5,986,893
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 2,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value; 300,000,000 shares authorized,
70,776,715 and 70,766,715 shares issued and outstanding
at September 30, 2005 and 62,881,679 and 62,871,679 shares
issued and outstanding at December 31, 2004 707,767 628,817
Additional paid-in capital 46,093,383 41,778,120
Treasury stock, at cost; 10,000 shares (12,504) (12,504)
Accumulated deficit (44,339,705) (40,405,506)
------------ ------------
Total shareholders' equity 2,448,941 1,988,927
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,483,980 $ 7,975,820
============ ============
The accompanying notes are an integral part of these financial statements.
3
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
2005 2004 2005 2004
------------- ------------- ------------- --------------
NET SALES $ 2,411,686 $ 2,445,916 $ 7,591,479 $ 9,067,197
Cost of sales 1,807,040 1,949,818 5,489,638 6,441,028
------------ ------------ ------------ ------------
GROSS MARGIN 604,646 496,098 2,101,841 2,626,169
OPERATING EXPENSES:
Research and development costs 1,571,727 1,397,452 4,697,444 3,998,756
Sales and marketing 320,518 359,034 1,164,529 1,161,380
General and administrative 411,986 198,482 1,758,510 729,210
------------ ------------ ------------ ------------
Total operating expenses 2,304,231 1,954,968 7,620,483 5,889,346
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (1,699,585) (1,458,870) (5,518,642) (3,263,177)
OTHER INCOME (EXPENSE):
Interest income 44,457 5,655 56,317 19,178
Interest expense (62,910) (58,889) (177,119) (179,357)
Other expense (10) (887) (810) (1,124)
------------ ------------ ------------ ------------
Total other income (expense) (18,463) (54,121) (121,612) (161,303)
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (1,718,048) (1,512,991) (5,640,254) (3,424,480)
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (1,718,048) (1,512,991) (5,640,254) (3,424,480)
INCOME FROM DISCONTINUED OPERATIONS
(including gain on disposal of $1,689,208) 1,701,466 101,480 1,706,055 45,583
------------ ------------ ------------ ------------
NET LOSS $ (16,582) $ (1,411,511) $ (3,934,199) $ (3,378,897)
============ ============ ============ ============
NET LOSS PER COMMON SHARE:
Basic and diluted
Loss from continuing operations $ (.02) $ (.03) $ (.08) $ (.06)
Income from discontinued operations 02 .00 .02 (.00)
------------ ------------ ------------ ------------
Total $ (.00) $ (.03) $ (.06) $ (.06)
============ ============ ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 70,735,981 57,703,387 67,131,126 57,375,272
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
---------------------------------
2005 2004
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,934,199) $(3,378,897)
Income from discontinued operations (16,848) (45,583)
Adjustments to reconcile net loss to net cash used in operating
Activities:
Depreciation and amortization 325,674 234,293
Issuance of common stock per separation and employment
agreements 139,250 --
Expense related to issuance of warrants 5,180 --
Gain from discontinued operations (1,689,208) --
Net change in allowance accounts 63,689 33,125
Deferred financing fees 12,447 12,447
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 1,447,308 418,340
Inventory 574,859 (103,756)
Prepaid expenses and other (164,083) (5,693)
Increase (decrease) in:
Accounts payable (366,277) 894,007
Accrued expenses 662,611 36,735
----------- -----------
Net cash used in operating activities by continuing operations (2,939,597) (1,904,982)
Net cash provided by operating activities discontinued operations 104,022 271,553
----------- -----------
Net cash used in operating activities (2,835,575) (1,633,429)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and furniture, net (207,186) (183,269)
Proceeds from discontinued operations, net 1,867,449 --
----------- -----------
Net cash (used in) provided by investing activities by
continuing operations 1,660,263 (183,269)
Net cash used in investing activities by discontinued operations (35,944) (6,530)
----------- -----------
Net cash (used in) provided by investing activities 1,624,319 (189,799)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable and line of credit -- (150,000)
Payments on capital lease obligation (37,364) (109,024)
Equity financing, net 3,944,403 --
Transfers to restricted cash (3,200,000) --
Payments from restricted cash 355,000
Proceeds from sale of common stock 108,400 --
Exercise of stock options 196,980 355,960
----------- -----------
Net cash provided by financing activities 1,367,419 96,936
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 156,163 (1,726,292)
CASH AND CASH EQUIVALENTS, beginning of period 2,146,791 3,431,679
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,302,954 $ 1,705,387
=========== ===========
Cash paid for interest $ 171,939 $ 179,357
=========== ===========
The accompanying notes are an integral part of these financial statements.
5
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements included herein are presented in accordance with
the requirements of Form 10-Q and consequently do not include all of the
disclosures normally made in the registrant's annual Form 10-K or 10-KSB filing.
These financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report on Form
10-KSB and Form 10-KSB/A for Simtek Corporation ("Simtek" or the "Company")
filed on March 17, 2005 and May 11, 2005, respectively for fiscal year 2004.
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
December 31, 2004 balance sheet data was derived from the audited financial
statements, but does not include all disclosures required by accounting
principles generally accepted in the United States of America. Results of
operations for the interim periods are not necessarily indicative of the results
of operations for the full fiscal year. Certain previously reported amounts have
been reclassified to conform to the current presentation.
