x
|
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Oregon
|
|
91-1761992
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
224 Airport Parkway, Suite 400, San Jose, CA
|
|
95110
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock
|
|
NASDAQ Global Market
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
x
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|
|
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Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
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||
Item 4.
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||
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||
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Item 5.
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||
Item 6.
|
||
Item 7.
|
||
Item 7A.
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||
Item 8.
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Item 9.
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||
Item 9A.
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||
Item 9B.
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||
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||
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Item 10.
|
||
Item 11.
|
||
Item 12.
|
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Item 13.
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Item 14.
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||
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Item 15.
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||
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||
Item 1.
|
Business.
|
•
|
Halo Free MEMC
.
Our proprietary Halo Free MEMC technology significantly improves the performance and viewing experience of any screen by addressing problems such as judder and motion blur. Unlike competitive solutions it also reduces halo effects that are a byproduct of MEMC. Halos are objectionable blurred regions that surround moving objects as the MEMC algorithms try to reconstruct missing image data caused by the concealing and revealing of objects as they pass over or behind one another. Removing halos drastically improves image quality and is of particular importance on high-resolution displays where artifacts become more visible.
|
•
|
Advanced Scaling
.
As display resolutions continue to increase, there is a need to convert lower resolution content to higher resolution in order to display content properly. With the latest wave of high-resolution displays, the quality and quantity demands of scaling have increased significantly. Artifacts become more noticeable on these types of displays as they distract from the realism effect. In addition, with the availability of 4K content lagging behind the availability of 4K displays, high-quality scaling is required to ensure 4K displays do not suffer when compared to Full-HD displays of the same size. Our advanced scaling is designed to ensure that up-conversion of lower resolution content is of the highest quality in maintaining the fidelity of image.
|
•
|
Mobile Video Display Processing
.
We have developed innovative Video Display Processing solutions, that are designed to optimize power consumption for mobile devices. Beyond MEMC and Advanced Scaling, these mobile solutions provide the kind of improvements in color, contrast, sharpness and de-blur that are currently only found in high quality televisions today. Furthermore, this technology can reduce system power consumption and extend battery life.
|
•
|
VueMagic and Networked Displays
. With the advent of mobile devices being used in business, education and consumer environments, we believe there is a growing need to connect to displays wirelessly for sharing and collaboration. VueMagic uses our networking technology to enable the same video stream to be networked across multiple displays for applications such as connected video projection and digital signage. VueMagic provides interactive features for annotation and display control, and unlike other solutions, is device and operating system independent.
|
•
|
ImageProcessor ICs.
Our ImageProcessor ICs include embedded microprocessors, digital signal processing technology and software that control the operations and signal processing within high-end display systems such as projectors and high-resolution flat panels. ImageProcessor ICs were our first product offerings and continue to comprise the majority of our business. We have continued to refine the architectures for optimal performance, manufacturing our products on process technologies that align with our customers’ requirements. Additionally, we provide a software development environment and operating system that enables our customers to more quickly develop and customize the "look and feel" of their products.
|
•
|
Video Co-Processor ICs.
Products in this category work with an image processor to post-process video signals to enhance the performance or feature set of the overall video solution (for example, by significantly reducing judder and motion blur). Our Video Co-Processor ICs can be used with our ImageProcessor ICs or with image processing solutions from other manufacturers, and in most cases can be incorporated by a display manufacturer without assistance from the supplier of the base image processor. This flexibility enables manufacturers to augment their existing or new designs to enhance their video display products.
|
•
|
Networked Display ICs.
Our Networked Display ICs allow the same video stream to be networked across multiple displays, for example to connect projectors in different classrooms or to enable networked streaming of video in digital signage applications. Our Networked Display IC combines video sharing capabilities with video image processing, wireless connectivity and Internet connection to ensure high quality, multi-source video output and enhanced value to our projection display customers.
|
•
|
Distributors.
Distributors are resellers in local markets who provide engineering support and stock our semiconductors in direct relation to specific manufacturing customer orders. Our distributors often have valuable and established relationships with our end customers, and in certain countries it is customary to sell to distributors. While distributor payment to us is not dependent upon the distributor’s ability to resell the product or to collect from the end customer, our distributors may provide longer payment terms to end customers than those we would offer. Sales to distributors accounted for
63%
,
65%
and
74%
of revenue in 2014, 2013 and 2012, respectively.
|
•
|
Direct Relationships.
We have established direct relationships with companies that manufacture high-end display systems. Some of our direct relationships are supported by commission-based manufacturers’ representatives, who are independent sales agents that represent us in local markets and provide engineering support but do not carry inventory. Revenue through direct relationships accounted for
37%
,
35%
and
26%
of total revenue in 2014, 2013 and 2012, respectively.
|
•
|
Integrators
.
Integrators are original equipment manufacturers who build display devices based on specifications provided by branded suppliers.
|
•
|
Branded Manufacturers
. Branded manufacturers are globally recognized manufacturers who develop display device specifications, and manufacture, market and distribute display devices either directly or through resellers to end-users.
|
•
|
Branded Suppliers
. Branded suppliers are globally recognized suppliers who develop display device specifications and then source them from integrators, typically in Asia, and distribute them either directly or through resellers to end-users.
|
Item 1A.
|
Risk Factors.
|
•
|
difficulties in managing international distributors and manufacturers due to varying time zones, languages and business customs;
|
•
|
compliance with U.S. laws affecting operations outside of the U.S., such as the Foreign Corrupt Practices Act;
|
•
|
reduced or limited protection of our IP, particularly in software, which is more prone to design piracy;
|
•
|
difficulties in collecting outstanding accounts receivable balances;
|
•
|
changes in tax rates, tax laws and the interpretation of those laws;
|
•
|
difficulties regarding timing and availability of export and import licenses;
|
•
|
ensuring that we obtain complete and accurate information from our Asian operations to make proper disclosures in the United States;
|
•
|
political and economic instability;
|
•
|
difficulties in maintaining sales representatives outside of the U.S. that are knowledgeable about our industry and products;
|
•
|
changes in the regulatory environment in the PRC, Japan, Taiwan and Korea that may significantly impact purchases of our products by our customers or our customers’ sales of their own products;
|
•
|
outbreaks of health epidemics in the PRC or other parts of Asia;
|
•
|
imposition of new tariffs, quotas, trade barriers and similar trade restrictions on our sales;
|
•
|
varying employment and labor laws; and
|
•
|
greater vulnerability to infrastructure and labor disruptions than in established markets.
|
•
|
reduced end user demand due to the economic impact of any natural disaster;
|
•
|
a disruption to the global supply chain for products manufactured in areas affected by natural disasters that are included in products purchased either by us or by our customers;
|
•
|
an increase in the cost of products that we purchase due to reduced supply; and
|
•
|
other unforeseen impacts as a result of the uncertainty resulting from a natural disaster.
|
•
|
difficulties in hiring and retaining necessary technical personnel;
|
•
|
difficulties in reallocating engineering resources and overcoming resource limitations;
|
•
|
difficulties with contract manufacturers;
|
•
|
changes to product specifications and customer requirements;
|
•
|
changes to market or competitive product requirements; and
|
•
|
unanticipated engineering complexities.
|
•
|
stop selling products using technology that contains the allegedly infringing IP;
|
•
|
attempt to obtain a license to the relevant IP, which may not be available on terms that are acceptable to us or at all;
|
•
|
attempt to redesign those products that contain the allegedly infringing IP; or
|
•
|
pay damages for past infringement claims that are determined to be valid or which are arrived at in settlement of such litigation or threatened litigation.
|
•
|
actual or anticipated fluctuations in our operating results;
|
•
|
changes in or failure to meet expectations as to our future financial performance;
|
•
|
changes in or failure to meet financial estimates of securities analysts;
|
•
|
announcements by us or our competitors of technological innovations, design wins, contracts, standards, acquisitions or divestitures;
|
•
|
the operating and stock price performance of other comparable companies;
|
•
|
issuances or proposed issuances of equity, debt or other securities by us, or sales of securities by our security holders; and
|
•
|
changes in market valuations of other technology companies.
|
•
|
our board of directors is divided into three classes serving staggered terms, which would make it more difficult for a group of shareholders to quickly replace a majority of directors;
|
•
|
our board of directors is authorized, without prior shareholder approval, to create and issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us or to effect a change of control, commonly referred to as "blank check" preferred stock;
|
•
|
members of our board of directors can be removed only for cause and at a meeting of shareholders called expressly for that purpose, by the vote of 75 percent of the votes then entitled to be cast for the election of directors;
|
•
|
our board of directors may alter our bylaws without obtaining shareholder approval; and shareholders are required to provide advance notice for nominations for election to the board of directors or for proposing matters to be acted upon at a shareholder meeting;
|
•
|
Oregon law permits our board to consider other factors beyond stockholder value in evaluating any acquisition offer (so-called "expanded constituency" provisions); and
|
•
|
a supermajority (67%) vote of shareholders is required to approve certain fundamental transactions.
|
Item 1B.
|
Unresolved Staff Comments.
|
Item 2.
|
Properties.
