Item
2.02. Results of Operations and Financial Condition.
On
August 6, 2020, MoSys, Inc. (the “Company”) issued a
press release announcing its financial results for the three and
six months ended June 30, 2020. A copy of this press release is
furnished as Exhibit 99.1 to this report. The press release should
be read in conjunction with the cautionary language regarding
forward-looking statements, which are included in the text of the
release.
In addition to disclosing financial results
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”), management also presents
information regarding the Company’s performance over
comparable periods based on gross margin, operating expenses
(research and development and sales, general and administrative),
operating income (loss), net income (loss) and net income (loss)
per share, exclusive of stock-based compensation, restructuring and
impairment charges and a one-time deemed dividend. Because
management discloses financial measures calculated without taking
into account these items, these financial measures are
characterized as "non-GAAP financial measures" under Securities and
Exchange Commission rules.
Stock-based
compensation charges represent non-cash charges related to equity
awards granted by the Company. Although these are recurring charges
to the Company’s operations, management believes the
measurement of these amounts can vary considerably from period to
period and depend substantially on factors that are not a direct
consequence of operating performance that is within
management’s control. Thus, management believes that
excluding these charges facilitates comparisons of the
Company’s operational performance in different periods, as
well as with similarly determined non-GAAP financial measures of
comparable companies.
The
Company’s non-GAAP financial measures exclude deemed
dividends. In April 2020, the Company completed an offering of
common stock (the “Offering’). As a result of the
Offering, the exercise price of 1,845,540 common stock purchase
warrants issued in a public offering of securities completed in
October 2018 was reduced from $6.00 to $2.40 per share. The Company
accounted for the warrant exercise price adjustment as a deemed
dividend, which increased the net loss attributable to common
stockholders for the three and six months ended June 30,
2020.
The
Company’s non-GAAP financial measures also exclude
restructuring charges related to reductions in workforce and
associated operating expenses to reduce net loss and cash burn and
to realign resources. The Company has incurred restructuring
charges in prior periods and may do so in the future, and such
charges should be considered in evaluating the performance of the
Company and its management. However, management believes that
presenting financial measures that exclude these charges
facilitates comparisons with the Company’s ongoing operating
results as well as those of other companies in its business
sector.
Adjusted EBITDA is
GAAP net income (loss), as reported on the Company’s
consolidated statements of operations, excluding stock-based
compensation, restructuring and impairment charges, interest
expense, depreciation, the provision (benefit) for income taxes and
the one-time deemed dividend.
Management and the
Company’s board of directors will continue to analyze the
historical consolidated results of operations and comprehensive
income (loss) (revenue, gross margin, research and development
expenses, selling, general and administrative expenses, operating
income (loss), net income (loss) and net income (loss) per share)
and adjusted EBITDA to assess the business and compare operating
results to the Company's performance objectives. For example, the
Company's budgeting and planning process utilizes these non-GAAP
financial measures.
The
Company discloses these non-GAAP financial measures to the public
as an additional means by which investors can assess the Company's
performance and to identify the Company's operating results for
investors on the same basis applied by management. The non-GAAP
financial measures disclosed by the Company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated
differently from, and, therefore, may not be comparable to,
similarly titled measures used by other companies. The Company has
furnished reconciliations of the non-GAAP financial measures to the
most directly comparable GAAP financial measures in the press
release furnished as Exhibit 99.1.
Moreover, although
these non-GAAP financial measures adjust expense, they should not
be viewed as a pro-forma presentation reflecting the elimination of
the underlying share-based compensation programs, which are an
important element of the Company's compensation structure. GAAP
requires that all forms of share-based payments should be valued
and included, as appropriate, in results of operations. Management
believes these expenses are a material part of the Company's
operating results.
The
information contained in this Current Report on Form 8-K and
Exhibit 99.1 hereto shall not be deemed “filed” for
purposes of Section 18 of the Securities and Exchange Act of 1934
(the “Exchange Act”) or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by
reference to any filing under the Securities Act of 1933 or the
Exchange Act, except as expressly set forth by specific reference
in such filing.