UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report (Date of earliest event Reported): May 5, 2020
MOSYS, INC.
(Exact
Name of Registrant as Specified in Charter)
000-32929
(Commission
File Number)
Delaware
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77-0291941
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(State or Other
Jurisdiction of Incorporation)
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(I.R.S. Employer
Identification Number)
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2309 Bering Dr.
San Jose, California 95131
(Address
of principal executive offices, with zip code)
(408) 418-7500
(Registrant's
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
|
Trading
Symbol(s)
|
Name of
each exchange on which registered
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Common
Stock, par value $0.001 per share
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MOSY
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The
Nasdaq Stock Market LLC
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Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (17
CFR
§230.405) or
Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR
§240.12b-2).
Emerging growth
company [ ]
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [ ]
Item
2.02. Results of Operations and Financial Condition.
On May
5, 2020, MoSys, Inc. (the “Company”) issued a press
release announcing its financial results for the three months ended
March 31, 2020. A copy of this press release is furnished as
Exhibit 99.1 to this report. The press release should be read in
conjunction with the cautionary language regarding forward-looking
statements, which are included in the text of the
release.
In addition to disclosing financial results
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”), management also presents
information regarding the Company’s performance over
comparable periods based on gross margin, operating expenses
(research and development and sales, general and administrative),
operating income (loss), net income (loss) and net income (loss)
per share, exclusive of stock-based compensation, and restructuring
and impairment charges. Because management discloses financial
measures calculated without taking into account these items, these
financial measures are characterized as "non-GAAP financial
measures" under Securities and Exchange Commission
rules.
Stock-based
compensation charges represent non-cash charges related to equity
awards granted by the Company. Although these are recurring charges
to the Company’s operations, management believes the
measurement of these amounts can vary considerably from period to
period and depend substantially on factors that are not a direct
consequence of operating performance that is within
management’s control. Thus, management believes that
excluding these charges facilitates comparisons of the
Company’s operational performance in different periods, as
well as with similarly determined non-GAAP financial measures of
comparable companies.
The
Company’s non-GAAP financial measures also exclude
restructuring charges related to reductions in workforce and
associated operating expenses to reduce net loss and cash burn and
to realign resources. The Company has incurred restructuring
charges in prior periods and may do so in the future, and such
charges should be considered in evaluating the performance of the
Company and its management. However, management believes that
presenting financial measures that exclude these charges
facilitates comparisons with the Company’s ongoing operating
results as well as those of other companies in its business
sector.
Adjusted EBITDA is
GAAP net income (loss), as reported on the Company’s
consolidated statements of operations, excluding stock-based
compensation, restructuring and impairment charges, interest
expense, depreciation, and the provision (benefit) for income
taxes.
Management and the
Company’s board of directors will continue to analyze the
historical consolidated results of operations and comprehensive
income (loss) (revenue, gross margin, research and development
expenses, selling, general and administrative expenses, operating
income (loss), net income (loss) and net income (loss) per share)
and adjusted EBITDA to assess the business and compare operating
results to the Company's performance objectives. For example, the
Company's budgeting and planning process utilizes these non-GAAP
financial measures.
The
Company discloses these non-GAAP financial measures to the public
as an additional means by which investors can assess the Company's
performance and to identify the Company's operating results for
investors on the same basis applied by management. The non-GAAP
financial measures disclosed by the Company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated
differently from, and, therefore, may not be comparable to,
similarly titled measures used by other companies. The Company has
furnished reconciliations of the non-GAAP financial measures to the
most directly comparable GAAP financial measures in the press
release furnished as Exhibit 99.1.
Moreover, although
these non-GAAP financial measures adjust expense, they should not
be viewed as a pro-forma presentation reflecting the elimination of
the underlying share-based compensation programs, which are an
important element of the Company's compensation structure. GAAP
requires that all forms of share-based payments should be valued
and included, as appropriate, in results of operations. Management
believes these expenses are a material part of the Company's
operating results.
The
information contained in this Current Report on Form 8-K and
Exhibit 99.1 hereto shall not be deemed “filed” for
purposes of Section 18 of the Securities and Exchange Act of 1934
(the “Exchange Act”) or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by
reference to any filing under the Securities Act of 1933 or the
Exchange Act, except as expressly set forth by specific reference
in such filing.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit No.
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Description
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Press Release by MoSys, Inc. dated
May 5, 2020
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SIGNATURE
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 hereunto duly authorized.
