FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus, and documents incorporated by reference herein and therein contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any
forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on
current expectations of future events. Such statements include, but are not limited to, statements about our updated financial guidance for the three months ended June 30, 2018, our proposed
acquisition of Echelon Corporation, or Echelon, and our ability to achieve fully the strategic and financial objectives related to the proposed Echelon acquisition, including the acquisition's impact
on our financial condition and results of operations and expected cost synergies, future financial and operating results, plans, objectives, expectations and intentions, costs and expenses, interest
rates, outcome of contingencies, financial condition, results of operations, liquidity, cost savings, objectives of management, business strategies, product attributes and benefits, market
opportunities, financing needs, anticipated trends and challenges in our business and in the markets in which we operate, the development and enhancement of our products to meet anticipated market
needs, and other statements that are not historical facts. You can find many of these statements by looking for words like "believes," "expects," "anticipates," "estimates," "may," "might," "should,"
"will," "could," "plan," "intend," "project," "seek" or similar expressions in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein
and any free writing prospectus. We intend that such forward-looking statements be subject to the safe harbors created thereby.
These
forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions
prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. Factors that might cause such a difference include those
discussed in the section captioned "Risk Factors" contained in an exhibit to our Current Report on Form 8-K filed with the SEC on July 9, 2018, as well as those discussed in this prospectus
supplement, the accompanying prospectus and the documents incorporated by reference herein and therein and any free writing prospectus. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date made.
All
subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of
this prospectus supplement or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities laws. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
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PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information about us, this offering and information appearing elsewhere in this
prospectus supplement, in the accompanying prospectus and in the documents incorporated by reference herein and therein. This summary is not complete and does not contain all the information you
should consider before investing in our common stock pursuant to this prospectus supplement and the accompanying prospectus. Before making an investment decision, to fully understand this offering and
its consequences to you, you should carefully read this entire prospectus supplement, the accompanying prospectus and the information incorporated by reference, including "Risk Factors," the financial
statements, and related notes, and the other information that we incorporate by reference herein and therein.
Company Overview
We are a leading provider of innovative, application-specific semiconductors that provide the key building blocks of Internet of Things, or IoT,
edge devices operating on networks worldwide. Our broad portfolio of semiconductor and embedded technologies are optimized for connected IoT devices used in industrial, consumer, communications and
medical applications. Through expert design, systems expertise and proprietary intellectual property, we enable our customers to differentiate their systems where it matters most for IoT: longer
battery life, greater reliability, integrated intelligence and lower cost. Our product portfolio includes analog, digital and non-volatile memory, or NVM, technologies delivered in the form of
standard products, application-specific integrated circuits, or ASICs, and intellectual property, or IP, cores.
Our
S3 Semiconductors business unit provides analog, mixed-signal and radio frequency ASICs and IP blocks, and manages the supply of high-quality devices to our customers, which include
original equipment manufacturers, or OEMs, semiconductor vendors, and systems houses. We combine our expertise in chip design and supply chain management to deliver finished products that help
customers optimize their bills of materials and electronic system designs. By shrinking their systems into custom ASICs, we help our customers to significantly cut costs, while increasing product
performance and providing product differentiation and protection.
Our
Memory business unit designs and delivers ultra-low power, smart devices that enable a new class of connected applications. We design our memory products with specific features and
embedded intelligence to dramatically reduce the overall energy consumption of our customers' systems and extend their battery life, while delivering high performance, reliability, enhanced security
and lower system cost. Our customers, including leading OEMs and original design manufacturers, select our custom NVM devices because of the many advantages our devices can provide compared to
commodity NVM devices, as well as the value they deliver at a system level.
Echelon
Proposed Echelon Acquisition
On June 28, 2018, we entered into an agreement and plan of merger with Echelon under which we agreed to acquire Echelon through a merger
of a wholly owned subsidiary of ours with Echelon. Following the merger, Echelon will be our wholly owned subsidiary. Under the merger agreement, at the closing of the proposed acquisition all
outstanding equity securities of Echelon will be converted into the right to receive an aggregate amount of approximately $44.1 million in cash. The Echelon acquisition is expected to close in
the third quarter of 2018, subject to satisfaction of customary closing conditions, including approval by holders of a majority of Echelon's outstanding common stock.
We cannot assure you that we will complete the Echelon acquisition. The completion of this offering is not contingent upon the completion of the Echelon
acquisition, and the completion of the Echelon acquisition is not contingent upon the completion of this offering.
Investors in our common
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stock
should not place undue reliance on the pro forma financial information included in this prospectus supplement because this offering is not contingent upon any of the transactions reflected in
the adjustments included in that information.
If
the Echelon acquisition is completed, we intend to use the net proceeds of this offering, along with any new borrowing that we may enter into, to fund the cash consideration for the
Echelon acquisition. Any remaining net proceeds will be used for general corporate purposes, including increasing our working capital, other acquisitions or investments in businesses, products or
technologies that are complementary to our own and capital expenditures. If the Echelon acquisition is not completed, we intend to use the net proceeds for general corporate purposes. See "Use of
Proceeds."
The
merger agreement has been filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on June 29, 2018, which is incorporated by reference herein. See
"The Echelon AcquisitionSummary of the Echelon Acquisition" and "Risk FactorsRisks Related Our Proposed Acquisition of Echelon."
Echelon's Business
Founded in 1988, Echelon is a pioneer in developing distributed intelligence, open-standard control networking platforms for Industrial Internet
of Things, or IIoT, applications and delivering elements necessary to design, install, monitor and control highly reliable, scalable and secure communities of devices. Echelon's vision is one of
low-cost monitoring and control technology in every industrial electrical device in the world and complete vertical solutions in the fastest growing market segments. Echelon helps its customers
migrate existing legacy devices, and bring new devices and applications into a growing global Industrial Internet.
The
IIoT refers to communities of rules-based, self-directed devices that reside in commercial or industrial environments and operate with little to no human interaction. Because of the
harsh nature of these environments (e.g., extreme temperature, vibration, noise, humidity, dust) where connectivity can be intermittent, and because industrial applications demand high
reliability, IIoT devices need to be robust. Specialized requirements of the IIoT include no-compromise control capability, proven reliability, and hardened security. In addition, IIoT devices must be
able to interact autonomously and function when disconnected from the Internet or a local access point. The IIoT incorporates decades of existing and in-service infrastructure-deployed mechanical and
digital vertical solutions. When these solutions are connected, they generally communicate with protocols developed many years ago, and often dedicated to specific applications.
IIoT
products have long lifecycles and must operate under extreme conditions. They must also be secure to prevent unauthorized access and abuse that could cause environmental hazards or
life-threatening situations. New systems running modern Information Technology protocols, such as Internet protocol, must interoperate with systems running mature Operational Technology protocols such
as LONWORKS, Echelon's proprietary control protocol, BacNet and Modbus.
Echelon's
control networking technology is purpose-built for industrial environments such as building automation, lighting and transportation. Echelon's product offerings consist of IIoT
embedded components and modules and its connected lighting platform, Lumewave. Its IIoT embedded components and modules are utilized by a wide array of OEMs and system integrators covering a
broad spectrum of markets. Echelon's IzoT embedded platform allows control networking to be done using Internet protocol all the way to the end device. Both LONWORKS and the IzoT control networking
platform consist of a three-tier architecture: a device tier, an edge server tier, and an enterprise software tier. At the device tier, industrial devices such as load controllers, lighting ballasts,
meters, and thermostats, embed Echelon or third-party free topology or power line smart transceivers, enabling them to act as peers working together to collect data and take cooperative action. These
individual devices are managed by edge servers, such as Echelon's Smart Servers. At the edge server tier, various
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control
technologies and protocols are unified and supervised so that local decisions can be made at the device tier levels. At the enterprise software tier, Echelon technology connects the edge
server tiers to an enterprise software tier, commonly an information technology solution, so business rules can be established for the control system and operational data can be archived for later
analysis. Edge servers communicate with enterprise tier solutions using Internet protocols such as TCP/IP and web services. Echelon's connected lighting platform is a multi-application solution that
brings benefits in the areas of energy savings and sustainability, safety enhancement, livability and improved maintenance efficiencies. Echelon's outdoor lighting control product portfolio includes
smart transceivers, outdoor lighting controllers, motion sensors, the SmartServer Edge Server, power line/RF Bridge technology, LumInsight Central Management Software and third-party software.
Rationale for Echelon Acquisition
We believe Echelon represents an attractive strategic complement to our growth initiatives, including expanding our reach into IIoT, enhancing
our product offerings and accelerating the diversification of our business through new markets and customer opportunities.
The
Echelon acquisition provides us with the potential to:
-
-
Extend our reach into IIoT.
Echelon complements our existing products with
well-regarded connectivity solutions in IIoT and intelligent cloud-based analytics for the IIoT edge network. We believe the combination of these IIoT embedded components and modules provides us the
potential to further penetrate the IIoT market and increase our market opportunity beyond memory to include key IIoT components and technologies, including communication, controller and industrial
control servers. Among the more significant of these markets are building automation systems, industrial and manufacturing equipment and energy management systems.
-
-
Expand margin and portfolio.
Echelon increases our value proposition to end
customers, allowing us to offer high value, software-enabled solutions with higher gross margins than our memory products. We believe the complementary combination of Echelon and our products will
create meaningful opportunities to drive future revenue growth. Further, the addition of Echelon's chips, modules, gateways, and design and management software helps to diversify our revenue streams
and expand our footprint and IoT content ownership.
-
-
Expand our sales channels.
Through Echelon's end customers, we expect to
gain greater access to tier 1 commercial and industrial customers. In addition, Echelon's end customer base and OEM relationships support our ability to further penetrate the IIoT market.
-
-
Enriches our product roadmap.
With Echelon's systems and software
expertise, we believe we can leverage our existing resources to extend our product roadmap to encompass modules and design and management software, creating additional opportunities to diversify our
revenue streams and expand our market opportunity.
Financial Overview
For the year ended December 31, 2017, Echelon generated revenue of $31.7 million compared to $32.4 million in 2016 with
gross margins of 55.7% compared to 55.8% in the same periods.
For the three months ended March 31, 2018, Echelon's revenue was $7.8 million compared to $7.7 million in the same period of 2017 with gross margins of 55.9% and 57.3% in the same
periods. Echelon generated a net loss of $4.6 million during 2017, compared to a net loss of $4.1 million in 2016. Echelon generated a net loss of $1.4 million during the first
quarter of 2018 compared to $1.3 million during the same period in 2017. As of March 31, 2018, Echelon had cash, cash equivalents, restricted investments and short-term investments of
$19.1 million.
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We
anticipate consummating the Echelon acquisition will contribute to our revenue growth and increase our gross margins. The Echelon acquisition is expected to be accretive to our
adjusted EBITDA and non-GAAP net income (loss) per share in the first year after close. Additionally, we expect to achieve cost savings and operational efficiencies or synergies of $6 to
$8 million in the first twelve months after close as we combine the two companies, converge our go-to-market strategies and unify product roadmaps.
Other Recent Developments
Credit Facility
On May 8, 2018, we entered into a credit agreement, or the credit facility, by and between certain lenders affiliated with Tennenbaum
Capital Partners, LLC, an administrative agent for the lenders, and a collateral agent for the secured parties. The credit facility provides for a term loan in an aggregate principal amount of
up to $35.0 million that matures in May 2022. The term loan made
pursuant to the credit facility bears interest at a rate per annum equal to the sum of the LIBOR rate plus 8.75% per annum. We will make interest-only payments on the principal amount of the credit
facility through September 2018, and will make principal and interest payments in quarterly installments beginning December 31, 2018. We used the proceeds of this term loan to repay our
outstanding $12.0 million term loan and to pay the purchase price of in our acquisition of S3 Asic Semiconductors Limited, or S3.
We
also issued to the lenders warrants to purchase an aggregate of 850,000 shares of our common stock with an exercise price of $8.62 per share, subject to certain adjustments.
