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): November 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
November 6, 2020, MoSys, Inc. (the “Company”) issued a
press release announcing its financial results for the three and
nine months ended September 30, 2020. A copy of this press release
is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
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 nine months ended September 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 Exchange Act of 1934, as
amended (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, as amended, 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: November 6,
2020
|
By: /s/ James
W.
Sullivan
|
|
|
|
James W. Sullivan
Vice President of Finance and Chief Financial
Officer
|
|
Exhibit 99.1
MoSys, Inc. Announces Third Quarter 2020 Financial
Results
SAN JOSE, Calif., November 6, 2020 – MoSys,
Inc. (NASDAQ: MOSY) (“MoSys” or the
“Company”), a provider of semiconductor solutions that enable fast,
intelligent data access for Cloud, networking, security and
communications systems, today announced
financial results
for its third quarter ended September 3o, 2020.
Third Quarter 2020 Financial Results
Total
net revenue for the third quarter of 2020 was $2.0 million,
consistent with the previous quarter and compared with $1.2 million
for the third quarter of 2019. Product revenue for the third
quarter of 2020 was $1.8 million, compared with $1.7 million in the
previous quarter and $1.0 million in the year ago period. The
sequential and year-over-year increase in product revenue reflected
increased shipments of Bandwidth Engine® products.
Gross
margin for the third quarter of 2020 was 66%, compared with 69% for
the second quarter of 2020 and 66% for the third quarter of 2019.
The sequential decrease in gross margins was primarily attributable
to product mix, including initial licensing revenue for its Virtual
Accelerator Engine technology recorded in the second quarter of
2020.
Total
operating expenses on a GAAP basis for the third quarter of 2020
were $1.9 million, consistent with the previous quarter and
compared with $2.6 million in the third quarter of 2019. Total
non-GAAP operating expenses, excluding stock-based compensation
expenses, for the third quarter of 2020 were $1.9 million,
consistent with the second quarter of 2020 and compared with $2.1
million in the third 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.
GAAP
net loss attributable to common stockholders for the third quarter
of 2020 was $0.7 million, or $0.20 per share. This compared with a
GAAP net loss of $1.0 million, or $0.32 per share, for the previous
quarter 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,
and a net loss of $1.8 million, or $0.83 per share, for the third
quarter of 2019. The deemed dividend increased the net loss
attributable to common stockholders by $0.13 for the nine months
ended September 30, 2020.
Non-GAAP
net loss for the third quarter of 2020 was $0.6 million, or $0.18
per share, consistent with the prior quarter and compared with a
non-GAAP net loss of $1.3 million, or $0.60 per share, for the
third quarter of 2019. Adjusted EBITDA for the third quarter of
2020 was a negative $0.5 million, consistent with the previous
quarter and compared with a negative $1.2 million for the third
quarter of 2019.
Management Commentary
“Like
other companies across the globe, we continue to navigate multiple
challenges related to the COVID-19 pandemic, including supply chain
constraints that have resulted in extended component lead times and
delays in customer projects and product launches,” stated Dan
Lewis, President & CEO of MoSys. “Despite these
challenges, revenue increased sequentially driven by increased
shipments of our Accelerator Engine IC products to networking and
security customers, as we executed operationally to meet our
customers’ order and delivery requirements. Our lead
application delivery customer is progressing, and we expect this
customer’s first platform to commence initial production in
the first half of 2021. In addition, we recorded multiple new
design wins, as we continued to successfully promote our existing
IC products.
During
the third quarter, we also continued to advance the development of
our Virtual Accelerator Engine (VAE) product line. The technology
is well suited for integration into high-performance FPGAs, and we
delivered our first implementation for packet classification, the
Graph Memory Engine. We continue to work closely with our lead VAE
customer and expect to execute a production license by early 2021.
Other customers are also recognizing the benefits of this product,
and we have multiple evaluations in progress.”
Mr.
Lewis concluded, “Our fourth quarter will be impacted by
customer transitions, as we believe we have completed final
shipments to one customer and await new customer platforms to begin
production in 2021. That said, we believe we are well positioned
for expanding revenue opportunities in 2021, driven by new customer
production for our Accelerator Engine products and development and
production licenses for our VAE technology. We remain focused on
the expansion of our VAE product portfolio, new design wins for our
Accelerator Engine products, and close management of our expenses
to preserve cash.”
Business Outlook
The
Company expects total net revenue for the fourth quarter of 2020 to
be in the range of $1.3 million to $1.6 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 a 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 Current Report on Form 8-K
dated November 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, its
anticipated total net revenue for the fourth quarter of 2020, the
timing of a first production license for its Virtual Accelerator
Engine products and the Company’s management of expenses.