|
Location
|
|
Function(s)
|
|
Square Feet Utilized
|
|
Lease Expiration
|
China
|
|
Engineering; sales;
customer support
|
|
48,000
|
|
Various dates
through
November 2015
|
California
|
|
Administration;
engineering; sales
|
|
19,000
|
|
December 2018
|
Taiwan
|
|
Customer support; sales;
operations; engineering
|
|
16,000
|
|
Various dates through November 2017
|
Oregon
|
|
Administration
|
|
5,000
|
|
December 2016
|
Japan
|
|
Sales; customer support
|
|
3,000
|
|
January 2015
1
|
1
|
Lease was renewed during January, 2015. The renewal expires in January, 2017.
|
Item 3.
|
Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Fiscal 2014
|
High
|
|
Low
|
||||
Fourth Quarter
|
$
|
6.63
|
|
|
$
|
3.86
|
|
Third Quarter
|
9.83
|
|
|
5.75
|
|
||
Second Quarter
|
7.98
|
|
|
4.68
|
|
||
First Quarter
|
9.05
|
|
|
4.62
|
|
||
|
|
|
|
||||
Fiscal 2013
|
High
|
|
Low
|
||||
Fourth Quarter
|
$
|
5.55
|
|
|
$
|
3.66
|
|
Third Quarter
|
5.30
|
|
|
3.14
|
|
||
Second Quarter
|
4.95
|
|
|
2.11
|
|
||
First Quarter
|
2.70
|
|
|
2.16
|
|
•
|
NASDAQ U.S. Benchmark TR Index
|
•
|
NASDAQ OMX Electrical Components and Equipment Index
|
Item 6.
|
Selected Financial Data.
|
|
Year ended December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Consolidated Statements of Operations Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue, net
|
$
|
60,923
|
|
|
$
|
48,118
|
|
|
$
|
59,710
|
|
|
$
|
64,609
|
|
|
$
|
69,529
|
|
Cost of revenue
|
29,142
|
|
|
21,708
|
|
|
29,862
|
|
|
34,242
|
|
|
37,366
|
|
|||||
Gross profit
|
31,781
|
|
|
26,410
|
|
|
29,848
|
|
|
30,367
|
|
|
32,163
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
25,296
|
|
|
20,664
|
|
|
20,757
|
|
|
22,906
|
|
|
22,810
|
|
|||||
Selling, general and administrative
|
15,434
|
|
|
13,883
|
|
|
14,944
|
|
|
15,266
|
|
|
15,167
|
|
|||||
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|||||
Total operating expenses
|
40,730
|
|
|
34,547
|
|
|
35,701
|
|
|
38,172
|
|
|
38,071
|
|
|||||
Loss from operations
|
(8,949
|
)
|
|
(8,137
|
)
|
|
(5,853
|
)
|
|
(7,805
|
)
|
|
(5,908
|
)
|
|||||
Other income (expense), net
|
(493
|
)
|
|
(405
|
)
|
|
(412
|
)
|
|
1,380
|
|
|
886
|
|
|||||
Loss before income taxes
|
(9,442
|
)
|
|
(8,542
|
)
|
|
(6,265
|
)
|
|
(6,425
|
)
|
|
(5,022
|
)
|
|||||
Provision (benefit) for income taxes
|
518
|
|
|
328
|
|
|
(571
|
)
|
|
141
|
|
|
(5,395
|
)
|
|||||
Net income (loss)
|
$
|
(9,960
|
)
|
|
$
|
(8,870
|
)
|
|
$
|
(5,694
|
)
|
|
$
|
(6,566
|
)
|
|
$
|
373
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.44
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
0.03
|
|
Diluted
|
$
|
(0.44
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
0.03
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
22,766
|
|
|
19,816
|
|
|
18,252
|
|
|
16,330
|
|
|
13,442
|
|
|||||
Diluted
|
22,766
|
|
|
19,816
|
|
|
18,252
|
|
|
16,330
|
|
|
14,384
|
|
|
December 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Consolidated Balance Sheets Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
17,926
|
|
|
$
|
20,805
|
|
|
$
|
13,404
|
|
|
$
|
15,092
|
|
|
$
|
16,872
|
|
Short-and long-term marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,969
|
|
|||||
Working capital
|
11,470
|
|
|
15,163
|
|
|
10,508
|
|
|
13,210
|
|
|
8,072
|
|
|||||
Total assets
|
34,144
|
|
|
36,744
|
|
|
29,541
|
|
|
36,377
|
|
|
52,414
|
|
|||||
Long-term liabilities, net of current portion
|
3,570
|
|
|
2,878
|
|
|
3,776
|
|
|
5,690
|
|
|
5,635
|
|
|||||
Total shareholders’ equity
|
15,684
|
|
|
18,942
|
|
|
14,668
|
|
|
17,800
|
|
|
13,931
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation.
|
|
Year ended December 31,
|
|
2014 v. 2013
|
|
2013 v. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ change
|
|
% change
|
|
$ change
|
|
% change
|
||||||||||||
Revenue, net
|
$
|
60,923
|
|
|
$
|
48,118
|
|
|
$
|
59,710
|
|
|
$
|
12,805
|
|
|
27
|
%
|
|
$
|
(11,592
|
)
|
|
(19
|
)%
|
|
Year ended December 31,
|
|||||||||||||||||||
|
2014
|
|
% of
revenue
|
|
2013
|
|
% of
revenue
|
|
2012
|
|
% of
revenue
|
|||||||||
Direct product costs and related overhead
1
|
$
|
28,402
|
|
|
47
|
%
|
|
$
|
20,230
|
|
|
42
|
%
|
|
$
|
28,227
|
|
|
47
|
%
|
Inventory charges
2
|
267
|
|
|
0
|
|
|
24
|
|
|
0
|
|
|
106
|
|
|
0
|
|
|||
Licensing costs
3
|
146
|
|
|
0
|
|
|
921
|
|
|
2
|
|
|
802
|
|
|
1
|
|
|||
Other cost of revenue
4
|
327
|
|
|
1
|
|
|
533
|
|
|
1
|
|
|
727
|
|
|
1
|
|
|||
Total cost of revenue
|
$
|
29,142
|
|
|
48
|
%
|
|
$
|
21,708
|
|
|
45
|
%
|
|
$
|
29,862
|
|
|
50
|
%
|
Gross profit
|
$
|
31,781
|
|
|
52
|
%
|
|
$
|
26,410
|
|
|
55
|
%
|
|
$
|
29,848
|
|
|
50
|
%
|
1
|
Includes purchased materials, assembly, test, labor, employee benefits and royalties, all of which are related to sales of IC products.
|
2
|
Includes charges to reduce inventory to lower of cost or market and a benefit for sales of previously written down inventory.
|
3
|
Includes direct labor costs and allocated overhead associated with licensing agreements.
|
4
|
Includes stock-based compensation and additional amortization of a non-cancelable prepaid royalty.
|
|
Year ended December 31,
|
|
2014 v. 2013
|
|
2013 v. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ change
|
|
% change
|
|
$ change
|
|
% change
|
||||||||||||
Research and development
|
$
|
25,296
|
|
|
$
|
20,664
|
|
|
$
|
20,757
|
|
|
$
|
4,632
|
|
|
22
|
%
|
|
$
|
(93
|
)
|
|
0
|
%
|
|
Year ended December 31,
|
|
2014 v. 2013
|
|
2013 v. 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$ change
|
|
% change
|
|
$ change
|
|
% change
|
||||||||||||
Selling, general and administrative
|
$
|
15,434
|
|
|
$
|
13,883
|
|
|
$
|
14,944
|
|
|
$
|
1,551
|
|
|
11
|
%
|
|
$
|
(1,061
|
)
|
|
(7
|
)%
|
|
Year ended December 31,
|
|
$ change
|
||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 v. 2013
|
|
2013 v. 2012
|
||||||||||
Interest expense and other, net
|
$
|
(493
|
)
|
|
$
|
(405
|
)
|
|
$
|
(412
|
)
|
|
$
|
(88
|
)
|
|
$
|
7
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Provision (benefit) for income taxes
|
$
|
518
|
|
|
$
|
328
|
|
|
$
|
(571
|
)
|
|
Payments Due By Period
|
||||||||||
Contractual Obligation
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
||||||
Operating leases
|
$
|
3,537
|
|
|
$
|
1,425
|
|
|
$
|
2,112
|
|
Payments on accrued balances related to asset financings
|
3,000
|
|
|
1,840
|
|
|
1,160
|
|
|||
Estimated purchase commitments to contract manufacturers
|
6,639
|
|
|
6,639
|
|
|
—
|
|
|||
Total
1
|
$
|
13,176
|
|
|
$
|
9,904
|
|
|
$
|
3,272
|
|
1.