Acquisition of S3
On May 9, 2018, we acquired Dublin-based S3, a global supplier of mixed-signal and radio frequency ASICs and an extensive library of
design intellectual property, for $35.0 million in cash and contingent consideration in the form of a $15.0 million earn-out. The earn-out is based on achievement of certain milestones
through 2019, including minimum total revenue targets, revenue derived from sales of semiconductor devices and new customer engagements with minimum value thresholds. We financed the acquisition with
cash and a portion of the proceeds of the $35.0 million term loan under our new credit facility described above.
With
the S3 acquisition, we have added a product portfolio of analog, mixed-signal and radio frequency ASICs and IP blocks that has generated over 200 ASIC and IP design projects
historically and estimated revenues of $12.8 million in 2017. We believe the acquisition also makes us better positioned to enable our customers to optimize their bills of materials and
electronic system designs. The new solutions we have added to our product portfolio carry gross margins in excess of 60%, which is materially higher than the gross margins for our memory products, and
we see opportunities to improve our average selling prices and pursue licensing arrangements in order to further expand our gross margin profile. The S3 acquisition has been immediately accretive to
our gross margin and adjusted EBITDA and is expected to be accretive to our non-GAAP net income (loss) per share in the first year after close.
Preliminary Estimates of Our Results of Operations for the Three Months Ended June 30, 2018
Our consolidated financial statements for the three months ended June 30, 2018 are not yet available. Our preliminary estimates of our
results of operations are subject to the completion of our financial closing procedures and any adjustments that may result from the
completion of the review of our condensed consolidated financial statements for the three months ended June 30, 2018. Accordingly, these estimates may change and those changes may be material.
As such, you should not place undue reliance on these estimates. For additional information regarding the various risks and
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uncertainties
inherent in estimates of this type, see "Forward-Looking Statements," elsewhere in this prospectus supplement.
The
preliminary estimates have been prepared by, and are the responsibility of, our management and have not been reviewed or audited or subject to any other procedures by our independent
registered public accounting firm. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect to these preliminary
estimates.
On
a preliminary estimated basis, we expect our results of operations for the three months ended June 30, 2018 to reflect:
-
-
Revenues between $18.1 million and $18.3 million;
-
-
Gross margin between 42% and 44%;
-
-
Total operating expenses between $11.3 million and $11.5 million; and
-
-
Non-GAAP total operating expenses between $8.3 million and $8.5 million, excluding approximately $2.0 million in
acquisition-related costs, $0.6 to $0.7 million in stock-based compensation expense and $0.3 million in amortization of acquisition-related intangible assets.
We
expect our revenues for the three months ended June 30, 2018 will be between $18.1 million and $18.3 million, an increase of 35.1% to 36.6% from revenues of
$13.4 million for the three months ended June 30, 2017. This increase was due to higher sales of standard flash memory products to Tier 1 OEM customers and the contribution of
revenues generated from our S3 business during the quarter, which we estimate were approximately $2.0 million. These increases were partially offset by slower than expected sales ramp for
DataFlash-L products, which are designed for smart home application markets and carry relatively higher gross margins than our other memory products.
We
expect our gross margin for the three months ended June 30, 2018 will be between 42% and 44%, a decrease of 6.1 to 8.1 percentage points from gross margin of 50.1% for
the three months ended June 30, 2017. This decrease was primarily due to product mix impacts, as we generated a higher proportion of our revenues from sales to Tier 1 OEM customers of
standard flash memory products, which generally carry lower gross margins than our other memory products.
We
expect our total operating expenses for the three months ended June 30, 2018 will be between $11.3 million and $11.5 million, an increase of 36.1% to 38.6% from
total operating expenses of $8.3 million for the three months ended June 30, 2017. This increase was driven by approximately $2.0 million of higher than expected transaction costs
associated with our S3 acquisition and proposed Echelon acquisition and to a lesser extent, higher operating costs associated with S3's operations following the closing of the S3 acquisition. On a
non-GAAP basis, total operating expenses for the three months ended June 30, 2018 increased as compared to non-GAAP total operating expenses for the three months ended June 30, 2017 due
to higher operating costs associated with S3's operations following the closing of the S3 acquisition.
Our Market Opportunity
We estimate that the combination of our recently completed S3 acquisition and the Echelon acquisition, if consummated, will increase our
serviceable available market opportunity from $1 billion in 2018 to over $20 billion by 2020. We believe that our serviceable available market
opportunity can be estimated based on the number of IoT edge nodes, specifically in the industrial, home automation, consumer and communications markets and the total semiconductor bill-of-materials
for these nodes. According to industry research and our estimates, the number of types of connected devices with memory, controller and connectivity (RF and other) is projected to exceed
21 million by 2020. We believe our products will address a substantial portion of the projected value per node after giving effect to the S3 acquisition and the Echelon acquisition.
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Corporate Information
We were originally incorporated in California in January 2006, and reincorporated in Delaware in October 2015. Our principal executive offices
are located at 3600 Peterson Way, Santa Clara, CA 95054 and our telephone number is (408) 400-0578. Our website is www.adestotech.com. Information contained on, or that can be accessed through,
our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus, and you should not consider information on our website to be part of this prospectus
supplement or the accompanying prospectus.
JOBS Act
We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging
growth company until the earlier of the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering in October 2015, the last day of the fiscal year in
which we have total annual gross revenue of at least $1.07 billion, the date on which we are deemed to be a large accelerated filer (this means that we have been public for at least
12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second
quarter of that fiscal year), or the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period.
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Table of Contents
The Offering
|
|
|
Common stock offered by us
|
|
6,700,000 shares
|
Common stock to be outstanding after this offering
|
|
28,109,292 shares
|
Option to purchase additional shares
|
|
We have granted the underwriters an option for a period of 30 days to purchase up to an additional 1,005,000 shares of
common stock.
|
Use of proceeds
|
|
We estimate that the net proceeds of this offering, after deducting the underwriting discount and estimated offering expenses payable by us, will be approximately $37.3 million, or $42.9 million if the underwriters' option to purchase additional
shares is exercised in full.
We intend to use the net proceeds of this offering, along with any new borrowing that we may enter into, to fund the cash consideration for the
Echelon acquisition. Any remaining net proceeds will be used for general corporate purposes, including increasing our working capital, other acquisitions or investments in businesses, products or technologies that are complementary to our own and
capital expenditures. If the Echelon acquisition is not completed, we intend to use the net proceeds for such general corporate purposes. See "Use of Proceeds."
|
Risk factors
|
|
See "Risk Factors" for a discussion of factors that you should read and consider before investing in our common
stock.
|
NASDAQ Capital Market symbol
|
|
IOTS
|
The
number of shares of our common stock to be outstanding immediately after this offering as shown above is based on 21,409,292 shares of common stock outstanding as of March 31,
2018 and excludes:
-
-
1,529,554 shares of common stock issuable upon exercise of outstanding options as of March 31, 2018, with a weighted-average exercise
price of $3.72 per share;
-
-
487,110 shares of common stock issuable upon the settlement of outstanding restricted stock units, or RSUs, as of March 31, 2018;
-
-
478,417 shares of common stock issuable upon the settlement of outstanding RSUs granted after March 31, 2018;
-
-
389,423 shares of our common stock issuable upon the exercise of warrants outstanding as of March 31, 2018, with a weighted-average
exercise price of $7.71 per share;
-
-
850,000 shares of our common stock issuable upon the exercise of warrants issued after March 31, 2018, with an exercise price of $8.62
per share;
-
-
1,415,994 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan as of March 31, 2018; and
-
-
432,699 shares of common stock reserved for future issuance under our 2015 Employee Stock Purchase Plan as of March 31, 2018.
Except
as otherwise indicated, all information in this prospectus supplement assumes no exercise or settlement of outstanding options, RSUs or warrants described above and no exercise of
the underwriters' option to purchase additional shares of common stock.
S-7
Table of Contents
Our Summary Consolidated Financial Data
The following table sets forth our summary selected historical consolidated financial data for the periods ended and as of the dates indicated.
The consolidated statements of operations data for the fiscal years ended December 31, 2015, 2016 and 2017 and the consolidated balance sheet data as of December 31, 2016 and 2017 have
been derived from, and should be read together with, our audited consolidated financial statements and the accompanying notes, which are incorporated by reference herein. The consolidated statements
of operations data for the three months ended March 31, 2017 and 2018 and the consolidated balance sheet data as of March 31, 2018 have been derived from our unaudited condensed
consolidated financial statements, which are incorporated by reference herein. Our historical results are not necessarily indicative of the results that may be expected in the future. The following
summary consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements
and related notes incorporated by reference in this prospectus supplement and the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
March 31,
|
|
|
|
2015
|
|
2016
|
|
2017
|
|
2017
|
|
2018
|
|
|
|
(in thousands, except share and per share data)
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
43,259
|
|
$
|
43,968
|
|
$
|
56,112
|
|
$
|
11,307
|
|
$
|
15,302
|
|
Cost of revenue
(1)
|
|
|
24,775
|
|
|
22,618
|
|
|
28,637
|
|
|
5,753
|
|
|
8,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
18,484
|
|
|
21,350
|
|
|
27,475
|
|
|
5,554
|
|
|
7,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
12,795
|
|
|
15,896
|
|
|
14,094
|
|
|
3,372
|
|
|
3,665
|
|
Sales and marketing
|
|
|
8,345
|
|
|
11,026
|
|
|
11,064
|
|
|
2,600
|
|
|
2,752
|
|
General and administrative
|
|
|
3,978
|
|
|
6,693
|
|
|
7,148
|
|
|
2,135
|
|
|
1,713
|
|
Gain from settlement with former foundry supplier
|
|
|
|
|
|
(1,962
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
25,118
|
|
|
31,653
|
|
|
32,306
|
|
|
8,107
|
|
|
8,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(6,634
|
)
|
|
(10,303
|
)
|
|
(4,831
|
)
|
|
(2,553
|
)
|
|
(950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(1,115
|
)
|
|
(1,275
|
)
|
|
(753
|
)
|
|
(213
|
)
|
|
(141
|
)
|
Other income (expense), net
|
|
|
(695
|
)
|
|
(50
|
)
|
|
(3
|
)
|
|
18
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (expense), net
|
|
|
(1,810
|
)
|
|
(1,325
|
)
|
|
(756
|
)
|
|
(195
|
)
|
|
(131
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for (benefit from) for income taxes
|
|
|
(8,444
|
)
|
|
(11,628
|
)
|
|
(5,587
|
)
|
|
(2,748
|
)
|
|
(1,081
|
)
|
Provision for (benefit from) income taxes
|
|
|
(61
|
)
|
|
(16
|
)
|
|
101
|
|
|
27
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(8,383
|
)
|
$
|
(11,612
|
)
|
$
|
(5,688
|
)
|
$
|
(2,775
|
)
|
$
|
(1,102
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
(2)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(2.79
|
)
|
$
|
(0.77
|
)
|
$
|
(0.31
|
)
|
$
|
(0.18
|
)
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
3,007,929
|
|
|
15,085,973
|
|
|
18,591,308
|
|
|
15,642,286
|
|
|
21,370,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-8
Table of Contents
-
(1)
-
Includes
stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
Three Months Ended
March 31,
|
|
|
|
2015
|
|
2016
|
|
2017
|
|
2017
|
|
2018
|
|
|
|
(in thousands)
|
|
Cost of revenue
|
|
$
|
19
|
|
$
|
81
|
|
$
|
112
|
|
$
|
21
|
|
$
|
25
|
|
Research and development
|
|
|
263
|
|
|
1,038
|
|
|
1,172
|
|
|
255
|
|
|
183
|
|
Sales and marketing
|
|
|
153
|
|
|
706
|
|
|
764
|
|
|
167
|
|
|
104
|
|
General and administrative
|
|
|
352
|
|
|
1,518
|
|
|
1,454
|
|
|
381
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
787
|
|
$
|
3,343
|
|
$
|
3,502
|
|
$
|
824
|
|
$
|
443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(2)
-
See
notes 1 and 12 to our consolidated financial statements incorporated by reference herein for an explanation of the calculations of our
basic and diluted net loss per share of common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
March 31,
2018
(1)
|
|
|
|
2016
|
|
2017
|
|
|
|
(in thousands)
|
|
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
19,719
|
|
$
|
30,078
|
|
$
|
29,546
|
|
Total assets
|
|
|
46,183
|
|
|
60,812
|
|
|
65,987
|
|
Current liabilities
|
|
|
17,215
|
|
|
14,474
|
|
|
21,144
|
|
Total debt
|
|
|
18,048
|
|
|
13,334
|
|
|
13,353
|
|
Total stockholders' equity
|
|
|
16,365
|
|
|
32,950
|
|
|
32,548
|
|
-
(1)
-
Subsequent
to March 31, 2018, we (x) entered into the credit facility, (y) repaid all outstanding borrowings, accrued interest,
and fees under our outstanding $12.0 million term loan in connection therewith and (z) completed the S3 acquisition, each as described above in "SummaryOther Recent
Developments." After giving effect to these transactions on a pro forma basis, as of March 31, 2018, cash and cash equivalents would have been $16.3 million, our total assets would have
been $103.7 million, our current liabilities would have been $29.6 million, our total debt would have been $34.9 million and our total stockholders' equity would have been
$32.4 million. See "Capitalization."
