424B3 1 dp180260_424b3.htm FORM 424B3

 

PROSPECTUS SUPPLEMENT Filed pursuant to Rule
(To Prospectus dated April 14, 2021) 424(b)(3) of the Rules and
  Regulations Under the
  Securities Act of 1933
  Registration Statement No. 333-260390
   

VALENS SEMICONDUCTOR LTD.

 

Ordinary Shares
Warrants to Purchase Ordinary Shares

 

Recent Developments

 

This prospectus supplement, together with the prospectus (as subsequently amended), is to be used by the selling shareholders listed in the prospectus in connection with offers and sales from time to time of the ordinary shares and warrants to purchase ordinary shares of Valens Semiconductor Ltd.

 

Forward-Looking Statements

 

This report includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding our anticipated future results, including financial results and contract wins, and future economic and market conditions. These statements are based on various assumptions, whether or not identified in this report, and on the current expectations of Valens Semiconductor's (“Valens”) management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Valens.

 

These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political and legal conditions; failure to realize the anticipated benefits of the business combination; future global, regional or local economic and market conditions; the development, effects and enforcement of laws and regulations; Valens' ability to manage future growth; Valens' ability to develop new products and solutions, bring them to market in a timely manner, and make enhancements to them; the effects of competition on Valens' future business; the outcome of any potential litigation, government and regulatory proceedings, investigations and inquiries; the effects of health epidemics, such as the recent global COVID-19 pandemic, have had and could in the future have on Valens' revenue, its employees and results of operations; the cyclicality of the semiconductor industry; Valens' ability to adjust its supply chain volume due to changing market conditions or failure to estimate its customers' demand, including during any downturn in the automotive or audio-video markets; disruptions in relationships with any one of Valens' key customers; difficulty selling products if customers do not design Valens products into their product offerings; Valens' dependence on winning selection processes and ability to generate timely or sufficient net sales or margins from those wins; political conditions in Israel; and those factors discussed in Valens' Registration Statement on Form F-1 and its other SEC filings under the heading “Risk Factors,” and other documents of Valens filed, or to be filed, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Valens does not presently know or that Valens currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Valens' expectations, plans or forecasts of future events and views as of the date of this report. Valens anticipates that subsequent events and developments may cause Valens' assessments to change. However, while Valens may elect to update these forward-looking statements at some point in the future, Valens specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Valens' assessment as of any date subsequent to the date of this report. Accordingly, undue reliance should not be placed upon the forward-looking statements.

 

September 13, 2022

 

 

Key Financial and Business Highlights

 

 

·Record quarterly revenues of $22.5 million, up 28.4% from Q2 2021 and up 4.0% from Q1 2022

 

·Q2 2022 GAAP gross margin was 70.2% compared to 71.2% in Q2 2021 (non-GAAP gross margin was 71.0% compared to 71.1% in Q2 2021)

 

·Q2 2022 GAAP Net Loss was $(10.0) million, which included net financial expenses of $3.6 million, primarily from devaluation of Israeli-shekel related cash balance, compared to Net Loss of $(3.7) million in Q2 2021, and Adjusted EBITDA loss in the second quarter was $(4.5) million, compared to $(2.1) million in Q2 2021

 

·Strong balance sheet with working capital of $168.3 million, and $156.8 million in cash, cash equivalents and short-term deposits as of June 30, 2022

 

·Automotive:

 

–Continue to make progress with the evaluation of the company’s MIPI A-PHY new VA7000 chipsets, as over 30 OEMs, Tier 1s and Tier 2s are evaluating this product for ADAS and surround view applications

 

·Audio-video:

 

–Received substantial demand for VS3000, Valens Semiconductor’s newest audio-video product family, from Tier 1 customers across many geographies

 

–Crestron Electronics announced full suite of more than 24 Professional Audio-Video (ProAV) products powered by the VS3000 for use by enterprises, in education and more. This adds to the multiple VS3000-based products already introduced by Crestron

 

–Interest in the company’s technology in the medical space continues to grow. Introduced a connectivity solution with Würth Elektronik for medical imaging in unprecedented resolution that complies with the strict medical isolation specifications

 

 

 

 

VALENS SEMICONDUCTOR LTD.

 

SUMMARY OF FINANCIAL RESULTS

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)

 

Three Months Ended

June 30,

Six Months Ended

June 30,

  2022 2021 2022 2021
Revenues 22,481 17,510 44,101 30,874
Gross Profit 15,784 12,467 31,224 21,999
Gross Margin 70.2% 71.2% 70.8% 71.3%
Net loss (9,995) (3,698) (15,045) (10,074)
Working Capital1 168,283 56,133 168,283 56,133
Cash, cash equivalents and short-term deposits2 156,754 51,873 156,754 51,873
Net cash used in operating activities (4,251) (6,443) (12,654) (9,651)
         
Non-GAAP Financial Data        
Non-GAAP Gross Margin3 71.0% 71.1% 71.5% 71.4%
Adjusted EBITDA4 (4,469) (2,116) (8,555) (6,419)

Non-GAAP Loss per share5 (in U.S. Dollars) 

 $(0.08) $(0.16) $(0.13) $(0.57)

 

 

 

 

 

 

1 Working Capital is calculated as Total Current Assets, less Total Current Liabilities, as of the last day of the period.