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MOSYS,
INC.
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|
|
|
|
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Date: May 5,
2020
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By:
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/s/ James W.
Sullivan
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|
|
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James W.
Sullivan
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|
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Vice President of
Finance and Chief Financial Officer
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Exhibit 99.1
MoSys, Inc. Reports First Quarter 2020 Financial
Results
SAN JOSE, Calif., May 5, 2020 – MoSys,
Inc. (NASDAQ: MOSY), a provider of high-speed semiconductor
solutions, today reported financial results for the first quarter
ended March 31, 2020.
First Quarter 2020 Financial Results
Total
net revenue for the first quarter of 2020 was $1.3 million,
compared with $2.3 million for the previous quarter and $3.5
million for the first quarter of 2019. Product revenue for the
first quarter was $1.1 million, compared with $2.1 million in the
fourth quarter of 2019 and $3.4 million in the year ago period. The
sequential decrease in product revenue reflected reduced shipments
of its Bandwidth Engine® products, including
approximately $0.7 million of shipments that were pushed out to the
second quarter due to COVID-19 shelter-in-place
orders.
Gross
margin for the first quarter of 2020 was 58%, compared with 59% for
the fourth quarter of 2019 and 62% for the first quarter of
2019.
Total
operating expenses on a GAAP basis for the first quarter of 2020
were $2.1 million, compared with operating expenses of $2.0 million
in the previous quarter and $2.1 million in the first quarter of
2019. Total non-GAAP operating expenses, excluding stock-based
compensation expenses, for the first quarter of 2020 were $2.0
million, compared with $1.9 million in the fourth quarter of 2019
and $2.1 million in the first quarter of 2019. A reconciliation of
GAAP results to non-GAAP results is provided in the financial
statement tables following the text of this press
release.
In
August 2019, the Company effected a 1-for-20 reverse stock split of
its common stock. All share and per share amounts in this press
release have been retroactively adjusted to reflect the reverse
stock split for prior periods, as applicable.
GAAP
net loss for the first quarter of 2020 was $1.4 million, or $0.61
per share, compared with a net loss of $0.7 million, or $0.31 per
share, for the previous quarter and GAAP net income of $10,000, or
$0.00 per diluted share, for the first quarter of
2019.
Non-GAAP
net loss for the first quarter of 2020 was $1.3 million, or $0.58
per share, compared with non-GAAP net loss of $0.6 million, or
$0.29 per share, in the prior quarter and non-GAAP net income of
$6,000, or $0.00 per diluted share, in the first quarter of 2019.
Adjusted EBITDA for the first quarter of 2020 was a negative $1.2
million, compared with a negative $0.5 million for the previous
quarter and a positive $0.1 million for the first quarter of
2019.
Management Commentary
“First
quarter product revenue was materially impacted by the COVID-19
shelter-in-place orders issued by county authorities, preventing us
from shipping devices against customer backlog in the last two
weeks of March,” said Dan Lewis, chief executive officer and
president of MoSys. “In the first half of April, we resumed
shipments of our IC products, completed shipment of all backlog
orders from March, and commenced April shipments. We expect to
continue shipping during the remainder of the second quarter ending
June 30, 2020, as we work with our vendors to ship critical
infrastructure components, as defined by the federal
government.”
Mr.
Lewis continued, “Also during the quarter, we continued to
expand our sales channels as we engaged Digi-Key Electronics, one
of the world's leading electronic component distributors, to sell
our Accelerator Engine IC products. We shipped an initial stocking
order to Digi-Key during the first quarter and believe that access
to its large customer base will generate additional design-win
opportunities. From a product development perspective, we continued
development efforts for our new Virtual Accelerator Engine software
and firmware product line. Most notably, we expect to recognize
initial revenue from the delivery of our Graph Memory Engine
product to a leading Accelerator Engine IC customer during the
second quarter and are also engaged with this customer on multiple
project license opportunities.”
Mr.
Lewis concluded, "Although we continue to see the impact of
COVID-19 on our business, we have recently seen some order pull-ins
from our major networking equipment customer. We also continue to
expand the pipeline for our Virtual Accelerator Engine product line
and expect to sign our first production license in the second half
of 2020. We are closely managing our operating expenditures during
this challenging time, as we actively identify and evaluate cost
reduction opportunities in order to minimize our cash burn.