S-9
Table of Contents
Summary Unaudited Pro Forma Condensed Combined Financial Information
The following sets forth certain summary unaudited pro forma condensed combined financial information of Adesto giving effect to the Echelon
acquisition and the S3 acquisition, including the assumed sale of $40.0 million of shares of our common stock in this offering, the aggregate net proceeds of which will be used to fund the
Echelon acquisition consideration. The Echelon acquisition is expected to close in the third quarter of 2018, subject to satisfaction of customary closing conditions, including approval by holders of
a majority of Echelon's outstanding common stock.
The
summary unaudited pro forma condensed combined statements of operations combine the results of operations of Adesto and Echelon for the fiscal year ended December 31, 2017 and
the quarter ended March 31, 2018, respectively, as if the Echelon acquisition had occurred on January 1, 2017, plus pro forma adjustments. The summary unaudited pro forma condensed
combined balance sheet has been prepared to reflect the Echelon acquisition as if the Echelon acquisition and the S3 acquisition had occurred on March 31, 2018, plus pro forma adjustments.
The
summary unaudited pro forma condensed combined financial information set forth below has been presented for illustrative purposes only and is not necessarily indicative of the
financial position or results of operations that would have been realized if the Echelon acquisition or the S3 acquisition had been completed on the dates indicated, nor is it indicative of future
operating results or financial position. The summary unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that
the combined company may achieve as a result of the Echelon acquisition and the S3 acquisition, the costs to integrate the operations of Adesto, Echelon and S3 or the costs necessary to achieve these
cost savings, operating synergies and revenue enhancements. The summary unaudited pro forma condensed combined financial information also reflects the common stock contemplated to be issued in
connection with the Echelon acquisition. In addition, the summary unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating
results of the combined company. The summary unaudited pro forma condensed combined financial information below should be read in conjunction with the unaudited pro forma condensed combined financial
information and the notes describing the pro forma adjustments related thereto and the accompanying disclosures included elsewhere in this prospectus supplement and with both our and Echelon's
historical financial statements and related notes, which are incorporated by reference in this prospectus supplement. See "Unaudited Pro Forma Condensed Combined Financial Information" beginning on
page S-29 of this prospectus supplement and "Incorporation of Information by Reference" beginning on page S-54 of this prospectus supplement.
S-10
Table of Contents
Adesto Technologies Corporation
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adesto
Historical
|
|
Echelon
Historical
|
|
Pro Forma
Adjustments
|
|
Pro Forma
Combined
|
|
|
|
(In thousands, except share and per share amounts)
|
|
Revenue, net
|
|
$
|
56,112
|
|
$
|
31,667
|
|
$
|
274
|
|
$
|
88,053
|
|
Cost of revenue
|
|
|
28,637
|
|
|
14,016
|
|
|
(52
|
)
|
|
42,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
27,475
|
|
|
17,651
|
|
|
326
|
|
|
45,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
14,094
|
|
|
9,313
|
|
|
1,910
|
|
|
25,317
|
|
Sales and marketing
|
|
|
11,064
|
|
|
5,532
|
|
|
520
|
|
|
17,116
|
|
General and administrative
|
|
|
7,148
|
|
|
6,959
|
|
|
2,085
|
|
|
16,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
32,306
|
|
|
21,804
|
|
|
4,515
|
|
|
58,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,831
|
)
|
|
(4,153
|
)
|
|
(4,189
|
)
|
|
(13,173
|
)
|
Interest and other income (expense), net
|
|
|
(756
|
)
|
|
(498
|
)
|
|
|
|
|
(1,254
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(5,587
|
)
|
|
(4,651
|
)
|
|
(4,189
|
)
|
|
(14,427
|
)
|
Income tax expense (benefit)
|
|
|
101
|
|
|
(28
|
)
|
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,688
|
)
|
$
|
(4,623
|
)
|
$
|
(4,189
|
)
|
$
|
(14,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.31
|
)
|
$
|
(1.04
|
)
|
$
|
|
|
$
|
(0.62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
18,591,308
|
|
|
4,465,000
|
|
|
240,882
|
|
|
23,297,190
|
|
Adesto Technologies Corporation
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adesto
Historical
|
|
Echelon
Historical
|
|
Pro Forma
Adjustments
|
|
Pro Forma
Combined
|
|
|
|
(In thousands, except share and per share amounts)
|
|
Revenue, net
|
|
$
|
15,302
|
|
$
|
7,837
|
|
$
|
|
|
$
|
23,139
|
|
Cost of revenue
|
|
|
8,122
|
|
|
3,460
|
|
|
(30
|
)
|
|
11,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
7,180
|
|
|
4,377
|
|
|
30
|
|
|
11,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
3,665
|
|
|
3,005
|
|
|
478
|
|
|
7,148
|
|
Sales and marketing
|
|
|
2,752
|
|
|
1,310
|
|
|
131
|
|
|
4,193
|
|
General and administrative
|
|
|
1,713
|
|
|
1,705
|
|
|
2,085
|
|
|
5,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
8,130
|
|
|
6,020
|
|
|
2,694
|
|
|
16,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(950
|
)
|
|
(1,643
|
)
|
|
(2,664
|
)
|
|
(5,257
|
)
|
Interest and other income (expense), net
|
|
|
(131
|
)
|
|
258
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(1,081
|
)
|
|
(1,385
|
)
|
|
(2,664
|
)
|
|
(5,130
|
)
|
Income tax expense (benefit)
|
|
|
21
|
|
|
(6
|
)
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,102
|
)
|
$
|
(1,379
|
)
|
$
|
(2,664
|
)
|
$
|
(5,145
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.05
|
)
|
$
|
(0.30
|
)
|
$
|
|
|
$
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
21,370,927
|
|
|
4,527,000
|
|
|
178,882
|
|
|
26,076,809
|
|
S-11
Table of Contents
Adesto Technologies Corporation
Unaudited Pro Forma Condensed Combined Balance Sheet
As of March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adesto
Historical
|
|
Echelon
Historical
|
|
S3 Acquisition
Adjustment
|
|
Pro Forma
Adjustments
|
|
Pro Forma
Combined
|
|
|
|
(In thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
29,546
|
|
$
|
5,846
|
|
$
|
267
|
|
$
|
(22,258
|
)
|
$
|
13,401
|
|
Restricted investments
|
|
|
|
|
|
1,250
|
|
|
|
|
|
|
|
|
1,250
|
|
Short-term investments
|
|
|
|
|
|
11,960
|
|
|
|
|
|
|
|
|
11,960
|
|
Accounts receivable, net
|
|
|
12,188
|
|
|
2,556
|
|
|
192
|
|
|
|
|
|
14,936
|
|
Inventories
|
|
|
7,554
|
|
|
3,566
|
|
|
|
|
|
4,449
|
|
|
15,569
|
|
Prepaid expenses
(1)
|
|
|
1,153
|
|
|
|
|
|
|
|
|
723
|
|
|
1,876
|
|
Deferred cost of revenues
|
|
|
|
|
|
529
|
|
|
|
|
|
|
|
|
529
|
|
Other current assets
|
|
|
55
|
|
|
1,516
|
|
|
883
|
|
|
(723
|
)
|
|
1,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
50,496
|
|
|
27,223
|
|
|
1,342
|
|
|
(17,809
|
)
|
|
61,252
|
|
Property and equipment, net
|
|
|
7,632
|
|
|
453
|
|
|
191
|
|
|
|
|
|
8,276
|
|
Intangible assets, net
|
|
|
6,808
|
|
|
668
|
|
|
15,340
|
|
|
17,762
|
|
|
40,578
|
|
Other non-current assets
|
|
|
1,029
|
|
|
558
|
|
|
|
|
|
|
|
|
1,587
|
|
Goodwill
|
|
|
22
|
|
|
|
|
|
34,352
|
|
|
2,936
|
|
|
37,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
65,987
|
|
$
|
28,902
|
|
$
|
51,225
|
|
$
|
2,889
|
|
$
|
149,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,845
|
|
$
|
2,570
|
|
$
|
37
|
|
$
|
(1,004
|
)
|
$
|
9,448
|
|
Accrued compensation and benefits
(2)
|
|
|
2,819
|
|
|
|
|
|
|
|
|
1,156
|
|
|
3,975
|
|
Accrued expenses and other current liabilities
|
|
|
2,506
|
|
|
2,256
|
|
|
761
|
|
|
(152
|
)
|
|
5,371
|
|
Price adjustments and other revenue reserves
|
|
|
4,545
|
|
|
|
|
|
|
|
|
|
|
|
4,545
|
|
Earn-out liability, current
|
|
|
|
|
|
|
|
|
10,218
|
|
|
|
|
|
10,218
|
|
Deferred revenues
|
|
|
|
|
|
849
|
|
|
129
|
|
|
(243
|
)
|
|
735
|
|
Line of credit, current
|
|
|
1,500
|
|
|
|
|
|
|
|
|
(1,500
|
)
|
|
|
|
Term loan, current
|
|
|
1,929
|
|
|
|
|
|
|
|
|
(1,225
|
)
|
|
704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
21,144
|
|
|
5,675
|
|
|
11,145
|
|
|
(2,968
|
)
|
|
34,996
|
|
Term loan, non-current
|
|
|
9,924
|
|
|
|
|
|
|
|
|
24,255
|
|
|
34,179
|
|
Earn-out liability, non-current
|
|
|
|
|
|
|
|
|
3,279
|
|
|
|
|
|
3,279
|
|
Other non-current liabilities
(3)
|
|
|
75
|
|
|
616
|
|
|
|
|
|
(397
|
)
|
|
294
|
|
Deferred rent, non-current
(3)
|
|
|
2,294
|
|
|
|
|
|
|
|
|
32
|
|
|
2,326
|
|
Deferred tax liability, non-current
(3)
|
|
|
2
|
|
|
|
|
|
1,918
|
|
|
4,256
|
|
|
6,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
33,439
|
|
|
6,291
|
|
|
16,342
|
|
|
25,178
|
|
|
81,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
2
|
|
|
49
|
|
|
|
|
|
(48
|
)
|
|
3
|
|
Additional paid-in capital
|
|
|
133,804
|
|
|
359,715
|
|
|
34,883
|
|
|
(357,309
|
)
|
|
171,093
|
|
Treasury stock
|
|
|
|
|
|
(28,130
|
)
|
|
|
|
|
28,130
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(312
|
)
|
|
(1,681
|
)
|
|
|
|
|
1,681
|
|
|
(312
|
)
|
Accumulated deficit
|
|
|
(100,946
|
)
|
|
(307,342
|
)
|
|
|
|
|
305,257
|
|
|
(103,031
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
32,548
|
|
|
22,611
|
|
|
34,883
|
|
|
(22,289
|
)
|
|
67,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
65,987
|
|
$
|
28,902
|
|
$
|
51,225
|
|
$
|
2,889
|
|
$
|
149,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Presented
as "Other current assets" in Echelon's Form 10-Q as of March 31, 2018
-
(2)
-
Presented
as "Accrued liabilities" in Echelon's Form 10-Q as of March 31, 2018
-
(3)
-
Presented
as "Other long-term liabilities" in Echelon's Form 10-Q as of March 31, 2018
-
(4)
-
See
Note 2 of the "Notes to Unaudited Pro Forma Condensed Combined Financial Information" contained elsewhere in this prospectus supplement.
