Business Wire | Jun 24, 2021 06:00AM EDT

Transphorm Announces Fiscal Fourth Quarter 2021 Financial Results

Jun. 24, 2021

GOLETA, Calif.--(BUSINESS WIRE)--Jun. 24, 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 fourth quarter of 2021 ended March 31, 2021, which reflects the Company's new fiscal year-end period.

Revenue for the fiscal fourth quarter of 2021 increased 20% sequentially to $2.4 million due to record product sales driven by the expanding adoption of Transphorm's GaN devices for power conversion applications. This compares to revenue of $2.0 million in the fiscal third quarter of 2021 and $1.1 million in the fiscal fourth quarter of the year ended March 31, 2020. For the full fiscal year 2021, revenue was $12.7 million, compared to $12.5 million in the full fiscal year 2020.

Operating expenses on a GAAP basis were $5.2 million in the fiscal fourth quarter, compared to $4.5 million in the prior quarter and $5.1 million in the fiscal fourth quarter of 2020. Fiscal fourth quarter 2021 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 fourth quarter of 2021 were $4.5 million, compared with non-GAAP operating expenses of $3.7 million in the prior quarter and $4.7 million in the fiscal fourth quarter of 2020.

GAAP net loss for the fiscal fourth quarter of 2021 was ($6.6) million, or ($0.16) per share, compared to a GAAP net loss of ($4.7) million, or ($0.13) per share, in the prior quarter and a GAAP net loss of ($4.2) million, or ($0.13) per share, in the fiscal fourth quarter of 2020. On a non-GAAP basis, net loss for the fiscal fourth quarter of 2021 was ($5.2) million, or ($0.13) per share, compared to a non-GAAP net loss of ($4.7) million, or ($0.13) per share, in the prior quarter and a non-GAAP net loss of ($6.1) million, or ($0.19) per share, in the fiscal fourth quarter of 2020.

For the full fiscal year 2021, GAAP net loss was ($20.3) million, or ($0.56) per share, compared to a GAAP net loss of ($13.1) million, or ($0.45) per share, for the full fiscal year 2020. On a non-GAAP basis, net loss for the full fiscal year 2021 was ($15.5) million, or ($0.42) per share, compared to a non-GAAP net loss of ($13.6) million, or ($0.47) per share, in the full fiscal year 2020.

Cash and equivalents as of March 31, 2021 were $9.5 million, compared to $14.6 million as of March 31, 2020.

Commenting on the current fiscal first quarter of 2022, Transphorm's President and Co-founder, Primit Parikh, stated, "Following our strong results and record product revenue in the March quarter, we have continued to secure new design wins and experience growing customer demand for Transphorm's GaN power devices. Throughout the current quarter our team has been focused on ramping both volume production shipments and future capacity, and we remain on track toward our goal of having the capacity to ship more than 1 million GaN devices for Adapters per month by the end of calendar 2021. We are also continuing to leverage the field-proven reliability, quality and performance of Transphorm's devices to extend our market leading position in GaN products for high-power applications, including gaming, crypto-mining and data centers - for which Transphorm's latest Gen 5 product will also be commercially released in the coming quarter."

Change of Fiscal Year

As previously announced, Transphorm recently completed the change of the Company's fiscal year end from December 31 to March 31. This change was implemented as part of the Company's preparations for a planned application to uplist to the Nasdaq Capital Market in the second half of calendar 2021.

Recent Business Update Conference Call

There will be no conference call associated with today's press release. The Company encourages interested parties to access the previously hosted business update conference call held on Tuesday, May 18, 2021. A replay and the supporting presentation materials from the May 18 conference call is available in the Investors section of Transphorm's website at www.transphormusa.com.

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.

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 (audited)

(in thousands except share and per share data)

March 31, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $ 9,500 $ 14,694

Accounts receivable, net, including related 1,618 844 parties

Inventory 2,223 1,627

Prepaid expenses and other current assets 953 1,061

Total current assets 14,294 18,226

Property and equipment, net 1,360 1,324

Goodwill 1,302 1,397

Intangible assets, net 914 988

Other assets 274 291

Total assets $ 18,144 $ 22,226



Liabilities, convertible preferred stock and stockholders' deficit

Current liabilities:

Accounts payable and accrued expenses $ 3,140 $ 3,182

Deferred revenue 505 674

Development loan 10,000 10,000

Revolving credit facility, including accrued 10,150 10,153 interest

Unfunded commitment to joint venture 1,866 1,466

Accrued payroll and benefits 1,410 1,215

Total current liabilities 27,071 26,690

Promissory note 16,128 15,392

Total liabilities 43,199 42,082

Total stockholders' deficit (25,055 ) (19,856 )

Total liabilities and stockholders' deficit $ 18,144 $ 22,226

Transphorm, Inc.

Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

Three Months Ended March 31,

Twelve Months Ended March 31,

2021(audited)

2020(unaudited)

2021(unaudited)

2020

(unaudited)

Revenue, net, including related parties

$

2,425

$

1,100

$

12,696

$

12,505

Operating expenses:

Cost of goods sold

1,788

1,455

7,015

6,543

Research and development

1,780

1,466

5,898

7,430

Sales and marketing

663

518

2,319

2,276

General and administrative

2,733

3,092

9,969

8,447

Total operating expenses

6,964

6,531

25,201

24,696

Loss from operations

(4,539

)

(5,431

)

(12,505

)

(12,191

)

Interest expense

187

189

758

760

Loss in joint venture

1,468

1,419

6,885

3,995

Changes in fair value of promissory note

699

(2,321

)

2,093

(2,187

)

Other income, net

(314

)

(531

)

(1,940

)

(1,659

)

Loss before tax expense

(6,579

)

(4,187

)

(20,301

)

(13,100

)

Tax expense

-

-

-

-

Net loss

$

(6,579

)

$

(4,187

)

$

(20,301

)

$

(13,100

)

Net loss per share - basic and diluted

$

(0.16

)

$

(0.13

)

$

(0.56

)

$

(0.45

)

Weighted average common shares outstanding - basic and diluted

40,274,660

31,912,170

36,571,712

29,093,258

Transphorm, Inc.

Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

Three Months Ended March Twelve Months Ended March 31, 31,

2021 2020 2021 2020 (audited) (unaudited) (unaudited) (unaudited)

Revenue, net,including related $ 2,425 $ 1,100 $ 12,696 $ 12,505 parties

Operating expenses:

Cost of goods sold 1,788 1,455 7,015 6,543

Research and 1,780 1,466 5,898 7,430 development

Sales and marketing 663 518 2,319 2,276

General and 2,733 3,092 9,969 8,447 administrative

Total operating 6,964 6,531 25,201 24,696 expenses

Loss from operations (4,539 ) (5,431 ) (12,505 ) (12,191 )

Interest expense 187 189 758 760

Loss in joint venture 1,468 1,419 6,885 3,995

Changes in fair value 699 (2,321 ) 2,093 (2,187 )of promissory note

Other income, net (314 ) (531 ) (1,940 ) (1,659 )

Loss before tax (6,579 ) (4,187 ) (20,301 ) (13,100 )expense

Tax expense - - - -

Net loss $ (6,579 ) $ (4,187 ) $ (20,301 ) $ (13,100 )

Net loss per share - $ (0.16 ) $ (0.13 ) $ (0.56 ) $ (0.45 )basic and diluted

Weighted averagecommon shares 40,274,660 31,912,170 36,571,712 29,093,258 outstanding - basicand diluted

Transphorm, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended March 31,

2021(audited)

2020(unaudited)

Cash flows from operating activities:

Net loss

$

(6,579

)

$

(4,187

)

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

Inventory write-off

7

169

Depreciation and amortization

197

236

Recovery from doubtful accounts

(48

)

-

Stock-based compensation

513

132

Interest cost

187

189

Gain on sale of equipment

(40

)

-

Loss in joint venture

1,468

1,419

Changes in fair value of promissory note

699

(2,321

)

Changes in operating assets and liabilities:

Accounts receivable

(690

)

(668

)

Inventory

(603

)

(264

)

Prepaid expenses and other current assets

108

(603

)

Other assets

17

9

Accounts payable and accrued expenses

(195

)

(179

)

Deferred revenue

(169

)

-

Accrued payroll and benefits

195

(83

)

Net cash used in operating activities

(4,933

)

(6,151

)

Cash flows from investing activities:

Purchases of property and equipment

(164

)

-

Investment in joint venture

(968

)

(1,548

)

Net cash used in investing activities

(1,132

)

(1,548

)

Cash flows from financing activities:

Proceeds from sale of equipment

4

-

Proceeds from stock option exercise

2

18

Payment for repurchase of common stock

-

(211

)

Loan repayment

-

(50

)