Stock-Based Compensation
------------------------
As permitted under the SFAS No. 123, Accounting for Stock-Based
Compensation, the Company accounts for its stock-based compensation in
accordance with the provisions of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees. As such, compensation expense is
recorded on the date of grant if the current market price of the underlying
stock exceeds the exercise price. Certain pro forma net loss and EPS disclosures
for employee stock option grants are included below as if the fair value method
as defined in SFAS No. 123 had been applied. Transactions in equity instruments
with non-employees for goods or services are accounted for by the fair value
method.
Had compensation cost been determined based on the fair value at the grant
dates for awards under employee stock based compensation plans consistent with
the fair value method, the Company's net loss and EPS would have been increased
to the pro forma amounts indicated below:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net loss as reported $ (16,582) $(1,411,511) $(3,934,199) $(3,378,897)
Add: Stock based compensation
included in reported
Net loss -- -- -- --
Deduct: Fair value of stock based
compensation (363,520) (207,632) (1,090,560) (622,897)
----------- ----------- ----------- -----------
Pro forma net loss $ (380,102) $(1,619,143) $(5,024,759) $(4,001,794)
=========== =========== =========== ===========
Net loss as reported - basic and
diluted $ (.00) $ (.03) $ (.06) $ (.06)
Pro forma net loss - basic and
diluted $ (.01) $ (.03) $ (.07) $ (.07)
The fair value of each option granted in the three and nine months periods
ending September 30, 2005 and 2004 were estimated on the date of grant using the
Black-Scholes option-pricing model with the following:
6
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended
September 30,
--------------------------
2005 2004
---- ----
Expected volatility 84.2% 108.3%
Risk-free interest rate 3.8% 2.4%
Expected dividends - -
Expected terms (in years) 4.0 4.0
In May 2005, the Company accelerated vesting of certain unvested and
out-of-the-money stock options previously awarded to employees and officers.
Because the price of the Company's common stock was $0.57 on the day of
acceleration, the options, which are exercisable at $0.62 and above, had no
economic value on the date of acceleration. As a result of the acceleration,
options to purchase approximately 1.7 million shares of Simtek common stock are
now exercisable. Options held by non-employee directors were excluded from the
vesting acceleration.
Under the recently revised Financial Accounting Standards Board Statement
No. 123, "Share-Based Payment," Simtek will apply the expense recognition
provisions relating to stock options beginning in the first quarter of 2006. As
a result of the acceleration, the Company expects to reduce the total stock
option expense it otherwise would be required to record by approximately
$506,000 in 2006, $215,000 in 2007, and $14,000 in 2008 on a pre-tax basis. This
effect of the future expense has been shown in the proforma stock based
compensation table above.
2. Liquidity
During the three and nine months ended September 30, 2005 and the twelve
months ended December 31, 2004, the Company incurred net losses from continuing
operations of approximately $1,718,000, $5,640,000 and $3,731,000, respectively
and has an accumulated deficit of $44,340,000 as of September 30, 2005. The
Company was also not in compliance with its debentures throughout 2004 and the
first nine months of 2005, but was successful in obtaining waivers through
October 1, 2006 from the debenture holders. The Company has working capital of
approximately $4,577,000 as of September 30, 2005, which includes restricted
investments of $2,845,000. The restricted investments may only be used to
satisfy obligations to Cypress Semiconductor incurred under the terms of the
Production and Development Agreement and to satisfy any potential liability
related to the sale of its Q-Dot subsidiary.
On May 5, 2005, the Company closed a Production and Development Agreement
with Cypress Semiconductor Corporation, or "Cypress", to jointly develop a
0.13-micron Silicon-Oxide-Nitride-Oxide-Silicon (SONOS) nonvolatile memory
process. The Company has agreed to work with Cypress to add the SONOS
nonvolatile capability to Cypress's baseline CMOS process, which is in
production at its Minnesota wafer fabrication plant. The Company intends to use
the technology to produce a family of 4-megabit nvSRAM and Value-Added-Memory
products. In connection with the Production and Development Agreement, the
Company closed a Share Purchase Agreement with Cypress on May 5, 2005, pursuant
to which Cypress purchased 6,740,816 shares of the Company's common stock for
$4,000,000 and acquired a warrant to purchase 5,055,612 shares of the Company's
common stock at an exercise price of $0.7772. The warrant has a ten-year term.
The Company also entered into an Escrow Agreement with Cypress pursuant to which
the Company deposited $3 million into an escrow account in order to support and
make certain payments for the 0.13-micron SONOS process and product
developments. This $3 million is restricted and is unavailable for other use by
the Company, unless distributed to the Company out of the escrow account per the
terms of the Escrow Agreement. During the three and nine months ended September
30, 2005, the Company dispersed $355,000 under the terms of the Escrow
Agreement.
7
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company operates in a volatile industry, whereby its average selling
prices and product costs are influenced by competitive factors. Furthermore, the
Company continues to incur significant research and development costs for
product development. These factors create pressures on sales, costs, earnings
and cash flows, which will impact liquidity.
If the Company is unable to achieve profitable operations in the near term,
it may result in increased liquidity pressure on the Company, whereby it might
be required to enter into debt or equity arrangements that may not be as
otherwise favorable to the Company.
3. Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment,"
which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS No. 123(R) is effective for public companies for annual periods beginning
after June 15, 2005, supersedes APB Opinion No. 25, Accounting for Stock Issued
to Employees, and amends SFAS No. 95, Statement of Cash Flows. SFAS No. 123(R)
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the income statement based on their fair
values. Pro-forma disclosure is no longer an alternative. The new standard will
be effective for us beginning January 1, 2006. We have not yet completed our
evaluation but expect the adoption to have an effect on the financial statements
similar to the pro-forma effects reported above.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs an
amendment of ARB No. 43, Chapter 4," which is effective for annual periods
beginning after June 15, 2005. SFAS 151 amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). This statement requires that such items be recognized as current
period charges and not included as a component of inventory costs. In addition,
the statement requires that fixed production overheads to the costs of
conversion be based on the normal capacity of the production facility. The new
standard will be effective for us beginning January 1, 2006. We have not yet
completed our evaluation of the effect on the financial statements, but do not
expect it to have a material effect.
4. Revenue Recognition
Revenue Recognition, Semiconductor Products - Product sales revenue is
recognized when a valid purchase order has been received with a fixed price and
the products are shipped to customers FOB origin (Colorado Springs, Colorado),
including distributors. Based on historic business with the majority of the
Company's customers and, in the case of new customers, the Company is reasonably
assured that collectibility on our shipments will occur. Customers receive a
one-year product warranty and sales to distributors are subject to a limited
product exchange program and a price protection in the event of changes in the
Company's product price. The Company provides a reserve for possible product
returns, product price protection and warranty costs at the time the sale is
recognized. The Company has a detailed procedure to ensure that its estimates
for reserves are reasonable and reliable. The reserve for product returns is
based on the actual inventory value of the Company's semiconductor products held
by its distributors. The Company's distributors are permitted to rotate up to 5%
of their stock every six months with the stipulation that they must submit a
replacement order of equal dollar value to the stock that they are returning.
The reserve for price protection is used when the Company authorizes special
pricing to one of its distributors for a specific customer. To date, the
estimates have not been materially different from the credits we have issued
under these reserves.
8
5. Inventories
The Company records inventory using the lower of cost (first-in, first-out)
or market. Inventory at September 30, 2005 and December 31, 2004 included:
September 30, 2005 December 31, 2004
------------------ -----------------
Raw Materials $ 33,162 $ 68,955
Work in progress 1,027,557 1,765,044
Finished Goods 402,845 204,423
----------- -----------
1,463,564 2,038,422
Less reserves for excess inventory (117,206) (168,580)
------------ ------------
$ 1,346,358 $ 1,869,842
=========== ===========
6. Convertible Debentures
On July 1, 2002, the Company received funding of $3,000,000 in a financing
transaction with Renaissance Capital Growth and Income Fund III, Inc.,
Renaissance US Growth & Investment Trust PLC and BFSUS Special Opportunities
Trust PLC. RENN Capital Group, Inc. is the agent for these investment funds. One
of the Company's directors holds the position of Senior Vice President of RENN
Capital Group. The $3,000,000 funding consists of convertible debentures with a
7-year term at a 7.5% per annum interest rate. Each fund equally invested
$1,000,000. The holder of the debenture shall have the right, at any time, to
convert all, or in multiples of $100,000, any part of the debenture into fully
paid and nonassessable shares of Simtek common stock. The debentures are
convertible into Simtek common stock at $0.312 per share, which was in excess of
the market price per share on July 1, 2002. Based on the conversion rate of
$0.312 per share, it would entitle each fund to 3,205,128 shares of Simtek
common stock. From March 1, 2003 through September 30, 2005, the Company was not
in compliance with two of the covenants set forth in the loan agreement. These
covenants relate to the interest coverage ratio and debt to equity ratio. On
October 20, 2005, the Company received a waiver for the two covenants through
October 1, 2006. However, significant variances in future actual operations from
the Company's current estimates could result in the reclassification of this
note to current liabilities. If the Company is in default of the covenants for a
period of 30 days it is considered a default under the debenture agreement and
the lender may declare the unpaid principal amount and all accrued interest
thereon due and payable. In addition, if the Company defaults under the
debenture agreement the lender may, among other things, foreclose on our
collateral on which it has a security interest. The lender has a security
interest in substantially all of our assets.
On June 28, 2005, the Company received a waiver from the debenture holders
extending until July 1, 2006 the commencement date for principal payments of the
$3 million aggregate principal amount 7.5% convertible debentures issued by the
Company in 2002. The original terms of the debentures required the Company to
make monthly principal payments of $10 per $1,000 of the then remaining
principal amount, beginning on June 28, 2005. The Company will still be required
to make interest payments. Under the terms of the waiver, monthly principal
payments of $13.33 per $1,000 of the then remaining outstanding principal amount
will commence on July 1, 2006. The final maturity date remains as June 28, 2009.
As consideration for the extension, the Company has issued to the debenture
holders warrants to purchase 200,000 shares of Simtek common stock at $0.50 per
share, a premium to the market price on the date of the waiver. The Company
estimated the value of the warrants at the time of grant, using the Black
Scholes option-pricing model, to be approximately $62,000. The Company
recognized $5,200 as additional interest expense in the three and nine months
ended September 30, 2005.