Recently, we successfully completed a financing that resulted in
net proceeds of approximately $1.7 million, which will be used to
support ongoing operations and strengthen our balance sheet. The
duration and timing of the current macroeconomic slowdown caused by
COVID-19 remains uncertain; however, our team is highly focused on
executing our business plan and converting pipeline opportunities
into sales, especially for our Virtual Accelerator Engine
products."
Business Outlook
The
Company expects total net revenue for the second quarter of 2020 to
be in the range of $1.8 million to $2.1 million.
Use of Non-GAAP Financial Measures
To supplement MoSys’ consolidated financial statements
presented in accordance with GAAP, MoSys uses non-GAAP financial
measures that exclude from the statement of operations the effects
of stock-based compensation. MoSys’ management believes that
the presentation of these non-GAAP financial measures is useful to
investors and other interested persons because they are one of the
primary indicators that MoSys’ management uses for planning
and forecasting future performance. The press release also makes
reference to and reconciles GAAP net income (loss) and adjusted
EBITDA, which the Company defines as GAAP net income (loss) before
interest expense, income tax provision, and depreciation and
amortization, as well as stock-based compensation. Management
believes that the presentation of non-GAAP financial measures that
exclude these items is useful to investors because management does
not consider these charges part of the day-to-day business or
reflective of the core operational activities of the Company that
are within the control of management or that would be used to
evaluate management’s operating performance.
Investors are encouraged to review the reconciliations of these
non-GAAP financial measures to the comparable GAAP results, which
are provided in tables below the Condensed Consolidated Statements
of Operations. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the
financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully
evaluated. The non-GAAP financial measures used by the Company may
be calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies. For
additional information regarding these non-GAAP financial measures,
and management’s explanation of why it considers such
measures to be useful, refer to the Form 8-K dated May 4, 2020 that
the Company filed with the Securities and Exchange
Commission.
Forward-Looking Statements
This press release may contain forward-looking statements about the
Company, including, without limitation, the Company’s
expectation that it will continue shipping its products during the
remainder of the second quarter, the anticipated benefit of
Digi-Key Electronics and its ability to generate additional
design-win opportunities for the Company, its anticipated total net
revenue for the second quarter of 2020, the timing of initial
revenue recognition from and first production license for its
Virtual Accelerator Engine products, and the Company’s
intention to continue to closely manage its expenditures in
order to minimize cash burn.
Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors
include, but are not limited, to the following:
●
a lack of working
capital to aggressively fund product development and
growth;
●
the timing of
customer orders and product shipments;
●
risks related to
the Covid-19 pandemic, including public health requirements in
response to the outbreak of Covid-19 and the impact on the
Company’s business and operations, which is evolving and
beyond the Company’s control, members of the Company’s
management team or a significant number of its employee base
becoming ill with Covid-19, changes in government regulations and
mandates to address Covid-19 that may adversely impact the
Company’s ability to continue to operate without disruption,
and a significant decline in global macroeconomic conditions that
have an adverse impact on the Company’s business and
financial results;
●
customer
concentration;
●
ability to enhance
our existing proprietary technologies and develop new
technologies;
●
achieving
additional design wins for our IC products through the acceptance
and adoption of our IC architecture and interface protocols by
potential customers and their suppliers;
●
difficulties and
delays in the development, production, testing and marketing of our
ICs;
●
reliance on our
manufacturing partners to assist successfully with the fabrication
of our ICs;
●
availability of
quantities of ICs supplied by our manufacturing partners at a
competitive cost;
●
ability to make our
new software acceleration and IP products commercially available
and achieve customer acceptance of these new proprietary
technologies;
●
level of
intellectual property protection provided by our patents, the
expenses and other consequences of litigation, including
intellectual property infringement litigation, to which we may be
or may become a party from time to time;
●
vigor and growth of
markets served by our customers and our operations;
and
●
other risks
identified in the company’s most recent report on Form 10-K
filed with the Securities and Exchange Commission on March 17,
2020, as well as other reports that MoSys files from time to time
with the Securities and Exchange Commission.
MoSys
does not intend to update publicly any forward-looking statement
for any reason, except as required by law, even as new information
becomes available or other events occur in the future.