S-12
Table of Contents
RISK FACTORS
An investment in our common stock involves a high degree of risk. Prior to making a decision about investing in our
common stock, you should carefully consider the risk factors described below together with all of the risks, uncertainties and assumptions discussed in the section captioned "Risk Factors" contained
in an exhibit to our Current Report on Form 8-K filed with the SEC on July 9, 2018 and in our other filings that are incorporated by reference in this prospectus supplement and the
accompanying prospectus in its entirety. If any of the risks incorporated by reference or set forth below occurs, our business, operations and financial condition could suffer significantly. As a
result, you could lose some or all of your investment in our common stock. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our business, operations and financial condition, or cause the value of our common stock to decline.
Risks Related to the Proposed Echelon Acquisition
This offering is not conditioned upon the closing of the Echelon acquisition, and there can be no assurance
that the Echelon acquisition will be completed.
On June 28, 2018, we signed a definitive merger agreement to acquire Echelon in a cash transaction. We expect the Echelon acquisition to
close in the third quarter of 2018, subject to satisfaction of customary closing conditions. In particular, the Echelon acquisition is subject to approval by Echelon's stockholders holding a majority
of Echelon's outstanding common stock, and there can be no assurance that holders of a majority of Echelon's outstanding common stock will approve the Echelon acquisition. This offering is not
conditioned upon the completion of the Echelon acquisition and there can be no assurance that the Echelon acquisition will be completed. If the Echelon acquisition is terminated or does not occur for
any reason, we will use the net proceeds from this offering for general corporate purposes as discussed in "Use of Proceeds".
Actual results may differ from any statements made by us concerning the anticipated impact of the Echelon
acquisition on the operating results of the combined company, and these differences could be material.
In connection with this offering, we have made a number of forward-looking statements within the meaning of the Private Securities Litigation
Reform Act, including statements relating to expected timing of the Echelon acquisition and the prospects for the combined company. These statements are based upon our management's preliminary
estimates based on forecasts prepared by us and by Echelon's management. Although we believe that we have a reasonable basis for such forward-looking statements, these statements are based on our
projections of future events that are subject to known and unknown risks and uncertainties and other factors that may cause the combined company's actual results, level of activity, performance or
achievements expressed or implied by these forward-looking statements to differ in a material way. Additional risks and uncertainties that could cause actual results to differ materially from
currently anticipated results include, but are not limited to, risks relating to our ability to successfully integrate Echelon; unanticipated increases in costs or expenses; our ability to realize
expected cost synergies; and the other risks identified in this prospectus supplement and the documents incorporated by reference in this prospectus supplement. Our actual financial condition and
results of operations following the Echelon acquisition may not be consistent with, or evident from, the statements provided herein. Other unknown or unpredictable factors also could harm our results.
Consequently, actual results or developments anticipated by us may not be realized or, even if substantially realized, may not have the expected consequences to, or effects on, us. In particular,
while the Echelon acquisition is expected to be accretive to our adjusted EBITDA and
non-GAAP net income (loss) per share in the first year after close, there can be no assurance with respect to the timing and scope of the accretive effect or whether it will be accretive at all. Any
failure to meet expectations regarding the prospects for the combined company could have a material adverse effect on the trading price or volume of our stock.
S-13
Table of Contents
We have made certain assumptions relating to the Echelon acquisition that may prove to be materially
inaccurate.
We have made assumptions relating to the Echelon acquisition, which assumptions may be inaccurate, including as the result of the failure to
realize the expected benefits of the Echelon acquisition, failure to realize expected revenue growth, higher than expected operating, transaction and integration costs, as well as general economic and
business conditions that adversely affect the combined company following the Echelon acquisition. These assumptions relate to numerous matters, including:
-
-
our ability to achieve expected synergies or cost savings following the Echelon acquisition;
-
-
projections of Echelon's future revenues;
-
-
our ability to maintain, develop and deepen relationships with end customers of Echelon and otherwise expand our sales channels;
-
-
our ability to expand our gross margins and portfolio;
-
-
our ability to improve our product roadmap;
-
-
the amount of goodwill and intangibles that will result from the Echelon acquisition;
-
-
certain other purchase accounting adjustments that we expect will be recorded in our financial statements in connection with the Echelon
acquisition;
-
-
merger and integration costs; and
-
-
other financial and strategic risks of the Echelon acquisition.
Any failure to successfully integrate Echelon's business and operations or fully realize any potential
synergies from the acquisition in the expected time frame would adversely affect our business, operating results, and financial condition.
The success of the Echelon acquisition will depend, in part, on our ability to successfully integrate Echelon's business and operations and
fully realize the anticipated benefits and potential synergies from combining our business with Echelon's business. If we are unable to achieve these objectives following the Echelon acquisition, the
anticipated benefits and potential cost savings and operational efficiencies or synergies of the acquisition may not be realized fully or at all, or may take longer to realize than expected. We do not
have an extensive history of acquiring other companies and managing integrations, and the risk of failing to achieve the anticipated benefits and potential cost savings and other synergies of the
Echelon acquisition may be increased by our ongoing efforts to integrate our May 2018 acquisition of S3. Any failure to timely realize the anticipated benefits and
potential cost savings and other synergies of the Echelon acquisition would have a material adverse effect on our business, operating results, and financial condition.
The Echelon acquisition may not be completed on a timely basis or at all. The failure to complete the Echelon
acquisition would eliminate, or any delay in the closing of the Echelon acquisition may significantly reduce, the benefits expected to be obtained from the Echelon acquisition and could adversely
affect the market price of our common stock and our future business and financial results.
The Echelon acquisition is subject to a number of conditions, including, the approval of the acquisition by Echelon's stockholders, compliance
with covenants of the parties and the continuing accuracy of the representations and warranties of the parties (subject to certain materiality standards), some of which are beyond our control and
could prevent, delay or otherwise materially and adversely affect closing of the Echelon acquisition. See "The Echelon AcquisitionSummary of the Echelon AcquisitionConditions
to the Completion of the Echelon Acquisition." Neither we nor Echelon can
S-14
Table of Contents
predict
whether and when these other conditions will be satisfied. In addition, both we and Echelon have the ability to terminate the merger agreement under certain circumstances. Failure to complete
the Echelon acquisition would prevent us and Echelon from realizing the anticipated benefits and potential synergies of the Echelon acquisition. We would also remain liable for significant transaction
costs, including legal, accounting and financial advisory fees, and we could become liable to Echelon if the merger agreement is terminated under certain circumstances for a termination fee equal to
$4.41 million.
See
"The Echelon Acquisition."
In
addition, the market price of our common stock may reflect various market assumptions as to whether the Echelon acquisition will be completed. Consequently, the completion of, the
failure to complete, or any delay in the closing of the Echelon acquisition could result in a significant change in the market price of our common stock.
Uncertainty about the Echelon acquisition may adversely affect the relationships that we, Echelon or our
combined company have with our respective customers, service providers and employees, whether or not the Echelon acquisition is completed.
Parties with whom we or Echelon do business may experience uncertainty associated with the Echelon acquisition, including with respect to
current or future business relationships with us, Echelon or the combined business. These business relationships may be subject to disruption as end customers, distributors and others may attempt to
(a) negotiate changes in existing business relationships, (b) delay, defer or cease purchasing products from or providing services to us, Echelon or our combined company or
(c) consider entering into business relationships with parties other than us, Echelon or the combined business, including our competitors or those of Echelon. These disruptions could have a
material adverse effect on the businesses, operating results, and financial condition of each of us or, if the Echelon acquisition is completed, the combined business.
Uncertainties associated with the Echelon acquisition may cause a loss of management personnel and other key
employees that could adversely affect our future business, operations and financial results following the Echelon acquisition.
Whether or not the Echelon acquisition is completed, the announcement and pendency of the Echelon acquisition could disrupt Echelon's and our
respective businesses. We and Echelon are both dependent on the experience and industry knowledge of our respective senior management and other key employees to develop new products and execute our
respective business plans. Our success after the Echelon acquisition will depend in part upon Echelon's and our ability to retain our respective key management personnel and other of our respective
key employees in advance of the Echelon acquisition, and of our combined company's ability to do so following the Echelon acquisition. Our current and prospective employees and those of Echelon may
experience uncertainty about their roles within the combined company following the Echelon acquisition, which may have an adverse effect on the current ability of Echelon or us to attract or retain
key management and other key personnel or the ability of the combined company to do so following the Echelon acquisition.
Accordingly,
no assurance can be given that the combined company will be able to attract or retain key management personnel and other key employees of ours or of Echelon to the same
extent that such companies have previously been able to attract or retain employees. In addition, following the Echelon acquisition, we might not be able to locate suitable replacements for any such
key employees who leave us or Echelon or offer employment to potential replacements on satisfactory terms.
We expect to incur substantial transaction-related costs in connection with the Echelon acquisition.
We have incurred and expect to incur significant, nonrecurring costs in connection with consummating the Echelon acquisition. We cannot identify
the timing, nature and amount of all such
S-15
Table of Contents
charges
as of the date of this prospectus supplement. In addition, we will incur integration costs following the completion of the acquisition as we integrate our business and Echelon's business,
including consolidation costs and employment-related costs. Integration efforts will also divert management attention and resources. These integration matters could have an adverse effect on us or
Echelon during the transition period and on the combined company after completion of the proposed acquisition, and no assurance can be given that the operation of the combined company will not
adversely affect our results of operations. There can be no assurances that the expected benefits and cost savings and operational efficiencies or synergies related to the integration of businesses
will be realized to offset these transaction and integration costs over time. We may also incur additional costs to maintain employee morale and to retain key employees. We will also incur significant
legal, financial advisor, accounting, banking and consulting fees, fees relating to regulatory filings and notices, and other costs associated with this offering and the acquisition. Some of these
costs are payable regardless of whether the offering and acquisition is completed.
We may incur additional debt to fund a portion of the purchase price for the Echelon acquisition.
After giving effect to the credit facility we entered into in May 2018, we would have had approximately $35 million aggregate principal
amount of indebtedness outstanding as of March 31, 2018. On an ongoing basis, we engage with lenders and other financial institutions in an effort to improve our liquidity and capital
resources. We may incur additional debt to fund our business and strategic initiatives, and may utilize additional debt to fund a portion of the purchase price for the Echelon acquisition. If we incur
additional debt and other obligations, the risks associated with our substantial leverage and the ability to service such debt would increase.
Our results after the Echelon acquisition may suffer if we do not effectively manage our expanded operations
following the Echelon acquisition.
Following the acquisitions of S3 and Echelon, the size of our business will increase significantly beyond the current size of our existing
business and the scope of our international operations will be greatly expanded. Our future success depends, in part, upon our ability to manage this expanded business and international operations,
which will pose substantial challenges for our management, including challenges related to the management and monitoring of additional operations and associated increased costs and complexity. There
can be no assurances we will be successful after closing of the Echelon acquisition or that we will realize the expected benefits currently anticipated from the Echelon acquisition.
Charges to earnings resulting from the application of the acquisition method of accounting may adversely
affect the market value of our common stock following the closing of the Echelon acquisition.