9
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. Geographic Concentration
Sales of the Company's semiconductor products by location for the three
month and nine month periods ended September 30, 2005 and 2004 were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2005 2004 2005 2004
---- ---- ---- ----
United States 29% 34% 27% 33%
Europe 20% 9% 19% 10%
Far East 43% 51% 44% 46%
All Others 8% 6% 10% 11%
---- ---- ---- ----
100% 100% 100% 100%
==== ==== ==== ====
8. Discontinued Operations
During the three months ended June 30, 2005, the Company committed to a
plan to sell all of the assets of its subsidiary, Q-DOT, as that business no
longer fits with the core operation of the Company's semiconductor business. On
August 30, 2005, the Company, along with the Company's wholly-owned subsidiary,
Q-DOT, Inc. ("Q-DOT"), entered into an Asset Purchase Agreement with Hittite
Microwave Corporation ("Hittite") and a wholly-owned subsidiary of Hittite, HMC
Acquisition Corporation ("HMC Acquisition"), whereby substantially all of the
assets of Q-DOT were sold to HMC Acquisition in exchange for a cash payment of
approximately $2.2 million. The Company realized a net gain of approximately
$1,689,000. In addition, Hittite assumed certain future obligations of Q-DOT,
including obligations related to Q-DOT's real estate lease and certain software
license agreements. Incident to the Asset Purchase Agreement, the parties also
entered an Escrow Agreement, whereby $200,000 of the purchase price was placed
in escrow for one year to secure certain indemnification obligations of Simtek
and Q-DOT. In addition, the parties entered into a Confidentiality,
Non-Disclosure and Restrictive Covenant Agreement, whereby, among other things,
Simtek and Q-DOT agreed not to compete against Hittite and HMC Acquisition for a
period of four years with respect to certain businesses relating to Q-DOT's
operations.
In accordance with SFAS No. 144, the consolidated financial statements of
the Company have been recast to present this business as a discontinued
operation. Accordingly, the revenues, the costs and expenses and assets and
liabilities of the discontinued operation have been excluded from the respective
captions in the Condensed Consolidated Statements of Operations and Condensed
Consolidated Balance Sheets and have been reported in the various statements
under the caption, "Assets from discontinued operations", Liabilities of
discontinued operations", and "Income from discontinued operations" for all
periods presented. In addition, certain of the Notes to the Condensed
Consolidated Financial Statements have been recast for all periods to reflect
the discontinuance of this operation.
Summary results for the discontinued operation are as follows (in thousands):
Description Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2005 2004 2005 2004
---- ---- ---- ----
Operating Results:
Revenue $362 $432 $1,398 $1,314
Costs and expenses 350 331 1,381 1,268
---- ---- ------ ------
Income from discontinued
Operation $ 12 $101 $ 17 $ 46
==== ==== ====== ======
10
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Amounts included in the September 30, 2005 and December 31, 2004 Condensed
Consolidated Balance Sheets for the discontinued operation are as follows (in
thousands):
September 30, December 31,
2005 2004
------------- ------------
Assets from discontinued operations $ - $ 555
Liabilities of discontinued operations $ - $ 326
11
SIMTEK CORPORATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis in this quarterly report on Form 10-Q
is intended to provide greater details of the results of operations and
financial condition of our Company. The following discussion should be read in
conjunction with our condensed consolidated financial statements and notes
thereto and other financial data included elsewhere herein as well as our Annual
Report and Form 10-KSB and Annual Report and Form 10-KSB/A filed on March 17,
2005 and May 11, 2005, respectively for fiscal year 2004. Certain statements
under this caption constitute forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The reader should not place undue reliance on these forward looking
statements for many reasons including those risks discussed in this document and
in our Form 10-KSB and Form 10-KSB/A. In addition, when used in this quarterly
report, the words "believes," "anticipates," "expects," "plans," "intends" and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements and statements of expectations, plans and intent are
subject to a number of risks and uncertainties. Actual results in the future
could differ materially from those described in the forward-looking statements,
including but not limited to the risk of delays in availability of new products
due to technological, market or financial factors, including the availability of
necessary working capital, and other factors described in the Company's most
recent Form 10-KSB. We undertake no obligation to release publicly the results
of any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
require us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the related disclosures. Our
accounting policies are discussed in Note 1 of the Notes to Consolidated
Financial Statements included in our 2004 Form 10-KSB and Form 10-KSB/A. The
estimates used by us are based upon our historical experiences combined with our
understanding of current facts and circumstances. Certain of our accounting
polices are considered critical as they are both important to the portrayal of
our financial condition and the results of our operations and require
significant or complex judgments on our part. We believe that the following
represent the critical accounting policies of Simtek as described in Financial
Reporting Release No. 60, Cautionary Advice Regarding Disclosure About Critical
Accounting Policies, which was issued by the Securities and Exchange Commission:
inventories; deferred income taxes; allowance for doubtful accounts; and,
allowance for sales returns.
The valuation of inventories involves complex judgments on our part. Excess
finished goods inventories are a natural component of market demand of
semiconductor devices. We continually evaluate and balance the levels of
inventories based on sales projections, current orders scheduled for future
delivery and historical product demand. While certain finished goods items will
sell out, quantities of other finished goods items will remain. These finished
goods are reserved as excess inventory. We believe we have adequate controls
with respect to the amount of finished goods inventories that are anticipated to
become excess. While we believe this process produces a fair valuation of
inventories, changes in general economic conditions of the semiconductor
industry could materially affect valuation of our inventories.