|
We are unable to reliably estimate the timing of future payments related to uncertain tax positions and repatriation of foreign earnings; therefore, $2.1 million of income taxes payable has been excluded from the table above.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
|
/s/ KPMG LLP
|
|
Portland, Oregon
|
March 4, 2015
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,926
|
|
|
$
|
20,805
|
|
Accounts receivable, net
|
4,648
|
|
|
4,761
|
|
||
Inventories
|
2,898
|
|
|
1,663
|
|
||
Prepaid expenses and other current assets
|
888
|
|
|
2,858
|
|
||
Total current assets
|
26,360
|
|
|
30,087
|
|
||
Property and equipment, net
|
6,402
|
|
|
4,084
|
|
||
Other assets, net
|
1,382
|
|
|
2,573
|
|
||
Total assets
|
$
|
34,144
|
|
|
$
|
36,744
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,154
|
|
|
$
|
1,327
|
|
Accrued liabilities and current portion of long-term liabilities
|
8,539
|
|
|
10,505
|
|
||
Current portion of income taxes payable
|
197
|
|
|
92
|
|
||
Short-term line of credit
|
3,000
|
|
|
3,000
|
|
||
Total current liabilities
|
14,890
|
|
|
14,924
|
|
||
Long-term liabilities, net of current portion
|
1,476
|
|
|
677
|
|
||
Income taxes payable, net of current portion
|
2,094
|
|
|
2,201
|
|
||
Total liabilities
|
18,460
|
|
|
17,802
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 250,000,000 shares authorized, 23,220,534 and 22,006,932 shares issued and outstanding as of December 31, 2014 and 2013, respectively
|
369,253
|
|
|
362,644
|
|
||
Accumulated other comprehensive income (loss)
|
11
|
|
|
(82
|
)
|
||
Accumulated deficit
|
(353,580
|
)
|
|
(343,620
|
)
|
||
Total shareholders' equity
|
15,684
|
|
|
18,942
|
|
||
Total liabilities and shareholders' equity
|
$
|
34,144
|
|
|
$
|
36,744
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenue, net
|
$
|
60,923
|
|
|
$
|
48,118
|
|
|
$
|
59,710
|
|
Cost of revenue (1)
|
29,142
|
|
|
21,708
|
|
|
29,862
|
|
|||
Gross profit
|
31,781
|
|
|
26,410
|
|
|
29,848
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development (2)
|
25,296
|
|
|
20,664
|
|
|
20,757
|
|
|||
Selling, general and administrative (3)
|
15,434
|
|
|
13,883
|
|
|
14,944
|
|
|||
Total operating expenses
|
40,730
|
|
|
34,547
|
|
|
35,701
|
|
|||
Loss from operations
|
(8,949
|
)
|
|
(8,137
|
)
|
|
(5,853
|
)
|
|||
Interest expense and other, net
|
(493
|
)
|
|
(405
|
)
|
|
(412
|
)
|
|||
Loss before income taxes
|
(9,442
|
)
|
|
(8,542
|
)
|
|
(6,265
|
)
|
|||
Provision (benefit) for income taxes
|
518
|
|
|
328
|
|
|
(571
|
)
|
|||
Net loss
|
$
|
(9,960
|
)
|
|
$
|
(8,870
|
)
|
|
$
|
(5,694
|
)
|
Net loss per share - basic and diluted
|
$
|
(0.44
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.31
|
)
|
Weighted average shares outstanding - basic and diluted
|
22,766
|
|
|
19,816
|
|
|
18,252
|
|
|||
|
|
|
|
|
|
||||||
(1) Includes:
|
|
|
|
|
|
||||||
Stock-based compensation
|
$
|
262
|
|
|
$
|
164
|
|
|
$
|
162
|
|
Additional amortization of non-cancelable prepaid royalty
|
65
|
|
|
369
|
|
|
565
|
|
|||
(2) Includes stock-based compensation
|
2,441
|
|
|
1,204
|
|
|
893
|
|
|||
(3) Includes stock-based compensation
|
2,599
|
|
|
1,640
|
|
|
1,109
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net loss
|
$
|
(9,960
|
)
|
|
$
|
(8,870
|
)
|
|
$
|
(5,694
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Pension adjustment
|
112
|
|
|
37
|
|
|
(56
|
)
|
|||
Tax effect of pension adjustment
|
(19
|
)
|
|
(6
|
)
|
|
10
|
|
|||
Total comprehensive loss
|
$
|
(9,867
|
)
|
|
$
|
(8,839
|
)
|
|
$
|
(5,740
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(9,960
|
)
|
|
$
|
(8,870
|
)
|
|
$
|
(5,694
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation
|
5,302
|
|
|
3,008
|
|
|
2,164
|
|
|||
Depreciation and amortization
|
4,514
|
|
|
4,409
|
|
|
4,735
|
|
|||
Reversal of uncertain tax positions
|
(270
|
)
|
|
(452
|
)
|
|
(1,455
|
)
|
|||
Deferred income tax expense (benefit)
|
89
|
|
|
154
|
|
|
(110
|
)
|
|||
(Gain) loss on asset disposal
|
—
|
|
|
(12
|
)
|
|
187
|
|
|||
Other
|
72
|
|
|
61
|
|
|
63
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
113
|
|
|
(989
|
)
|
|
785
|
|
|||
Inventories
|
(1,235
|
)
|
|
1,039
|
|
|
1,405
|
|
|||
Prepaid expenses and other current and long-term assets, net
|
2,253
|
|
|
(637
|
)
|
|
1,368
|
|
|||
Accounts payable
|
1,827
|
|
|
(937
|
)
|
|
(2,410
|
)
|
|||
Accrued current and long-term liabilities
|
(1,446
|
)
|
|
1,837
|
|
|
187
|
|
|||
Income taxes payable
|
429
|
|
|
207
|
|
|
559
|
|
|||
Net cash provided by (used in) operating activities
|
1,688
|
|
|
(1,182
|
)
|
|
1,784
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(2,861
|
)
|
|
(1,694
|
)
|
|
(1,835
|
)
|
|||
Purchases of licensed technology
|
—
|
|
|
(598
|
)
|
|
—
|
|
|||
Proceeds from sales of property and equipment
|
—
|
|
|
13
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(2,861
|
)
|
|
(2,279
|
)
|
|
(1,835
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Payments on asset financings
|
(3,013
|
)
|
|
(2,243
|
)
|
|
(2,081
|
)
|
|||
Proceeds from issuances of common stock
|
1,307
|
|
|
480
|
|
|
444
|
|
|||
Net proceeds from equity offering
|
—
|
|
|
9,625
|
|
|
—
|
|
|||
Proceeds from line of credit
|
—
|
|
|
3,000
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
(1,706
|
)
|
|
10,862
|
|
|
(1,637
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(2,879
|
)
|
|
7,401
|
|
|
(1,688
|
)
|
|||
Cash and cash equivalents, beginning of period
|
20,805
|
|
|
13,404
|
|
|
15,092
|
|
|||
Cash and cash equivalents, end of period
|
$
|
17,926
|
|
|
$
|
20,805
|
|
|
$
|
13,404
|
|
|
Common Stock
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balance as of December 31, 2011
|
17,966,170
|
|
|
346,923
|
|
|
(67
|
)
|
|
(329,056
|
)
|
|
17,800
|
|
||||
Stock issued under employee equity incentive plans
|
434,613
|
|
|
444
|
|
|
—
|
|
|
—
|
|
|
444
|
|
||||
Stock-based compensation expense
|
—
|
|
|
2,164
|
|
|
—
|
|
|
—
|
|
|
2,164
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,694
|
)
|
|
(5,694
|
)
|
||||
Pension adjustment, net of tax of $(10)
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
||||
Balance as of December 31, 2012
|
18,400,783
|
|
|
349,531
|
|
|
(113
|
)
|
|
(334,750
|
)
|
|
14,668
|
|
||||
Stock issued under employee equity incentive plans
|
581,649
|
|
|
480
|
|
|
—
|
|
|
—
|
|
|
480
|
|
||||
Equity offering
|
3,024,500
|
|
|
9,625
|
|
|
—
|
|
|
—
|
|
|
9,625
|
|
||||
Stock-based compensation expense
|
—
|
|
|
3,008
|
|
|
—
|
|
|
—
|
|
|
3,008
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,870
|
)
|
|
(8,870
|
)
|
||||
Pension adjustment, net of tax of $6
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
||||
Balance as of December 31, 2013
|
22,006,932
|
|
|
362,644
|
|
|
(82
|
)
|
|
(343,620
|
)
|
|
18,942
|
|
||||
Stock issued under employee equity incentive plans
|
1,213,602
|
|
|
1,307
|
|
|
—
|
|
|
—
|
|
|
1,307
|
|
||||
Stock-based compensation expense
|
—
|
|
|
5,302
|
|
|
—
|
|
|
—
|
|
|
5,302
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,960
|
)
|
|
(9,960
|
)
|
||||
Pension adjustment, net of tax of $19
|
—
|
|
|
—
|
|
|
93
|
|
|
—
|
|
|
93
|
|
||||
Balance as of December 31, 2014
|
23,220,534
|
|
|
$
|
369,253
|
|
|
$
|
11
|
|
|
$
|
(353,580
|
)
|
|
$
|
15,684
