|
(Mark One)
|
|
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
04-3457049
|
|
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
|
incorporation or organization)
|
||
One Tech Drive, Suite 325
Andover, Massachusetts
|
01810
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x |
PAGE NO.
|
|||
PART I.
|
FINANCIAL INFORMATION
|
|
|
ITEM 1.
|
Financial Statements
|
|
|
Unaudited Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011
|
1
|
||
Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2012 and 2011
|
2
|
||
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2012 and 2011
|
3
|
||
Unaudited Consolidated Statement of Stockholders’ Equity as of September 30, 2012
|
4
|
||
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011
|
5
|
||
Notes to Unaudited Consolidated Financial Statements
|
6
|
||
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
20
|
|
ITEM 4.
|
Controls and Procedures
|
32
|
|
PART II.
|
OTHER INFORMATION
|
|
|
ITEM 1.
|
Legal Proceedings
|
33
|
|
ITEM 1A.
|
Risk Factors
|
33
|
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
33
|
|
ITEM 6.
|
Exhibits
|
34
|
|
Signatures
|
|
September 30,
2012 |
December 31,
2011 |
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 25,347,187 | $ | 51,914,128 | ||||
Restricted cash
|
2,706,830 | 3,791,189 | ||||||
Short-term investments
|
33,640,012 | 6,814,728 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $41,815 and $6,441, respectively, as of September 30, 2012 and December 31, 2011
|
6,833,143 | 6,068,904 | ||||||
Inventories
|
9,775,070 | 11,459,153 | ||||||
Other current assets
|
2,751,586 | 2,050,787 | ||||||
Total current assets
|
81,053,828 | 82,098,889 | ||||||
Property and equipment, net
|
29,488,751 | 30,998,489 | ||||||
Long-term investments
|
2,600,000 | 2,600,000 | ||||||
Goodwill
|
612,578 | 606,976 | ||||||
Intangible assets, net
|
10,133,406 | 11,091,532 | ||||||
Other assets
|
141,610 | 136,633 | ||||||
Total assets
|
$ | 124,030,173 | $ | 127,532,519 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 4,332,101 | $ | 8,439,605 | ||||
Accrued expenses
|
3,199,371 | 2,630,966 | ||||||
Advance research funding
|
2,706,830 | 3,791,189 | ||||||
Current portion of note payable to bank
|
1,000,000 | 500,000 | ||||||
Total current liabilities
|
11,238,302 | 15,361,760 | ||||||
Note payable to bank, net of current portion
|
16,430,000 | 17,430,000 | ||||||
Building liability
|
8,064,310 | 8,161,288 | ||||||
Other liabilities
|
97,105 | 124,180 | ||||||
Total other liabilities
|
24,591,415 | 25,715,468 | ||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.00001 par value; authorized, 45,000,000 shares; 24,199,585 and 23,983,813 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively
|
242 | 240 | ||||||
Additional paid-in capital
|
102,556,701 | 101,266,272 | ||||||
Accumulated other comprehensive income
|
4,423,913 | 4,363,930 | ||||||
Accumulated deficit
|
(19,487,200 | ) | (19,908,135 | ) | ||||
MEMSIC, Inc. stockholders' equity
|
87,493,656 | 85,722,307 | ||||||
Non-controlling interest related to joint ventures
|
706,800 | 732,984 | ||||||
Total stockholders' equity
|
88,200,456 | 86,455,291 | ||||||
Total liabilities and stockholders’ equity
|
$ | 124,030,173 | $ | 127,532,519 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net sales
|
$ | 15,188,705 | $ | 18,357,300 | $ | 49,620,995 | $ | 46,684,854 | ||||||||
Cost of goods sold
|
9,878,008 | 12,155,533 | 31,108,812 | 30,543,197 | ||||||||||||
Gross profit
|
5,310,697 | 6,201,767 | 18,512,183 | 16,141,657 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
1,440,336 | 2,200,240 | 4,912,696 | 6,610,213 | ||||||||||||
Sales and marketing
|
1,276,933 | 1,881,240 | 3,937,640 | 4,875,893 | ||||||||||||
General and administrative
|
2,332,925 | 2,397,618 | 6,968,920 | 6,374,497 | ||||||||||||
Depreciation
|
358,277 | 401,815 | 1,175,572 | 1,199,166 | ||||||||||||
Amortization
|
338,879 | 403,835 | 1,148,887 | 1,212,001 | ||||||||||||
Total operating expenses
|
5,747,350 | 7,284,748 | 18,143,715 | 20,271,770 | ||||||||||||
Operating (loss) income
|
(436,653 | ) | (1,082,981 | ) | 368,468 | (4,130,113 | ) | |||||||||
Other income:
|
||||||||||||||||
Interest and dividend income
|
4,378 | 153,227 | 237,412 | 335,082 | ||||||||||||
Foreign exchange gain (loss)
|
209,628 | 328,639 | (15,825 | ) | 848,114 | |||||||||||
Other, net
|
19,583 | 323,587 | 58,225 | 406,007 | ||||||||||||
Total other income
|
233,589 | 805,453 | 279,812 | 1,589,203 | ||||||||||||
(Loss) profit before income taxes
|
(203,064 | ) | (277,528 | ) | 648,280 | (2,540,910 | ) | |||||||||
Provision for income taxes
|
96,462 | 58,343 | 194,400 | 172,653 | ||||||||||||
Net (loss) income
|
(299,526 | ) | (335,871 | ) | 453,880 | (2,713,563 | ) | |||||||||
Less: net income attributable to non-controlling interests
|
18,629 | 32,895 | 32,945 | 91,685 | ||||||||||||
Net (loss) income attributable to MEMSIC, Inc.
|
$ | (318,155 | ) | $ | (368,766 | ) | $ | 420,935 | $ | (2,805,248 | ) | |||||
Net (loss) income per common share attributable to MEMSIC, Inc.:
|
||||||||||||||||
Basic
|
$ | (0.01 | ) | $ | (0.02 | ) | $ | 0.02 | $ | (0.12 | ) | |||||
Diluted
|
$ | (0.01 | ) | $ | (0.02 | ) | $ | 0.02 | $ | (0.12 | ) | |||||
Weighted average shares outstanding used in calculating net (loss) income per common share:
|
||||||||||||||||
Basic
|
24,024,725 | 23,825,134 | 23,985,453 | 23,822,587 | ||||||||||||
Diluted
|
24,024,725 | 23,825,134 | 24,414,565 | 23,822,587 |
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net (loss) income
|
$ | (299,526 | ) | $ | (335,871 | ) | $ | 453,880 | $ | (2,713,563 | ) | |||||
Other comprehensive income (loss):
|
||||||||||||||||
Unrealized gain on investments
|
1,068 | (199,759 | ) | 12 | (200,570 | ) | ||||||||||
Foreign currency translation adjustments
|
387,628 | 398,169 | 59,972 | 943,809 | ||||||||||||
Comprehensive income (loss)
|
89,170 | (137,461 | ) | 513,863 | (1,970,324 | ) | ||||||||||
Less: income attributable to noncontrolling interest
|
18,629 | 32,895 | 32,945 | 91,685 | ||||||||||||
Foreign currency translation adjustment
|
- | - | - | (3,025 | ) | |||||||||||
Comprehensive income attributable to noncontrolling interests
|
18,629 | 32,895 | 32,945 | 88,660 | ||||||||||||
Comprehensive income (loss) attibutable to MEMSIC, Inc.
