Transphorm Reports Second Quarter 2020 Results

GOLETA, Calif.--()--Transphorm, Inc. (“Transphorm” or the “Company”) (OTCQB: TGAN), a pioneer in the development and manufacturing of high reliability, high performance gallium nitride (GaN) power semiconductors, today announced financial results for the second quarter ended June 30, 2020.

First Half 2020 & Recent Business Highlights

  • Introduced SuperGaN™ Power FETs with launch of Gen IV GaN platform
  • Partnered with Microchip Technology Inc. to combine high reliability GaN with a digital signal controller in support of accelerating GaN adoption
  • Announced Hangzhou Zhongheng Electric Co. development of an ultra-efficient, GaN-based power module using Transphorm’s GaN devices
  • Raised $19.7 million in net proceeds from a private placement of common stock in February
  • Successfully listed common stock on the OTC market and recently granted DTC eligibility

Second Quarter 2020 Financial Highlights

  • Revenue increased to $6.3 million, including $5.0 million of licensing revenue
  • Net loss was $2.3 million, or ($0.06) per share
  • Cash and equivalents were $9.4 million at quarter-end

We are very pleased with the progress we demonstrated during the second quarter,” said Mario Rivas, Transphorm’s CEO. “We continue to successfully expand our comprehensive portfolio of high-voltage GaN power conversion devices, while working to drive increased adoption of our products for targeted applications, including the emerging opportunity in fast charging power adapters. Although the COVID-19 pandemic has impacted certain customers, resulting in delays of their internal development programs that could adversely affect the pace of adoption and revenue in the near-term, we are confident that our pipeline of customer engagements and design wins will drive future long-term growth.”

Second Quarter of 2020 Results

Revenue increased to $6.3 million, compared to $1.1 million in the first quarter of 2020 and $0.5 million in the second quarter of 2019. Second quarter 2020 revenue included $5.0 million of licensing revenue from a manufacturing partner, Nexperia, related to funding of technology development, as well as $0.7 million from the Company’s three-year contract with the U.S. Navy. For the first six months of 2020, revenue was $7.4 million as compared to $1.0 million in the prior year period.

Operating expenses were $4.2 million in the second quarter, compared to $5.1 million in the prior quarter and $4.2 million in the second quarter of 2019. Second quarter 2020 operating expenses consisted of R&D expenses of $1.6 million and SG&A expenses of $2.6 million.

Net loss for the second quarter of 2020 was $2.3 million, or ($0.06) per share, compared to a net loss of $4.2 million, or ($0.13) per share, in the prior quarter and a net loss of $5.9 million, or ($0.21) per share, in the second quarter of 2019.

Cash and equivalents as of June 30, 2020 were $9.4 million, compared to $14.6 million as of March 31, 2020.

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.

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, the successful execution and continuity of Company partnerships and customer engagements, the Company’s technology and product offerings, industry acceptance of GaN technology, 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, 2020
(Unaudited)

 

December 31, 2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

9,382

 

 

 

$

2,875

 

 

Accounts receivable, net, including related parties

769

 

 

 

709

 

 

Inventory

1,342

 

 

 

990

 

 

Prepaid expenses and other current assets

1,828

 

 

 

783

 

 

Total current assets

13,321

 

 

 

5,357

 

 

Property and equipment, net

1,533

 

 

 

1,770

 

 

Goodwill

1,336

 

 

 

1,325

 

 

Intangible assets, net

1,136

 

 

 

1,313

 

 

Other assets

417

 

 

 

497

 

 

Total assets

$

17,743

 

 

 

$

10,262

 

 

 

 

 

 

Liabilities, convertible preferred stock and stockholders’ deficit

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

1,664

 

 

 

$

2,383

 

 

Deferred revenue

193

 

 

 

 

 

Development loan

10,000

 

 

 

5,000

 

 

Revolving credit facility, including accrued interest

10,762

 

 

 

10,458

 

 

Unfunded commitment to joint venture

1,548

 

 

 

1,688

 

 

Accrued payroll and benefits

1,348

 

 

 

1,159

 

 

Total current liabilities

25,515

 

 

 

20,688

 

 

Development loans, net of current portion

 

 

 

10,000

 

 

Promissory note

15,580

 

 

 

16,169

 

 

Total liabilities

41,095

 

 

 

46,857

 

 

Commitments and contingencies

 

 

 

Convertible preferred stock:

 

 

 

Series 1, $0.0001 par value; no shares authorized, issued and outstanding as of June 30, 2020; 12,438,704 shares authorized and 12,433,953 shares issued and outstanding as of December 31, 2019

 

 

 

39,658

 

 

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

 

 

 

30,000

 

 

Series 3, $0.0001 par value; no shares authorized, issued and outstanding as of June 30, 2020; 4,000,000 shares authorized, issued and outstanding as of December 31, 2019

 

 

 

16,000

 

 