The allowance for doubtful accounts reflects a reserve that reduces
customer accounts receivable to the net amount estimated to be collectible.
Estimating the credit worthiness of customers and the recoverability of customer
accounts requires us to exercise considerable judgment. In estimating
12
SIMTEK CORPORATION
uncollectible amounts, we consider factors such as industry specific economic
conditions, historical customer performance and anticipated customer
performance. While we believe our processes to be adequate to effectively
quantify our exposure to doubtful accounts, changes in industry or specific
customer conditions may require us to adjust our allowance for doubtful
accounts.
The allowance for sales returns consists of two separate segments,
distributor stock rotation and distributor price reductions. When we record the
allowance, the net result reduces customer accounts receivable and gross sales.
Generally, we calculate the stock rotation portion of the allowance based upon
distributor inventory levels. Generally the contracts we have with our
distributors, allow them to return to us up to 5% of their inventory in exchange
for inventory that better meets their demands. We believe that our processes to
adequately predict our allowance for sales returns are effective in quantifying
our exposures due to industry or specific customer conditions. At times, we are
required to allow our distributors to lower the selling price of a specific
device in order to meet competition. When this occurs, we record an allowance
for potential credit that our distributors will be requesting. This allowance is
based on approved pricing changes, inventory affected and historical data. We
believe that our processes to adequately predict our allowance for distributor
price reductions are effective in quantifying our exposures due to industry or
specific customer conditions.
We record an allowance that directly relates to the warranty of our
products for one year. The allowance for warranty return reduces our gross
sales. This allowance is calculated by looking at annual revenues and historical
rates of our products returned due to warranty issues. While we believe this
process adequately predicts our allowance for warranty returns, changes in the
manufacturing or design of our product could materially affect valuation of our
warranties.
We have recorded a valuation allowance on deferred tax assets. Future
operations may change our estimate in connection with potential utilization of
these assets.
Overview
Total unit shipments of our semiconductor memory products were up for the
three months ended September 30, 2005 approximately 16% and down approximately
8% for the nine months ended September 30, 2005, as compared to the same periods
in 2004. Our net revenue was $2,412,000 and $7,591,000 for the three and nine
months ended September 30, 2005, respectively, compared to the $2,446,000 and
$9,067,000, respectively, for the comparable periods of 2004. This decrease in
net revenue for both periods was due to a decrease in revenue from our high-end
industrial and military products and a decrease in our average selling prices of
our commercial products. Our competitors aggressively cut prices to our key
customers resulting in lower average selling prices as we responded to these
price moves, and reduced volumes in situations where we chose not to meet some
of the competitive prices quoted.
Increased operating expenses had an impact on our profitability for the
three and nine months ended September 30, 2005 compared to the three and nine
months ended September 30, 2004. Most significantly, the expenses recognized for
the abnormal yields and scrap related to the .25 micron product line and
expenses related to changes in management discussed below, contributed to the
higher operating expenses.
As discussed in Note 8 of the Notes to Condensed Consolidate Financial
statements, we sold all assets related to our subsidiary, Q-DOT on August 30,
2005 and we have included Q-DOT as a discontinued operation. As such, all
discussion of operating results relates to the semiconductor portion of our
business.
13
SIMTEK CORPORATION
Results of Operations:
Revenues
The following table sets forth our net revenues for semiconductor devices
by product markets for the three and nine months ended September 30, 2005 and
2004 (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -------------------------------
2005 2004 Variance 2005 2004 Variance
---- ---- -------- ---- ---- --------
Commercial $ 2,171 $ 1,836 $ 335 $ 6,387 $ 7,243 $ (856)
High-end industrial and
military 241 610 $ (369) $ 1,204 $ 1,824 $ (620)
------- ------- ------- ------- ------- -------
Total Semiconductor
Revenue $ 2,412 $ 2,446 $ (34) $ 7,591 $ 9,067 $(1,476)
======= ======= ======= ======= ======= =======
Commercial revenues include revenue generated from our legacy products
(products built on silicon wafers received from Chartered Semiconductor
Manufacturing Plc., or Chartered of Singapore, collectively "Chartered") and
from our .25 micron products (products built on silicon wafers received from
DongbuAnam Semiconductor or DongbuAnam, collectively "Dongbu"). Commercial
revenues increased by $335,000 and decreased by $856,000 for the three and nine
months ended September 30, 2005, respectively, as compared to the three months
and nine months ended September 30, 2004. The increase for the three-month
period reflects an 8% increase in unit shipments of our .8 micron legacy
products, which was offset by a decrease in average selling prices on certain
devices. In addition, unit shipments of our flagship .25 micron products in the
third quarter were 1200% higher than the 2004 quarter. The decrease for the
nine-month period was primarily due to a decrease in unit shipments and average
selling prices.