 

2 As of the last day of the period.

 

3 GAAP Gross Profit excluding share-based compensation and depreciation expenses, divided by revenue. For the three months ended June 30, 2022, and 2021, share-based compensation and depreciation expenses were $181 thousand and $(10) thousand respectively. For the six months ended June 30, 2022, and 2021, share-based compensation and depreciation expenses were $321 thousand and $47 thousand respectively.

 

4 Adjusted EBITDA is defined as Net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation and change in fair value of Forfeiture Shares, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to Net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Please refer to the appendix at the end of this report for a reconciliation to the most directly comparable measure in accordance with GAAP.

 

5 See reconciliation of GAAP to non-GAAP financial measures.

 

 

 

 

VALENS SEMICONDUCTOR LTD.

 


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollars in thousands, except share and per share amounts)
(Unaudited)

 

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

  2022   2021   2022   2021
               
REVENUES 22,481   17,510   44,101  

30,874

COST OF REVENUES

(6,697)

  

(5,043)

  

(12,877)

  

(8,875)

GROSS PROFIT

15,784

  

12,467

  

31,224

  

21,999

OPERATING EXPENSES:              
Research and development expenses (14,904)   (10,956)   (29,031)  

(21,354)

Sales and marketing expenses  (4,473)   (3,222)   (8,682)  

(6,332)

General and administrative expenses

(4,340)

   (2,366) (8,641)

(4,544)

TOTAL OPERATING EXPENSES

(23,717)

  

(16,544)

  

(46,354)

  

(32,230)

OPERATING LOSS

(7,933)

  

(4,077)

  

(15,130)

  

(10,231)

Change in fair value of Forfeiture Shares

1,538

  

-

  

4,142

  

-

Financial income (expenses), net

(3,560)

  

503

  

(3,675)

  

336

LOSS BEFORE INCOME TAXES (9,955)   (3,574)   (14,663)  

(9,895)

INCOME TAXES

(43)

  

(124)

  

(389)

  

(179) 

LOSS AFTER INCOME TAXES (9,998)   (3,698)   (15,052)  

(10,074)

Equity in earnings of investee

3

  

-

  

7

  

-

NET LOSS (9,995)   (3,698)   (15,045)  

(10,074)

EARNINGS PER SHARE DATA:              

BASIC AND DILUTED NET LOSS PER ORDINARY SHARE6

(in U.S. Dollars)

 $(0.10)   $(0.68) $(0.15) $(1.61)

WEIGHTED AVERAGE NUMBER OF SHARES USED IN CALCULATION OF NET LOSS PER ORDINARY

 97,442,359   11,020,299   97,296,206

10,927,357

 

 

 

 

6 See note 5.

 

 

 

VALENS SEMICONDUCTOR LTD.

 


CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

 

       

ASSETS

   June 30, 2022   December 31, 2021
CURRENT ASSETS            
Cash and cash equivalents     46,577     56,791
Short-term deposits     110,177     117,568
Trade accounts receivable     10,047     7,095
Inventories     17,318     9,322
Prepaid expenses and other current assets     4,492     8,255
TOTAL CURRENT ASSETS     188,611     199,031

LONG-TERM ASSETS:

            
Property and equipment, net     2,571     2,741
Operating lease Right-Of-Use (ROU) assets7     4,408     -
Other assets     638     828
TOTAL LONG-TERM ASSETS     7,617     3,569

TOTAL ASSETS

     196,228     202,600
             
LIABILITIES AND EQUITY            

CURRENT LIABILITIES8

     20,328     15,699

LONG-TERM LIABILITIES:

            
Forfeiture shares     516     4,658
Non-current operating leases liabilities9     2,126     -
Other long-term liabilities     48     46
TOTAL LONG-TERM LIABILITIES     2,690     4,704
TOTAL LIABILITIES     23,018     20,403
             
SHAREHOLDERS’ EQUITY     173,210     182,197
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     196,228     202,600
             

 

 

 

7 As of January 1, 2022, the company has implemented the FASB ASU No. 2016-02, Leases (ASC 842), on the recognition, measurement, presentation, and disclosure of leases.

 

8 As of June 30, 2022, includes $1,814 thousand of current maturities of operating leases liabilities (none as of December 31, 2021); see footnote 7.

 

9 See footnote 7.

 

 

 

 

VALENS SEMICONDUCTOR LTD.