|
$ | 70,541 | $ | (170,356 | ) | $ | 480,918 | $ | (2,058,984 | ) |
Common Stock
|
Additional
Paid-In |
Accumulated
Other |
Accumulated
|
MEMSIC, Inc.
Stockholders’ |
Non-
controlling |
Total
|
||||||||||||||||||||||||||
Shares
|
Par Value
|
Capital
|
Income
|
Deficit
|
Equity
|
Interest
|
Equity
|
|||||||||||||||||||||||||
Balance at December 31, 2011
|
23,983,813 | $ | 240 | $ | 101,266,272 | $ | 4,363,930 | $ | (19,908,135 | ) | $ | 85,722,307 | $ | 732,984 | $ | 86,455,291 | ||||||||||||||||
Net income
|
- | 420,935 | 420,935 | 32,945 | 453,880 | |||||||||||||||||||||||||||
Foreign currency translation adjustment
|
59,972 | - | 59,972 | - | 59,972 | |||||||||||||||||||||||||||
Unrealized loss on short-term investment
|
12 | - | 12 | - | 12 | |||||||||||||||||||||||||||
Comprehensive income
|
59,983 | 420,935 | 480,918 | 32,945 | 513,863 | |||||||||||||||||||||||||||
Exercise of options to purchase common stock
|
106,468 | 1 | 193,537 | 193,538 | 193,538 | |||||||||||||||||||||||||||
Issuance of restricted stock award
|
109,304 | 1 | (7,224 | ) | (7,223 | ) | (7,223 | ) | ||||||||||||||||||||||||
Stock compensation expense
|
1,104,116 | 1,104,116 | 1,104,116 | |||||||||||||||||||||||||||||
Dividend paid to Japan non-controlling interest
|
(59,129 | ) | (59,129 | ) | ||||||||||||||||||||||||||||
Balance at September 30, 2012
|
24,199,585 | $ | 242 | $ | 102,556,701 | $ | 4,423,913 | $ | (19,487,200 | ) | $ | 87,493,656 | $ | 706,800 | $ | 88,200,456 |
Nine months ended September 30,
|
||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | 453,880 | $ | (2,713,563 | ) | |||
Adjustments to reconcile net income (loss) to cash used in operating activities:
|
||||||||
Depreciation
|
2,626,577 | 2,293,162 | ||||||
Amortization
|
1,164,783 | 1,240,241 | ||||||
Stock compensation expense
|
1,104,116 | 1,259,202 | ||||||
Deferred rent
|
(27,075 | ) | 42,421 | |||||
Deferred income taxes
|
(14,252 | ) | 46,483 | |||||
Changes in operating assets and liabilities:
|
||||||||
Restricted cash
|
1,086,261 | (773,318 | ) | |||||
Accounts receivable
|
(765,348 | ) | (3,711,949 | ) | ||||
Inventories
|
1,691,000 | (338,568 | ) | |||||
Other assets
|
(814,422 | ) | (104,043 | ) | ||||
Advance research funding
|
(1,086,261 | ) | 773,318 | |||||
Accounts payable and accrued expenses
|
(3,560,466 | ) | 3,212,975 | |||||
Net cash provided by operating activities
|
1,858,793 | 1,226,361 | ||||||
Cash flows from investing activities:
|
||||||||
Purchase of short-term investments
|
(26,825,076 | ) | (1,414,578 | ) | ||||
Proceeds from sale of long-term investments
|
- | 200,000 | ||||||
Purchase of property and equipment
|
(1,089,522 | ) | (2,502,862 | ) | ||||
Net cash used in investing activities
|
(27,914,598 | ) | (3,717,440 | ) | ||||
Cash flows from financing activities:
|
||||||||
Cash dividend paid to non-controlling interest
|
(59,129 | ) | (115,389 | ) | ||||
Proceeds from exercise of options to purchase common stock
|
186,315 | 55,662 | ||||||
Payment on note payable to bank
|
(500,000 | ) | - | |||||
Net cash used in financing activities
|
(372,814 | ) | (59,727 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(138,322 | ) | (616,780 | ) | ||||
Net decrease in cash and cash equivalents
|
(26,566,941 | ) | (3,167,586 | ) | ||||
Cash and cash equivalents —beginning of period
|
51,914,128 | 55,694,205 | ||||||
Cash and cash equivalents —end of period
|
$ | 25,347,187 | $ | 52,526,619 |
Advanced Research Funding
|
||||
Balance at January 1, 2012
|
$ | 3,791,189 | ||
Funds received
|
445,519 | |||
Research and development activities
|
(669,946 | ) | ||
Property and equipment expenditures
|
(865,421 | ) | ||
Foreign exchange rate impact
|
5,489 | |||
Balance at September 30, 2012
|
$ | 2,706,830 |
Level 1: | Observable inputs such as quoted prices for identical assets or liabilities in active markets |
Level 2: |
Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs
|
Level 3: | Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities |
|
A.
|
Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities
|
|
B.
|
Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method
|
|
C.