|
|
|
Software
|
Lesser of 3 years or contractual license term
|
|
|
Equipment, furniture and fixtures
|
2 years
|
|
|
Tooling
|
2 to 4 years
|
|
|
Leasehold improvements
|
Lesser of lease term or estimated useful life
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Actuarial income (loss) on pension obligation
|
$
|
38
|
|
|
$
|
(52
|
)
|
Accumulated transition pension obligation
|
(27
|
)
|
|
(30
|
)
|
||
Accumulated other comprehensive income (loss)
|
$
|
11
|
|
|
$
|
(82
|
)
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Accounts receivable, gross
|
$
|
4,949
|
|
|
$
|
5,076
|
|
Allowance for doubtful accounts
|
(301
|
)
|
|
(315
|
)
|
||
Accounts receivable, net
|
$
|
4,648
|
|
|
$
|
4,761
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Balance at beginning of year
|
$
|
315
|
|
|
$
|
352
|
|
|
$
|
361
|
|
Additions charged (reductions credited)
|
2
|
|
|
10
|
|
|
(9
|
)
|
|||
Accounts written-off, net of recoveries
|
(16
|
)
|
|
(47
|
)
|
|
—
|
|
|||
Balance at end of year
|
$
|
301
|
|
|
$
|
315
|
|
|
$
|
352
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Finished goods
|
$
|
1,697
|
|
|
$
|
793
|
|
Work-in-process
|
1,201
|
|
|
870
|
|
||
Inventories
|
$
|
2,898
|
|
|
$
|
1,663
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Software
|
$
|
11,883
|
|
|
$
|
8,282
|
|
Equipment, furniture and fixtures
|
9,171
|
|
|
8,353
|
|
||
Tooling
|
4,282
|
|
|
2,886
|
|
||
Leasehold improvements
|
2,237
|
|
|
2,212
|
|
||
|
27,573
|
|
|
21,733
|
|
||
Accumulated depreciation and amortization
|
(21,171
|
)
|
|
(17,649
|
)
|
||
Property and equipment, net
|
$
|
6,402
|
|
|
$
|
4,084
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Accrued payroll and related liabilities
|
$
|
2,385
|
|
|
$
|
2,261
|
|
Accrued commissions and royalties
|
2,055
|
|
|
1,862
|
|
||
Current portion of accrued liabilities for asset financings
|
1,744
|
|
|
2,251
|
|
||
Accrued interest payable
|
1,383
|
|
|
1,087
|
|
||
Reserve for warranty returns
|
105
|
|
|
329
|
|
||
Deferred revenue
|
30
|
|
|
1,271
|
|
||
Other
|
837
|
|
|
1,444
|
|
||
Accrued liabilities and current portion of long-term liabilities
|
$
|
8,539
|
|
|
$
|
10,505
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Reserve for warranty returns:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
329
|
|
|
$
|
457
|
|
|
$
|
439
|
|
Provision (benefit)
|
(195
|
)
|
|
84
|
|
|
588
|
|
|||
Charge-offs
|
(29
|
)
|
|
(212
|
)
|
|
(570
|
)
|
|||
Balance at end of year
|
$
|
105
|
|
|
$
|
329
|
|
|
$
|
457
|
|
Level 1:
|
Valuations based on quoted prices in active markets for identical assets and liabilities.
|
Level 2:
|
Valuations based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
Level 3:
|
Valuations based on unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
As of December 31, 2014:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
17,480
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,480
|
|
As of December 31, 2013:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
20,396
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,396
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Domestic
|
$
|
(10,858
|
)
|
|
$
|
(9,705
|
)
|
|
$
|
(7,510
|
)
|
Foreign
|
1,416
|
|
|
1,163
|
|
|
1,245
|
|
|||
Domestic and foreign pre-tax loss
|
$
|
(9,442
|
)
|
|
$
|
(8,542
|
)
|
|
$
|
(6,265
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
55
|
|
|
$
|
55
|
|
|
$
|
55
|
|
State
|
—
|
|
|
(17
|
)
|
|
1
|
|
|||
Foreign
|
374
|
|
|
136
|
|
|
(517
|
)
|
|||
Total current
|
429
|
|
|
174
|
|
|
(461
|
)
|
|||
Deferred:
|
|
|
|
|
|
||||||
Foreign
|
89
|
|
|
154
|
|
|
(110
|
)
|
|||
Total deferred
|
89
|
|
|
154
|
|
|
(110
|
)
|
|||
Income tax expense (benefit)
|
$
|
518
|
|
|
$
|
328
|
|
|
$
|
(571
|
)
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
70,237
|
|
|
$
|
67,630
|
|
Research and experimentation credit carryforwards
|
11,026
|
|
|
10,868
|
|
||
Foreign tax credit carryforwards
|
4,049
|
|
|
4,044
|
|
||
Deferred stock-based compensation
|
2,794
|
|
|
2,520
|
|
||
Capital loss carryforwards
|
2,212
|
|
|
2,222
|
|
||
Depreciation and amortization
|
2,046
|
|
|
2,098
|
|
||
Reserves and accrued expenses
|
740
|
|
|
740
|
|
||
Other
|
529
|
|
|
395
|
|
||
Total gross deferred tax assets
|
93,633
|
|
|
90,517
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Foreign earnings
|
(350
|
)
|
|
(471
|
)
|
||
Other
|
(335
|
)
|
|
(485
|
)
|
||
Total gross deferred tax liabilities
|
(685
|
)
|
|
(956
|
)
|
||
Less valuation allowance
|
(92,792
|
)
|
|
(89,136
|
)
|
||
Net deferred tax assets
|
$
|
156
|
|
|
$
|
425
|
|
|
2014
|
|
2013
|
||||
Uncertain tax positions:
|
|
|
|
||||
Balance at beginning of year
|
$
|
1,592
|
|
|
$
|
1,653
|
|
Accrual for positions taken in a prior year
|
(21
|
)
|
|
10
|
|
||
Accrual for positions taken in current year
|
249
|
|
|
222
|
|
||
Reversals due to lapse of statute of limitations
|
(174
|
)
|
|
(293
|
)
|
||
Balance at end of year
|
$
|
1,646
|
|
|
$
|
1,592
|
|
Interest and penalties:
|
|
|
|
||||
Balance at beginning of year
|
$
|
305
|
|
|
$
|
437
|
|
Accrual for positions taken in prior year
|
17
|
|
|
27
|
|
||
Reversals due to lapse of statute of limitations
|
(96
|
)
|
|
(159
|
)
|
||
Balance at end of year
|
$
|
226
|
|
|
$
|
305
|
|
Year Ending December 31,
|
|
Software licenses
|
|
Operating leases
|
|
Total
|
||||||
2015
|
|
$
|
1,840
|
|
|
$
|
1,425
|
|
|
$
|
3,265
|
|
2016
|
|
972
|
|
|
863
|
|
|
1,835
|
|
|||
2017
|
|
188
|
|
|
671
|
|
|
859
|
|
|||
2018
|
|
—
|
|
|
578
|
|
|
578
|
|
|||
|
|
3,000
|
|
|
$
|
3,537
|
|
|
$
|
6,537
|
|
|
Less: Interest component
|
|
(206
|
)
|
|
|
|
|
|||||
Present value of minimum software license payments
|
|
2,794
|
|
|
|
|
|
|||||
Less: Current portion
|
|
(1,744
|
)
|
|
|
|
|
|||||
Long-term portion of obligations
|
|
$
|
1,050
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net loss
|
$
|
(9,960
|
)
|
|
$
|
(8,870
|
)
|
|
$
|
(5,694
|
)
|
Shares used in computing net loss per share - basic and diluted
|
22,766
|
|
|
19,816
|
|
|
18,252
|
|
|||
Net loss per common share - basic and diluted
|
$
|
(0.44
|
)
|
|
$
|
(0.45
|
)
|
|
$
|
(0.31
|
)
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Employee equity incentive plans
|
4,346
|
|
|
4,338
|
|
|
4,173
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
193
|
|
|
$
|
149
|
|
|
$
|
118
|
|
Income taxes, net of refunds received
|
213
|
|
|
382
|
|
|
382
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Acquisitions of property and equipment and other
assets under extended payment terms
|
$
|
3,381
|
|
|
$
|
1,266
|
|
|
$
|
1,231
|
|
|
Number of
shares
|
|
Weighted
average
exercise
price
|
|||
Options outstanding as of December 31, 2013:
|
3,716,007
|
|
|
$
|
3.65
|
|
Granted
|
47,000
|
|
|
5.84
|
|
|
Exercised
|
(336,474
|
)
|
|
3.07
|
|
|
Canceled and forfeited
|
(43,916
|
)
|
|
2.59
|
|
|
Expired
|
(47,043
|
)
|
|
32.80
|
|
|
Options outstanding as of December 31, 2014:
|
3,335,574
|
|
|
$
|
3.34
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of exercise prices
|
|
Number
outstanding as of
December 31,
2014
|
|
Weighted
average
remaining
contractual
life
|
|
Weighted
average
exercise
price
|
|
Number
exercisable as of
December 31,
2014
|
|
Weighted
average
exercise
price
|
||||||
