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): August 6,
2020
MOSYS,
INC.
(Exact
Name of Registrant as Specified in Charter)
000-32929
(Commission File
Number)
Delaware
|
77-0291941
|
(State or
Other
Jurisdiction
of Incorporation)
|
(I.R.S. Employer Identification Number)
|
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
|
Common
Stock, par value $0.001 per share
|
MOSY
|
The
Nasdaq Stock Market LLC
|
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
August 6, 2020, MoSys, Inc. (the “Company”) issued a
press release announcing its financial results for the three and
six months ended June 30, 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, restructuring and
impairment charges and a one-time deemed dividend. 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 exclude deemed
dividends. In April 2020, the Company completed an offering of
common stock (the “Offering’). As a result of the
Offering, the exercise price of 1,845,540 common stock purchase
warrants issued in a public offering of securities completed in
October 2018 was reduced from $6.00 to $2.40 per share. The Company
accounted for the warrant exercise price adjustment as a deemed
dividend, which increased the net loss attributable to common
stockholders for the three and six months ended June 30,
2020.
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, the provision (benefit) for income taxes and
the one-time deemed dividend.
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.
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.
MOSYS, INC.
Date: August 6,
2020
|
By: /s/ James
W.
Sullivan
|
|
|
|
James W. Sullivan
Vice President of Finance and Chief Financial
Officer
|
|
Exhibit 99.1
MoSys, Inc. Reports Second Quarter 2020 Financial
Results
SAN JOSE, Calif., August 6, 2020 – MoSys,
Inc. (NASDAQ: MOSY), a provider of semiconductor solutions that enable fast,
intelligent data access for Cloud, networking, security and
communications systems, today reported
financial results
for its second quarter ended June 30, 2020.
Second Quarter 2020 Financial Results
Total
net revenue for the second quarter of 2020 was $2.0 million,
compared with $1.3 million for the previous quarter and $3.1
million for the second quarter of 2019. Product revenue for the
second quarter was $1.7 million, compared with $1.1 million in the
first quarter of 2020 and $2.8 million in the year ago period. The
sequential increase in product revenue reflected increased
shipments of Bandwidth Engine® products that were
unable to be shipped at the end of the first quarter due to
COVID-19 shelter-in-place constraints.
Gross
margin for the second quarter of 2020 was 69%, compared with 58%
for the first quarter of 2020 and 60% for the second quarter of
2019. The increase in gross margins was attributable to
manufacturing efficiencies driven by higher shipment volumes and
licensing revenues recognized in the second quarter of
2020.
Total
operating expenses on a GAAP basis for the second quarter of 2020
were $1.9 million, compared with $2.1 million in the previous
quarter and $1.9 million in the second quarter of 2019. Total
non-GAAP operating expenses, excluding stock-based compensation
expenses, for the second quarter of 2020 were $1.9 million,
compared with $2.0 million in the first quarter of 2020 and $1.8
million in the second 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 attributable to common stockholders for the second quarter
of 2020 was $1.0 million, or $0.32 per share, which included a $0.4
million one-time, non-cash deemed dividend to account for a warrant
exercise price adjustment for warrants issued in an October 2018
public offering of common stock. This compared with a GAAP net loss
of $1.4 million, or $0.61 per share, for the previous quarter and a
net loss of $0.1 million, or $0.05 per share, for the second
quarter of 2019. The deemed dividend increased the net loss
attributable to common stockholders by $0.12 and $0.14 for the
three and six months ended June 30, 2020,
respectively.
Non-GAAP
net loss for the second quarter of 2020 was $0.6 million, or $0.18
per share, compared with non-GAAP net loss of $1.3 million, or
$0.58 per share, in the prior quarter and non-GAAP net income of
$16,000, or $0.01 per diluted share, in the second quarter of 2019.
Adjusted EBITDA for the second quarter of 2020 was a negative $0.5
million, compared with a negative $1.2 million for the previous
quarter and a positive $0.1 million for the second quarter of
2019.
During
the second quarter, the Company generated $2.2 million from
financing activities, including net proceeds of $1.6 million from
an offering of common stock and $0.6 million in loan proceeds from
the Paycheck Protection Program (the PPP), which was established
under the U.S. government’s Coronavirus Aid, Relief, and
Economic Security Act. The Company intends to apply for forgiveness
of the loan under the terms of the PPP, but no assurance can be
given on whether the loan will be forgiven.