|
Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)
|
Carrying amount as
of
September 30, 2012 |
Quoted prices
in active
markets
available
(Level 1) |
Significant
other
observable
inputs
(Level 2) |
Significant
unobservable
inputs
(Level 3) |
Valuation
Technique |
|||||||||||||
Cash equivalents
|
$ | 25,347 | $ | 25,347 | $ | - | $ | - |
(A)
|
||||||||
Restricted cash
|
2,707 | 2,707 | - | - |
(A)
|
||||||||||||
Short-term investments
|
33,640 | 33,640 | - | - |
(A)
|
||||||||||||
Long-term investments
|
2,600 | - | - | 2,600 |
(B)
|
||||||||||||
Total assets recorded at fair value
|
$ | 64,294 | $ | 61,694 | $ | - | $ | 2,600 |
Auction Rate Securities
|
||||
Balance at January 1, 2012
|
$ | 2,600 | ||
Redemptions
|
- | |||
Transfers to Level 3
|
- | |||
Gains and losses:
|
||||
Reported in earnings
|
- | |||
Reported in other comprehensive loss
|
- | |||
Balance at September 30, 2012
|
$ | 2,600 |
September 30,
2012 |
December 31,
2011 |
|||||||
Raw materials
|
$ | 4,337,909 | $ | 5,106,112 | ||||
Work in process
|
3,115,495 | 3,258,397 | ||||||
Finished goods
|
2,321,666 | 3,094,644 | ||||||
Total
|
$ | 9,775,070 | $ | 11,459,153 |
Gross carrying
amount
|
Accumulated
amortization
|
Net carrying
amount
|
Expected life
(Years)
|
|||||||||||||||
September 30, 2012
|
||||||||||||||||||
Patents
|
$ | 1,407,530 | $ | (351,166 | ) | $ | 1,056,364 | 15 | ||||||||||
Know-how
|
597,035 | (491,043 | ) | 105,992 | 5 | |||||||||||||
Trademarks
|
408,000 | (408,000 | ) | - | 2 | |||||||||||||
Customer relationships
|
4,925,579 | (1,442,395 | ) | 3,483,184 | 8 | - | 10 | |||||||||||
Developed technology
|
7,555,853 | (2,067,987 | ) | 5,487,866 | 8 | - | 10 | |||||||||||
$ | 14,893,997 | $ | (4,760,591 | ) | $ | 10,133,406 |
Date
|
Payment Amount
|
|||
June 29, 2013
|
$ | 1,000,000 | ||
June 29, 2014
|
2,500,000 | |||
June 29, 2015
|
13,930,000 | |||
$ | 17,430,000 |
|
·
|
permits the granting of restricted stock units (“RSU”), performance-based stock awards and stock appreciation rights;
|
|
·
|
eliminates the ability to reprice options;
|
|
·
|
extends the expiration date of the plan to June 29, 2021;
|
|
·
|
provides that awards may qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended; and
|
|
·
|
incorporates certain other administrative provisions.
|
Nine months ended September 30,
|
||||||||||||
2012
|
2011
|
|||||||||||
Volatility
|
67% | - | 71% | 64% | ||||||||
Expected dividend yield
|
0% | 0% | ||||||||||
Expected life (years)
|
6.3 | - | 8.5 | 5.6 | - | 5.8 | ||||||
Risk free interest rate
|
1.15% | - | 1.44% | 2.20% | - | 2.34% | ||||||
Forfeitures
|
33% | - | 36% | 36% | - | 37% |
Options
Outstanding |
Weighted
Average |
Remaining
Contractual |
Aggregrate
Intrinsic Value |
|||||||||||||
Options outstanding at January 1, 2012
|
2,338,805 | $ | 5.00 | 6.5 | $ | 1,131,474 | ||||||||||
Granted
|
615,000 | 2.23 | - | - | ||||||||||||
Exercised
|
(106,468 | ) | 1.82 | - | - | |||||||||||
Cancelled
|
(87,987 | ) | 3.69 | - | - | |||||||||||
Options outstanding at September 30, 2012
|
2,759,350 | $ | 4.54 | 6.6 | $ | 425,710 | ||||||||||
Options vested at September 30, 2012
|
1,480,441 | $ | 4.63 | 5.2 | $ | 354,160 | ||||||||||
Available for grant at September 30, 2012
|
3,698,462 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Research and development
|
$ | 85,412 | $ | 41,464 | $ | 172,281 | $ | 226,043 | ||||||||
Sales and marketing
|
54,411 | 47,917 | 144,569 | 135,845 | ||||||||||||
General and administrative
|
213,291 | 375,591 | 787,266 | 897,314 | ||||||||||||
Total
|
$ | 353,114 | $ | 464,972 | $ | 1,104,116 | $ | 1,259,202 |
Shares
|
Weighted
Average |
|||||||
Nonvested at January 1, 2012
|
140,000 | $ | 3.41 | |||||
Awarded
|
- | - | ||||||
Vested
|
(87,500 | ) | 3.41 | |||||
Forfeited
|
- | - | ||||||
Nonvested at September 30, 2012
|
52,500 | $ | 3.41 |
Shares
|
Weighted
Average |
|||||||
Nonvested at January 1, 2012
|
534,000 | $ | 3.12 | |||||
Awarded
|
378,500 | 3.18 | ||||||
Vested
|
(112,083 | ) | 3.15 | |||||
Forfeited
|
(131,000 | ) | 3.17 | |||||
Nonvested at September 30, 2012
|
669,417 | $ | 3.13 |
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net (loss) income attributable to MEMSIC, Inc.
|
$ | (318,155 | ) | $ | (368,766 | ) | $ | 420,935 | $ | (2,805,248 | ) | |||||
Denominator:
|
||||||||||||||||
Basic weighted average shares
|
24,024,725 | 23,825,134 | 23,985,453 | 23,822,587 | ||||||||||||
Dilutive effect of common stock equivalents
|
- | - | 429,112 | - | ||||||||||||
Diluted weighted average shares
|
24,024,725 | 23,825,134 | 24,414,565 | 23,822,587 | ||||||||||||
Net (loss) income per common share to MEMSIC, Inc.
