Business Wire | Mar 9, 2021 04:05PM EST

Transphorm Reports Fourth Quarter 2020 Results

Mar. 09, 2021

GOLETA, Calif.--(BUSINESS WIRE)--Mar. 09, 2021--Transphorm, Inc. (OTCQB: TGAN)-a pioneer in and global supplier of high reliability, high performance gallium nitride (GaN) power conversion products, today announced financial results for the fourth quarter and full year ended December 31, 2020.

Recent Business Highlights

* Fulfilled purchase order for high-volume power adapter application and secured new wins for seven-figure unit volumes * Secured order for a Gen 4 GaN in power supply targeted at crypto mining application * Demonstrated new Gen 5 SuperGaN(r) device, featuring the world's lowest packaged on-resistance GaN device and 25% lower power loss over Silicon Carbide (SiC) in a standard TO247 package, and began sampling for Electric Vehicle application * Announced Bel Power Solutions is incorporating Transphorm's high voltage GaN FETs into a family of 1.5 to 3.2 kW Titanium efficiency power supplies * Released availability of new power supply reference design virtual prototype in collaboration with partner, Keysight Technologies * Entered into expanded $4 million, multi-year cooperation and development agreement with Yaskawa Electric * Successfully completed private placement of common stock, generating gross proceeds of $15 million

"The fourth quarter marked a strong finish to a successful year, as we continued to make significant progress on our design win momentum, strategic partnerships and go-to-market initiatives," said Mario Rivas, Transphorm's CEO. "The compelling combination of high reliability and high performance offered by Transphorm's GaN power devices is contributing to increased adoption across an expanded customer base and target applications in fast-charging adapters, data center servers and crypto mining, as well as electric vehicles. As a result, we've entered 2021 with strong momentum and a healthy order backlog that we believe will drive meaningful product revenue growth as we continue to ramp volume shipments for an increasing number of design wins throughout the coming year."

Fourth Quarter of 2020 Results

Revenue was $2.0 million in the fourth quarter, compared to $1.9 million in the third quarter of 2020 and $9.9 million in the fourth quarter of 2019, which included $9.0 million in licensing revenue. For the full year 2020, revenue was $11.4 million and compared to full year revenue of $11.9 million in 2019.

Operating expenses were $4.5 million in the fourth quarter, compared to $4.3 million in the prior quarter and $5.0 million in the fourth quarter of 2019. Fourth quarter 2020 operating expenses consisted of R&D expenses of $1.5 million and SG&A expenses of $3.1 million.

For the fourth quarter of 2020, the Company recorded a net loss of $4.7 million, or ($0.13) per share, compared to a net loss of $6.7 million, or ($0.19) per share, in the prior quarter and net income of $2.4 million, or $0.09 per share, in the fourth quarter of 2019. For the full year 2020, the Company recorded a net loss of $17.9 million, or ($0.56) per share, compared with a net loss of $15.3 million, or ($0.54) per share, for the full year 2019.

Cash and equivalents as of December 31, 2020 were $14.7 million, compared to $4.4 million at the end of the third quarter of 2020 and $2.9 million at the end of the fourth quarter of 2019.

Conference Call

Transphorm will host a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to review the Company's fourth quarter results and provide a business update. The conference call will be webcast live over the Internet with an associated slide presentation, which can be accessed by all interested parties in the Investor Relations section of Transphorm's website at www.transphormusa.com. Investors and analysts may also join the conference call by dialing 1-833-529-0218 and providing the conference ID 6656513. For those unable to attend the live webcast, a replay and the supporting presentation materials will be available on the day of the conference call and for approximately 90 days in the Investor Relations section of the Company's website. Additionally, a telephone replay of the conference call will be available approximately two hours after the conclusion of the call and through March 16, 2021. The telephone replay can be accessed by dialing +1-416-621-4642 and entering the conference ID 6656513.

About Transphorm

Transphorm, Inc., a global leader in the GaN revolution, designs and manufactures high performance and high reliability GaN semiconductors for high voltage power conversion applications. Having one of the largest Power GaN IP portfolios of more than 1,000 owned or licensed patents, Transphorm produces the industry's first JEDEC and AEC-Q101 qualified high voltage GaN semiconductor devices. The Company's vertically integrated device business model allows for innovation at every development stage: design, fabrication, device, and application support. Transphorm's innovations are moving power electronics beyond the limitations of silicon to achieve over 99% efficiency, 40% more power density and 20% lower system cost. Transphorm is headquartered in Goleta, California and has manufacturing operations in Goleta and Aizu, Japan. For more information, please visit www.transphormusa.com. Follow us on Twitter @transphormusa and WeChat @ Transphorm.

Forward-Looking Statements

This press release contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning the Company's technology and product offerings, industry acceptance of GaN technology, and the Company's pipeline and future anticipated growth. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "may," "will," "should," "would," "expect," "plan," "believe," "intend," "look forward," and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: risks related to Transphorm's operations, such as additional financing requirements and access to capital; competition; the ability of Transphorm to protect its intellectual property rights; and other risks set forth in the Company's filings with the Securities and Exchange Commission. Except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Transphorm, Inc.

