UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): May 11, 2017
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) |
| 3301 Olcott Street Santa Clara, California 95054 |
| (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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On May 11, 2017, MoSys, Inc., or the Company, issued a press release announcing its financial results for the three months ended March 31, 2017. A copy of this press release is furnished as Exhibit 99.1 to this report. The press release should be read in conjunction with the statements 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 loss, net loss and net loss per share, exclusive of stock-based compensation, restructuring and impairment charges, and amortization of intangibles. 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.
Amortization of intangible assets results from the value recorded for a license the Company retained to patents sold in 2011. The amortization does not represent operating expenses ordinarily incurred by the Company with respect to its primary business activities of selling integrated circuits. Thus, these charges are excluded from the Company’s non-GAAP financial measures to provide another basis for evaluating and comparing the Company’s performance for the three months ended March 31, 2017.
In the first quarter of 2016, the Company effected a reduction in workforce and associated operating expenses, net loss and cash burn and to realign resources. Substantially all of these restructuring charges were paid in the first quarter of 2016.
Management and the Company’s board of directors will continue to analyze the historical consolidated results of operations and comprehensive loss (revenue, gross margin, research and development expenses, selling, general and administrative expenses, operating loss, net loss and net loss per share), excluding stock-based compensation, charges for amortization of intangibles and restructuring charges described above, 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, along with other types of financial information.
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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release by MoSys, Inc. dated May 11, 2017. |
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: May 11, 2017 | By: | /s/ James W. Sullivan |
| James W. Sullivan | ||
| Vice President of Finance and Chief Financial Officer | ||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release by MoSys, Inc. dated May 11, 2017. |
Exhibit 99.1
MoSys, Inc. Reports First Quarter 2017 Financial Results
SANTA CLARA, Calif., May 11, 2017 (GLOBE NEWSWIRE) -- MoSys, Inc. (NASDAQ:MOSY), today reported financial results for the first quarter ended March 31, 2017.
First Quarter 2017 Financial Results
Total net revenue for the first quarter of 2017 was $1.2 million, compared with $1.4 million in the previous quarter and $1.5 million in the first quarter of 2016. Product revenue in the first quarter was $1.0 million, consistent with the fourth quarter of 2016, and compared with $1.1 million in the year-ago period.
Gross margin for the first quarter of 2017 was 50 percent, compared with 57 percent in the fourth quarter of 2016 and 41 percent for the first quarter of 2016.
Total operating expenses on a GAAP basis for the first quarter of 2017 were $4.8 million, compared with $15.1 million in the fourth quarter of 2016, which included a non-cash goodwill impairment charge of $9.9 million, and $7.4 million in the year-ago period.
In February 2017, the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share amounts in this press release have been adjusted to reflect the reverse stock split for all current and prior periods.
GAAP net loss for the first quarter of 2017 was $4.4 million, or ($0.66) per share, compared with a net loss of $14.5 million, or ($2.18) per share, in the previous quarter and a net loss of $6.9 million, or ($1.05) per share, for the first quarter of 2016. Non-GAAP net loss for the first quarter of 2017 was $4.2 million, or ($0.63) per share, which excludes intangible asset amortization and stock-based compensation expenses. A reconciliation of GAAP results to non-GAAP results is provided in the financial statement tables following the text of this press release.
Management Commentary
“First quarter 2017 product revenue was primarily comprised of ongoing shipments of our Bandwidth Engine® 2 ICs, with the majority of those shipments to our lead IP security appliance customer. We have a reliable volume forecast from this customer for the remainder of this year, and are working to confirm order commitments from our other top customers,” commented Len Perham, MoSys’ President and CEO. “During the first quarter, we won our first Bandwidth Engine 3 design-in with a leading networking equipment supplier in China, and received our first pre-production order from this customer. We also secured additional Bandwidth Engine 2 design-ins with multiple customers for next-generation video applications.
“After the close of the quarter, as previously announced, we revised our operating plan and began implementing our cost reduction initiatives. We expect to realize significant operating cost savings from these actions, and believe these expense reductions will position us to maintain ongoing operations and preserve cash until such time that our past design wins ramp more materially.”
Mr. Perham further commented, “Although we are now running a leaner organization, we remain confident that we have the necessary resources and personnel to fully support the current needs and firm orders of our customers. In addition, we remain focused on carefully managing operating costs and expanding our portfolio of design wins, while continuing to explore strategic alternatives and asset monetization strategies to ensure our viability and provide value to our stockholders.”
Financial Results Conference Call
The Company will not be hosting a conference call or webcast in conjunction with today’s release of its first quarter results.
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 non-cash goodwill impairment, restructuring, stock-based compensation and intangible asset amortization charges. 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. MoSys’ 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 reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is provided in a table below the Condensed Consolidated Statements of Operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. For additional information regarding these non-GAAP financial measures, and management’s explanation of why it considers such measures to be useful, refer to the Form 8-K dated May 11, 2017 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, anticipated benefits and performance expected from its IC products and the Company’s future markets and future business prospects. 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:
other risks identified in the company’s most recent report on Form 10-K filed with the Securities and Exchange Commission, as well as other reports that MoSys files from time to time with the Securities and Exchange Commission. MoSys undertakes no obligation 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. There can be no assurance that MoSys’ review of strategic alternatives will result in any specific action.