High-end industrial and military product saw decreases of $369,000 and
$620,000 for the three and nine months ended September 30, 2005, respectively,
as compared to the same periods in 2004. High-end industrial and military unit
volume was 60% lower in the 2005 third quarter compared to 2004. For the nine
months in 2005, unit volume was down 18% and average selling prices were down
19% from the 2004 period. These decreases reflect our efforts to align customer
inventory levels to their actual demand for the products. We expect this will
result in higher average selling prices for these parts in the next several
quarters.
Three distributors accounted for approximately 34% of our semiconductor
devices product sales for the quarter ended September 30, 2005. Products sold to
distributors are sold without material recourse. Distributors sell our products
to various end customers. If one of these distributors was to terminate its
relationship with us, we believe that there would not be a material impact on
our product sales, as other distributors would likely take their place.
We expect that revenue will increase in the next several quarters, as
shipments of our .25 micron product family ramp up. Customer acceptance of our
flagship .25 micron products has increased significantly in 2005. In addition,
we expect that sales of our high-end industrial and military products will
increase as customer inventory levels and consumption demand are realigned.
Cost of Sales and Gross Margin
We recorded cost of sales for semiconductor devices of $1,807,000 and
$5,490,000 for the three and nine months ended September 30, 2005, respectively,
as compared with the $1,950,000 and $6,441,000 for the three and nine months
ended September 30, 2004, respectively. These costs reflect an approximate 5%
increase and 1% decrease in gross margin percentages for the three and nine
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SIMTEK CORPORATION
months ended September 30, 2005, respectively, as compared to the same periods
in 2004. Actual gross margin percentages for the three and nine months ended
September 30, 2005 were 25% and 28%, respectively, as compared to gross margins
percentages for the three and nine months ended September 30, 2004 of 20% and
29%, respectively. We saw decreases in our product costs for our legacy products
for the three and nine month periods, as yields have improved for the products
produced from silicon wafers manufactured in Chartered's Fab 2 facility and test
cost reductions. In addition, costs for the 1 megabit .25 micron product were
also reduced in the third quarter of 2005. The decreases in product costs
accounted for the increase in gross margin for the three-month period. The
decrease in gross margins for the nine-month period was due primarily to
decreased average selling prices and lower unit volume of the high-end
industrial and military products, which typically carry high gross margins.
During the three and nine months ended September 30, 2005, we purchased all
of our silicon wafers to produce 0.8 micron nonvolatile static random access
memory products from a single supplier, Chartered, to support sales of our
nonvolatile semiconductor memory products. Sales of products built on these
wafers accounted for approximately 84% and 88% of our semiconductor product
revenue for the three and nine months ended September 30, 2005, respectively. We
purchased silicon wafers to produce our family of 1-megabit and certain
256-kilobit nonvolatile static random access memory products built on 25 micron
technology from Dongbu. Sales of our semiconductor products built on .25 micron
technology accounted for approximately 16% and 11% of our semiconductor product
revenue for the three and nine months ended September 30, 2005, respectively.
The remaining sales for the nine-month period were for a one-time sale of our
discontinued logic products.
We expect gross margins on both our legacy and .25 micron products to
improve over the next several quarters. The net yields on the silicon wafers
received from Chartered over the last few months have resulted in yields
significantly better and more stable than in earlier production received during
the transition from Chartered's wafer fabrication facility # 1 to Chartered's
wafer fabrication facility # 2. The yields are better than the historical yields
from Chartered's wafer fabrication facility # 1. In addition, we are moving the
final testing of our higher volume products to Asia, which will result in lower
costs. On the .25 micron products, we achieved full production qualification on
the 1 megabit products in September 2005. Based on that qualification, we can
reduce the amount of back-end testing, which will reduce the costs in the next
several quarters.
Research and Development
We believe that continued investments into new product development are
required for us to remain competitive in the markets we serve. Currently, our
research and development department has been focusing on yield improvement and
qualification of our new.25 micron product family. Through September 30, 2005,
we have been shipping our family of 1-megabit nonvolatile semiconductor memory
products tested to production requirements on a provisional qualification.
Qualification was completed on September 30, 2005. Our development engineers are
now working with Cypress Semiconductor on the development of our next generation
technology based on Cypress' .13 micron platform. We expect to have initial
customer samples in the latter part of 2006.
Total research and development expenses were $1,572,000 and $4,697,000 for
the three and nine months ended September 30, 2005, respectively, as compared to
$1,397,000 and $3,999,000 for the three and nine months ended September 30,
2004, respectively.
The $175,000 increase for the three-month period was due primarily to
$564,000 in charges incurred related to the joint development agreement with
Cypress Semiconductor and an $8,000 increase in travel expenses. The charges
associated with the development agreement with Cypress are funded by the
restricted cash account. The increases were offset by decreases in payroll and
15
SIMTEK CORPORATION
payroll overhead costs of $84,000, consulting services of $145,000 and other
product development costs of $96,000, software and equipment related costs of
$61,000 and other miscellaneous expenses of $11,000. The $84,000 decrease in
payroll and payroll overhead costs was a direct result of reduced headcount. The
$145,000 decrease in consulting services was due to a decrease in engineering
work performed by our subsidiary Q-DOT for the development of our
data-communication products. The $96,000 decrease in product development costs
was related to the wind down of the final development of the .25 micron product.
Management expects that product development costs will increase over the next
several years as development with Cypress on the new .13 micron and 90 nanometer
technologies accelerate.
