Business context and reporting period
The supplied filing is MoSys, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2015—not a Peraso Inc. filing. MoSys develops and sells fabless semiconductor IC products, including Bandwidth Engine and LineSpeed, for networking and communications markets, alongside legacy IP royalties. The company reported that no design-win customers had yet commenced full production using its ICs.
Financial results and position
Amounts below are in millions of dollars, except per-share data and percentages.
| Metric | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Revenue | $0.994 | $1.749 | $1.770 | $3.081 |
| Gross profit / margin | $0.431 / 43% | $0.727 / 42% | $0.970 / 55% | $1.482 / 48% |
| Operating expenses | $7.339 | $7.922 | $15.846 | $16.773 |
| Net loss | $(6.906) | $(7.161) | $(14.871) | $(15.248) |
| Basic and diluted loss per share | $(0.11) | $(0.14) | $(0.25) | $(0.31) |
For the first six months, operating cash use was $13.067 million, versus $11.924 million in 2014. Investing activities used $7.116 million, largely reflecting transfers into investments; financing provided $22.675 million, including $21.368 million net proceeds from a March stock offering. Cash and cash equivalents were $5.602 million at June 30; cash plus short- and long-term investments totaled $35.272 million, and working capital was $31.987 million. Current liabilities were $2.669 million, with $0.248 million of long-term liabilities; the filing reports no borrowings or debt balance.
Material changes versus prior period
- Q2 revenue declined 43% year over year; first-half revenue fell 43%. Product revenue declined 44% in Q2 and 54% for the first half, primarily due to lower shipment volumes. First-half 2014 product revenue also benefited from a $0.4 million reversal of prior sales-return reserves.
- Royalty and other revenue fell 42% in Q2 and 31% for the first half, attributed to lower licensee shipment volumes and less revenue from residual licensing agreements.
- Gross margin increased to 43% in Q2 and 55% for the first half, mainly because royalties—with no associated costs—made up a larger share of revenue. Gross profit dollars nonetheless declined.
- Operating expenses decreased year over year, but remained far above revenue. The net loss narrowed modestly, while operating cash use increased.
- Common shares issued and outstanding rose from 49.793 million at year-end 2014 to 65.193 million at June 30, 2015, primarily following the 14.375 million-share offering.
Outlook, risks and unusual items
- Management expected cash expenditures to exceed receipts for the remainder of 2015, and R&D expense to rise significantly in Q3 due to mask tooling and fabrication costs for next-generation Bandwidth Engine and LineSpeed products. Management believed available cash and investments would fund requirements for the foreseeable future, but gave no assurance that capital would last until positive cash flow or that additional financing, if needed, would be available on favorable terms.
- Profitability depends on developing a market for the IC products, securing design wins and achieving production and sales. Longer-term volume pricing remained subject to customer negotiations; royalty timing and levels were described as difficult to predict.
- Concentration is significant: four customers each represented at least 10% of first-half 2015 revenue, and three customers accounted for 74% of receivables at June 30.
- Under the Credo development and marketing agreement, MoSys had paid $4.6 million and was entitled to reimbursement of $4.2 million from product gross profits; after reimbursement, gross profits are shared equally. Two MoSys executives had separately loaned Credo $250,000, potentially convertible into minority equity interests.
- Contractual obligations totaled $6.094 million, including $3.944 million in operating leases, $2.022 million in software licenses and $0.128 million in purchase commitments. No material legal proceeding was reported; indemnification exposure was not quantified.
- Goodwill was $23.134 million; management identified no impairment indicators at June 30. The filing notes stock-price fluctuations could affect future impairment assessments.
Important facts for investors to verify
- Confirm issuer identity: the provided text names MoSys, Inc., despite the request metadata naming Peraso Inc.
- Review subsequent revenue, customer production ramps, design-win conversion and product gross margins.
- Assess operating cash burn against cash and investment balances, planned Q3 fabrication spending and potential financing needs.
- Evaluate dilution from the equity offering and outstanding equity awards; approximately 9.363 million potential shares were excluded from diluted loss per share as anti-dilutive.
- Check the status and economics of the Credo reimbursement, product launches and eventual profit sharing.