Filing identity and period
The supplied filing is MoSys, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2014, filed November 7, 2014. This does not match the request metadata identifying Peraso Inc.; verify the issuer before relying on this summary.
MoSys develops and sells fabless semiconductor ICs for networking and communications, including Bandwidth Engine and LineSpeed products, and also earns royalties and licensing revenue. Financial amounts below are in U.S. dollars; “million” figures are rounded.
Financial performance
| Metric | Q3 2014 | Q3 2013 | Nine months 2014 | Nine months 2013 |
|---|---|---|---|---|
| Revenue | $1.153m | $0.957m | $4.234m | $3.412m |
| Gross profit (margin) | $0.706m (61%) | $0.799m (83%) | $2.188m (52%) | $3.158m (93%) |
| Operating expenses | $9.196m | $7.838m | $25.969m | $21.594m |
| Net loss | $8.483m | $6.945m | $23.731m | $18.338m |
| Basic and diluted loss per share | $0.17 | $0.14 | $0.48 | $0.42 |
- Q3 revenue increased 20%; product revenue rose to $437,000 from $90,000, while royalty and other revenue declined to $716,000 from $867,000.
- Nine-month product revenue increased to $1.993m from $211,000, but royalty and other revenue fell to $2.241m from $3.201m. Management attributed the royalty decline mainly to lower shipments by licensees.
- Gross margin fell as revenue shifted from royalties, which have no associated cost, toward IC products with material and testing costs. R&D rose 20% year over year in both the quarter and nine-month period; SG&A rose 6%.
Cash, liquidity and balance sheet
- At September 30, 2014, cash and cash equivalents were $4.685m; short- and long-term investments totaled $28.972m. Management cited $33.7m of cash, cash equivalents and investments and $25.4m of working capital.
- Cash and investments together were down about $16.5m from December 31, 2013. Total assets were $60.887m, versus $77.989m; stockholders’ equity was $57.456m, versus $75.418m.
- For the first nine months, operating cash use was $18.711m, investing activities provided $16.837m (primarily net transfers from investments to cash), and financing provided $2.195m. Cash ended at $4.685m.
- The balance sheet reports no borrowings; current liabilities were $3.193m and long-term liabilities $238,000. Contractual obligations totaled $8.772m, including operating leases, software licenses and wafer purchase obligations.
Outlook, risks and notable items
- Management expected cash expenditures to exceed receipts for the foreseeable future, but believed existing cash and investments sufficient for at least the next 12 months. It noted additional capital might be needed and could be unavailable on acceptable terms; an effective shelf registration permitted up to approximately $50m of securities to be sold through September 2017.
- Management expected product revenue to fluctuate during the remainder of 2014 because customers had not begun full production of systems using MoSys ICs. It expected Q4 R&D expense to rise, mainly from masks and test-chip costs for new product tape-outs, and SG&A to remain consistent with Q3.
- MoSys recorded $400,000 of revenue in the first half of 2014 from reversal of prior-period sales-return reserves. The company said gross-margin contribution from the reversal was not material.
- Four customers accounted for 99% of net receivables at quarter-end; two customers represented 67% of Q3 revenue. This concentration increases exposure to customer and collection fluctuations.
- Under a development and marketing agreement with Credo, MoSys had paid $2.9m for development, mask and wafer costs and was entitled to reimbursement of $2.6m from product gross profits before remaining profits are shared equally. Two MoSys executives had also loaned Credo $250,000, potentially convertible into minority equity interests.
- The company reported no material legal proceeding believed likely to adversely affect its financial position or results. It was under tax examination in India; no liability for uncertain tax benefits was recorded. Goodwill testing in September 2014 indicated no impairment.
- Management stated disclosure controls were effective as of September 30, 2014, with no material third-quarter change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the issuer: the provided filing is for MoSys, Inc., not Peraso Inc.
- Track whether IC design wins convert into sustained production revenue and whether royalty declines continue.
- Assess operating cash burn against the company’s liquidity and its stated 12-month funding expectation.
- Monitor customer concentration, product margins, R&D spending and any need for additional financing or share issuance.
- Review the Credo reimbursement and profit-sharing terms, India tax examination, and customer receivable exposure in subsequent filings.