The $698,000 increase for the nine-month period was primarily due to a
one-time charge of $827,000 related to the development of our .25-micron
product, discussed in the second quarter. This charge was partially offset by
decreases in payroll and payroll overhead costs of $121,000, consulting services
of $299,000, product development costs of $314,000 and other miscellaneous
expenses of $22,000 which were in turn partially offset by increases in
equipment related costs of $7,000, travel expenses of $8,000 and costs related
to the joint development with Cypress Semiconductor of $612,000. The $121,000
decrease in payroll and payroll overhead costs was a direct result of reduced
headcount. The $299,000 decrease in consulting services was due to a decrease in
engineering work performed by our subsidiary Q-DOT for the development of our
data-communication products. The $314,000 decrease in product development costs
was related to wind down of the final development of the .25 micron product. As
discussed in the second quarter, the one-time charge related to our .25 micron
product was due to abnormally low yields and high scrap due to design and
process issues with the silicon wafers. These issues have been resolved and
yields from the revised silicon wafers are significantly better and now result
in a cost effective product.
General and Administration
Total general and administration expenses were $412,000 and $1,759,000 for
the three and nine months ended September 30, 2005, respectively, as compared to
$198,000 and $729,000, respectively, for the same periods in 2004.
The $214,000 increase for the three month period was primarily due to
increases in payroll and payroll overhead costs of $84,000, costs related to our
annual meeting of shareholders of $41,000, reorganization costs of $31,000,
professional and consulting services of $25,000 and increases in bad debt, board
of director costs, travel expenses and other miscellaneous expenses of $33,000.
The $1,030,000 increase for the nine month period was due to increases in
accounting and legal expenses of $106,000, $208,000 increase in payroll and
payroll overhead costs, $645,000 in expenses related to separation and
employment agreements and a $75,000 increase in board of director costs and
contract services. The increases in payroll and payroll overhead costs and
contract services, in both periods, were related to increases in headcount and
increases in administrative services provided by our subsidiary Q-DOT. The
increases in accounting and legal expenses, in both periods, were related to
increased activity related to agreements with personnel and increased securities
work. The $645,000 in expenses was related to costs associated with the terms of
the employment agreement for our current Chief Executive Officer and the costs
associated with the separation agreement entered into with our previous Chief
Executive Officer, which were discussed in the second quarter.
Marketing
Total marketing expenses were $321,000 and $1,165,000 for the three and
nine months ended September 30, 2005, respectively, as compared to $359,000 and
$1,161,000, respectively, for the same periods in 2004.
The decrease for the three-month period was primarily due to decreases in
advertising expenses, printing expenses and other miscellaneous expenses.
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SIMTEK CORPORATION
Expenses for the nine-month periods were essentially the same. Management
expects marketing expenses to increase over the next several quarters, as the
Company expands its efforts to identify new markets and customers for its
current and future products.
Loss from Continuing Operations
We recorded a net loss, from continuing operations, of approximately
$1,718,000 and $5,640,000 for the three and nine months ended September 30,
2005, respectively, as compared to $1,513,000 and $3,424,000 for the three and
nine months ended September 30, 2004, respectively. The increase in net loss for
the three-month period was due primarily to increased operating expenses
previously discussed. The increase in net loss for the nine-month period was due
primarily to lower revenues, decreased gross margins and increases in operating
expenses, discussed previously.
Liquidity and Capital Resources
As of September 30, 2005, we had a net working capital of $4,577,071,
including restricted cash of $2,845,000, as compared to a net working capital of
$2,114,099 as of September 30, 2004.
On August 30, 2005, we, along with our wholly-owned subsidiary, Q-DOT,
entered into an Asset Purchase Agreement with Hittite and a wholly-owned
subsidiary of Hittite, HMC Acquisition, whereby substantially all of the assets
of Q-DOT were sold to HMC Acquisition in exchange for a cash payment of
approximately $2.2 million. The Company realized a net gain of approximately
$1,689,000. In addition, Hittite assumed certain future obligations of Q-DOT,
including obligations related to Q-DOT's real estate lease and certain software
license agreements. Incident to the Asset Purchase Agreement, the parties also
entered an Escrow Agreement, whereby $200,000 of the purchase price was placed
in escrow for one year to secure certain indemnification obligations of Simtek
and Q-DOT. In addition, the parties entered into a Confidentiality,
Non-Disclosure and Restrictive Covenant Agreement, whereby, among other things,
Simtek and Q-DOT agreed not to compete against Hittite and HMC Acquisition for a
period of four years with respect to certain businesses relating to Q-DOT's
operations.
On May 5, 2005, we closed a Production and Development Agreement with
Cypress to jointly develop a 0.13-micron Silicon-Oxide-Nitride-Oxide-Silicon
(SONOS) nonvolatile memory process. We have agreed to work with Cypress to add
the SONOS nonvolatile capability to Cypress's baseline CMOS process, which is in
production at its Minnesota wafer fabrication plant. We intend to use the
technology to produce a family of 4-megabit nvSRAM and Value-Added-Memory
products. In connection with the Production and Development Agreement, we closed
a Share Purchase Agreement with Cypress on May 5, 2005, pursuant to which
Cypress purchased 6,740,816 shares of our common stock for $4,000,000 and
acquired a warrant to purchase 5,055,612 shares of our common stock at an
exercise price of $0.7772. The warrant has a ten-year term. We also entered into
an Escrow Agreement with Cypress pursuant to which we deposited $3 million into
an escrow account in order to support and make certain payments for the
0.13-micron SONOS process and product developments. This $3 million is
restricted and is unavailable for other use by us, unless distributed to us out
of the escrow account per the terms of the Escrow Agreement.