The Echelon acquisition will be accounted for using the acquisition method of accounting, which will result in charges to earnings that could
have an adverse impact on the market value of our common stock following the closing of the Echelon acquisition. Under the acquisition method of accounting, the total estimated purchase price will be
allocated to Echelon's pro forma net tangible assets and identifiable intangible assets based on their respective fair values as of the date of closing of the Echelon acquisition. Any excess of the
purchase price over those fair values will be recorded as goodwill. The combined company will incur additional amortization expense based on the identifiable amortizable intangible assets acquired
pursuant to the merger agreement and their relative useful lives. Additionally, to the extent the value of goodwill or identifiable intangible assets or other long-lived assets may become impaired,
the combined company will be required to incur charges relating to the impairment. These amortization and potential impairment charges could have a material impact on the combined company's results of
operations.
S-16
Table of Contents
If our goodwill or intangible assets become impaired, we may be required to record a significant charge to
earnings.
We review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Goodwill is required to be tested for impairment at least annually. As of March 31, 2018, we had recorded a total of $6.8 million of goodwill and other intangible assets. According to
our preliminary valuation of assets acquired and liabilities assumed included in our unaudited pro forma condensed combined financial statements included elsewhere in this prospectus supplement, we
will record an additional $2.9 million in goodwill in connection with our proposed acquisition of Echelon. The preliminary estimates of fair value and weighted-average useful life included in
our unaudited pro forma condensed combined financial statements will likely be different from the final acquisition accounting for the Echelon transaction, and the difference could have a material
impact on the pro forma condensed combined financial statements. Once we have full access to the specifics of Echelon's operations, additional insight will be gained that could impact: (1) the
intangible assets identified; (2) the estimated total value assigned to intangible assets; and (3) the estimated useful life of each category of intangible assets. The estimated
intangible asset values and their useful lives could be impacted by a variety of factors that may become known to us only upon access to additional information and/or changes in such factors that may
occur prior to the effective time of the acquisition. For each $1.0 million change in the fair value of identifiable intangible assets, there could be an annual change in amortization
expenseincrease or decreaseof approximately $32 thousand per quarter, assuming a weighted-average useful life of 7.9 years. An adverse change in market
conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an
impairment charge to our goodwill or intangible assets. Any such material charges may have a material negative impact on our operating results.
The pro forma financial statements included in this prospectus supplement are presented for illustrative
purposes only and may not be an indication of our financial condition or results of operations following the Echelon acquisition.
The pro forma financial statements included in this prospectus supplement are presented for illustrative purposes only, are based on various
adjustments and assumptions, many of which are preliminary, and may not be an indication of our financial condition or results of operations following the Echelon acquisition. Our actual financial
condition and results of operations following the Echelon acquisition may not be consistent with, or evident from, these pro forma financial statements. In addition, the assumptions used in preparing
the pro forma financial data may not prove to be accurate, and other factors may affect our financial condition or results of operations following the Echelon acquisition. In addition, this offering
of common stock is not conditioned upon completion of the Echelon acquisition. Therefore, investors should refer to our historical financial statements incorporated by reference in this prospectus
supplement when evaluating an investment in our shares of common stock.
Risks Related to This Offering
Our management will have broad discretion as to the use of the proceeds from this offering and we may not use
the proceeds effectively.
This offering is not conditioned upon the completion of the Echelon acquisition and there can be no assurance that the Echelon acquisition will
be completed. If the Echelon acquisition is not completed, we intend to use the net proceeds for general corporate purposes. Our management will have broad discretion in the application of the net
proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. You will be relying on the judgment of our
management concerning these uses and you will not
S-17
Table of Contents
have
the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The failure of our management to apply these funds effectively could result in
unfavorable returns and uncertainty about our prospects, each of which could cause the price of our common stock to decline. See "Use of Proceeds."
If you purchase shares of common stock sold in this offering you will experience immediate and substantial
dilution in your investment. You also will experience further dilution if we issue additional equity securities in the future.
Since the price per share of our common stock being offered is substantially higher than the net tangible book value per share of our common
stock, you will suffer substantial dilution with respect to the net tangible book value of the shares of common stock you purchase in this offering. Based on the public offering price of $6.00 per
share and our net tangible book value as of March 31, 2018, if you purchase shares of common stock in this offering, you will suffer immediate and
substantial dilution of $3.76 per share with respect to the net tangible book value of the common stock. See "Dilution" for a more detailed discussion of the dilution you will incur if you purchase
shares of common stock in this offering.
In
addition, we have a significant number of stock options, RSUs and warrants outstanding, and may also choose to issue additional common stock, or securities convertible into or
exchangeable for common stock, in the future. In the event that the outstanding options, RSUs and warrants are exercised or settled, or that we issue additional common stock or other convertible or
exchangeable securities, you could experience additional dilution. Furthermore, we cannot assure you that we will be able to issue shares or other securities in any other offering at a price per share
that is equal to or greater than the price per share paid by investors in this offering, and investors purchasing our securities in the future may have rights superior to investors purchasing shares
in this offering.
Future sales of our common stock in the public market could cause the market price of our common stock to
drop significantly, even if our business is doing well.
The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market after
the closing of this offering, or the perception that these sales could occur. For example, certain holders of our common stock have rights, subject to conditions, to require us to file registration
statements covering their common stock or to include their common stock registration statements that we may file for ourselves or other stockholders. Once we register these shares, they can be freely
sold in the public market. Moreover, we have also registered under the Securities Act of 1933, as amended, shares of common stock that we may issue under our equity compensation plans.
Except
as noted below, we and our executive officers and directors who collectively hold shares representing less than 10% of our outstanding common stock have agreed, subject to certain
exceptions, not to dispose of or hedge any of the shares of common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus
supplement continuing through the date 90 days after the date of this prospectus supplement. ARCH Venture Fund VI, L.P., a holder of more than 10% of our common stock, and Keith
Crandell, a member of our board of directors, have each agreed to the same restrictions but for a period of 60 days after the date of the prospectus supplement. As of the date of this
prospectus supplement, most of our other outstanding shares of common stock are available for sale in the public market at any time by our existing stockholders, subject to Rule 144 limitations
applicable to affiliates.
In
addition, we have a significant number of stock options, RSUs and warrants outstanding. If a substantial number of shares of common stock underlying these options, RSUs or warrants
are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock
S-18
Table of Contents
could
decline. Sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares of common stock intend to
sell shares, could reduce the market price of our common stock and make it more difficult for you to sell your common stock at a time and price that you deem appropriate.
In
the future, we may also issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition,
litigation settlement, employee arrangements or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.
S-19
Table of Contents
THE ECHELON ACQUISITION
The following summary describes material provisions of the merger agreement. This summary is subject to, and qualified
in its entirety by reference to, the merger agreement, a copy of which is included as an exhibit to Echelon's Current Report on Form 8-K filed with the SEC on June 29, 2018, which is
incorporated by reference into this prospectus supplement and the accompanying prospectus. You are urged to read the merger agreement carefully and in its entirety, as it is the legal document
governing the merger.
The merger agreement and the following summary have been included to provide you with information regarding the terms of the merger agreement. The representations
and warranties contained in the merger agreement are not intended to be a source of business or operational information about us or Echelon as such representations and warranties are made as of a
specified date, are tools used to allocate risk between the parties, are subject to contractual standards of knowledge and materiality and are modified or qualified by information contained in our
public filings and the public filings of Echelon and in the disclosure schedules exchanged by the parties. Accordingly, you should not rely on the representations, warranties,
covenants and agreements, or any descriptions thereof, contained in the merger agreement as characterizations of the actual state of facts or condition of Echelon or us. Business and operational
information regarding Echelon and us can be found elsewhere in this prospectus supplement, and with respect to us, in the other public documents that we file with the SEC. See "Where You Can Find More
Information."
Summary of Echelon Acquisition
On June 28, 2018, we entered into a merger agreement with Echelon under which we agreed to acquire all of Echelon's outstanding capital
stock through a merger of a wholly owned subsidiary of ours with Echelon. Following the acquisition, Echelon will be our wholly-owned subsidiary. We refer to this transaction as the Echelon
acquisition. Under the merger agreement, at the closing of the proposed acquisition, all outstanding equity securities of Echelon will be converted into the right to receive an aggregate amount of
approximately $44.1 million in cash. Upon the completion of the Echelon acquisition, each issued and outstanding share of common stock, par value $0.001 per share, of Echelon will be converted
into the right to receive $8.50 in cash, or the per share amount. All shares of Echelon common stock underlying option awards and restricted stock unit awards, whether vested or unvested, will be
converted into the right to receive the per share amount (or, in the case of an option award, the spread between the per share amount and the applicable exercise price). The Echelon acquisition is
expected to close in the third quarter of 2018, subject to satisfaction of customary closing conditions, including approval by holders of a majority of Echelon's outstanding common stock.
Our
board of directors has approved and adopted the merger agreement. The Echelon acquisition is not subject to approval by our stockholders. The merger agreement has also been approved
and adopted by the board of directors of Echelon and is subject to approval by Echelon's stockholders holding a majority of Echelon's outstanding common stock.
If
the Echelon acquisition is completed, we intend to use the net proceeds of this offering, along with any new borrowing that we may enter into, to fund the cash consideration for the
Echelon acquisition. Any remaining net proceeds will be used for general corporate purposes, including increasing our working capital, other acquisitions or investments in businesses, products or
technologies that are complementary to our own and capital expenditures. If the Echelon acquisition is not completed, we intend to use the net proceeds for general corporate purposes. See "Use of
Proceeds."
Conditions to the Completion of the Echelon Acquisition
Each party's obligation to consummate the Echelon acquisition is subject to the satisfaction or waiver of customary closing conditions,
including the absence of injunction or the enactment of any law that would restrain, prohibit or otherwise prevent the consummation of the acquisition.
S-20
Table of Contents
Our
obligation to consummate the Echelon acquisition is subject to the satisfaction or waiver of certain conditions including:
-
-
the approval of the acquisition by Echelon's stockholders;
-
-
the accuracy of the representations and warranties of Echelon contained in the merger agreement, subject to specified materiality and "material
adverse effect" qualifications;
-
-
Echelon's performance of and compliance with, in all material respects, its obligations under the merger agreement; and
-
-
there shall not have been any event or occurrence that has a material adverse effect on Echelon's business.
Echelon's
obligation to consummate the Echelon acquisition is subject to the satisfaction or waiver of the following conditions:
-
-
the accuracy in all material respects of our representations and warranties contained in the merger agreement; and
-
-
our compliance in all material respects with our obligations under the merger agreement.
Termination of the Merger Agreement
The merger agreement may be terminated at any time before the effective time of the Echelon acquisition by the mutual written consent of us and
Echelon, and under the following circumstances:
-
-
by either party if the Echelon acquisition is not consummated by December 1, 2018 (provided that the right to terminate the merger
agreement will not be available to a party whose breach of a representation, warranty, covenant or agreement caused the failure of the Echelon acquisition to be consummated by such date);
-
-
by either party if a permanent injunction, judgment or other order which is final and non-appealable is issued preventing or prohibiting the
consummation of the Echelon acquisition;
-
-
by either party if Echelon fails to obtain the requisite stockholder approval (provided that this right to terminate the merger agreement will
not be available to a party whose action or failure to act (which constitute a breach by such party of the merger agreement) has been the primary cause of the failure to obtain such stockholder
approval);
-
-
by either party if there is a breach of any representation, warranty, covenant or agreement in the merger agreement by the other party, and
such breach has not been cured within 20 days after notice to the breaching party; and
-
-
by Echelon, if prior to the receipt of the requisite stockholder approval, the Company has received a Superior Proposal (as defined in the
merger agreement) and Echelon's board of directors (or a committee thereof) has authorized Echelon to enter into a definitive agreement to consummate the transaction contemplated by that Superior
Proposal.