|
||||||||||||||||
Basic
|
$ | (0.01 | ) | $ | (0.02 | ) | $ | 0.02 | $ | (0.12 | ) | |||||
Diluted
|
$ | (0.01 | ) | $ | (0.02 | ) | $ | 0.02 | $ | (0.12 | ) |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Mobile phone
|
$ | 5,243,315 | $ | 9,737,128 | $ | 22,880,109 | $ | 21,889,987 | ||||||||
Consumer
|
3,487,296 | 1,991,405 | 7,306,208 | 4,623,725 | ||||||||||||
Automotive
|
3,945,869 | 3,766,068 | 11,015,781 | 11,066,547 | ||||||||||||
Industrial/other
|
2,512,224 | 2,862,699 | 8,418,896 | 9,104,595 | ||||||||||||
Total
|
$ | 15,188,704 | $ | 18,357,300 | $ | 49,620,994 | $ | 46,684,854 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Revenue
|
||||||||||||||||
Sensor products
|
$ | 13,145,153 | $ | 15,935,106 | $ | 42,357,351 | $ | 38,913,454 | ||||||||
System solution products
|
2,043,551 | 2,422,193 | 7,263,643 | 7,771,400 | ||||||||||||
Total
|
$ | 15,188,704 | $ | 18,357,300 | $ | 49,620,994 | $ | 46,684,854 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Gross Profit
|
||||||||||||||||
Sensor products
|
$ | 4,466,788 | $ | 4,919,964 | $ | 14,934,062 | $ | 11,957,813 | ||||||||
System solution products
|
843,908 | 1,281,803 | 3,578,120 | 4,183,844 | ||||||||||||
Total
|
$ | 5,310,696 | $ | 6,201,767 | $ | 18,512,182 | $ | 16,141,657 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Asia (excluding Japan)
|
$ | 7,329,818 | $ | 10,513,338 | $ | 27,161,665 | $ | 25,430,554 | ||||||||
Europe
|
708,595 | 897,630 | 2,690,563 | 2,581,518 | ||||||||||||
Japan
|
3,577,585 | 2,441,347 | 8,663,818 | 5,668,284 | ||||||||||||
North America
|
3,508,244 | 4,459,558 | 11,000,030 | 12,795,129 | ||||||||||||
Other
|
64,462 | 45,427 | 104,918 | 209,369 | ||||||||||||
Total
|
$ | 15,188,704 | $ | 18,357,300 | $ | 49,620,994 | $ | 46,684,854 |
September 30,
2012 |
December 31,
2011 |
|||||||
United States
|
$ | 56,220,165 | $ | 54,144,187 | ||||
China
|
65,910,907 | 71,877,989 | ||||||
Japan
|
1,899,101 | 1,510,343 | ||||||
Total
|
$ | 124,030,173 | $ | 127,532,519 |
September 30,
2012 |
December 31,
2011 |
|||||||
United States
|
$ | 590,468 | $ | 830,826 | ||||
China
|
28,897,811 | 30,166,756 | ||||||
Japan
|
472 | 907 | ||||||
Total
|
$ | 29,488,751 | $ | 30,998,489 |
·
|
semiconductor sensor products, which we refer to as sensor products, based on MEMS technology and advanced integrated circuit design; and
|
·
|
sensor system solution products, which we refer to as system solution products, which incorporate sensors with on-board computing, wireless communications and systems and application software solutions.
|
|
•
|
the semiconductor component market is highly competitive, and as a result, the average selling prices of particular components generally experience rapid declines over the course of their respective product and technology life cycles. This trend has been particularly evident recently in the market for mobile phone applications. We seek to mitigate the impact of this trend on our business by continuing to rapidly design, develop and sell new generations of products with additional functionalities to replace older generation products;
|
|
•
|
we may also elect to reduce our product prices as we are able to improve our manufacturing efficiency or to reduce our manufacturing costs. We may also reduce prices in order to increase market adoption of our products in certain markets;
|
|
•
|
changes in our product mix may affect the average selling prices of our products. For example, our products for consumer and mobile phone markets generally have lower average selling prices than products for the automotive market; and
|
|
•
|
we may grant discounts to our large customers or OEM and ODM customers for high volume purchases.
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||||||||||||||||||
Amount
|
% of Sales
|
Amount
|
% of Sales
|
Amount
|
% of Sales
|
Amount
|
% of Sales
|
|||||||||||||||||||||||||
Sensor products
|
$ | 13,145 | 86.5 | % | $ | 15,935 | 86.8 | % | $ | 42,357 | 85.4 | % | $ | 38,913 | 83.4 | % | ||||||||||||||||
System solution products
|
2,044 | 13.5 | 2,422 | 13.2 | 7,264 | 14.6 | 7,771 | 16.6 | ||||||||||||||||||||||||
Total
|
$ | 15,189 | 100.0 | % | $ | 18,357 | 100.0 | % | $ | 49,621 | 100.0 | % | $ | 46,684 | 100.0 | % |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||||||||||||||||||
Amount
|
% of Sales
|
Amount
|
% of Sales
|
Amount
|
% of Sales
|
Amount
|
% of Sales
|
|||||||||||||||||||||||||
Mobile phone
|
$ | 5,243 | 34.5 | % | $ | 9,737 | 53.0 | % | $ | 22,880 | 46.1 | % | $ | 21,890 | 46.9 | % | ||||||||||||||||
Consumer
|
3,487 | 23.0 | 1,991 | 10.9 | 7,306 | 14.7 | 4,623 | 9.9 | ||||||||||||||||||||||||
Automotive
|
3,946 | 26.0 | 3,766 | 20.5 | 11,016 | 22.2 | 11,067 | 23.7 | ||||||||||||||||||||||||
Industrial/other
|
2,512 | 16.5 | 2,863 | 15.6 | 8,419 | 17.0 | 9,105 | 19.5 | ||||||||||||||||||||||||
Total
|
$ | 15,188 | 100.0 | % | $ | 18,357 | 100.0 | % | $ | 49,621 | 100.0 | % | $ | 46,685 | 100.0 | % |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||||||||||||||||||
Amount
|
% of Sales
|
Amount
|
% of Sales
|
Amount
|
% of Sales
|
Amount
|
% of Sales
|
|||||||||||||||||||||||||
Asia (excluding Japan)
|
$ | 7,330 | 48.3 | % | $ | 10,513 | 57.3 | % | $ | 27,162 | 54.7 | % | $ | 25,431 | 54.5 | % | ||||||||||||||||
Europe
|
709 | 4.7 | 898 | 4.9 | 2,691 | 5.4 | 2,582 | 5.5 | ||||||||||||||||||||||||
Japan
|
3,578 | 23.5 | 2,441 | 13.3 | 8,664 | 17.5 | 5,668 | 12.1 | ||||||||||||||||||||||||
North America
|
3,508 | 23.1 | 4,460 | 24.3 | 11,000 | 22.2 | 12,795 | 27.4 | ||||||||||||||||||||||||
Other
|
63 | 0.4 | 45 | 0.2 | 104 | 0.2 | 209 | 0.5 | ||||||||||||||||||||||||
Total
|
$ | 15,188 | 100.0 | % | $ | 18,357 | 100.0 | % | $ | 49,621 | 100.0 | % | $ | 46,685 | 100.0 | % |
For the three months ended September 30,
|
For the nine months ended September 30,
|
|||||||||||||||||||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||||||||||||||||||