Short-term liquidity
--------------------
Our unrestricted cash balance at September 30, 2005 was $2,303,000.
Our future liquidity will depend on our revenue growth and our ability to
sell our products at positive gross margins and to control our operating
expenses. Through December 31, 2005, we expect to spend approximately $2,000,000
for operating expenses assuming some revenue growth. We expect to meet our
17
SIMTEK CORPORATION
capital needs from sales revenues; and, to the extent we do not have sufficient
revenues, from our existing cash reserves. In addition, we believe that we may
need additional capital in the latter part of the year or in early 2006, to fund
anticipated revenue growth.
Long-term liquidity
-------------------
We believe that we will achieve a cash breakeven point in mid 2006, as
projected revenues increase and production costs for both our legacy and 25
micron nonvolatile semiconductor memory products decrease. However, in order to
fund significant organic growth as well as take advantage of other potential
strategic opportunities in the future, we may require additional capital
resources. We have engaged the services of C.E. Unterberg, Towbin, LLC to assist
us in evaluating our operating and strategic capital needs as well as possible
alternatives. As of this date, there has been no commitment to any investment
transaction.
18
SIMTEK CORPORATION
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact our financial
position, results of operations or cash flows due to adverse changes in
financial and commodity market prices and rates. We are exposed to market risk
in the areas of changes in United States interest rates and changes in foreign
currency exchange rates as measured against the United States dollar. These
exposures are directly related to our normal operating activities. We currently
have no derivative financial instruments.
Interest payable on our convertible debentures is fixed at 7.5% over the
term of the debentures. As such, changes in interest rates will not affect
future expenses or cash flows.
We manage interest income by investing our excess cash in cash equivalents
bearing variable interest rates, which are tied to various market indices. We do
not believe that near-term changes in interest rates will result in a material
effect on future earnings, fair values or cash flows.
We do not speculate in the foreign exchange market and do not manage
exposures that arise in the normal course of business related to fluctuations in
foreign currency exchange rates by entering into offsetting positions through
the use of foreign exchange forward contracts.
Average selling prices of our products have not increased significantly as
a result of inflation during the past several years, primarily due to intense
competition within the semiconductor industry. The effect of inflation on our
costs of production has been minimized through improvements in production
efficiencies. We anticipate that these factors will continue to minimize the
effects of any foreseeable inflation and other price pressures within the
industry and markets in which we participate.
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SIMTEK CORPORATION
ITEM 4 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Harold Blomquist, who serves as the Company's chief executive officer, and Brian
Alleman, who serves as the Company's chief financial officer, after evaluating
the effectiveness of the Company's disclosure controls and procedures as of the
end of the period covered by this quarterly report (the "Evaluation Date")
concluded that as of the Evaluation Date, the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported as specified in the SEC's rules and
forms and to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is accumulated and
communicated to our management to allow timely decisions regarding required
disclosure.
(b) Changes in internal control over financial reporting.
There were no changes in the Company's internal control over financial reporting
during the three months ended September 30, 2005, that have materially affected,
or are reasonably likely to materially affect, internal control over financial
reporting.
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SIMTEK CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings -None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits
10.1 Waiver Letter agreement, dated June 28, 2005, by and between
the Company, Q-DOT, Inc., Renaissance Capital Growth &
Income Fund III, Inc., Renaissance US Growth Investment
Trust PLC and BFS US Special Opportunities Trust PLC
(incorporated by reference to the Company's Current Report
on Form 8-K filed by the Company with the SEC on July 5,
2005)
10.2 Asset Purchase Agreement, dated August 30, 2005, by and
among Hittite Microwave Corporation, HMC Acquisition
Corporation, the Company and Q-DOT, Inc. (incorporated by
reference to the Company's Current Report on Form 8-K filed
by the Company with the SEC on September 6, 2005)
10.3 Escrow Agreement, dated August 30, 2005, by and among the
Company, Q-DOT, Inc., Hittite Microwave Corporation,
HMC Acquisition Corporation, and U.S. Bank, National
Association (incorporated by reference to the Company's
Current Report on Form 8-K filed by the Company with the SEC
on September 6, 2005)
10.4 Confidentiality, Non-Disclosure and Restrictive Covenant
Agreement, dated August 30, 2005, by and among Hittite
Microwave Corporation, HMC Acquisition Corporation, the
Company and Q-DOT, Inc. (incorporated by reference to the
Company's Current Report on Form 8-K filed by the Company
with the SEC on September 6, 2005)
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 of Principal Executive Officer
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 of Principal Financial Officer
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of Principal Executive Officer
32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of Principal Financial Officer
21
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)
November 11, 2005 By: /s/ HAROLD BLOMQUIST
------------------------------
HAROLD BLOMQUIST
Chief Executive Officer, President
November 11, 2005 By: /s/ BRIAN ALLEMAN
-----------------------------
BRIAN ALLEMAN
Chief Financial Officer
22