Business Wire | Aug 16, 2021 04:05PM EDT

Transphorm Announces Fiscal First Quarter 2022 Financial Results

Aug. 16, 2021

GOLETA, Calif.--(BUSINESS WIRE)--Aug. 16, 2021--Transphorm, Inc. (OTCQX: TGAN)-a pioneer in and global supplier of high reliability, high performance gallium nitride (GaN) power conversion products, today announced financial results for the company's fiscal first quarter of 2022 ended June 30, 2021.

Revenue for the fiscal first quarter of 2022 increased 33% sequentially to $3.2 million driven by record product sales from ramping shipments of Transphorm GaN devices for fast chargers and adapters as well as increased traction for higher power conversion applications, including gaming, data centers and crypto-mining. This compares to revenue of $2.4 million in the fiscal fourth quarter of 2021 ended March 31, 2021 and $6.3 million (included $5.0 million of licensing revenue) in the fiscal first quarter of 2021 ended June 30, 2020.

Operating expenses on a GAAP basis were $5.3 million in the fiscal first quarter of 2022, compared to $5.2 million in the prior quarter and $4.2 million in the fiscal first quarter of 2021. Fiscal first quarter 2022 operating expenses consisted of R&D expenses of $1.8 million and SG&A expenses of $3.4 million. On a non-GAAP basis, operating expenses in the fiscal first quarter of 2022 were $4.6 million, compared with non-GAAP operating expenses of $4.5 million in the prior quarter and $3.9 million in the fiscal first quarter of 2021.

GAAP net loss for the fiscal first quarter of 2022 was ($7.1) million, or ($0.17) per share, compared to a GAAP net loss of ($6.6) million, or ($0.16) per share, in the prior quarter and a GAAP net loss of ($2.3) million, or ($0.06) per share, in the fiscal first quarter of 2021. On a non-GAAP basis, net loss for the fiscal first quarter of 2022 was ($5.3) million, or ($0.13) per share, compared to a non-GAAP net loss of ($5.2) million, or ($0.13) per share, in the prior quarter and a non-GAAP net loss of ($0.3) million, or ($0.01) per share, in the fiscal first quarter of 2021.

Cash and equivalents as of June 30, 2021 were $2.5 million, compared to $9.5 million as of March 31, 2021. In a subsequent private placement transaction completed on August 13, 2021, the company closed $5.0 million of equity financing at $5.00 per share from a multi-billion dollar public company in Asia with international operations in the semiconductor ecosystem.

"We achieved another consecutive quarter of strong sequential growth and record product revenue," commented Primit Parikh, Transphorm's President and Co-founder. "We more than doubled shipments of Transphorm's GaN power devices for the third consecutive quarter to fulfill growing customer demand in the consumer adapter and high-power markets. Additionally, we recently completed the planned transition of our AFSW wafer-fab into a new JV with a strong strategic-financial partner that shares our goals of accelerating GaN adoption. Looking ahead, our team remains focused on expanding capacity over the coming quarters, as we continue to secure and ramp a growing pipeline of design wins."

"Along with the strong operating performance, the company remains committed to its previously communicated ambition to uplist on the NASDAQ later in the calendar year," said Mario Rivas, Transphorm's CEO. "In July, we were also excited to strengthen our Board, with the addition of Ms. Kelly Smales as an independent director, with an extensive semiconductor finance background."

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 fiscal first 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 3299126.

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 August 23, 2021. The telephone replay can be accessed by dialing +1-416-621-4642 and entering the conference ID 3299126.

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_GaN.

Non-GAAP Financial Measures

This press release includes and makes reference to certain non-GAAP financial measures. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Transphorm believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. Transphorm believes that these non-GAAP financial measures provide additional insight into Transphorm's ongoing performance and core operational activities and has chosen to provide these measures for more consistent and meaningful comparison between periods. These measures should only be used to evaluate Transphorm's results of operations in conjunction with the corresponding GAAP measures. The non-GAAP results exclude the effect of stock-based compensation, depreciation, amortization and change in fair value of promissory note.

A reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this press release.

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 planned application to uplist to the Nasdaq Capital Market, the Company's technology and anticipated 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.