MoSys,
Inc. (NASDAQ: MOSY) is a provider of hardware and software/firmware
solutions that enable fast, intelligent data access and data
decisions for cloud networking, security, test and measurement,
video and other systems. MoSys’s Accelerator Engines are
memory integrated circuits with unmatched intelligence, performance
and capacity that eliminate data access bottlenecks to deliver
speed and intelligence in systems, including those scaling from
100G to multi-terabits per second. MoSys’s Software
Accelerator Platforms include software and firmware that focus on
accelerating application-specific decision functions and are
portable across a wide range of hardware configurations with or
without MoSys hardware. MoSys’ hardware and software
solutions provide system architects and designers with unique
system acceleration options. More information is available at
www.mosys.com.
Bandwidth Engine and MoSys are registered trademarks of MoSys, Inc.
in the US and/or other countries. The MoSys logo is a trademark of
MoSys, Inc. All other marks mentioned herein are the property of
their respective owners.
(Financial Tables to Follow)
Contact:
Jim Sullivan, CFO
MoSys, Inc.
+1 (408) 418-7500
jsullivan@mosys.com
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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(In
thousands, except per share amounts; unaudited)
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Net
Revenue
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Product
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$1,068
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$3,386
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Royalty and
other
|
192
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134
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Total net
revenue
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1,260
|
3,520
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Cost
of Net Revenue
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530
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1,354
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|
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Gross
Profit
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730
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2,166
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Operating
Expenses
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Research and
development
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961
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1,153
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Selling, general
and administrative
|
1,135
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972
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Total operating
expenses
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2,096
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2,125
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Income (loss) from
operations
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(1,366)
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41
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Other expense,
net
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(39)
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(31)
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Net
Income (loss)
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$(1,405)
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$10
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|
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Net
income (loss) per share
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Basic and
diluted
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$(0.61)
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$0.00
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Shares
used in computing net income (loss) per share
|
|
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Basic
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2,295
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2,153
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Diluted
|
2,295
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2,271
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CONSOLIDATED
BALANCE SHEETS
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(In
thousands, unaudited)
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Assets
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Current
assets:
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Cash, cash
equivalents and investments
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$5,640
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$6,353
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Accounts
receivable, net
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539
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1,175
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Inventories
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1,105
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968
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Prepaid expenses
and other
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567
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472
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Total current
assets
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7,851
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8,968
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Property and
equipment, net
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162
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197
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Right-of-use lease
asset
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109
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156
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Other
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18
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78
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Total
assets
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$8,140
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$9,399
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Liabilities
and Stockholders’ Equity
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Current
liabilities:
|
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Accounts
payable
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$107
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$218
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Deferred
revenue
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122
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166
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Short-term lease
liability
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116
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166
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Accrued expenses
and other
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1,325
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1,155
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Total current
liabilities
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1,670
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1,705
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Convertible notes
payable
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2,970
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2,858
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Total
liabilities
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4,640
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4,563
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Stockholders'
equity
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3,500
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4,836
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Total liabilities
and stockholders’ equity
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$8,140
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$9,399
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Reconciliation
of GAAP to Non-GAAP Net Income (Loss) and Net Income (Loss) Per
Share
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(In
thousands, except per share amounts; unaudited)
|
|
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GAAP
net imcome (loss)
|
$(1,405)
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$10
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Stock-based
compensation expense
|
|
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- Research and
development
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27
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(27)
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- Selling, general
and administrative
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41
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23
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Total stock-based
compensation expense
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68
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(4)
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Non-GAAP
net income (loss)
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$(1,337)
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$6
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|
|
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GAAP
net income (loss) per share, basic and diluted
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$(0.61)
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$0.00
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Reconciling
items
|
|
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- Stock-based
compensation expense
|
0.03
|
0.00
|
|
|
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Non-GAAP
net income (loss) per share, basic and diluted
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$(0.58)
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$0.00
|
|
|
|
Shares
used in computing non-GAAP net income (loss) per share
|
|
|
Basic
|
2,295
|
2,153
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Diluted
|
2,295
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2,271
|
|
Reconciliation
of GAAP and Non-GAAP Financial Information
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(In
thousands; unaudited)
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP net income (loss) and adjusted EBITDA
|
|
|
GAAP
net income (loss)
|
$(1,405)
|
$10
|
Stock-based
compensation expense
|
|
|
- Research and
development
|
27
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(27)
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- Selling, general
and administrative
|
41
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23
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Stock-based
compensation expense
|
68
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(4)
|
|
|
|
Non-GAAP
net income (loss)
|
(1,337)
|
6
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EBITDA
adjustments:
|
|
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Depreciation
|
41
|
72
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Interest
expense
|
55
|
54
|
|
|
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Adjusted
EBITDA
|
$(1,241)
|
$132
|