$0.55 - $2.01
|
|
718,409
|
|
|
3.85
|
|
$
|
0.88
|
|
|
693,158
|
|
|
$
|
0.84
|
|
2.20 - 2.36
|
|
720,690
|
|
|
3.11
|
|
2.33
|
|
|
679,003
|
|
|
2.33
|
|
||
2.37 - 3.15
|
|
794,832
|
|
|
2.38
|
|
3.08
|
|
|
640,089
|
|
|
3.08
|
|
||
3.21 - 3.48
|
|
682,646
|
|
|
1.81
|
|
3.42
|
|
|
676,792
|
|
|
3.42
|
|
||
3.51 - 34.47
|
|
418,997
|
|
|
2.23
|
|
9.66
|
|
|
358,957
|
|
|
10.36
|
|
||
$0.55 - $34.47
|
|
3,335,574
|
|
|
2.72
|
|
$
|
3.34
|
|
|
3,047,999
|
|
|
$
|
3.34
|
|
|
Number of
shares
|
|
Weighted
average
exercise
price
|
|
Weighted
average
remaining
contractual
term
|
|
Aggregate
intrinsic
value
|
|||||
Vested
|
3,047,999
|
|
|
$
|
3.34
|
|
|
2.61
|
|
$
|
5,829
|
|
Expected to vest
|
267,249
|
|
|
3.29
|
|
|
3.85
|
|
388
|
|
||
Total
|
3,315,248
|
|
|
$
|
3.33
|
|
|
2.71
|
|
$
|
6,217
|
|
|
Number of
shares
|
|
Weighted average grant date fair value
|
|||
Unvested at December 31, 2013:
|
998,253
|
|
|
$
|
4.06
|
|
Granted
|
737,797
|
|
|
6.94
|
|
|
Vested
|
(775,927
|
)
|
|
3.88
|
|
|
Canceled
|
(32,627
|
)
|
|
3.38
|
|
|
Unvested at December 31, 2014:
|
927,496
|
|
|
$
|
6.40
|
|
Expected to vest after December 31, 2014
|
798,308
|
|
|
$
|
6.40
|
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Stock Option Plans:
|
|
|
|
|
|
|||
Risk free interest rate
|
1.64
|
%
|
|
1.08
|
%
|
|
0.79
|
%
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected term (in years)
|
5.00
|
|
|
4.93
|
|
|
4.69
|
|
Volatility
|
73
|
%
|
|
82
|
%
|
|
89
|
%
|
Employee Stock Purchase Plan:
|
|
|
|
|
|
|||
Risk free interest rate
|
0.22
|
%
|
|
0.19
|
%
|
|
0.19
|
%
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected term (in years)
|
1.02
|
|
|
1.03
|
|
|
1.04
|
|
Volatility
|
82
|
%
|
|
62
|
%
|
|
52
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Japan
|
$
|
36,062
|
|
|
$
|
19,824
|
|
|
$
|
35,198
|
|
Taiwan
|
8,266
|
|
|
7,337
|
|
|
10,163
|
|
|||
China
|
5,761
|
|
|
6,329
|
|
|
3,627
|
|
|||
U.S.
|
3,656
|
|
|
8,407
|
|
|
5,996
|
|
|||
Korea
|
3,256
|
|
|
3,241
|
|
|
1,118
|
|
|||
Europe
|
2,609
|
|
|
1,515
|
|
|
1,871
|
|
|||
Other
|
1,313
|
|
|
1,465
|
|
|
1,737
|
|
|||
|
$
|
60,923
|
|
|
$
|
48,118
|
|
|
$
|
59,710
|
|
|
Year Ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Distributors:
|
|
|
|
|
|
|||
All distributors
|
63
|
%
|
|
65
|
%
|
|
74
|
%
|
Distributor A
|
29
|
%
|
|
31
|
%
|
|
50
|
%
|
Distributor B
|
9
|
%
|
|
10
|
%
|
|
5
|
%
|
End Customers:
(1)
|
|
|
|
|
|
|||
Top five end customers
|
60
|
%
|
|
57
|
%
|
|
53
|
%
|
End customer A
|
22
|
%
|
|
3
|
%
|
|
5
|
%
|
End customer B
|
13
|
%
|
|
12
|
%
|
|
13
|
%
|
End customer C
|
10
|
%
|
|
12
|
%
|
|
8
|
%
|
End customer D
|
5
|
%
|
|
4
|
%
|
|
17
|
%
|
End customer E
|
4
|
%
|
|
17
|
%
|
|
—
|
%
|
|
Quarterly Period Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
2014
|
|
|
|
|
|
|
|
||||||||
Revenue, net
|
$
|
13,541
|
|
|
$
|
15,166
|
|
|
$
|
17,111
|
|
|
$
|
15,105
|
|
Gross profit
|
7,995
|
|
|
7,661
|
|
|
8,566
|
|
|
7,559
|
|
||||
Loss from operations
|
(2,439
|
)
|
|
(1,935
|
)
|
|
(1,968
|
)
|
|
(2,607
|
)
|
||||
Loss before income taxes
|
(2,561
|
)
|
|
(2,065
|
)
|
|
(2,091
|
)
|
|
(2,725
|
)
|
||||
Net loss
|
(2,507
|
)
|
|
(2,382
|
)
|
|
(2,300
|
)
|
|
(2,771
|
)
|
||||
Net loss per share - basic and diluted:
|
(0.11
|
)
|
|
(0.11
|
)
|
|
(0.10
|
)
|
|
(0.12
|
)
|
||||
2013
|
|
|
|
|
|
|
|
||||||||
Revenue, net
|
$
|
8,271
|
|
|
$
|
9,554
|
|
|
$
|
15,309
|
|
|
$
|
14,984
|
|
Gross profit
|
3,977
|
|
|
4,622
|
|
|
9,322
|
|
|
8,489
|
|
||||
Income (loss) from operations
|
(5,505
|
)
|
|
(4,662
|
)
|
|
1,792
|
|
|
238
|
|
||||
Income (loss) before income taxes
|
(5,603
|
)
|
|
(4,759
|
)
|
|
1,691
|
|
|
129
|
|
||||
Net income (loss)
|
(5,405
|
)
|
|
(4,924
|
)
|
|
1,509
|
|
|
(50
|
)
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
(0.29
|
)
|
|
(0.26
|
)
|
|
0.07
|
|
|
(0.00
|
)
|
||||
Diluted
|
(0.29
|
)
|
|
(0.26
|
)
|
|
0.07
|
|
|
(0.00
|
)
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services.
|
Item 15.
|
Exhibits, Financial Statement Schedules.
|
(a)
|
1. Financial Statements.
|
(a)
|
2. Financial Statement Schedules.
|
(a)
|
3. Exhibits.
|
|
|
Exhibit
Number
|
Description
|
|
|
3.1
|
Sixth Amended and Restated Articles of Incorporation of Pixelworks, Inc., As Amended (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2004).
|
|
|
3.2
|
Third Amendment to Sixth Amended and Restated Articles of Incorporation of Pixelworks, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 11, 2008).
|
|
|
3.3
|
Second Amended and Restated Bylaws of Pixelworks, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K filed March 10, 2010).
|
|
|
4.1
|
Reference is made to Exhibit 3.1 above (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 declared effective May 19, 2000).
|
|
|
10.1
|
Form of Indemnity Agreement between Pixelworks, Inc. and each of the members of the Board and Steven Moore, the Company’s Chief Financial Officer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 2, 2010). +
|
|
|
10.2
|
Pixelworks, Inc. 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on June 21, 2005). +
|
|
|
10.3
|
Pixelworks, Inc. Amended and Restated 2010 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 12, 2011). +
|
|
|
10.4
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on July 16, 2012). +
|
|
|
10.5
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Restricted Stock Awards (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 7, 2009). +
|
|
|
10.6
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Option Grants (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K filed March 8, 2012). +
|
|
|
10.7
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Director Stock Unit Awards (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2010). +
|
|
|
10.8
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Restricted Stock Unit Award. +
|
|
|
10.9
|
Summary of Pixelworks Non-Employee Director Compensation. +
|
|
|
10.10
|
2012 Executive Employment Agreement dated and effective November 2, 2012, by and between Bruce Walicek and Pixelworks, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 6, 2012). +
|
|
|
10.11
|
Form of Pixelworks, Inc. Senior Management Bonus Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 31, 2009). +
|
|
|
10.12
|
Offer letter dated June 22, 2007 between Pixelworks, Inc. and Steven L. Moore (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007). +
|
|
|
10.13
|
Change of Control Severance Agreement dated May 11, 2009 and effective April 1, 2009, by and between Pixelworks, Inc. and Steven L. Moore (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed March 10, 2010). +
|
|
|
10.14
|
Amendment to the Amended and restated Change of Control Severance Agreement by and between Pixelworks, Inc. and Steven Moore (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 24, 2012). +
|
|
|
10.15
|
Intellectual Property Sublicense Agreement dated March 30, 1999 between VAutomation Incorporated and Pixelworks, Inc. (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 declared effective May 19, 2000).
|
|
|
10.16
|
License Agreement dated February 22, 2000 between Pixelworks, Inc. and InFocus Systems, Inc. (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 declared effective May 19, 2000).