Condensed Consolidated Balance Sheets

(in thousands except share and per share data)

June 30, March 31, 2021 2021 (unaudited)

Assets

Current assets:

Cash and cash equivalents $ 2,462 $ 9,500

Accounts receivable, net, including related 2,247 1,618 parties

Inventory 2,924 2,223

Prepaid expenses and other current assets 2,160 953

Total current assets 9,793 14,294

Property and equipment, net 1,832 1,360

Goodwill 1,303 1,302

Intangible assets, net 839 914

Other assets 267 274

Total assets $ 14,034 $ 18,144



Liabilities and stockholders' deficit

Current liabilities:

Accounts payable and accrued expenses $ 3,744 $ 3,140

Deferred revenue 1,016 505

Development loan 8,000 10,000

Revolving credit facility, including accrued 166 10,150 interest

Unfunded commitment to joint venture 1,339 1,866

Accrued payroll and benefits 1,582 1,410

Total current liabilities 15,847 27,071

Revolving credit facility 12,000

Promissory note 17,190 16,128

Total liabilities 45,037 43,199

Stockholders' deficit:

Common stock 4 4

Additional paid-in capital 145,332 144,201

Accumulated deficit (175,455 ) (168,403 )

Accumulated other comprehensive loss (884 ) (857 )

Total Stockholders' deficit (31,003 ) (25,055 )

Total liabilities and stockholders' deficit $ 14,034 $ 18,144



Transphorm, Inc.

Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

Three Months Ended

June 30, 2021 (unaudited)

March 31, 2021

June 30, 2020 (unaudited)

Revenue, net

$

3,216

$

2,425

$

6,329

Operating expenses:

Cost of goods sold

2,567

1,788

1,248

Research and development

1,823

1,780

1,594

Sales and marketing

687

663

528

General and administrative

2,743

2,733

2,058

Total operating expenses

7,820

6,964

5,428

Loss from operations

(4,604

)

(4,539

)

901

Interest expense

204

187

189

Loss in joint venture

1,490

1,468

1,856

Changes in fair value of promissory note

1,024

699

1,658

Other income, net

(270

)

(314

)

(532

)

Loss before tax expense

(7,052

)

(6,579

)

(2,270

)

Tax expense

-

-

-

Net loss

$

(7,052

)

$

(6,579

)

$

(2,270

)

Loss per share - basic and diluted

$

(0.17

)

$

(0.16

)

$

(0.06

)

Weighted average common shares outstanding - basic and diluted

40,637,213

40,274,660

35,135,520

Transphorm, Inc.

Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

Three Months Ended

June 30, 2021 March 31, 2021 June 30, 2020 (unaudited) (unaudited)

Revenue, net $ 3,216 $ 2,425 $ 6,329

Operating expenses:

Cost of goods sold 2,567 1,788 1,248

Research and development 1,823 1,780 1,594

Sales and marketing 687 663 528

General and administrative 2,743 2,733 2,058

Total operating expenses 7,820 6,964 5,428

Loss from operations (4,604 ) (4,539 ) 901

Interest expense 204 187 189

Loss in joint venture 1,490 1,468 1,856

Changes in fair value of 1,024 699 1,658 promissory note

Other income, net (270 ) (314 ) (532 )

Loss before tax expense (7,052 ) (6,579 ) (2,270 )

Tax expense - - -

Net loss $ (7,052 ) $ (6,579 ) $ (2,270 )

Loss per share - basic and $ (0.17 ) $ (0.16 ) $ (0.06 )diluted

Weighted average common sharesoutstanding - basic and 40,637,213 40,274,660 35,135,520 diluted



Transphorm, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

Three Months Ended June 30,

2021

2020

Cash flows from operating activities:

Net loss

$

(7,052

)

$

(2,270

)

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

Inventory write-off (reversal)

134

(7

)

Depreciation and amortization

197

202

Licensing revenue from a related party

-

(5,000

)

Stock-based compensation

497

104

Interest cost

54

189

Loss in joint venture

1,490

1,856

Changes in fair value of promissory note

1,024

1,658

Changes in operating assets and liabilities:

Accounts receivable

(629

)

608

Inventory

(835

)

(250

)

Prepaid expenses and other current assets

(707

)

(447

)

Other assets

7

71

Accounts payable and accrued expenses

354

(540

)

Deferred revenue

511

193

Accrued payroll and benefits

172

272

Net cash used in operating activities

(4,783

)

(3,361

)

Cash flows from investing activities:

Purchases of property and equipment

(346

)

(22

)

Investment in joint venture

(2,018

)

(1,879

)

Net cash used in investing activities

(2,364

)

(1,901

)

Cash flows from financing activities:

Proceeds from stock option exercise

134

-

Net cash provided by financing activities

134

-

Effect of foreign exchange rate changes on cash and cash equivalents

(25

)

(4

)

Net increase (decrease) in cash and cash equivalents

(7,038

)

(5,266

)

Cash and cash equivalents at beginning of period

9,500

14,648

Cash and cash equivalents at end of period

$

2,462

$

9,382

Supplemental disclosures of cash flow information:

Interest expense paid

$

150

$

-

Supplemental non-cash investing activity:

Equipment purchases

$

250

Supplemental non-cash financing activity:

Issuance of shares in connection with a service contract

$

500

Development loan reduction related to licensing revenue

$

-

$

5,000

Transphorm, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

Three Months Ended June 30,

2021 2020

Cash flows from operating activities:

Net loss $ (7,052 ) $ (2,270 )

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

Inventory write-off (reversal) 134 (7 )

Depreciation and amortization 197 202

Licensing revenue from a related party - (5,000 )

Stock-based compensation 497 104

Interest cost 54 189

Loss in joint venture 1,490 1,856

Changes in fair value of promissory note 1,024 1,658

Changes in operating assets and liabilities:

Accounts receivable (629 ) 608

Inventory (835 ) (250 )

Prepaid expenses and other current assets (707 ) (447 )

Other assets 7 71

Accounts payable and accrued expenses 354 (540 )

Deferred revenue 511 193

Accrued payroll and benefits 172 272

Net cash used in operating activities (4,783 ) (3,361 )

Cash flows from investing activities:

Purchases of property and equipment (346 ) (22 )

Investment in joint venture (2,018 ) (1,879 )

Net cash used in investing activities (2,364 ) (1,901 )

Cash flows from financing activities:

Proceeds from stock option exercise 134 -

Net cash provided by financing activities 134 -

Effect of foreign exchange rate changes on cash and (25 ) (4 )cash equivalents

Net increase (decrease) in cash and cash equivalents (7,038 ) (5,266 )

Cash and cash equivalents at beginning of period 9,500 14,648

Cash and cash equivalents at end of period $ 2,462 $ 9,382



Supplemental disclosures of cash flow information:

Interest expense paid $ 150 $ -

Supplemental non-cash investing activity:

Equipment purchases $ 250

Supplemental non-cash financing activity:

Issuance of shares in connection with a service $ 500 contract

Development loan reduction related to licensing revenue $ - $ 5,000

Transphorm, Inc.

Reconciliation of GAAP and Non-GAAP Financial Information (unaudited)

(in thousands except share and per share data)

Three Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

GAAP net loss

$

(7,052

)

$

(6,579

)

$

(2,270

)

Adjustments:

Stock-based compensation

497

513

104

Depreciation

123

123

128

Amortization

74

74

74

Changes in fair value of promissory note

1,024

699

1,658

Total adjustments to GAAP net loss

1,718

1,409

1,964

Non-GAAP net loss

$

(5,334

)

$

(5,170

)

$

(306

)

GAAP net loss per share - basic and diluted

$

(0.17

)

$

(0.16

)

$

(0.06

)

Adjustment

0.04

0.03

0.05

Non-GAAP net loss per share - basic and diluted

$

(0.13

)

$

(0.13

)

$

(0.01

)

Weighted average common shares outstanding - basic and diluted

40,637,213

40,274,660

35,135,520

Transphorm, Inc.

Reconciliation of GAAP and Non-GAAP Financial Information (unaudited)

(in thousands except share and per share data)

Three Months Ended

June 30, 2021 March 31, 2021 June 30, 2020

GAAP net loss $ (7,052 ) $ (6,579 ) $ (2,270 )

Adjustments:

Stock-based compensation 497 513 104

Depreciation 123 123 128

Amortization 74 74 74

Changes in fair value of 1,024 699 1,658 promissory note

Total adjustments to GAAP 1,718 1,409 1,964 net loss

Non-GAAP net loss $ (5,334 ) $ (5,170 ) $ (306 )



GAAP net loss per share - $ (0.17 ) $ (0.16 ) $ (0.06 )basic and diluted

Adjustment 0.04 0.03 0.05

Non-GAAP net loss per share $ (0.13 ) $ (0.13 ) $ (0.01 )- basic and diluted

Weighted average commonshares outstanding - basic 40,637,213 40,274,660 35,135,520 and diluted



Three Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

GAAP operating expenses

$

5,253

$

5,176

$

4,180

Adjustments:

Stock-based compensation

470

475

90

Depreciation

123

123

128

Amortization

74

74

74

Total adjustments to GAAP operating expenses

667

672

292

Non-GAAP operating expenses

$

4,586

$

4,504

$

3,888

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CONTACT: Investor Contacts: Shelton Group Brett Perry | Leanne Sievers 1-214-272-0070 | 1-949-224-3874 sheltonir@sheltongroup.com

CONTACT: Company Contact: Cameron McAulay Chief Financial Officer 1-805-456-1300 ext. 140 cmcaulay@transphormusa.com