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 Annual 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
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In
thousands, except per share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
|
|
|
|
Product
|
$1,803
|
$1,037
|
$4,550
|
$7,233
|
Royalty and
other
|
168
|
169
|
649
|
559
|
Total net
revenue
|
1,971
|
1,206
|
5,199
|
7,792
|
|
|
|
|
|
Cost
of Net Revenue
|
677
|
407
|
1,811
|
2,989
|
|
|
|
|
|
Gross
Profit
|
1,294
|
799
|
3,388
|
4,803
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
Research and
development
|
972
|
1,097
|
2,918
|
3,231
|
Selling, general
and administrative
|
955
|
1,059
|
3,054
|
2,963
|
Impairment of
goodwill
|
-
|
420
|
-
|
420
|
Total operating
expenses
|
1,927
|
2,576
|
5,972
|
6,614
|
|
|
|
|
|
Loss from
operations
|
(633)
|
(1,777)
|
(2,584)
|
(1,811)
|
|
|
|
|
|
Other expense,
net
|
(74)
|
(24)
|
(167)
|
(83)
|
Net
loss
|
$(707)
|
$(1,801)
|
$(2,751)
|
$(1,894)
|
|
|
|
|
|
Deemed dividend for
warrant exercise price adjustment
|
-
|
-
|
(392)
|
-
|
Net
loss attributable to common stockholders
|
$(707)
|
$(1,801)
|
$(3,143)
|
$(1,894)
|
|
|
|
|
|
Net
loss per share
|
|
|
|
|
Basic and
diluted
|
$(0.20)
|
$(0.83)
|
$(1.03)
|
$(0.88)
|
|
|
|
|
|
Shares
used in computing net loss per share
|
|
|
|
|
Basic and
diluted
|
3,546
|
2,171
|
3,037
|
2,161
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
Cash, cash
equivalents and investments
|
$6,921
|
$6,353
|
Accounts
receivable, net
|
790
|
1,175
|
Inventories
|
713
|
968
|
Prepaid expenses
and other
|
359
|
472
|
Total current
assets
|
8,783
|
8,968
|
|
|
|
Property and
equipment, net
|
86
|
197
|
Right-of-use lease
asset
|
352
|
156
|
Other
|
17
|
78
|
Total
assets
|
$9,238
|
$9,399
|
|
|
|
Liabilities
and Stockholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$80
|
$218
|
Deferred
revenue
|
-
|
166
|
Short-term lease
liability
|
201
|
166
|
PPP note payable -
current portion
|
171
|
-
|
Accrued expenses
and other
|
1,233
|
1,155
|
Total current
liabilities
|
1,685
|
1,705
|
|
|
|
Convertible notes
payable
|
3,092
|
2,858
|
PPP note
payable
|
408
|
-
|
Long-term lease
liability
|
152
|
-
|
Total
liabilities
|
5,337
|
4,563
|
|
|
|
Stockholders'
equity
|
3,901
|
4,836
|
|
|
|
Total liabilities
and stockholders’ equity
|
$9,238
|
$9,399
|
|
Reconciliation
of GAAP to Non-GAAP Net Loss and Net Loss Per Share
|
(In
thousands, except per share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
net loss attributable to common stockholders
|
$(707)
|
$(1,801)
|
$(3,143)
|
$(1,894)
|
Deemed dividend for
warrant exercise price adjustment
|
-
|
-
|
392
|
-
|
Stock-based
compensation expense
|
|
|
|
|
- Research and
development
|
25
|
41
|
79
|
81
|
- Selling, general
and administrative
|
38
|
43
|
118
|
118
|
Total stock-based
compensation expense
|
63
|
84
|
197
|
199
|
|
|
|
|
|
Impairment of
goodwill
|
-
|
420
|
-
|
420
|
Non-GAAP
net loss
|
$(644)
|
$(1,297)
|
$(2,554)
|
$(1,275)
|
|
|
|
|
|
GAAP
net loss attributable to common stockholders per share, basic and
diluted
|
$(0.20)
|
$(0.83)
|
$(1.03)
|
$(0.88)
|
Reconciling
items
|
|
|
|
|
- Deemed dividend
for warrant exercise price adjustment
|
-
|
-
|
0.13
|
-
|
- Stock-based
compensation expense
|
0.02
|
0.04
|
0.06
|
0.09
|
- Impairment of
goodwill
|
-
|
0.19
|
-
|
0.20
|
|
|
|
|
|
Non-GAAP
net loss per share, basic and diluted
|
$(0.18)
|
$(0.60)
|
$(0.84)
|
$(0.59)
|
|
|
|
|
|
Shares
used in computing non-GAAP net loss per share
|
|
|
|
|
Basic and
diluted
|
3,546
|
2,171
|
3,037
|
2,161
|
|
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
|
$(707)
|
$(1,801)
|
$(3,143)
|
$(1,894)
|
Deemed dividend for
warrant exercise price adjustment
|
-
|
-
|
392
|
-
|
Stock-based
compensation expense
|
|
|
|
|
- Research and
development
|
25
|
41
|
79
|
81
|
- Selling, general
and administrative
|
38
|
43
|
118
|
118
|
Stock-based
compensation expense
|
63
|
84
|
197
|
199
|
Impairment of
goodwill
|
-
|
420
|
-
|
420
|
|
|
|
|
|
Non-GAAP
net loss
|
(644)
|
(1,297)
|
(2,554)
|
(1,275)
|
EBITDA
adjustments:
|
|
|
|
|
Depreciation
|
39
|
37
|
121
|
148
|
Interest
expense
|
70
|
54
|
181
|
164
|
|
|
|
|
|
Adjusted
EBITDA
|
$(535)
|
$(1,206)
|
$(2,252)
|
$(963)
|