Echelon
will be required to pay us a termination fee of $1.54 million in certain circumstances if the merger agreement is terminated and Echelon accepts a Superior Proposal (as
defined in the merger agreement) or Echelon's Board of Directors makes a change of board recommendation. In addition, Echelon will be required to pay such termination fee in certain circumstances in
which the merger agreement is terminated and an alternative acquisition transaction is subsequently consummated within a year of the termination (whether such consummation occurs before or after the
one-year anniversary of such termination). Echelon will further be required to pay us up to $440,000 of our reasonable and documented out-of-pocket fees and expenses (including attorney's fees and
expenses) in certain circumstances if the merger agreement is terminated and Echelon fails to obtain the requisite
S-21
Table of Contents
stockholder
approval. We will be required to pay Echelon a termination fee of $4.41 million if the merger agreement is terminated by Echelon after September 15, 2018 (which date may be
extended to September 30, 2018 under certain circumstances) and (1) all of the conditions to closing have been satisfied or waived, (2) Echelon has provided irrevocable written
notice to us that Echelon is prepared to close, and (3) we have failed to consummate the acquisition and effect the closing after three business days of such irrevocable written notice. The
receipt of either party of any termination fees will constitute liquidated damages and is the sole and exclusive remedy of the other party in respect of the merger agreement in the circumstances in
which such fees are payable.
S-22
Table of Contents
USE OF PROCEEDS
We estimate that the net proceeds of this offering, after deducting the underwriting discount and estimated offering expenses payable by us,
will be approximately $37.3 million, or $42.9 million if the underwriters' option to purchase additional shares is exercised in full. We cannot assure you that this offering will be
completed.
We
currently intend to use the net proceeds from the sale of common stock in this offering, along with any new borrowing that we may enter into, to fund the cash consideration for the
Echelon acquisition, which we estimate to be $44.1 million in cash. Any remaining net proceeds will be used for working capital and other general corporate purposes, including increasing our
working capital, other acquisitions or investments in businesses, products or technologies that are complementary to our own and capital expenditures. Other than the Echelon acquisition, we have no
current agreements or commitments for any other acquisitions or investments.
This
offering is not conditioned upon the completion of the Echelon acquisition and there can be no assurance that the Echelon acquisition will be completed. If the Echelon acquisition
is not completed, we intend to use the net proceeds for general corporate purposes as described above.
The
occurrence of unforeseen events or changed business conditions could result in the application of the net proceeds from this offering in a manner other than as described in this
prospectus supplement. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. Pending application of the proceeds of sale of our common
stock, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.
S-23
Table of Contents
CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of March 31,
2018:
-
-
on an actual basis;
-
-
on an as adjusted basis to give effect to our entry into the credit facility, repayment of all outstanding borrowings, accrued interest, and
fees under our term loan in connection therewith and the S3 acquisition, each as described in "SummaryOther Recent Developments"; and
-
-
on a pro forma as adjusted basis to give further effect to (1) the sale and issuance of 6,700,000 shares of our common stock
pursuant to this offering at a public offering price of $6.00 per share, after deducting the underwriting discount and estimated offering expenses payable by us and (2) the consummation of the
proposed Echelon acquisition, as described under "Use of Proceeds."
The
as adjusted and pro forma as adjusted data in the following table assumes the transactions referred to above had been completed as of March 31, 2018 on the terms and in
accordance with the assumptions set forth under "Unaudited Pro Forma Condensed Combined Financial Information" included elsewhere in this prospectus supplement. You should read this table together
with "Use of Proceeds," which appears elsewhere in this prospectus supplement, as well as our "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our
Annual Report on Form 10-K for the year ended December 31, 2017 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and our consolidated financial
statements and related notes incorporated by reference in this prospectus supplement and the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2018
|
|
|
|
Actual
|
|
As Adjusted
|
|
Pro Forma
as Adjusted
|
|
|
|
(unaudited, in thousands, except per share amounts)
|
|
Cash and cash equivalents
|
|
$
|
29,546
|
|
$
|
16,269
|
|
$
|
28,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
|
|
Line of credit, current
|
|
$
|
1,500
|
|
$
|
|
|
$
|
|
|
Term loan, current
|
|
|
1,929
|
|
|
704
|
|
|
704
|
|
Term loan, non-current
|
|
|
9,924
|
|
|
34,179
|
|
|
34,179
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
13,353
|
|
|
34,883
|
|
|
34,883
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 100,000,000 shares authorized, 21,409,292 shares issued and outstanding actual; 21,409,292 shares issued and
outstanding as adjusted and 28,109,292 shares issued and outstanding pro forma as adjusted
|
|
|
2
|
|
|
2
|
|
|
3
|
|
Additional paid-in capital
|
|
|
133,804
|
|
|
133,804
|
|
|
171,080
|
|
Accumulated other comprehensive loss
|
|
|
(312
|
)
|
|
(312
|
)
|
|
(312
|
)
|
Accumulated deficit
|
|
|
(100,946
|
)
|
|
(101,137
|
)
|
|
(101,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
32,548
|
|
|
32,357
|
|
|
69,634
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
45,901
|
|
$
|
67,240
|
|
$
|
104,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-24
Table of Contents
The
number of shares of common stock issued and outstanding actual, pro forma and pro forma as adjusted in the table above does not include the following
shares:
-
-
1,529,554 shares of common stock issuable upon exercise of outstanding options as of March 31, 2018, with a weighted-average exercise
price of $3.72 per share;
-
-
487,110 shares of common stock issuable upon the settlement of outstanding RSUs as of March 31, 2018;
-
-
478,417 shares of common stock issuable upon the settlement of outstanding RSUs granted after March 31, 2018;
-
-
389,423 shares of our common stock issuable upon the exercise of warrants outstanding as of March 31, 2018, with a weighted-average
exercise price of $7.71 per share;
-
-
850,000 shares of our common stock issuable upon the exercise of warrants issued after March 31, 2018, with an exercise price of $8.62
per share;
-
-
1,415,994 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan as of March 31, 2018; and
-
-
432,699 shares of common stock reserved for future issuance under our 2015 Employee Stock Purchase Plan as of March 31, 2018.
S-25
Table of Contents
PRICE RANGE OF COMMON STOCK
Our common stock has been quoted on The NASDAQ Capital Market under the symbol "IOTS" since our initial public offering in October 2015. The
following table sets forth, for the periods indicated, the reported high and low closing sales prices per share of our common stock as reported by The NASDAQ Capital Market:
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
Fiscal Year ending December 31, 2016
|
|
|
|
|
|
|
|
First Fiscal Quarter
|
|
$
|
7.59
|
|
$
|
5.11
|
|
Second Fiscal Quarter
|
|
|
5.76
|
|
|
3.02
|
|
Third Fiscal Quarter
|
|
|
3.81
|
|
|
2.02
|
|
Fourth Fiscal Quarter
|
|
|
2.59
|
|
|
1.60
|
|
Fiscal Year ending December 31, 2017
|
|
|
|
|
|
|
|
First Fiscal Quarter
|
|
$
|
4.40
|
|
$
|
1.90
|
|
Second Fiscal Quarter
|
|
|
5.60
|
|
|
3.85
|
|
Third Fiscal Quarter
|
|
|
8.15
|
|
|
4.25
|
|
Fourth Fiscal Quarter
|
|
|
8.50
|
|
|
6.15
|
|
Fiscal Year ending December 31, 2018
|
|
|
|
|
|
|
|
First Fiscal Quarter
|
|
$
|
7.70
|
|
$
|
5.80
|
|
Second Fiscal Quarter
|
|
|
9.55
|
|
|
7.15
|
|
Third Fiscal Quarter (through July 10, 2018)
|
|
|
8.50
|
|
|
6.40
|
|
The
last reported sale price for our common stock on July 10, 2018 was $6.80 per share.
As
of July 5, 2018, our common stock was held of record by 38 holders.
DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation
of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our board
of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of
directors considers relevant. In addition, the terms of our credit facility currently prohibit us from paying dividends.
S-26
Table of Contents
DILUTION
If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share of
our common stock and the as adjusted net tangible book value per share of our common stock immediately after this offering.
Our
net tangible book value as of March 31, 2018 was approximately $25.7 million, or $1.20 per share. Net tangible book value per share is determined by dividing our total
tangible assets, less total liabilities, by the number of shares of our common stock outstanding as of March 31, 2018. Dilution with respect to net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of our common stock immediately after this offering.
After
giving effect to the sale of shares of our common stock at the public offering price of $6.00 per share and after deducting the underwriting discount and estimated offering
expenses payable by us, our as adjusted net tangible book value as of March 31, 2018 would have been approximately $63.0 million, or $2.24 per share. This represents an immediate
increase in net tangible book value of $1.04 per share to existing stockholders and immediate dilution of $3.76 per share to investors purchasing our common stock in this offering at the public
offering price. The following table illustrates this dilution on a per share basis:
|
|
|
|
|
|
|
|
Public offering price per share
|
|
|
|
|
$
|
6.00
|
|
Net tangible book value per share of as March 31, 2018
|
|
$
|
1.20
|
|
|
|
|
Increase in net tangible book value per share attributable to investors purchasing our common stock in this offering
|
|
|
1.04
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book value per share after this offering
|
|
|
|
|
|
2.24
|
|
|
|
|
|
|
|
|
|
Dilution per share to investors purchasing our common stock in this offering
|
|
|
|
|
$
|
3.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If
the underwriters exercise their option to purchase additional shares of common stock in full, the as adjusted net tangible book value per share of our common stock after giving effect
to this offering
would be $2.36 per share, and the dilution in net tangible book value per share to investors purchasing common stock in this offering would be $3.64 per share.
The
table and discussion above are based on 21,409,292 shares of common stock outstanding as of March 31, 2018 and excludes:
-
-
1,529,554 shares of common stock issuable upon exercise of outstanding options as of March 31, 2018, with a weighted-average exercise
price of $3.72 per share;
-
-
487,110 shares of common stock issuable upon the settlement of outstanding RSUs as of March 31, 2018;
-
-
478,417 shares of common stock issuable upon the settlement of outstanding RSUs granted after March 31, 2018;
-
-
389,423 shares of our common stock issuable upon the exercise of warrants outstanding as of March 31, 2018, with a weighted-average
exercise price of $7.71 per share;
-
-
850,000 shares of our common stock issuable upon the exercise of warrants issued after March 31, 2018, with an exercise price of $8.62
per share;
-
-
1,415,994 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan as of March 31, 2018; and
S-27
Table of Contents
-
-
432,699 shares of common stock reserved for future issuance under our 2015 Employee Stock Purchase Plan as of March 31, 2018.
To
the extent that outstanding options, RSUs or warrants have been or may be exercised or settled or other shares of common stock are issued, investors purchasing our common stock in
this offering may experience further dilution. In addition, we may choose to issue additional common stock, or securities convertible into or exchangeable for common stock, in the future. The issuance
of these securities could result in further dilution for investors purchasing our common stock in this offering.
S-28
Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements are based on the historical consolidated financial statements of
Adesto and Echelon after giving effect to the Echelon acquisition and the S3 acquisition, including the assumed sale of $40 million of shares of our common stock in this offering, the aggregate
net proceeds of which will be used to finance the Echelon acquisition consideration, and applying the assumptions and adjustments described in the accompanying notes. The Echelon acquisition is
expected to close in the third quarter of 2018, subject to various contingencies.
The
unaudited pro forma condensed combined statements of operations combine the results of operations of Adesto and Echelon for the fiscal year ended December 31, 2017 and the
quarter ended March 31, 2018, respectively, as if the Echelon acquisition had occurred on January 1, 2017, plus pro forma adjustments. The unaudited pro forma condensed combined balance
sheet has been prepared to
reflect the Echelon acquisition and the S3 acquisition as if the Echelon acquisition and S3 acquisition had occurred on March 31, 2018, plus pro forma adjustments.