About MoSys, Inc.
MoSys, Inc. (NASDAQ:MOSY) is a fabless semiconductor company enabling leading equipment manufacturers of Cloud, networking, communications, and data center systems to address the continual increase in Internet users, data and services. The company's solutions deliver data path connectivity, speed and intelligence while eliminating data access bottlenecks on line cards and systems scaling from 100G to multi-terabits per second. Engineered and built for high-reliability carrier and enterprise applications, MoSys' Bandwidth Engine®, Programmable Search Engine, and LineSpeed™ IC product families are based on the company's patented high-performance, high-density intelligent access and high-speed serial interface technology, and utilize the company's highly efficient GigaChip® Interface. MoSys is headquartered in Santa Clara, California. More information is available at www.mosys.com.
Bandwidth Engine, GigaChip and MoSys are registered trademarks of MoSys, Inc. in the US and/or other countries. LineSpeed and the MoSys logo are trademarks of MoSys, Inc. All other marks mentioned herein are the property of their respective owners.
(Financial Tables to Follow)
| MOSYS, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (In thousands, except per share amounts; unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| Net Revenue | ||||||||||
| Product | $ | 955 | $ | 1,120 | ||||||
| Royalty and other | 257 | 331 | ||||||||
| Total net revenue | 1,212 | 1,451 | ||||||||
| Cost of Net Revenue | 602 | 863 | ||||||||
| Gross Profit | 610 | 588 | ||||||||
| Operating Expenses | ||||||||||
| Research and development | 3,485 | 5,232 | ||||||||
| Selling, general and administrative | 1,314 | 1,516 | ||||||||
| Restructuring and impairment charges | - | 676 | ||||||||
| Total operating expenses | 4,799 | 7,424 | ||||||||
| Loss from operations | (4,189 | ) | (6,836 | ) | ||||||
| Other expense, net | (216 | ) | (29 | ) | ||||||
| Net Loss | $ | (4,405 | ) | $ | (6,865 | ) | ||||
| Net loss per share | ||||||||||
| Basic and diluted | $ | (0.66 | ) | $ | (1.05 | ) | ||||
| Shares used in computing net loss per share | ||||||||||
| Basic and diluted | 6,647 | 6,567 | ||||||||
| MOSYS, INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (In thousands, unaudited) | ||||||||||
| March 31, | December 31, | |||||||||
| 2017 | 2016 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash, cash equivalents and investments | $ | 5,570 | $ | 9,768 | ||||||
| Accounts receivable, net | 710 | 559 | ||||||||
| Inventories | 1,055 | 1,451 | ||||||||
| Prepaid expenses and other | 321 | 473 | ||||||||
| Total current assets | 7,656 | 12,251 | ||||||||
| Property and equipment, net | 1,078 | 1,274 | ||||||||
| Goodwill | 13,276 | 13,276 | ||||||||
| Other | 318 | 344 | ||||||||
| Total assets | $ | 22,328 | $ | 27,145 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 402 | $ | 561 | ||||||
| Accrued expenses and other | 1,913 | 2,773 | ||||||||
| Total current liabilities | 2,315 | 3,334 | ||||||||
| Notes payable | 8,699 | 8,250 | ||||||||
| Other | 226 | 233 | ||||||||
| Total liabilities | 11,240 | 11,817 | ||||||||
| Stockholders' equity | 11,088 | 15,328 | ||||||||
| Total liabilities and stockholders’ equity | $ | 22,328 | $ | 27,145 | ||||||
| MOSYS, INC. | ||||||||||
| Reconciliation of GAAP to Non-GAAP Net Loss and Net Loss Per Share | ||||||||||
| (In thousands, except per share amounts; unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| GAAP net loss | $ | (4,405 | ) | $ | (6,865 | ) | ||||
| Stock-based compensation expense | ||||||||||
| - | Research and development | 109 | 438 | |||||||
| - | Selling, general and administrative | 76 | 167 | |||||||
| Total stock-based compensation expense | 185 | 605 | ||||||||
| Restructuring and impairment charges | - | 676 | ||||||||
| Amortization of intangible assets | 28 | 28 | ||||||||
| Non-GAAP net loss | $ | (4,192 | ) | $ | (5,556 | ) | ||||
| GAAP net loss per share | $ | (0.66 | ) | $ | (1.05 | ) | ||||
| Reconciling items | ||||||||||
| - | Stock-based compensation expense | 0.03 | 0.10 | |||||||
| - | Restructuring and impairment charges | - | 0.10 | |||||||
| - | Amortization of intangible assets | - | - | |||||||
| Non-GAAP net loss per share: basic and diluted | $ | (0.63 | ) | $ | (0.85 | ) | ||||
| Shares used in computing non-GAAP net loss per share | ||||||||||
| Basic and diluted | 6,647 | 6,567 | ||||||||
Contacts:
Jim Sullivan, CFO
MoSys, Inc.
+1 (408) 418-7500
jsullivan@mosys.com
Beverly Twing, Sr. Acct. Manager
Shelton Group, Investor Relations
+1 (214) 272-0089
btwing@sheltongroup.com