|
|
|
10.17
|
Office Lease Agreement dated December 2005, by and between CA-The Concourse Limited Partnership and Pixelworks, Inc. (incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K filed March 13, 2006).
|
|
|
10.18
|
Office Lease Agreement dated September 10, 2008 and commencing December 1, 2008 by and between Pixelworks, Inc. and Durham Plaza, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 7, 2008).
|
|
|
10.19
|
First Amendment to Office Lease Agreement, dated April 16, 2013, by and between CA-The Concourse Limited Partnership and Pixelworks, Inc.
|
|
|
10.20
|
First Amendment to Lease, dated July 1, 2013, by and between Durham Plaza, LLC and Pixelworks, Inc.
|
+
|
Indicates a management contract or compensation arrangement.
|
*
|
Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in such filing.
|
|
|
PIXELWORKS, INC.
|
||
|
|
|
|
|
Dated:
|
March 4, 2015
|
By:
|
|
/s/ Bruce A. Walicek
|
|
|
|
|
Bruce A. Walicek
|
|
|
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Bruce A. Walicek
|
|
President and Chief Executive Officer
|
|
|
Bruce A. Walicek
|
|
(Principal Executive Officer)
|
|
March 4, 2015
|
|
|
|
||
/s/ Steven L. Moore
|
|
Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Accounting and Financial Officer)
|
|
|
Steven L. Moore
|
|
|
|
March 4, 2015
|
|
|
|
||
/s/ Richard L. Sanquini
|
|
Chairman of the Board
|
|
|
Richard L. Sanquini
|
|
|
|
March 4, 2015
|
|
|
|
||
/s/ Mark A. Christensen
|
|
Director
|
|
|
Mark A. Christensen
|
|
|
|
March 4, 2015
|
|
|
|
||
/s/ Barry L. Cox
|
|
Director
|
|
|
Barry L. Cox
|
|
|
|
March 4, 2015
|
|
|
|
|
|
/s/ Stephen L. Domenik
|
|
Director
|
|
|
Stephen L. Domenik
|
|
|
|
March 4, 2015
|
|
|
|
|
|
/s/ C. Scott Gibson
|
|
Director
|
|
|
C. Scott Gibson
|
|
|
|
March 4, 2015
|
|
|
|
||
/s/ Daniel J. Heneghan
|
|
Director
|
|
|
Daniel J. Heneghan
|
|
|
|
March 4, 2015
|
|
|
|
||
/s/ David J. Tupman
|
|
Director
|
|
|
David J. Tupman
|
|
|
|
March 4, 2015
|
|
|
|
|
|
/s/ Bruce A. Walicek
|
|
Director
|
|
|
Bruce A. Walicek
|
|
|
|
March 4, 2015
|
|
|
Exhibit
Number
|
Description
|
|
|
3.1
|
Sixth Amended and Restated Articles of Incorporation of Pixelworks, Inc., As Amended (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2004).
|
|
|
3.2
|
Third Amendment to Sixth Amended and Restated Articles of Incorporation of Pixelworks, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 11, 2008).
|
|
|
3.3
|
Second Amended and Restated Bylaws of Pixelworks, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K filed March 10, 2010).
|
|
|
4.1
|
Reference is made to Exhibit 3.1 above (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 declared effective May 19, 2000).
|
|
|
10.1
|
Form of Indemnity Agreement between Pixelworks, Inc. and each of the members of the Board and Steven Moore, the Company’s Chief Financial Officer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 2, 2010). +
|
|
|
10.2
|
Pixelworks, Inc. 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on June 21, 2005). +
|
|
|
10.3
|
Pixelworks, Inc. Amended and Restated 2010 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 12, 2011). +
|
|
|
10.4
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on July 16, 2012). +
|
|
|
10.5
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Restricted Stock Awards (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 7, 2009). +
|
|
|
10.6
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Option Grants (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K filed March 8, 2012). +
|
|
|
10.7
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Director Stock Unit Awards (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2010). +
|
|
|
10.8
|
Pixelworks, Inc. Amended and Restated 2006 Stock Incentive Plan, Terms and Conditions of Restricted Stock Unit Award. +
|
|
|
10.9
|
Summary of Pixelworks Non-Employee Director Compensation. +
|
|
|
10.10
|
2012 Executive Employment Agreement dated and effective November 2, 2012, by and between Bruce Walicek and Pixelworks, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 6, 2012). +
|
|
|
10.11
|
Form of Pixelworks, Inc. Senior Management Bonus Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 31, 2009). +
|
|
|
10.12
|
Offer letter dated June 22, 2007 between Pixelworks, Inc. and Steven L. Moore (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 9, 2007). +
|
|
|
10.13
|
Change of Control Severance Agreement dated May 11, 2009 and effective April 1, 2009, by and between Pixelworks, Inc. and Steven L. Moore (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed March 10, 2010). +
|
|
|
10.14
|
Amendment to the Amended and restated Change of Control Severance Agreement by and between Pixelworks, Inc. and Steven Moore (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 24, 2012). +
|
|
|
10.15
|
Intellectual Property Sublicense Agreement dated March 30, 1999 between VAutomation Incorporated and Pixelworks, Inc. (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 declared effective May 19, 2000).
|
|
|
10.16
|
License Agreement dated February 22, 2000 between Pixelworks, Inc. and InFocus Systems, Inc. (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 declared effective May 19, 2000).
|
|
|
10.17
|
Office Lease Agreement dated December 2005, by and between CA-The Concourse Limited Partnership and Pixelworks, Inc. (incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K filed March 13, 2006).
|
|
|
10.18
|
Office Lease Agreement dated September 10, 2008 and commencing December 1, 2008 by and between Pixelworks, Inc. and Durham Plaza, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 7, 2008).
|
|
|
10.19
|
First Amendment to Office Lease Agreement, dated April 16, 2013, by and between CA-The Concourse Limited Partnership and Pixelworks, Inc.
|
|
|
10.20
|
First Amendment to Lease, dated July 1, 2013, by and between Durham Plaza, LLC and Pixelworks, Inc.
|
|
|
10.21
|
Loan and Security Agreement dated December 21, 2010 by and between Silicon Valley Bank and Pixelworks, Inc. (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K filed March 9, 2011).
|
|
|
10.22
|
Amendment No. 1 dated December 14, 2012 to the Loan and Security Agreement dated December 21, 2010, by and between Silicon Valley Bank and Pixelworks, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed December 20, 2012).
|
|
|
10.23
|
Amendment No. 2 dated December 4, 2013 to the Loan and Security Agreement dated December 21, 2010, by and between Silicon Valley Bank and Pixelworks, Inc. (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed December 9, 2013).
|
|
|
10.24
|
Form of Addendum to Change of Control Agreement for Officers (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 23, 2014). +
|
|
|
10.25
|
Advisory Agreement between Pixelworks, Inc. and David J. Tupman dated July 30, 2012 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 4, 2014).
|
|
|
21
|
Subsidiaries of Pixelworks, Inc. (incorporated by reference to Exhibit 21 to the Company's Annual Report on Form 10-K filed March 5, 2014).
|
|
|
+
|
Indicates a management contract or compensation arrangement.
|
*
|
Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in such filing.
|
A.
|
Landlord and Tenant are parties to that certain lease dated December 28. 2005 (the "Lease"). Pursuant to the Lease, Landlord has leased to Tenant space (the "
Existing Premises
") described as Suite No(s). 300 and 400 on the 3rd and 4th floors of the building commonly known as The Concourse II located at 224 Airport Parkway. San Jose, California.
|
B.
|
The Lease will expire by its term on June 30, 2013 (the "
Existing Expiration Date
"). The parties wish to extend the term of the Lease, except with respect to the portion of the Existing Premises described as Suite No. 300 on the 3rd floor of the Building and shown on Exhibit A attached hereto (the "
Reduction Space
"), on the following terms and conditions.
|
C.
|
The Lease describes the Existing Premises as containing approximately 37,346 rentablc square feet and the Building as containing approximately 114,211 rcntable square feet. Landlord has re-measured the Balance of the Existing Premises (defined in
Section 3.1.A
below) and the Building and the parties have agreed to modify the Lease to reflect the results of such re-measurement.
|
1.
|
Re-measurement of Balance or the Existing Premises and Building.
Landlord and Tenant acknowledge and agree that (a) Landlord has re-measured the Balance of the Existing Premises and the Building and that, according lo such re-measurement, (i) the rentable area of the Balance of the Existing Premises is 19,294 rentable square feet, and (ii) the rentable area of the Building is 117,073 square feet; and (b) from and after the Extension Date (defined below), the rentable square footages of the Balance of the Existing Premises and the Building shall be deemed to be the square footages set forth in the preceding clause (a).
|
2.
|
Extension.
Except as provided in Section 3 below. the term of the Lease is hereby extended through December 31, 2018 (the "
Extended Expiration Date
"). The portion of the term of the Lease commencing on the date immediately following the Existing Expiration Date (the "
Extension Date
") and ending on the Extended Expiration Date shall be referred to herein as the ''
Extended Term'
'.
|
3.
|
Reduction.
|
3.1.
|
Reduction Effective Date.