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
(Unaudited)

 

   

Three Months Ended

June 30,

  

Six Months Ended

June 30,

    2022   2021   2022   2021
CASH FLOW FROM OPERATING ACTIVITIES                
    Net loss for the period   (9,995)   (3,698)   (15,045)   (10,074)
    Adjustments to reconcile net loss to net cash used in operating activities:                
    Income and expense items not involving cash flows:                
Depreciation   347   266   667   522
Stock-based compensation    3,117   1,695   5,908   3,290
Exchange rate differences   4,501   (545)   4,972   (231)
Interest from short-term deposits   (132)   37   (295)   219
Change in fair value of forfeiture shares   (1,538)   -   (4,142)   -
Reduction in the carrying amount of ROU assets   424   -   844   -
    Changes in operating assets and liabilities:                 
Trade accounts receivable    166   (2,475)   (2,952)   767
Prepaid expenses and other current assets   3,245   (458)   3,763   (1,588)
Inventories   (4,852)   (1,752)   (7,996)   (2,541)
Other assets    86   (26)   190   (31)
Current Liabilities   1,189   513   2,742   23
Change in operating lease liabilities   (811)   -   (1,312)   -
Other long-term liabilities   2   -   2   (7)
    Net cash used in operating activities    (4,251)   (6,443)   (12,654)   (9,651)
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

                
    Investment in short-term deposits   (13,088)   (4,520)   (31,340)   (4,520)
    Maturities of short-term deposits    21,900   12,500   37,400   29,500
    Purchase of property and equipment  

(244)

  

(127)

  

(424)

  

(505)

    Net cash provided by investing activities   8,568   7,853   5,636   24,475

CASH FLOWS FROM FINANCING ACTIVITIES:

                
    Deferred issuance costs   -   (218)   -   (218)
    Exercise of options  

96

  

589

  

150

  

665

    Net cash provided by financing activities   96   371   150   447
                 
    Effect of exchange rate changes on cash and cash equivalents   (2,830)   531   (3,346)   217
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   1,583   2,312   (10,214)   15,488
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD  

44,994

  

39,492

  

56,791

  

26,316

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD   46,577   41,804   46,577   41,804
                 
SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION                
    Cash paid for taxes   65   147   121   224
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                
Trade accounts payable on account of property and equipment   -   -   73   -
Unpaid issuance costs   -   2,722   -   2,722
Operating lease liabilities arising from obtaining operating right-of-use assets   104   -   350   -

 

 

 

 

VALENS SEMICONDUCTOR LTD.

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(U.S. Dollars in thousands)

(Unaudited)

 

The following table provides a reconciliation of Net loss to Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as Net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation and change in fair value of Forfeiture Shares, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to Net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

 

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

  2022   2021   2022   2021
               
Net loss (9,995)   (3,698)   (15,045)  

(10,074)

Adjusted to exclude the following:              
  Change in fair value of Forfeiture Shares (1,538)   -   (4,142)   -
  Financial expense (income), net 3,560   (503)   3,675   (336)
  Income taxes 43   124   389   179
  Equity in earnings of investee (3)   -   (7)   -
  Depreciation 347   266   667   522
  Stock-based compensation expenses 3,117   1,695   5,908   3,290
Adjusted EBITDA (4,469)   (2,116)   (8,555)   (6,419)

 

 

 

 

VALENS SEMICONDUCTOR LTD.

 

RECONCILIATION OF GAAP TO NON-GAAP Tables

(U.S. Dollars in thousands)

(Unaudited)

 

The following tables provide a calculation of the GAAP Loss per share and reconciliation to Non-GAAP Loss per share.

 

 

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 GAAP Loss per Share 2022   2021   2022   2021
               
GAAP Net Loss (9,995)   (3,698)   (15,045)  

(10,074)

Adjusted to include the following:              
Accrued dividend related to Preferred Shares

-

  

(3,788)

  

-

   (7,478)
Total Loss used for computing Loss per Share (9,995)   (7,486)   (15,045)  

(17,552)

Earnings Per Share Data: 

              
GAAP Loss per Share (in U.S. Dollars) $(0.10)   $(0.68)   $(0.15)  

$(1.61)

Weighted average number of shares used in
calculation of net loss per share

 97,442,359   11,020,299   97,296,206  

10,927,357

 

 

Three Months Ended

June 30,

  

Six Months Ended 

June 30,

Non-GAAP Loss per Share10 2022   2021   2022   2021
               
GAAP Net loss (9,995)   (3,698)   (15,045)  

(10,074)

Adjusted to exclude the following:              

Stock based compensation 

 3,117   1,695   5,908   3,290
Depreciation 347   266   667  

522

Change in fair value of Forfeiture Shares

(1,538)

  

-

  

(4,142)

  

-

Total Loss used for computing Loss per Share (8,069)   (1,737)   (12,612)  

(6,262)

Earnings Per Share Data:

              
Non-GAAP Loss per Share (in U.S. Dollars) $(0.08)   $(0.16)   $(0.13)  

$(0.57)

Weighted average number of shares used in
calculation of net loss per share

 97,442,359   11,020,299   97,296,206  

10,927,357

 

 

 

10 The company calculates its non-GAAP Loss per Share as GAAP Net Loss adjusted to exclude the following: Stock based compensation, depreciation, and the change in fair value of Forfeiture Share (the change in fair value of Forfeiture Shares totaled at $1,538 thousand and $2,604 thousand for the second and first quarters of 2022, respectively) divided by the weighted average number of shares used in calculation of net loss per share.