Management Commentary
“We
were pleased with the increase in our IC revenues in the second
quarter, as we were able to begin shipping products again in April,
after experiencing COVID-related disruptions at the end of the
previous quarter. To date, we have experienced no further
disruptions. We secured multiple new design wins for our
Accelerator Engine IC products, including an additional design win
for a product platform with our lead application delivery customer.
In addition, we recently announced our QPR product line of ultra,
high-speed SRAM memory devices optimized for FPGA-based systems. We
expect to make initial QPR shipments in the third quarter to stock
our lead distributor.
“In
addition to announcing our new QPR product line, we made
significant progress on our Virtual Accelerator Engine software and
firmware products, successfully delivering a working demonstration
of our graph memory engine (GME) technology to a lead customer and
recognizing first revenue during the second quarter. We expect
to sign an
initial production license for our GME technology with this
customer in the second half of 2020, and we have multiple
evaluations in process with other prospective
customers.”
Mr. Lewis concluded, “Through the dedication of the
entire MoSys team, we have been able to continue the majority of
our business activities remotely throughout the pandemic and remain
focused on meeting our customer requirements, while ensuring the
health and safety of our employees and their families. The ultimate
impact from COVID-19 on our business, especially to customer
product programs and our supply chain, remains uncertain. Our
financing activities during the second quarter significantly
improved our balance sheet and provided additional cash to fund
ongoing operations. We have a solid backlog of product orders for
the second half of 2020 and remain focused on converting pipeline
opportunities into sales, especially for our Virtual Accelerator
Engine products."
Business Outlook
The
Company expects total net revenue for the third 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 and deemed dividends. 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) attributable to common
stockholders 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, restructuring and impairment charges and the one-time
deemed dividend. 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 August 6, 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
expectations regarding the impact of COVID-19 on its business,
anticipated shipments of its QPR products, its anticipated total
net revenue for the third quarter of 2020, the timing of a first
production license for its Virtual Accelerator Engine products and
the Company’s backlog of IC orders. 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.
About MoSys, Inc.
MoSys,
Inc. (NASDAQ: MOSY) is focused on Accelerating Data Intelligence
and provides both silicon chips and IP solutions to enable fast,
intelligent data access and decision making for a wide range of
markets including cloud networking, security, 5G, SmartNIC, test
and measurement, and video systems. MoSys’s Quazar family of
high-speed memories and the Blazar family of 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 Stellar
family of Virtual Accelerator Engines includes software, FPGA RTL
and RISC-based firmware to accelerate applications and are portable
across a wide range of hardware configurations with or without
MoSys silicon chips. 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, Quazar, Blazar
and Stellar are trademarks 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
MOSYS, INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands, except per share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
|
|
|
|
Product
|
$1,679
|
$2,810
|
$2,747
|
$6,196
|
Royalty and
other
|
289
|
256
|
481
|
390
|
Total net