Amount
|
% of net
sales
|
Amount
|
% of net
sales
|
Amount
|
% of net
sales
|
Amount
|
% of net
sales
|
|||||||||||||||||||||||||
(dollar amounts in thousands)
|
(dollar amounts in thousands)
|
|||||||||||||||||||||||||||||||
Net sales | $ | 15,189 | 100.0 | % | $ | 18,357 | 100.0 | % | $ | 49,621 | 100.0 | % | $ | 46,685 | 100.0 | % | ||||||||||||||||
Cost of goods sold
|
9,878 | 65.0 | 12,156 | 66.2 | 31,109 | 62.7 | 30,543 | 65.4 | ||||||||||||||||||||||||
Gross profit
|
5,311 | 35.0 | 6,201 | 33.8 | 18,512 | 37.3 | 16,142 | 34.6 | ||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||
Research and development
|
1,440 | 9.5 | 2,200 | 12.0 | 4,913 | 9.9 | 6,610 | 14.2 | ||||||||||||||||||||||||
Sales and marketing
|
1,277 | 8.4 | 1,881 | 10.2 | 3,938 | 7.9 | 4,876 | 10.4 | ||||||||||||||||||||||||
General and administrative
|
2,333 | 15.4 | 2,397 | 13.1 | 6,969 | 14.0 | 6,374 | 13.6 | ||||||||||||||||||||||||
Depreciation
|
358 | 2.4 | 402 | 2.2 | 1,176 | 2.4 | 1,199 | 2.6 | ||||||||||||||||||||||||
Amortization
|
339 | 2.2 | 404 | 2.2 | 1,149 | 2.3 | 1,212 | 2.6 | ||||||||||||||||||||||||
Total operating expenses
|
5,747 | 37.9 | 7,284 | 39.7 | 18,145 | 36.5 | 20,271 | 43.4 | ||||||||||||||||||||||||
Operating (loss) income
|
(436 | ) | (2.9 | ) | (1,083 | ) | (5.9 | ) | 367 | 0.8 | (4,129 | ) | (8.8 | ) | ||||||||||||||||||
Other income:
|
||||||||||||||||||||||||||||||||
Interest and dividend income
|
4 | 0.0 | 153 | 0.8 | 238 | 0.5 | 335 | 0.7 | ||||||||||||||||||||||||
Foreign exchange gain
|
210 | 1.4 | 329 | 1.8 | (16 | ) | (0.0 | ) | 848 | 1.8 | ||||||||||||||||||||||
Other, net
|
19 | 0.1 | 323 | 1.8 | 58 | 0.1 | 406 | 0.9 | ||||||||||||||||||||||||
Total other income
|
233 | 1.5 | 805 | 4.4 | 280 | 0.6 | 1,589 | 3.4 | ||||||||||||||||||||||||
(Loss) income before income taxes
|
(203 | ) | (1.4 | ) | (278 | ) | (1.5 | ) | 647 | 1.4 | (2,540 | ) | (5.4 | ) | ||||||||||||||||||
Provision for income taxes
|
96 | 0.6 | 58 | 0.3 | 194 | 0.3 | 173 | 0.4 | ||||||||||||||||||||||||
Net (loss) income
|
(299 | ) | (2.0 | ) | (336 | ) | (1.8 | ) | 453 | 1.0 | (2,713 | ) | (5.8 | ) | ||||||||||||||||||
Less: net income attributable to noncontrolling interests
|
19 | 0.1 | 33 | 0.2 | 33 | 0.1 | 92 | 0.2 | ||||||||||||||||||||||||
Net (loss) income attributable to MEMSIC, Inc.
|
$ | (318 | ) | (2.1 | )% | $ | (369 | ) | (2.0 | ) % | $ | 420 | 1.0 | % | $ | (2,805 | ) | (6.0 | ) % |
Three months ended September 30,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Gross Profit
|
Margin %
|
Gross Profit
|
Margin %
|
|||||||||||||
Sensor products
|
$ | 4,467 | 34.0 | % | $ | 4,920 | 30.9 | % | ||||||||
System solution products
|
844 | 41.3 | 1,281 | 52.9 | ||||||||||||
Total
|
$ | 5,311 | 35.0 | % | $ | 6,201 | 33.8 | % |
Nine months ended September 30,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Gross Profit
|
Margin %
|
Gross Profit
|
Margin %
|
|||||||||||||
Sensor products
|
$ | 14,934 | 35.3 | % | $ | 11,958 | 30.7 | % | ||||||||
System solution products
|
3,578 | 49.3 | 4,184 | 53.8 | ||||||||||||
Total
|
$ | 18,512 | 37.3 | % | $ | 16,142 | 34.6 | % |
Date
|
Payment Amount
|
|||
June 29, 2013
|
$ | 1,000,000 | ||
June 29, 2014
|
2,500,000 | |||
June 29, 2015
|
13,930,000 | |||
$ | 17,430,000 |
Filed with | Incorporated by Reference | |||||||||
Exhibit
No.
|
Description |
This
Form 10-Q
|
Form | Filing Date | Exhibit
No.
|
|||||
3.1
|
|
Second Amended and Restated Certificate of Incorporation of MEMSIC, Inc.
|
|
8-K
|
|
December 19, 2007
|
|
3.1
|
||
3.2
|
|
Amended and Restated By-Laws of MEMSIC, Inc.
|
|
S-1/A
|
|
November 30, 2007
|
|
3.4
|
||
4.1
|
|
Form of common stock certificate.
|
|
S-1/A
|
|
December 7, 2007
|
|
4.2
|
||
4.2
|
|
Fifth Amended and Restated Investor Rights Agreement.
|
|
S-1
|
|
September 28, 2007
|
|
4.3
|
||
4.4
|
|
2009 Nonqualified Inducement Stock Plan
|
|
10Q
|
November 14, 2011
|
|
4.4
|
|||
31.1
|
Chief Executive Officer certification required by Rule 13a-14(a)
|
X
|
||||||||
31.2
|
Principal Accounting Officer certification required by Rule 13a-14(a)
|
X
|
||||||||
32.1
|
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350
|
X
|
||||||||
32.2
|
Principal Financial and Accounting Officer certification pursuant to 18 U.S.C. Section 1350
|
X
|
||||||||
101.***
|
The following materials from MEMSIC, Inc.’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Consolidated Balance Sheets; (ii) the Unaudited Consolidated Statements of Operations; (iii) the Unaudited Consolidated Statements of Comprehensive Income (Loss); (iv) the Unaudited Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text.
|
X
|
MEMSIC, Inc.
|
|||
Dated: November 14, 2012
|
By:
|
/S/ YANG ZHAO
|
|
Yang Zhao
|
|||
Chief Executive Officer and President
|
|||
Principal Executive Officer
|
|||
Dated: November 14, 2012
|
By:
|
/S/ PATRICIA NIU
|
|
Patricia Niu
|
|||
Principal Financial and Accounting Officer
|
1)
|
I have reviewed this quarterly report on Form 10-Q of MEMSIC, 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 quarterly 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 quarterly 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 we 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 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 registrant’s board of directors:
|
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.
|
/s/ YANG ZHAO
|
|
Yang Zhao
|
|
Chief Executive Officer
|
1)
|
I have reviewed this quarterly report on Form 10-Q of MEMSIC, 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 quarterly 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 quarterly 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 we 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 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 registrant’s board of directors:
|
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.