The
unaudited pro forma condensed combined financial information should be read in conjunction with:
-
-
the accompanying notes to the unaudited condensed combined pro forma financial information;
-
-
the separate audited consolidated financial statements of Adesto as of and for the year ended December 31, 2017 and the related notes,
included in Adesto's Annual Report on Form 10-K for the fiscal year ended December 31, 2017;
-
-
the separate unaudited condensed consolidated financial statements of Adesto as of and for the three months ended March 31, 2018 and the
related notes, included in Adesto's Quarterly Report on Form 10-Q for the period ended March 31, 2018;
-
-
the separate audited consolidated financial statements of Echelon as of and for the year ended December 31, 2017 and the related notes,
included in Echelon's Annual Report on Form 10-K for the fiscal year ended December 31, 2017;
-
-
the separate unaudited condensed consolidated financial statements of Echelon as of and for the three months ended March 31, 2018 and
the related notes, included in Echelon's Quarterly Report on Form 10-Q for the period ended March 31, 2018; and
-
-
the separate audited consolidated statement of assets acquired and liabilities assumed of S3 Asic Semiconductors Limited as of May 9,
2018 and the related notes, included in Adesto's report on Form 8-K/A filed on June 27, 2018.
The
unaudited pro forma condensed combined financial information has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. The unaudited
pro forma condensed combined financial information presented is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been
realized if the Echelon acquisition and the S3 acquisition had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The unaudited pro forma
condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the Echelon acquisition or
the S3 acquisition, the costs to integrate the operations of Adesto Echelon and S3 or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements. The
unaudited pro forma condensed combined financial information also reflects the common stock contemplated to be issued in connection with the Echelon acquisition. In addition, the unaudited pro forma
condensed combined financial information does not purport to project the future financial position or operating results of the combined company. There were no transactions between Adesto and Echelon
during the periods
S-29
Table of Contents
presented
in the unaudited pro forma condensed combined financial statements that would need to be eliminated. The pro forma adjustments represent Adesto's best estimates and are based upon current
available information and certain assumptions that Adesto believes is reasonable under the circumstances. The transaction is being accounted for as a business combination using the acquisition method
with Adesto as the accounting acquirer in accordance with Accounting Standards Codification Topic 805, Business Combinations, or ASC 805. Under this method of accounting the purchase price will be
allocated to Echelon's assets acquired and liabilities assumed based upon their estimated fair values at the date of completion of the Echelon acquisition. The process of valuing the tangible and
intangible assets and liabilities of Echelon immediately prior to the Echelon acquisition, as well as evaluating accounting policies for conformity, is preliminary. The final valuation may materially
change the allocation of the merger consideration, which could materially affect the fair values assigned to the assets acquired and liabilities assumed and could result in a material change to the
unaudited pro forma condensed combined financial information. Refer to Note 2 of the "Notes to Unaudited Pro Forma Condensed Combined Financial Information" for more information on the basis of
presentation.
S-30
Table of Contents
Adesto Technologies Corporation
Unaudited Pro Forma Condensed Combined Balance Sheet
As of March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adesto
Historical
|
|
Echelon
Historical
|
|
S3 Acquisition
(Note 8)
|
|
Pro Forma
Adjustments
(Note 5)
|
|
Pro Forma
Combined
|
|
|
|
(In thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
29,546
|
|
$
|
5,846
|
|
$
|
267
|
|
$
|
(22,258)
|
a,g,n
|
$
|
13,401
|
|
Restricted investments
|
|
|
|
|
|
1,250
|
|
|
|
|
|
|
|
|
1,250
|
|
Short-term investments
|
|
|
|
|
|
11,960
|
|
|
|
|
|
|
|
|
11,960
|
|
Accounts receivable, net
|
|
|
12,188
|
|
|
2,556
|
|
|
192
|
|
|
|
|
|
14,936
|
|
Inventories
|
|
|
7,554
|
|
|
3,566
|
|
|
|
|
|
4,449
|
b
|
|
15,569
|
|
Prepaid expenses
(1)
|
|
|
1,153
|
|
|
|
|
|
|
|
|
723
|
h
|
|
1,876
|
|
Deferred cost of revenues
|
|
|
|
|
|
529
|
|
|
|
|
|
|
|
|
529
|
|
Other current assets
|
|
|
55
|
|
|
1,516
|
|
|
883
|
|
|
(723)
|
h
|
|
1,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
50,496
|
|
|
27,223
|
|
|
1,342
|
|
|
(17,809
|
)
|
|
61,252
|
|
Property and equipment, net
|
|
|
7,632
|
|
|
453
|
|
|
191
|
|
|
|
|
|
8,276
|
|
Intangible assets, net
|
|
|
6,808
|
|
|
668
|
|
|
15,340
|
|
|
17,762
|
c
|
|
40,578
|
|
Other non-current assets
|
|
|
1,029
|
|
|
558
|
|
|
|
|
|
|
|
|
1,587
|
|
Goodwill
|
|
|
22
|
|
|
|
|
|
34,352
|
|
|
2,936
|
d
|
|
37,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
65,987
|
|
$
|
28,902
|
|
$
|
51,225
|
|
$
|
2,889
|
|
$
|
149,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
7,845
|
|
$
|
2,570
|
|
|
37
|
|
$
|
(1,004)
|
i
|
$
|
9,448
|
|
Accrued compensation and benefits
(2)
|
|
|
2,819
|
|
|
|
|
|
|
|
|
1,156
|
j
|
|
3,975
|
|
Accrued expenses and other current liabilities
|
|
|
2,506
|
|
|
2,256
|
|
|
761
|
|
|
(152)
|
i,j
|
|
5,371
|
|
Price adjustments and other revenue reserves
|
|
|
4,545
|
|
|
|
|
|
|
|
|
|
|
|
4,545
|
|
Earn-out liability, current
|
|
|
|
|
|
|
|
|
10,218
|
|
|
|
|
|
10,218
|
|
Deferred revenues
|
|
|
|
|
|
849
|
|
|
129
|
|
|
(243)
|
e
|
|
735
|
|
Line of credit, current
|
|
|
1,500
|
|
|
|
|
|
|
|
|
(1,500)
|
n
|
|
|
|
Term loan, current
|
|
|
1,929
|
|
|
|
|
|
|
|
|
(1,225)
|
n
|
|
704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
21,144
|
|
|
5,675
|
|
|
11,145
|
|
|
(2,968
|
)
|
|
34,996
|
|
Term loan, non-current
|
|
|
9,924
|
|
|
|
|
|
|
|
|
24,255
|
m,n
|
|
34,179
|
|
Earn-out liability, non-current
|
|
|
|
|
|
|
|
|
3,279
|
|
|
|
|
|
3,279
|
|
Other non-current liabilities
(3)
|
|
|
75
|
|
|
616
|
|
|
|
|
|
(397)
|
k,l
|
|
294
|
|
Deferred rent, non-current
(3)
|
|
|
2,294
|
|
|
|
|
|
|
|
|
32
|
k
|
|
2,326
|
|
Deferred tax liability, non-current
(3)
|
|
|
2
|
|
|
|
|
|
1,918
|
|
|
4,256
|
f,l
|
|
6,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
33,439
|
|
|
6,291
|
|
|
16,342
|
|
|
25,178
|
|
|
81,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (See Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
2
|
|
|
49
|
|
|
|
|
|
(48
|
)
|
|
3
|
|
Additional paid-in capital
|
|
|
133,804
|
|
|
359,715
|
|
|
34,883
|
|
|
(357,309
|
)
|
|
171,093
|
|
Treasury stock
|
|
|
|
|
|
(28,130
|
)
|
|
|
|
|
28,130
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(312
|
)
|
|
(1,681
|
)
|
|
|
|
|
1,681
|
|
|
(312
|
)
|
Accumulated deficit
|
|
|
(100,946
|
)
|
|
(307,342
|
)
|
|
|
|
|
305,257
|
|
|
(103,031
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
32,548
|
|
|
22,611
|
|
|
34,883
|
|
|
(22,289
|
)
|
|
67,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
65,987
|
|
$
|
28,902
|
|
$
|
51,225
|
|
$
|
2,889
|
|
$
|
149,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Presented
as "Other current assets" in Echelon's Form 10-Q as of March 31, 2018
-
(2)
-
Presented
as "Accrued liabilities" in Echelon's Form 10-Q as of March 31, 2018
-
(3)
-
Presented
as "Other long-term liabilities" in Echelon's Form 10-Q as of March 31, 2018
See accompanying notes to unaudited pro forma condensed combined financial statements.
S-31
Table of Contents
Adesto Technologies Corporation
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adesto
Historical
|
|
Echelon
Historical
|
|
Pro Forma
Adjustments
(Note 6)
|
|
Pro Forma
Combined
|
|
|
|
(In thousands, except share and per share amounts)
|
|
Revenue, net
|
|
$
|
56,112
|
|
$
|
31,667
|
|
$
|
274
|
d
|
$
|
88,053
|
|
Cost of revenue
|
|
|
28,637
|
|
|
14,016
|
|
|
(52
|
)a,d
|
|
42,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
27,475
|
|
|
17,651
|
|
|
326
|
|
|
45,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
14,094
|
|
|
9,313
|
|
|
1,910
|
b
|
|
25,317
|
|
Sales and marketing
|
|
|
11,064
|
|
|
5,532
|
|
|
520
|
c
|
|
17,116
|
|
General and administrative
|
|
|
7,148
|
|
|
6,959
|
|
|
2,085
|
e
|
|
16,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
32,306
|
|
|
21,804
|
|
|
4,515
|
|
|
58,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,831
|
)
|
|
(4,153
|
)
|
|
(4,189
|
)
|
|
(13,173
|
)
|
Interest and other income (expense), net
|
|
|
(756
|
)
|
|
(498
|
)
|
|
|
|
|
(1,254
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(5,587
|
)
|
|
(4,651
|
)
|
|
(4,189
|
)
|
|
(14,427
|
)
|
Income tax expense (benefit)
|
|
|
101
|
|
|
(28
|
)
|
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,688
|
)
|
$
|
(4,623
|
)
|
$
|
(4,189
|
)
|
$
|
(14,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.31
|
)
|
$
|
(1.04
|
)
|
$
|
|
|
$
|
(0.62
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
18,591,308
|
|
|
4,465,000
|
|
|
240,882
|
f
|
|
23,297,190
|
|
See accompanying notes to unaudited pro forma condensed combined financial statements.
S-32
Table of Contents
Adesto Technologies Corporation
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adesto
Historical
|
|
Echelon
Historical
|
|
Pro Forma
Adjustments
(Note 6)
|
|
Pro Forma
Combined
|
|
|
|
(In thousands, except share and per share amounts)
|
|
Revenue, net
|
|
$
|
15,302
|
|
$
|
7,837
|
|
$
|
|
|
$
|
23,139
|
|
Cost of revenue
|
|
|
8,122
|
|
|
3,460
|
|
|
(30
|
)a
|
|
11,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
7,180
|
|
|
4,377
|
|
|
30
|
|
|
11,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
3,665
|
|
|
3,005
|
|
|
478
|
b
|
|
7,148
|
|
Sales and marketing
|
|
|
2,752
|
|
|
1,310
|
|
|
131
|
c
|
|
4,193
|
|
General and administrative
|
|
|
1,713
|
|
|
1,705
|
|
|
2,085
|
e
|
|
5,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
8,130
|
|
|
6,020
|
|
|
2,694
|
|
|
16,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(950
|
)
|
|
(1,643
|
)
|
|
(2,664
|
)
|
|
(5,257
|
)
|
Interest and other income (expense), net
|
|
|
(131
|
)
|
|
258
|
|
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(1,081
|
)
|
|
(1,385
|
)
|
|
(2,664
|
)
|
|
(5,130
|
)
|
Income tax expense (benefit)
|
|
|
21
|
|
|
(6
|
)
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,102
|
)
|
$
|
(1,379
|
)
|
$
|
(2,664
|
)
|
$
|
(5,145
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.05
|
)
|
$
|
(0.30
|
)
|
$
|
|
|
$
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
21,370,927
|
|
|
4,527,000
|
|
|
178,882
|
f
|
|
26,076,809
|
|
See accompanying notes to unaudited pro forma condensed combined financial statements.