The term of the Lease shall expire, with respect to the Reduction Space only, on the Existing Expiration Date with the same force and effect as if such term were not being extended pursuant to
Section 2
above. Without limiting the foregoing:
|
A.
|
From and after the date immediately following the Existing Expiration Date (the "
Reduction Effective Dat
e"), the Premises shall consist solely of the Existing Premises less the Reduction Space (the "
Balance of the Existing Premises
") and shall be deemed to contain 19,294 rentable square feet.
|
B.
|
Tenant shall surrender the Reduction Space to Landlord in accordance with the terms of the Lease (as determined without giving effect to
Section 2
above) on or before the Existing Expiration Date.
|
C.
|
Tenant shall remain liable for all Rent and other amounts payable under the Lease with respect to the Reduction Space for the period up to and including the Existing Expiration Date, even though billings for such amounts may occur after the Existing Expiration Date.
|
D.
|
Tenant's restoration obligations with respect to the Reduction Space shall be as set forth in the Lease (as determined without giving effect to
Section 2
above). Landlord hereby notifies Tenant, pursuant to Section 8 of the Lease, that Tenant shall be required to remove the following items from the Reduction Space:
|
E.
|
If Tenant fails to surrender any portion of the Reduction Space on or before the Existing Expiration Date, Tenant's tenancy with respect to the Reduction Space shall be subject to Section 16 of the Lease (as determined without giving effect to
Section 2
above).
|
F.
|
Any other rights or obligations of Landlord or Tenant under the Lease relating to the Reduction Space that, in the absence of
Section 2
above, would have survived the Existing Expiration Date shall survive the Existing Expiration Date.
|
5.
|
Security Deposit.
No additional security deposit shall be required in connection with this Amendment. Notwithstanding the foregoing, so long as Tenant is not in default on or before September 30, 2014, then, upon Tenant's written request: (a) the amount of the Security Deposit required under Section 1.08 of the Lease shall be reduced from $156,853.20 to $80,000.00, and (b) Landlord, within 30 days after such request, shall return to Tenant any unapplied portion of the Security Deposit exceeding such reduced amount; provided, however, that no such reduction shall occur and no such return shall be required if a default occurs before the earlier of (i) the date on which such return occurs, or (ii) or the date occurring 30 days after such request.
|
6.
|
Tenant's Pro Rata Share.
With respect to the Balance of the Existing Premises during the Extended Term. Tenant's Pro Rata Share hall be 16.4803%.
|
7.
|
Expenses and Taxes.
During the Extended Term, Tenant shall pay for Tenant's Pro Rata Share of Expenses and Taxes in accordance with the terms of the Lease; provided, however, that, during the Extended Term, the Base Year for Expenses and Taxes shall be 2013.
|
8.
|
Improvement to Premises.
|
8.1.
|
Condition of Premises.
Tenant acknowledges that it is in possession of the Premises and agrees to accept it "as is" without any representations by Landlord regarding its condition and without any obligation on the part of Landlord to perform or pay for any alteration or improvement, except as may be otherwise expressly provided in this Amendment.
|
8.2.
|
Responsibility for Improvements to Premises.
Landlord shall perform improvements to the Premises in accordance with the Work Letter attached hereto as Exhibit A.
|
9.
|
Other Pertinent Provisions.
Landlord and Tenant agree that, effective as of the date of this Amendment (unless different effective date(s) is/are specifically referenced in this Section), the Lease shall be amended in the following additional respects:
|
9.1.
|
Parking.
Effective as of the Extension Date, in the first sentence of Section I of Exhibit G, the words "112 non-reserved parking spaces"' arc hereby replaced with the words "58 non- reserved parking spaces."
|
9.2.
|
First Renewal Option.
Section 2 of Exhibit F to the Lease, entitled "First Renewal Option,'' is hereby deleted from the Lease.
|
9.3.
|
Second Renewal Option.
Section 3 of Exhibit F to the Lease, entitled "Second Renewal Option," is hereby deleted from the Lease.
|
9.4.
|
Right of First Offer
. Section 4 of Exhibit F to the Lease, entitled "'Right of First Offer," is hereby deleted from the Lease.
|
9.5.
|
Right of First Refusal
. Section 5 of Exhibit F to the Lease, entitled "Right of First Refusal," is hereby deleted from the Lease.
|
9.6.
|
Notice of Offer.
Section 6 of Exhibit F to the Lease, entitled "Notice of Offer," is hereby deleted from the Lease.
|
9.7.
|
Exterior Signage.
Notwithstanding any contrary provision of Section 7 of Exhibit F to the Lease, (a) Tenant, at its expense (subject to
Section 1
of
Exhibit A
), and not later than the Existing Expiration Date, shall remove the Sign and repair any damage to the Building or Property resulting from it installation, operation, maintenance, repair or removal, in accordance with Section 7.D of Exhibit F lo the Lease as if the Lease were expiring or terminating on the Existing Expiration Date; and (b) from and after the Extension Date, Tenant shall have no further right to install any Sign under Section 7 of Exhibit F to the Lease.
|
10.
|
Extension Option.
|
10.1.
|
Grant of Option; Conditions.
Tenant shall have the right (the "
Extension Option
") to extend the term of the Lease for one (1) additional period of five (5) years commencing on the day following the Extended Expiration Date and ending on the 5th anniversary of the Extended Expiration Date (the "
Extension Term
"'), if:
|
A.
|
Not less than nine (9) and not more than 12 full calendar months before the Extended Expiration Date, Tenant delivers written notice to Landlord (the "
Extension Notice
") electing to exercise the Extension Option and stating Tenant's estimate of the Prevailing Market (defined in
Section 10.5
below) rate for the Extension Term;
|
B.
|
Tenant is not in default under the Lease beyond any applicable cure period when Tenant delivers the Extension Notice;
|
C.
|
No part of the Premises is sublet (other than to an Affiliate of Tenant ) when Tenant delivers the Extension Notice; and
|
D.
|
The Lease has not been assigned (other than pursuant to a Business Transfer) before Tenant delivers the Extension Notice.
|
10.2.
|
Terms Applicable to Extension Term.
|
A.
|
During the Extension Term. (a) the Base Rent rate per rentable square foot shall be equal to the Prevailing Market rate per rentable square foot; (b) Base Rent shall increase, if at all, in accordance with the increases assumed in the determination of Prevailing Market rate; and (c) Base Rent shall be payable in monthly installments in accordance with the terms and conditions of the Lease.
|
B.
|
During the Extension Term Tenant shall pay Tenant's Pro Rata Share of Expenses and Taxes for the Premises in accordance with the Lease.
|
10.3.
|
Procedure for Determining Prevailing Market.
|
A.
|
Initial Procedure
. Within 30 days after receiving the Extension Notice, Landlord shall give Tenant either (i) written notice ("
Landlord's Binding Notice
") accepting Tenant's estimate of the Prevailing Market rate for the Extension Term stated in the Extension Notice, or (ii) written notice ("
Landlord's Rejection Notice
"') rejecting such estimate and stating Landlord's estimate of the Prevailing Market rate for the Extension Term. If Landlord gives Tenant a Landlord 's Rejeclion Notice, Tenant, within 15 days thereafter, shall give Landlord either (i) written notice ("
Tenant's Binding Notice
") accepting Landlord's estimate of the Prevailing Market rate for the Extension Term stated in such Landlord' s Rejection Notice. or (ii) written notice ("
Tenant 's Rejection Notice
") rejecting such estimate. If Tenant gives Landlord a Tenant' s Rejection Notice, Landlord
|
B.
|
Dispute Resolution Procedure.
|
1.
|
If, within 30 days after delivery of a Tenant's Rejection Notice, the parties fail to agree in writing upon the Prevailing Market rate, Landlord and Tenant, with in five (5) days thereafter. shall each simultaneously submit to the other, in a sealed envelope, its good faith estimate of the Prevailing Market rate for the Extension Term (collectively, the "
Estimates
"). Within seven (7) days after the exchange of Estimates, Landlord and Tenant shall each select an appraiser to determine which of the two Estimates most closely reflects the Prevailing Market rate for the Extension Term. Each appraiser so selected shall be certified as an MAI appraiser or as an ASA appraiser and shall have had at least five (5) years' experience within the previous 10 years as a real estate appraiser working in San Jose, California, with working knowledge of current rental rates and leasing practices relating to buildings similar to the Building. For purposes hereof, an "MAI" appraiser means an individual who holds an MAI designation conferred by, and is an independent member of, the American Institute of Real Estate Appraisers (or its successor organization, or in the event there is no successor organization, the organization and designation most similar), and an "ASA" appraiser means an individual who holds the Senior Member designation conferred by, and is an independent member of, the American Society of Appraisers (or its successor organization, or, in the event there is no successor organization, the organization and designation most similar).
|
2.
|
If each party selects an appraiser in accordance with
Section 10.3.B.1
above. the parties shall cause their respective appraisers to work together in good faith to agree upon which of the two Estimates most closely reflects the Prevailing Market rate for the Extension Term. The Estimate, if any, so agreed upon by such appraisers shall be final and binding on both parties as the Prevailing Market rate for the Extension Term and may be entered in acourt of competent jurisdiction. If the appraisers fail to reach such agreement within 20 days after their selection, then, within 10 days after the expiration of such 20-day period, the parties shall instruct the appraisers to select a third appraiser meeting the above criteria (and if the appraisers fail to agree upon such third appraiser within 10 days after being so instructed, either party may cause a court of competent jurisdiction to select such third appraiser). Promptly upon selection of such third appraiser, the parties shall instruct such appraiser (or, if only one of the parties has selected an appraiser within the 7-day period described above, then promptly after the expiration of such 7-day period the parties shall instruct such appraiser) to determine, as soon as practicable but in any case within 14 days after his selection, which of the two Estimates most closely reflects the Prevailing Market rate. Such determination by such appraiser (the "
Final Appraiser
") shall be final and binding on both parties as the Prevailing Market rate for the Extension Term and may be entered in a court of competent jurisdiction. If the Final Appraiser believes that expert advice would materially assist him, he may retain one or more qualified persons to provide such expert advice. The parties shall share equally in the costs of the Final Appraiser and of any experts retained by the Final Appraiser. Any fees of any other appraiser. counsel or expert engaged by Landlord or Tenant shall be borne by the party retaining such appraiser, counsel or expert,
|
C.
|
Adjustment.