|
/s/ PATRICIA NIU
|
|
Patricia Niu
|
|
Principal Financial and Accounting 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.
|
/s/ YANG ZHAO
|
|
Yang Zhao
|
|
Chief Executive Officer
|
|
November 14, 2012
|
|
(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.
|
/s/ PATRICIA NIU
|
|
Patricia Niu
|
|
Principal Financial and Accounting Officer
|
|
November 14, 2012
|
Note 6 - Goodwill And Intangible Assets (Detail) (USD $)
|
1 Months Ended | 3 Months Ended | 9 Months Ended | 72 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2017
|
Sep. 30, 2012
Minimum [Member]
|
Sep. 30, 2011
Minimum [Member]
|
|
Goodwill | $ 606,976 | $ 612,578 | $ 612,578 | |||||
Goodwill, Translation Adjustments | 5,602 | |||||||
Goodwill, Impairment Loss | 4,500,000 | |||||||
Amortization of Intangible Assets | $ 338,879 | $ 403,835 | $ 1,148,887 | $ 1,212,001 | $ 1,400,000 | $ 300,000 | $ 400,000 |
Note 12 - Segment Information (Detail) - Revenue By Product Application (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Mobile phone [Member]
|
||||
Revenue | $ 5,243,315 | $ 9,737,128 | $ 22,880,109 | $ 21,889,987 |
Consumer [Member]
|
||||
Revenue | 3,487,296 | 1,991,405 | 7,306,208 | 4,623,725 |
Automotive [Member]
|
||||
Revenue | 3,945,869 | 3,766,068 | 11,015,781 | 11,066,547 |
Industrial/Other [Member]
|
||||
Revenue | 2,512,224 | 2,862,699 | 8,418,896 | 9,104,595 |
Total [Member]
|
||||
Revenue | $ 15,188,704 | $ 18,357,300 | $ 49,620,994 | $ 46,684,854 |
Note 9 - Stock Based Compensation (Detail) - RSA Activity (Restricted Stock [Member], USD $)
|
9 Months Ended | ||
---|---|---|---|
Dec. 31, 2011
Beginning Balance [Member]
|
Sep. 30, 2012
Ending Balance [Member]
|
Sep. 30, 2012
|
|
Nonvested Shares | 140,000 | 52,500 | |
Nonvested Weighted Average Grant Date Fair Value (in Dollars per share) | $ 3.41 | $ 3.41 | |
Awarded | 0 | ||
Awarded (in Dollars per share) | $ 0 | ||
Vested | (87,500) | ||
Vested (in Dollars per share) | $ 3.41 | ||
Forfeited | 0 | ||
Forfeited (in Dollars per share) | $ 0 | ||
Nonvested Shares | 140,000 | 52,500 | |
Nonvested Weighted Average Grant Date Fair Value (in Dollars per share) | $ 3.41 | $ 3.41 |
Note 12 - Segment Information (Detail) - Revenues And Gross Profit By Reportable Segment (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Gross Profit | $ 5,310,697 | $ 6,201,767 | $ 18,512,183 | $ 16,141,657 |
Sensor products [Member]
|
||||
Revenue | 13,145,153 | 15,935,106 | 42,357,351 | 38,913,454 |
Gross Profit | 4,466,788 | 4,919,964 | 14,934,062 | 11,957,813 |
System solution products [Member]
|
||||
Revenue | 2,043,551 | 2,422,193 | 7,263,643 | 7,771,400 |
Gross Profit | 843,908 | 1,281,803 | 3,578,120 | 4,183,844 |
Total [Member]
|
||||
Revenue | 15,188,704 | 18,357,300 | 49,620,994 | 46,684,854 |
Gross Profit | $ 5,310,696 | $ 6,201,767 | $ 18,512,182 | $ 16,141,657 |
Note 2 - Summary of Significant Accounting Policies (Detail) - Advance Research Funding Activities (USD $)
|
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Advance Research Funding | $ 2,706,830 | $ 3,791,189 |
Foreign exchange rate impact | 5,489 | |
Advance Research Funding | 2,706,830 | 3,791,189 |
Beginning Balance [Member]
|
||
Advance Research Funding | 3,791,189 | |
Advance Research Funding | 3,791,189 | |
Funds Received [Member]
|
||
Advance Research Funding | 445,519 | |
Advance Research Funding | 445,519 | |
Research and Development [Member]
|
||
Advance Research Expenditures | (669,946) | |
Advance Research Expenditures | (669,946) | |
Property and Equipment [Member]
|
||
Advance Research Expenditures | (865,421) | |
Advance Research Expenditures | (865,421) | |
Ending Balance [Member]
|
||
Advance Research Funding | 2,706,830 | |
Advance Research Funding | $ 2,706,830 |
Note 12 - Segment Information (Detail) - Total Assets by Geographical Region are as Follows: (USD $)
|
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Total Assets | $ 124,030,173 | $ 127,532,519 |
United States [Member]
|
||
Total Assets | 56,220,165 | 54,144,187 |
Total Long-Lived Assets | 590,468 | 830,826 |
China [Member]
|
||
Total Assets | 65,910,907 | 71,877,989 |
Total Long-Lived Assets | 28,897,811 | 30,166,756 |
Japan [Member]
|
||
Total Assets | 1,899,101 | 1,510,343 |
Total Long-Lived Assets | 472 | 907 |
Total [Member]
|
||
Total Assets | 124,030,173 | 127,532,519 |
Total Long-Lived Assets | $ 29,488,751 | $ 30,998,489 |
Note 5 - Inventories (Tables)
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current [Table Text Block] |
|
Note 10 - Common Stock (Detail)
|
Sep. 30, 2012
|
Sep. 30, 2011
|
---|---|---|
Common Stock, Capital Shares Reserved for Future Issuance | 7,179,729 | 5,699,655 |
Note 7 - Note Payable to Bank (Detail) - Principal Payments (USD $)
|
Sep. 30, 2012
|
---|---|
June 29, 2013 | $ 1,000,000 |
June 29, 2014 | 2,500,000 |
June 29, 2015 | 13,930,000 |
$ 17,430,000 |
Note 4 - Fair Value of Financial Instruments (Detail) - Long-Term Investments (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Balance | $ 2,600 | $ 2,600 |
Balance | $ 2,600 | $ 2,600 |
Note 11 - Net Loss Per Common Share (Detail) - The Calculation Of The Numerator And Denominator For Basic And Diluted Net Loss Per Common Share (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Numerator: | ||||
Net (loss) income attributable to MEMSIC, Inc. (in Dollars) | $ (318,155) | $ (368,766) | $ 420,935 | $ (2,805,248) |
Denominator: | ||||
Basic weighted average shares | 24,024,725 | 23,825,134 | 23,985,453 | 23,822,587 |
Dilutive effect of common stock equivalents | 429,112 | 1,800,000 | ||
Diluted weighted average shares | 24,024,725 | 23,825,134 | 24,414,565 | 23,822,587 |
Net (loss) income per common share to MEMSIC, Inc. | ||||
Basic (in Dollars per share) | $ (0.01) | $ (0.02) | $ 0.02 | $ (0.12) |
Diluted (in Dollars per share) | $ (0.01) | $ (0.02) | $ 0.02 | $ (0.12) |
Note 9 - Stock Based Compensation (Detail) - Stock-Based Compensation Expense (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Share-Based Compensation | $ 1,000 | $ 0 | ||
Research and Development Expense [Member]
|
||||
Share-Based Compensation | 85,412 | 41,464 | 172,281 | 226,043 |
Selling and Marketing Expense [Member]
|
||||
Share-Based Compensation | 54,411 | 47,917 | 144,569 | 135,845 |
General and Administrative Expense [Member]
|
||||
Share-Based Compensation | 213,291 | 375,591 | 787,266 | 897,314 |
Total [Member]
|
||||
Share-Based Compensation | $ 353,114 | $ 464,972 | $ 1,104,116 | $ 1,259,202 |
Note 2 - Summary of Significant Accounting Policies
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] |
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles
of Consolidation
The
accompanying unaudited consolidated financial statements
include the accounts of the Company, MEMSIC Semiconductor,
MTS, Crossbow Japan and Wuxi WSN. The Company presents all of
Crossbow Japan’s and Wuxi WSN’s assets,
liabilities, revenue and expenses, as well as the
non-controlling interests in joint ventures in its
consolidated financial statements. All significant
intercompany balances and transactions have been eliminated
in consolidation.