revenue
|
1,968
|
3,066
|
3,228
|
6,586
|
|
|
|
|
|
Cost
of Net Revenue
|
604
|
1,228
|
1,134
|
2,582
|
|
|
|
|
|
Gross
Profit
|
1,364
|
1,838
|
2,094
|
4,004
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
Research and
development
|
985
|
981
|
1,946
|
2,134
|
Selling, general
and administrative
|
964
|
932
|
2,099
|
1,904
|
Total operating
expenses
|
1,949
|
1,913
|
4,045
|
4,038
|
|
|
|
|
|
Loss from
operations
|
(585)
|
(75)
|
(1,951)
|
(34)
|
|
|
|
|
|
Other expense,
net
|
(54)
|
(28)
|
(93)
|
(59)
|
Net
loss
|
$(639)
|
$(103)
|
$(2,044)
|
$(93)
|
|
|
|
|
|
Deemed dividend for
warrant exercise price adjustment
|
(392)
|
-
|
(392)
|
-
|
Net
loss attributable to common stockholders
|
$(1,031)
|
$(103)
|
$(2,436)
|
$(93)
|
|
|
|
|
|
Net
loss per share
|
|
|
|
|
Basic and
diluted
|
$(0.32)
|
$(0.05)
|
$(0.88)
|
$(0.04)
|
|
|
|
|
|
Shares
used in computing net loss per share
|
|
|
|
|
Basic and
diluted
|
3,265
|
2,159
|
2,780
|
2,156
|
MOSYS, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
Cash, cash
equivalents and investments
|
$7,375
|
$6,353
|
Accounts
receivable, net
|
601
|
1,175
|
Inventories
|
1,016
|
968
|
Prepaid expenses
and other
|
311
|
472
|
Total current
assets
|
9,303
|
8,968
|
|
|
|
Property and
equipment, net
|
127
|
197
|
Right-of-use lease
asset
|
63
|
156
|
Other
|
18
|
78
|
Total
assets
|
$9,511
|
$9,399
|
|
|
|
Liabilities
and Stockholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$48
|
$218
|
Deferred
revenue
|
-
|
166
|
Short-term lease
liability
|
66
|
166
|
PPP note payable -
current portion
|
195
|
-
|
Accrued expenses
and other
|
1,302
|
1,155
|
Total current
liabilities
|
1,611
|
1,705
|
|
|
|
Convertible notes
payable
|
2,970
|
2,858
|
PPP note
payable
|
384
|
-
|
Total
liabilities
|
4,965
|
4,563
|
|
|
|
Stockholders'
equity
|
4,546
|
4,836
|
|
|
|
Total liabilities
and stockholders’ equity
|
$9,511
|
$9,399
|
MOSYS, INC.
|
Reconciliation of GAAP to Non-GAAP Net Income (Loss) and Net Income
(Loss) Per Share
|
(In thousands, except per share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
net loss attributable to common stockholders
|
$(1,031)
|
$(103)
|
$(2,436)
|
$(93)
|
Deemed dividend for
warrant exercise price adjustment
|
392
|
-
|
392
|
-
|
Stock-based
compensation expense
|
|
|
|
|
-Research and
development
|
27
|
67
|
54
|
40
|
-Selling, general
and administrative
|
39
|
52
|
80
|
75
|
Total stock-based
compensation expense
|
66
|
119
|
134
|
115
|
|
|
|
|
|
Non-GAAP
net income (loss)
|
$(573)
|
$16
|
$(1,910)
|
$22
|
|
|
|
|
|
GAAP
net loss attributable to common stockholders per share, basic and
diluted
|
$(0.32)
|
$(0.05)
|
$(0.88)
|
$(0.04)
|
Reconciling
items
|
|
|
|
|
-Deemed dividend
for warrant exercise price adjustment
|
0.12
|
-
|
0.14
|
-
|
-Stock-based
compensation expense
|
0.02
|
0.06
|
0.05
|
0.05
|
|
|
|
|
|
Non-GAAP
net income (loss) per share, basic and diluted
|
$(0.18)
|
$0.01
|
$(0.69)
|
$0.01
|
|
|
|
|
|
Shares
used in computing non-GAAP net income (loss) per share
|
|
|
|
|
Basic
|
3,265
|
2,159
|
2,780
|
2,156
|
Diluted
|
3,265
|
2,286
|
2,780
|
2,276
|
MOSYS, INC.
|
Reconciliation of GAAP and Non-GAAP Financial
Information
|
(In thousands; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP loss and adjusted EBITDA
|
|
|
|
|
GAAP
net loss attributable to common stockholders
|
$(1,031)
|
$(103)
|
$(2,436)
|
$(93)
|
Deemed dividend for
warrant exercise price adjustment
|
392
|
-
|
392
|
-
|
Stock-based
compensation expense
|
|
|
|
|
-Research and
development
|
27
|
67
|
54
|
40
|
-Selling, general
and administrative
|
39
|
52
|
80
|
75
|
Stock-based
compensation expense
|
66
|
119
|
134
|
115
|
|
|
|
|
|
Non-GAAP
net income (loss)
|
(573)
|
16
|
(1,910)
|
22
|
EBITDA
adjustments:
|
|
|
|
|
Depreciation
|
41
|
39
|
82
|
111
|
Interest
expense
|
56
|
56
|
111
|
110
|
|
|
|
|
|
Adjusted
EBITDA
|
$(476)
|
$111
|
$(1,717)
|
$243
|