Proceeds from issuance of common stock, net of offering cost

950

19,741

Net cash provided by financing activities

956

19,498

Effect of foreign exchange rate changes on cash and cash equivalents

(85

)

(26

)

Net (decrease) increase in cash and cash equivalents

(5,194

)

11,773

Cash and cash equivalents at beginning of period

14,694

2,875

Cash and cash equivalents at end of period

$

9,500

$

14,648

Supplemental disclosures of cash flow information:

Interest expense paid

$

153

$

-

Supplemental non-cash financing activity:

Conversion of preferred stock to common stock in connection with the Reverse Merger

$

-

$

85,658

Transphorm, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended March 31,

2021 2020 (audited) (unaudited)

Cash flows from operating activities:

Net loss $ (6,579 ) $ (4,187 )

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

Inventory write-off 7 169

Depreciation and amortization 197 236

Recovery from doubtful accounts (48 ) -

Stock-based compensation 513 132

Interest cost 187 189

Gain on sale of equipment (40 ) -

Loss in joint venture 1,468 1,419

Changes in fair value of promissory note 699 (2,321 )

Changes in operating assets and liabilities:

Accounts receivable (690 ) (668 )

Inventory (603 ) (264 )

Prepaid expenses and other current assets 108 (603 )

Other assets 17 9

Accounts payable and accrued expenses (195 ) (179 )

Deferred revenue (169 ) -

Accrued payroll and benefits 195 (83 )

Net cash used in operating activities (4,933 ) (6,151 )

Cash flows from investing activities:

Purchases of property and equipment (164 ) -

Investment in joint venture (968 ) (1,548 )

Net cash used in investing activities (1,132 ) (1,548 )

Cash flows from financing activities:

Proceeds from sale of equipment 4 -

Proceeds from stock option exercise 2 18

Payment for repurchase of common stock - (211 )

Loan repayment - (50 )

Proceeds from issuance of common stock, net of 950 19,741 offering cost

Net cash provided by financing activities 956 19,498

Effect of foreign exchange rate changes on cash and (85 ) (26 )cash equivalents

Net (decrease) increase in cash and cash equivalents (5,194 ) 11,773

Cash and cash equivalents at beginning of period 14,694 2,875

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



Supplemental disclosures of cash flow information:

Interest expense paid $ 153 $ -

Supplemental non-cash financing activity:

Conversion of preferred stock to common stock in $ - $ 85,658 connection with the Reverse Merger

Transphorm, Inc.

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

(in thousands except share and per share data)

Three Months Ended

Twelve Months Ended

March 31,

December 31,

March 31,

March 31,

March 31,

2021

2020

2020

2021

2020

GAAP net loss

$

(6,579

)

$

(4,712

)

$

(4,187

)

$

(20,301

)

$

(13,100

)

Adjustments:

Stock based compensation

513

705

132

1,906

555

Depreciation

123

130

133

499

553

Amortization

74

74

103

296

593

Changes in fair value of promissory note

699

(927

)

(2,321

)

2,093

(2,187

)

Total adjustments to GAAP net loss

1,409

(18

)

(1,953

)

4,794

(486

)

Non-GAAP net loss

(5,170

)

(4,730

)

(6,140

)

(15,507

)

(13,586

)

GAAP net loss per share - basic and diluted

$

(0.16

)

$

(0.13

)

$

(0.13

)

$

(0.56

)

$

(0.45

)

Adjustment

0.03

-

(0.06

)

0.14

(0.02

)

Non-GAAP net loss per share - basic and diluted

$

(0.13

)

$

(0.13

)

$

(0.19

)

$

(0.42

)

$

(0.47

)

Weighted average shares outstanding - basic and diluted

40,274,660

35,719,749

31,912,170

36,571,712

29,093,258

Three Months Ended

Twelve Months Ended

March 31,

December 31,

March 31,

March 31,

March 31,

2021

2020

2020

2021

2020

GAAP Operating Expense

$

5,176

$

4,524

$

5,076

$

18,186

$

18,153

Adjustments:

Stock based compensation

475

657

116

1,790

493

Depreciation

123

130

133

499

553

Amortization

74

74

103

296

593

Total adjustments to GAAP Operating Expense

672

861

352

2,585

1,639

Non-GAAP Operating Expense

$

4,504

$

3,663

$

4,724

15,601

16,514

View source version on businesswire.com: https://www.businesswire.com/news/home/20210624005336/en/

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