Unaudited
Interim Financial Information
The
accompanying interim consolidated financial statements are
unaudited. These financial statements and notes
should be read in conjunction with the audited consolidated
financial statements and related notes, together with
management’s discussion and analysis of financial
condition and results of operations, contained in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2011, which is on file with the Securities and
Exchange Commission (SEC).
The
accompanying unaudited interim consolidated financial
statements have been prepared pursuant to the rules and
regulations of the SEC. Certain information and footnote
disclosures normally included in financial statements that
have been prepared in accordance with accounting principles
generally accepted in the United States (GAAP) have been
condensed or omitted pursuant to such SEC rules and
regulations. In the opinion of management, the
unaudited interim consolidated financial statements and notes
have been prepared on the same basis as the audited
consolidated financial statements in the Company’s
Annual Report on Form 10-K for the year ended December 31,
2011, and include all adjustments (consisting of normal,
recurring adjustments) necessary for the fair presentation of
the Company’s financial position at September 30, 2012,
results of operations for the three and nine months ended
September 30, 2012 and 2011 and cash flows for the nine
months ended September 30, 2012 and 2011. The
interim periods are not necessarily indicative of results to
be expected for any other interim periods or for the full
year.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP
requires the Company to make estimates and assumptions that
affect at the date of the financial statements the reported
amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of revenue
and expenses. Actual results could differ from these
estimates.
Cash
Equivalents
The
Company considers all highly liquid instruments with an
original maturity of three months or less to be cash
equivalents.
Restricted
Cash
The
Company has presented cash on hand associated with advance
research funding received from the Chinese government as
restricted cash since the cash must be maintained in a
separate bank account and used only for specified research
projects.
Advance
Research Funding
Advance
research funding represents research funding granted by the
Chinese government for specific research and development
projects the Company is taking on. The amount received is
initially recorded as a liability and subsequently recognized
as a credit to research and development expenses in the
statements of operations or to the carrying value of
equipment purchased for the projects as the Company performs
the projects and has complied with the conditions or
performance obligations attached to the related government
grants. There are no conditions under which
amounts utilized are required to be refunded under the terms
of the grants.
Advance
research funding activities for the nine months ended
September 30, 2012 are as follows:
Short-term
Investments
Short-term
investments consist primarily of bank certificate deposits,
government and municipal bonds with maturities of one year or
less. The Company classifies its short-term investments as
“held-to-maturity”, which are carried at
amortized cost.
Foreign
Currency
The
Company’s manufacturing operations and certain other
operations are conducted by MEMSIC Semiconductor, MTS and
Wuxi WSN. The functional currency of MEMSIC Semiconductor,
MTS and Wuxi WSN is the Renminbi. Financial transactions
between the Company and MEMSIC Semiconductor and MTS are
conducted in United States dollars. At September 30, 2012 and
December 31, 2011, the underlying currency for approximately
53.1% and 56.4% of consolidated assets, respectively, was the
Renminbi. The functional currency of the acquired joint
venture Crossbow Japan is the Japanese Yen. Financial
transactions between the Company and Crossbow Japan are
conducted in United States dollars. At September 30, 2012 and
December 31, 2011, the underlying currency for approximately
1.5% and 1.2% of consolidated assets, respectively, was the
Japanese Yen. The Company does not believe that it
is subject to significant foreign exchange risk and,
accordingly, has not utilized hedging strategies with respect
to such foreign exchange exposure.
The
financial statements of MEMSIC Semiconductor, MTS, Wuxi WSN
and Crossbow Japan are translated into United States dollars
in accordance with GAAP, utilizing the following method:
assets and liabilities are translated at the exchange rate in
effect at the end of the period, and revenues and expenses
are translated at the weighted average exchange rate during
the year. Cumulative translation gains and losses are
included as a separate component of stockholders’
equity and reported as a part of comprehensive income.
Transaction gains and losses are included in the consolidated
statements of operations as incurred.
Net
Income (Loss) per Common Share
Basic
net income (loss) per share is calculated by dividing net
income (loss) by the weighted-average common shares
outstanding during the period. Diluted net income (loss)
per share is calculated by dividing net income (loss) by
the weighted-average common shares and potentially dilutive
securities outstanding during the period using the treasury
stock method.
Income
Taxes
Deferred
tax assets and liabilities relate to temporary differences
between the financial reporting basis and the tax basis of
assets and liabilities, the carryforward tax losses and
available tax credits. Such assets and liabilities are
measured using tax rates and laws expected to be in effect at
the time of their reversal or utilization. Valuation
allowances are established, when necessary, to reduce the net
deferred tax asset to an amount more likely than not to be
realized. For interim reporting periods, the Company uses the
estimated annual effective tax rate except with respect to
discrete items, whose impact is recognized in the interim
period in which the discrete item occurred.