If the Prevailing Market rate has not been determined by the commencement date of the Extension Term, Tenant shall pay Base Rent for the Extension Term upon the terms and conditions in effect during the last month ending on or before the expiration date of the Lease until such time as the Prevailing Market rate has been determined. Upon such determination, the Base Rent for the Extension Term shall be retroactively adjusted. If such adjustment results in an under- or overpayment of Base Rent by Tenant, Tenant shall pay
|
10.4.
|
Extension Amendment.
If Tenant is entitled to and properly exercises its Extension Option, and if the Prevailing Market rate for the Extension Term is determined in accordance with
Section 10.3
above, Landlord, within a reasonable time thereafter. shall prepare and deliver to Tenant an amendment (the "
Extension Amendment
") reflecting change in the Base Rent, the term of the Lease, the expiration date of the Lease, and other appropriate terms, and Tenant shall execute and return the Extension Amendment to Landlord within 15 days after receiving it. Not withstanding the foregoing, upon determination of the Prevailing Market rate for the Extension Term in accordance with
Section 10.3
above, an otherwise valid exercise of the Extension Option shall be fully effective whether or not the Extension Amendment is executed.
|
10.5.
|
Definition of Prevailing Market.
For purposes of this Extension Option, "
Prevailing Market
" shall mean the arms-length, fair-market. annual rental rate per rentablc square foot under extension and renewal leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Building and office buildings comparable to the Building, in the San Jose, California area. The determination of Prevailing Market shall take into account any material differences in configuration or condition between the Premises and any comparison space (including any cost that would have to be incurred in order to make the configuration or condition of the comparison space similar to that of the Premises), together with any other material economic differences between the terms of the Lease and any comparison lease or amendment, such as rent abatements, construction costs and other concessions, and the manner, if any, in which the landlord under any such lease is reimbursed for operating expenses and taxes. The determination of Prevailing Market shall also take into consideration any reasonably anticipated changes in the Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate will become effective under the Lease.
|
11.
|
Other Provisions.
|
11.1.
|
Liability Insurance.
Clause (a) of the first sentence of Sect ion 14 of the Lease is hereby amended by replacing the amount "$2.000,000.00" set forth therein with the amount ''$3.000,000.00."
|
11.2.
|
Waiver of Subrogation.
Each party waives, and shall cause its insurance carrier to waive, any right of recovery against the other party, any of its (direct or indirect ) owners, or any of their respective beneficiaries, trustees, officers, directors, employees or agents for any loss of or damage to property which loss or damage is (or, if the insurance required under the Lease had been carried, would have been) covered by the waiving party's property insurance. For purposes of this Section only, (a) any deductible with respect to a party's insurance shall be deemed covered by, and recoverable by such party under, valid and collectable policies of insurance; and (b) any contractor retained by Landlord to install, maintain or monitor a fire or security alarm for the Building shall be deemed an agent of Landlord.
|
11.3.
|
Compliance with Law.
Without limiting Tenant's obligations under the Lease, if, as a result of Tenant's performance of any Alteration, Landlord becomes required under Law to perform any inspection or give any notice relating to the Premises or such Alteration, or to ensure that such alteration is performed in any particular manner, Tenant shall comply with such requirement on Landlord's behalf and promptly thereafter provide Landlord with reasonable documentation of such compliance.
|
11.4.
|
Application
. Notwithstanding any contrary provision hereof, Sections 11.1 through 11.3 above shall not apply to any period occurring before the Extension Date.
|
12.
|
Miscellaneous.
|
12.1.
|
This Amendment and the attached exhibits, which are hereby incorporated into and made a part of thi s Amendment, set forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Tenant shall not be entitled, in connection with entering into this Amendment, to any free rent, allowance. alteration, improvement or similar economic incentive to which Tenant may have been entitled in connection with entering into the Lease, except as may be otherwise expressly provided in this Amendment.
|
12.2.
|
Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.
|
12.3.
|
In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this Amendment shall govern and control.
|
12.4.
|
Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered it to Tenant.
|
12.5.
|
The capitalized terms used in this Amendment shall have the same definitions as set forth in the Lease to the extent that such capitalized terms arc defined therein and not redefined in this Amendment.
|
12.6.
|
Tenant shall indemnify and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principal, and members of any such agents harmless from all claims of any brokers (other than Cornish & Carey Commercial, a California corporation) claiming to have represented Tenant in connection with this Amendment. Landlord shall indemnify and hold Tenant, its trustees, members, principals, beneficiaries, partners,. officers, directors, employees, and agents, and the respective principals and members of any such agents harmless from all claims of any brokers claiming to have represented Landlord in connection with this Amendment. Tenant acknowledges that any assistance rendered by any agent or employee of any affiliate of Landlord in connection with this Amendment has been made as an accommodation to Tenant solely in furtherance of consummating the transaction on behalf of Landlord, and not as agent for Tenant.
|
12.7.
|
If Tenant has any expansion right (whether such right is designated as a right of first offer, right of first refusal, expansion option or otherwise) that was granted to Tenant under the Lease (as determined without giving effect to this Amendment) and that, by virtue of this Amendment, will continue in effect during the Extended Term, then, from and after the Extension Date, such expansion right shall be subject and subordinate to any expansion right (whether such right is designated as a right of first offer, right of first refusal, expansion option or otherwise) of any tenant of the Building or Project existing on the date of mutual execution and delivery hereof.
|
LANDLORD:
|
|||||
CA-THE CONCOURSE LIMITED PARTNERSHIP, a Delaware Limited Partnership
|
|||||
By:
|
EOP Owner GP L.L.C
|
||||
|
a Delaware limited liability company,
its general partner
|
||||
|
By:
|
/s/ Todd R Hedrick
|
|
||
|
|
Name:
|
Todd R. Hedrick
|
|
|
|
|
Title:
|
Senior Vice President - Leasing
|
|
|
|
|
|
|
|
|
TENANT:
|
|||||
PIXELWORKS, INC., an Oregon Corporation
|
|||||
By:
|
/s/ Steven L. Moore
|
|
|
||
Name:
|
Steven L. Moore
|
|
|
||
Title:
|
VP & CFO
|
|
|
1.
|
ALLOWANCE.
|
2.
|
PLANS AND PRICING.
|
3.
|
CONSTRUCTION.
|
Period
|
Base Annual Rent per Rentable Square Foot
|
8/1/13 - 12/31/14
|
$23.25
|
1/1/15 - 12/31/15
|
$23.95
|
1/1/16 - 12/31/16
|
$24.67
|
Renewal Term (if exercised)
|
See below
|
LANDLORD:
|
DURHAM PLAZA, LLC, an Oregon limited liability company
|
|
|
By:
|
/s/ Jack Greene
|
|
Its:
|
Managing Member
|
|
By:
|
|
|
Its:
|
|
TENANT:
|
PIXELWORKS, INC., an Oregon corporation
|
|
|
By:
|
/s/ Steven Moore
|
|
Its:
|
VP & CFO
|
1.
|
I have reviewed this annual report on Form 10-K of Pixelworks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 4, 2015
|
By:
|
|
/s/ Bruce A. Walicek
|
|
|
|
|
Bruce A. Walicek
|
|
|
|
|
President and
Chief Executive Officer (Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Pixelworks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
March 4, 2015
|
By:
|
|
/s/ Steven L. Moore
|
|
|
|
|
Steven L. Moore
|
|
|
|
|
Vice President, Chief Financial Officer,
Secretary and Treasurer (Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
|
/s/ Bruce A. Walicek
|
|
|
Bruce A. Walicek
|
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
|
|
Date:
|
|
March 4, 2015
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
|
/s/ Steven L. Moore
|
|
|
Steven L. Moore
|
|
|
Vice President,Chief Financial Officer Secretary, and Treasurer (Principal Financial Officer)
|
|
|
|
Date:
|
|
March 4, 2015
|