Total convertible preferred stock

 

 

 

85,658

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

Common stock, $0.0001 par value; 750,000,000 shares authorized and 35,135,520 shares issued and outstanding as of June 30, 2020; 29,012,034 shares authorized and 4,220,998 shares issued and outstanding as of December 31, 2019

4

 

 

 

 

 

Additional paid-in capital

127,787

 

 

 

22,404

 

 

Accumulated deficit

(150,372

)

 

 

(143,915

)

 

Accumulated other comprehensive loss

(771

)

 

 

(742

)

 

Total stockholders’ deficit

(23,352

)

 

 

(122,253

)

 

Total liabilities, convertible preferred stock and stockholders’ deficit

$

17,743

 

 

 

$

10,262

 

 

Transphorm, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(in thousands except share and per share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue, net, including related parties

$

6,329

 

 

 

$

488

 

 

 

$

7,429

 

 

 

$

1,017

 

 

Operating expenses:

 

 

 

 

 

 

 

Cost of goods sold

1,248

 

 

 

1,182

 

 

 

2,703

 

 

 

2,586

 

 

Research and development

1,594

 

 

 

2,022

 

 

 

3,060

 

 

 

4,204

 

 

Sales and marketing

528

 

 

 

675

 

 

 

1,046

 

 

 

1,526

 

 

General and administrative

2,058

 

 

 

1,494

 

 

 

5,150

 

 

 

2,745

 

 

Total operating expenses

5,428

 

 

 

5,373

 

 

 

11,959

 

 

 

11,061

 

 

Income (loss) from operations

901

 

 

 

(4,885

)

 

 

(4,530

)

 

 

(10,044

)

 

Interest expense

189

 

 

 

189

 

 

 

378

 

 

 

376

 

 

Loss in joint venture

1,856

 

 

 

1,100

 

 

 

3,275

 

 

 

2,227

 

 

Changes in fair value of promissory note

1,658

 

 

 

51

 

 

 

(663

)

 

 

84

 

 

Other income, net

(532

)

 

 

(324

)

 

 

(1,063

)

 

 

(460

)

 

Loss before tax expense

(2,270

)

 

 

(5,901

)

 

 

(6,457

)

 

 

(12,271

)

 

Tax expense

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(2,270

)

 

 

$

(5,901

)

 

 

$

(6,457

)

 

 

$

(12,271

)

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

$

(0.06

)

 

 

$

(0.21

)

 

 

$

(0.19

)

 

 

$

(0.44

)

 

Weighted average common shares outstanding - basic and diluted

35,135,520

 

 

 

28,153,555

 

 

 

33,523,844

 

 

 

28,153,555

 

 

Transphorm, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

Six Months Ended June 30,

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

Net loss

$

(6,457

)

 

 

$

(12,271

)

 

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

 

 

 

Inventory write-off

162

 

 

 

 

 

Depreciation and amortization

438

 

 

 

615

 

 

Licensing revenue from a related party

(5,000

)

 

 

 

 

Stock-based compensation

236

 

 

 

276

 

 

Interest cost

378

 

 

 

376

 

 

Loss in joint venture

3,275

 

 

 

2,227

 

 

Changes in fair value of promissory note

(663

)

 

 

84

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(60

)

 

 

(10

)

 

Inventory

(514

)

 

 

(277

)

 

Prepaid expenses and other current assets

(1,050

)

 

 

4

 

 

Other assets

80

 

 

 

(61

)

 

Accounts payable and accrued expenses

(719

)

 

 

(473

)

 

Deferred revenue

193

 

 

 

3,000

 

 

Accrued payroll and benefits

189

 

 

 

44

 

 

Net cash used in operating activities

(9,512

)

 

 

(6,466

)

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(22

)

 

 

(116

)

 

Investment in joint venture

(3,427

)

 

 

(1,103

)

 

Net cash used in investing activities

(3,449

)

 

 

(1,219

)

 

Cash flows from financing activities:

 

 

 

Proceeds from development loans

 

 

 

9,000

 

 

Proceeds from stock option exercise

18

 

 

 

 

 

Payment for repurchase of common stock

(211

)

 

 

 

 

Loan repayment

(50

)

 

 

 

 

Proceeds from issuance of common stock, net of offering cost

19,741

 

 

 

 

 

Net cash provided by financing activities

19,498

 

 

 

9,000

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

(30

)

 

 

14

 

 

Net increase in cash and cash equivalents

6,507

 

 

 

1,329

 

 

Cash and cash equivalents at beginning of period

2,875

 

 

 

3,069

 

 

Cash and cash equivalents at end of period

$

9,382

 

 

 

$

4,398

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Interest expense paid

$

 

 

 

$

496

 

 

Supplemental non-cash financing activity:

 

 

 

Development loan reduction related to licensing revenue

$

5,000

 

 

 

$

 

 

 

Contacts

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

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Contacts

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