Inventories
Inventories
are stated at the lower of cost (weighted average FIFO) or
market. The Company evaluates its inventory for potential
excess and obsolete inventories based on forecasted demands
and records a provision for such amounts as necessary.
Revenue
Recognition
The
Company recognizes revenue from the sale of its products to
its customers when all of the following conditions have been
met: (i) evidence exists of an arrangement with the
customer, typically consisting of a purchase order or
contract; (ii) the Company’s products have been
shipped and risk of loss has passed to the customer;
(iii) the Company has completed all of the necessary
terms of the purchase order or contract; (iv) the amount
of revenue to which the Company is entitled is fixed or
determinable; and (v) the Company believes it is
probable that it will be able to collect the amount due from
the customer based upon an evaluation of the customer’s
creditworthiness. To the extent that one or more of these
conditions has not been satisfied, the Company defers
recognition of revenue. An allowance for estimated future
product returns and sales price allowances is established at
the date of revenue recognition. An allowance for
uncollectible receivables is established by a charge to
operations when, in the opinion of the Company, it is
probable that the amount due to the Company will not be
collected.
The
Company sells its products to distributors as well as to end
customers. Sales to distributors are made pursuant to
distributor agreements, which allow for the return of goods
under certain limited circumstances. Accordingly, the Company
follows the following criteria for recognition of sales to
distributors: (i) the selling price to the distributor
is fixed or determinable at the date of shipment;
(ii) the distributor’s obligation to pay the
selling price is not contingent on resale of the product;
(iii) the Company’s product has been shipped and
risk of loss has passed to the distributor; (iv) it is
probable that the amount due from the distributor will be
collected; (v) the Company does not have significant
future obligations to directly assist in the
distributor’s resale of the product; and (vi) the
amount of future returns can be reasonably estimated. Once
these criteria are met, the Company recognizes revenue upon
shipment to the distributor and estimates returns based on
historical sales returns.
Stock-Based
Compensation
The
Company accounts for share-based payments to employees based
on requirements that all share-based payments to employees,
including grants of employee stock options, shall be
recognized in the financial statements based on their fair
values. The cost of equity-based service awards is based on
the grant-date fair value of the award and is recognized over
the period during which the employee is required to provide
service in exchange for the award (vesting period).
Stock-based compensation arrangements with non-employees are
accounted for utilizing the fair value method or, if a more
reliable measurement, the value of the services or
consideration received. The resulting compensation expense is
recognized for financial reporting purposes over the term of
performance or vesting.
Recent
Accounting Pronouncements
In
July 2012, the FASB issued ASU No. 2012-02, Intangibles
— Goodwill and Other (ASC Topic 350), Testing
Indefinite-Lived Intangible Assets for Impairment, which adds
an optional qualitative assessment for determining whether an
indefinite-lived intangible asset is impaired, similar to the
goodwill guidance issued in ASU 2011-08. Companies have the
option to first perform a qualitative assessment to determine
whether it is more likely than not (a likelihood of more than
50%) that an indefinite-lived intangible asset is impaired.
If a company determines that it is more likely than not that
the fair value of such an asset exceeds its carrying amount,
it would not need to calculate the fair value of the asset in
that year. However, if a company concludes otherwise, it must
calculate the fair value of the asset, compare that value
with its carrying amount and record an impairment charge, if
any. The guidance is effective for annual and interim
impairment tests performed for fiscal years beginning
after September 15, 2012. The adoption of ASU No.
2012-02 did not have a material effect on the Company’s
financial position, results of operations or cash
flows.
In
September 2011, the FASB amended ASC Topic 350, Intangibles
— Goodwill and Other. This amendment is intended to
reduce the cost and complexity of the annual goodwill
impairment test by providing entities an option to perform a
qualitative assessment to determine whether further
impairment testing is necessary. The amended provisions are
effective for reporting periods beginning on or after
December 15, 2011. This amendment impacts testing steps only
and, therefore, adoption will not have an impact on the
Company’s consolidated financial position, results of
operations or cash flows.
In
June 2011, the FASB issued ASU 2011-05, which amended ASC
Topic 220, Comprehensive Income. This amendment was issued to
enhance comparability between entities that report under GAAP
and International Financial Reporting Standards (IFRS) and to
provide a more consistent method of presenting non-owner
transactions that affect an entity’s equity. The
amendment requires companies to present the components of net
income and other comprehensive income either as one
continuous statement or as two separate but consecutive
statements. It eliminates the option to report other
comprehensive income and its components as part of the
statement of changes in shareholders’ equity.
Furthermore, regardless of the presentation methodology
elected, the issuer will be required to present on the face
of the financial statements a reclassification adjustment for
items that are reclassified from other comprehensive income
to net income. The methodology for the computation and
presentation of earnings per share remains the same. The
pronouncement is effective for fiscal years beginning after
December 15, 2011 and is to be applied retrospectively. As
this pronouncement relates to disclosure only, the adoption
did not have an impact on the Company’s consolidated
financial position, results of operations or cash
flows.
In
December 2011, the FASB issued ASU 2011-12, deferring a
requirement in ASU 2011-05 that companies present
reclassification adjustments for each component of
accumulated other comprehensive income (AOCI) in both net
income and other comprehensive income (OCI) on the face of
the financial statements. Companies continue to be required
to present amounts reclassified out of AOCI on the face of
the financial statement in which the components of OCI are
presented or to disclose those amounts in the notes to the
financial statements. The FASB is reconsidering the
presentation requirements for reclassification
adjustments.
In
May 2011, the FASB issued ASU No. 2011-04, Fair Value
Measurement (ASC Topic 820), Amendments to Achieve Common
Fair Value Measurement and Disclosure Requirements in U.S.
GAAP and IFRS (ASU No. 2011-04). The amendments in this
update apply to all reporting entities that are required or
permitted to measure or disclose the fair value of an asset,
a liability, or an instrument classified in a reporting
entity’s shareholders’ equity in the financial
statements. ASU No. 2011-04 does not extend the use of fair
value accounting, but provides guidance on how it should be
applied where its use is already required or permitted by
other standards within U.S. GAAP or IFRS. ASU No. 2011-04
changes the wording used to describe many requirements in
GAAP for measuring fair value and for disclosing information
about fair value measurements. Additionally, ASU No. 2011-04
clarifies the FASB’s intent about the application of
existing fair value measurements. The amendments in this
update are to be applied prospectively. For public entities,
the amendments are effective during interim and annual
periods beginning after December 15, 2011. The adoption of
ASU No. 2011-04 did not have a material effect on the
Company’s financial position, results of operations or
cash flows.
|