Consolidated Balance Sheet

(in thousands except share and per share data)

December December 31, 2020 31, 2019

Assets

Current assets:

Cash and cash equivalents $ 14,694 $ 2,875

Accounts receivable, net, including related parties 844 709

Inventory 1,627 990

Prepaid expenses and other current assets 1,061 783

Total current assets 18,226 5,357

Property and equipment, net 1,324 1,770

Goodwill 1,397 1,325

Intangible assets, net 988 1,313

Other assets 291 497

Total assets $ 22,226 $ 10,262



Liabilities, convertible preferred stock and stockholders' deficit

Current liabilities:

Accounts payable and accrued expenses $ 3,182 $ 2,383

Deferred revenue 674 -

Development loan 10,000 5,000

Revolving credit facility, including accrued interest 10,153 10,458

Unfunded commitment to joint venture 1,466 1,688

Accrued payroll and benefits 1,215 1,159

Total current liabilities 26,690 20,688

Development loans, net of current portion - 10,000

Promissory note 15,392 16,169

Total liabilities 42,082 46,857

Commitments and contingencies

Convertible preferred stock:

Series 1, $0.0001 par value; no shares authorized,issued and outstanding as of December 31, 2020; - 39,658 12,438,704 shares authorized and 12,433,953 sharesissued and outstanding as of December 31, 2019

Series 2, $0.0001 par value; no shares authorized,issued and outstanding as of December 31, 2020; - 30,000 7,507,699 shares authorized and 7,499,996 sharesissued and outstanding as of December 31, 2019

Series 3, $0.0001 par value; no shares authorized,issued and outstanding as of December 31, 2020; - 16,000 4,000,000 shares authorized, issued and outstandingas of December 31, 2019

Total convertible preferred stock - 85,658



Stockholders' deficit:

Common stock, $0.0001 par value; 750,000,000 sharesauthorized and 40,278,496 shares issued andoutstanding as of December 31, 2020; 29,012,034 4 - shares authorized and 4,220,998 shares issued andoutstanding as of December 31, 2019

Additional paid-in capital 142,736 22,404

Accumulated deficit (161,824) (143,915)

Accumulated other comprehensive loss (772) (742)

Total stockholders' deficit (19,856) (122,253)

Total liabilities, convertible preferred stock and $ 22,226 $ 10,262 stockholders' deficit

Transphorm, Inc.

Consolidated Statements of Operations (unaudited)

(in thousands except share and per share data)

Year Ended December 31,

2020

2019

Revenue, net, including related parties

$

11,371

$

11,934

Operating expenses:

Cost of goods sold

6,682

6,492

Research and development

5,584

8,146

Sales and marketing

2,174

2,609

General and administrative

10,328

6,606

Total operating expenses

24,768

23,853

Loss from operations

(13,397)

(11,919)

Interest expense

760

758

Loss in joint venture

6,836

3,703

Changes in fair value of promissory note

(927)

167

Other income, net

(2,157)

(1,264)

Loss before tax expense

(17,909)

(15,283)

Tax expense

-

-

Net loss

$

(17,909)

$

(15,283)

Net loss per share - basic and diluted

$

(0.56)

$

(0.54)

Weighted average common shares outstanding - basic and diluted

31,739,801

28,153,605

Transphorm, Inc.

Consolidated Statements of Operations (unaudited)

(in thousands except share and per share data)

Year Ended December 31,

2020 2019

Revenue, net, including related parties $ 11,371 $ 11,934

Operating expenses:

Cost of goods sold 6,682 6,492

Research and development 5,584 8,146

Sales and marketing 2,174 2,609

General and administrative 10,328 6,606

Total operating expenses 24,768 23,853

Loss from operations (13,397) (11,919)

Interest expense 760 758

Loss in joint venture 6,836 3,703

Changes in fair value of promissory note (927) 167

Other income, net (2,157) (1,264)

Loss before tax expense (17,909) (15,283)

Tax expense - -

Net loss $ (17,909) $ (15,283)



Net loss per share - basic and diluted $ (0.56) $ (0.54)

Weighted average common shares outstanding - basic 31,739,801 28,153,605 and diluted

Transphorm, Inc.

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

Year Ended December 31,

2020

2019

Cash flows from operating activities:

Net loss

$

(17,909)

$

(15,283)

Adjustments to reconcile net loss to net cash used in operating activities:

Inventory write-off

435

155

Depreciation and amortization

835

1,216

Provision for doubtful accounts

110

-

Licensing revenue from a related party

(5,000)

-

Stock-based compensation

1,525

566

Interest cost

610

608

Loss in joint venture

6,836

3,703

Changes in fair value of promissory note

(927)

167

Changes in operating assets and liabilities:

Accounts receivable

(245)

(429)

Inventory

(1,072)

(293)

Prepaid expenses and other current assets

(283)

(154)

Other assets

206

(42)

Accounts payable and accrued expenses

34

509

Deferred revenue

674

(3,000)

Accrued payroll and benefits

56

(13)

Net cash used in operating activities

(14,115)

(12,290)

Cash flows from investing activities:

Purchases of property and equipment

(58)

(203)

Investment in joint venture

(7,348)

(2,698)

Net cash used in investing activities

(7,406)

(2,901)

Cash flows from financing activities:

Proceeds from development loans

-

15,000

Proceeds from stock option exercise

32

-

Payment for repurchase of common stock

(211)

-

Loan repayment

(50)

-

Proceeds from issuance of common stock, net of offering cost

33,387

-

Net cash provided by financing activities

33,158

15,000

Effect of foreign exchange rate changes on cash and cash equivalents

182

(3)

Net increase (decrease) in cash and cash equivalents

11,819

(194)

Cash and cash equivalents at beginning of period

2,875

3,069

Cash and cash equivalents at end of period

$

14,694

$

2,875

Supplemental disclosures of cash flow information:

Interest expense paid

$

915

$

496

Supplemental non-cash financing activity:

Private placement offering cost

$

223

$

177

Development loan reduction related to licensing revenue

$

5,000

$

-

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CONTACT: Investor Contacts: Shelton Group Brett Perry | Leanne Sievers 1-214-272-0070 | 1-949-224-3874 sheltonir@sheltongroup.com Company Contact: Cameron McAulay Chief Financial Officer 1-805-456-1300 ext. 140 cmcaulay@transphormusa.com