S-33
Table of Contents
Adesto Technologies Corporation
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(All tabular dollar amounts in thousands except per share amounts)
Note 1Description of the Transaction.
On June 28, 2018, Adesto, Circuit Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Adesto, or Merger Sub,
and Echelon, entered into an Agreement and Plan of Merger, or the merger agreement. Pursuant to the terms of the merger
agreement, Merger Sub will merge with and into Echelon, with Echelon continuing as the surviving corporation. We refer to this transaction as the Echelon acquisition. Upon completion of the Echelon
acquisition, each issued and outstanding share of common stock, par value $0.001 per share, of Echelon will be converted into the right to receive $8.50 in cash. The Echelon acquisition consideration
is estimated to be $44.1 million and will be funded with a combination of cash on hand and a sale of shares of common stock in this offering, such shares to be issued and sold by Adesto.
Under
the terms of the merger agreement, at the effective time, each outstanding and unexercised option to purchase Echelon common stock, or Echelon Option, whether or not vested, that
is outstanding immediately prior to the effective time, will be canceled, and the holder thereof will be entitled to receive (subject to any applicable withholding or other taxes, or other amounts
required by applicable legal requirements to be withheld) an amount in cash equal to the product of (i) the positive difference (if any) between (A) $8.50, minus (B) the exercise
price applicable to such Echelon Option, multiplied by (ii) the number of shares of Echelon common stock subject to such Echelon Option.
Under
the terms of the merger agreement, at the effective time, each restricted stock unit of Echelon, or Echelon RSU, that is outstanding immediately prior to the effective time,
whether vested or unvested (which awards will vest in full as of immediately prior to the effective time), will be canceled and extinguished, and the holder thereof will be entitled to receive
(subject to applicable withholding or other taxes, which withholding will first be applied against the cash portion of the consideration paid in respect of such restricted stock units): an amount in
cash equal to the product of $8.50, multiplied by the total number of shares of Echelon common stock subject to such Echelon RSU.
To
finance a portion of the Echelon acquisition consideration, Adesto expects to sell and issue 4,705,882 shares of Adesto common stock. Solely for purposes of the unaudited pro forma
condensed combined financial information, it has been assumed that the per share price of the common stock will be $8.50 per share (based on the closing price on July 6, 2018), with net
proceeds of $37.3 million after estimated underwriting discounts and commissions and offering expenses of approximately $2.7 million.
Adesto
intends to use the net proceeds from this offering, along with any new borrowing that we may enter into, to fund the cash consideration payable in connection with the Echelon
acquisition, which Adesto estimates at $44.1 million and for general corporate purposes. This offering of common stock is not conditioned upon the completion of the Echelon acquisition and
there can be no assurance that the Echelon acquisition will be completed.
Note 2Basis of Presentation.
The accompanying unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of
Regulation S-X and gives effect to events that
are (1) directly attributable to the Echelon acquisition, (2) factually supportable and (3) with respect to the condensed combined statements of operations, expected to have a
continuing impact on the combined company's results.
The
unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with Adesto as the accounting
acquirer,
S-34
Table of Contents
using
the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and based on the historical consolidated financial statements of Adesto and Echelon. Under ASC 805, all assets acquired
and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs and restructuring costs associated with the business
combination are expensed as incurred. The excess of merger consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.
The
allocation of the purchase consideration for the Echelon acquisition depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the purchase
consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. A final determination of fair values of assets acquired and liabilities
assumed relating to the acquisition could differ materially from the preliminary allocation of purchase consideration. This final valuation will be based on the actual net tangible and intangible
assets of Echelon existing at the acquisition date. The final valuation may materially change the allocation of purchase consideration, which could materially affect the fair values assigned to the
assets acquired and liabilities assumed and could result in a material change to the unaudited pro forma condensed combined financial information.
The
pro forma adjustments represent Adesto management's best estimates and are based upon currently available information and certain assumptions that Adesto believes are reasonable
under the circumstances. Adesto is not aware of any material transactions between Adesto and Echelon (prior to the announcement of the Echelon acquisition) during the periods presented, hence
adjustments to eliminate transactions between Adesto and Echelon have not been reflected in the unaudited pro forma condensed combined financial information.
Upon
completion of the Echelon acquisition, Adesto will perform a comprehensive review of Echelon's accounting policies. As a result of the review, Adesto may identify additional
differences between the accounting policies of the two companies, which when conformed, could have a material impact on the unaudited pro forma condensed combined financial information. Based on a
preliminary analysis, Adesto did not identify any differences that would have a material impact on the unaudited pro forma
condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information assumes there are no differences in accounting policies.
The
unaudited pro forma condensed combined financial information presented is for illustrative purposes only and is not necessarily indicative of the financial position or results of
operations that would have been realized if the Echelon acquisition had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The unaudited pro
forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the Echelon
acquisition, the costs to integrate the operations of Adesto and Echelon or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.
Note 3Preliminary Estimated Acquisition Consideration.
The preliminary fair value of consideration to acquire Echelon was approximately $44.1 million and consisted of the following:
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Cash consideration to Echelon's shareholders
|
|
$
|
38,610
|
|
Cash consideration for Echelon Option and Echelon RSU
|
|
|
5,500
|
|
|
|
|
|
|
Total preliminary estimated acquisition consideration
|
|
$
|
44,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-35
Table of Contents
Note 4Preliminary Estimated Purchase Price Allocation and Intangible Assets.
Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Echelon are recognized and measured as
of the acquisition date at fair value and added to those of Adesto. The determination of fair value used in the pro forma adjustments presented herein are preliminary and based on management estimates
of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the Echelon acquisition. The final determination of the
purchase price allocation, upon the completion of the Echelon acquisition, will be based on Echelon's net assets acquired as of that date and will depend on a number of factors that cannot be
predicted with certainty at this time. Therefore, the actual allocations will differ from the pro forma adjustments presented. The allocation is dependent upon certain valuation and other studies that
have not yet been completed. Accordingly, the pro forma purchase price allocation is subject to further adjustment as additional information becomes available
and as additional analyses and final valuations are completed. There can be no assurances that these additional analyses and final valuations will not result in significant changes to the estimates of
fair value set forth below.
The
following table sets forth a preliminary allocation of the estimated merger consideration to the identifiable tangible and intangible assets acquired and liabilities assumed of
Echelon:
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Cash and cash equivalents, restricted investments and short-term investments
|
|
$
|
19,056
|
|
Accounts receivable
|
|
|
2,556
|
|
Inventory
|
|
|
8,015
|
|
Deferred cost of revenues
|
|
|
529
|
|
Other current assets
|
|
|
1,516
|
|
|
|
|
|
|
Total current assets
|
|
|
31,672
|
|
Property and equipment, net
|
|
|
453
|
|
Other long term assets
|
|
|
558
|
|
|
|
|
|
|
Total assets
|
|
|
32,683
|
|
|
|
|
|
|
Accounts payable
|
|
|
(2,570
|
)
|
Accrued liabilities
|
|
|
(2,256
|
)
|
Deferred revenue
|
|
|
(606
|
)
|
|
|
|
|
|
Total current liabilities
|
|
|
(5,432
|
)
|
Deferred tax liability, non-current
|
|
|
(3,891
|
)
|
Other long term liabilities
|
|
|
(616
|
)
|
|
|
|
|
|
Total liabilities
|
|
|
(9,939
|
)
|
|
|
|
|
|
Fair value of net assets acquired
|
|
$
|
22,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-36
Table of Contents
Preliminary
goodwill and identifiable intangible assets identified in connection with the acquisition consist of the following:
|
|
|
|
|
|
(in thousands)
|
|
Fair Value
|
|
Useful
Life (in Years)
|
Developed technology
|
|
$
|
11,460
|
|
4 - 6
|
Customer relationships
|
|
|
6,510
|
|
9 - 11
|
Trademarks
|
|
|
460
|
|
11 - 13
|
Goodwill
|
|
|
2,936
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
goodwill is primarily attributable to the assembled workforce of Echelon, new product development capabilities and synergies and economies of scale expected from combining the
operations
of Adesto and Echelon. Goodwill is tested for impairment on an annual basis as of November 1 of each year or whenever events or changes in circumstances indicate that the asset might be
impaired. Factors that we consider in deciding when to perform an impairment test include significant negative industry or economic trends or significant changes or planned changes in our use of the
intangible assets. Goodwill will be deductible for tax purposes over 15 years.
Note 5Pro Forma Adjustments for Condensed Combined Balance Sheet.
-
a)
-
Reflects
the payment of estimated merger consideration and transaction costs.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Cash consideration to Echelon's shareholders
|
|
$
|
(38,610
|
)
|
Cash consideration for Echelon Option and Echelon RSU
|
|
|
(5,500
|
)
|
Transaction costs paid (exclusive of debt financing fees paid)
|
|
|
(2,085
|
)
|
|
|
|
|
|
Net adjustment to cash and cash equivalents
|
|
$
|
(46,195
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
b)
-
Reflects
the purchase accounting adjustment for inventories based on the acquisition method of accounting.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Elimination of Echelon's inventoriescarrying value
|
|
$
|
(3,566
|
)
|
Inventoriesfair value
|
|
|
8,015
|
|
|
|
|
|
|
Net adjustment to inventories
|
|
$
|
4,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
c)
-
Reflects
the preliminary purchase accounting adjustment for estimated intangible assets based on the acquisition method of accounting. Refer to Note 4 of the
"
Notes to Unaudited Pro Forma Condensed Combined Financial Information
" for additional information on the acquired intangible assets expected to be
recognized.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Elimination of Echelon's intangiblescarrying value
|
|
$
|
(668
|
)
|
Intangible assetsfair value
|
|
|
18,430
|
|
|
|
|
|
|
Net adjustment to intangibles, net
|
|
$
|
17,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-37
Table of Contents
-
d)
-
Reflects
the purchase accounting adjustment for goodwill based on the acquisition method of accounting.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Elimination of Echelon's goodwillcarrying value
|
|
$
|
|
|
Goodwillfair value
|
|
|
2,936
|
|
|
|
|
|
|
Net adjustment to goodwill
|
|
$
|
2,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
e)
-
Reflects
the purchase accounting adjustment for deferred revenue based on the acquisition method of accounting.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Elimination of Echelon's deferred revenuecarrying value
|
|
$
|
(849
|
)
|
Deferred revenuefair value
|
|
|
606
|
|
|
|
|
|
|
Net adjustment to deferred revenue
|
|
$
|
(243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
f)
-
This
adjustment reflects the originating deferred tax liabilities, or DTLs, resulting from pro forma fair value adjustments of the acquired assets and assumed
liabilities based on applicable statutory tax rates for the jurisdictions associated with the respective estimated purchase price allocation. The originating DTLs are primarily related to the
preliminary purchase price allocation associated with acquired intangible assets. The estimate of DTLs is preliminary and is subject to change based upon Adesto's final determination of the fair value
of assets acquired and liabilities assumed, by jurisdiction including the final allocation across such legal entities and related jurisdictions.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Elimination of Echelon's deferred tax liabilitycarrying value
|
|
$
|
|
|
Deferred tax liabilityfair value
(1)
|
|
|
3,891
|
|
|
|
|
|
|
Net adjustment to deferred tax liability
|
|
$
|
3,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
DTLs
have been recognized based on applicable statutory tax rates for the jurisdictions associated with the respective net increase in estimated
amortizable identifiable intangible assets. The statutory tax rate was applied, as appropriate, to each adjustment based on the jurisdiction in which the adjustment is expected to occur. Furthermore,
tax related adjustments included in the unaudited pro forma condensed combined financial information are based on the current tax law and do not consider or contemplate effects of proposed U.S. tax
reform.
-
g)
-
To
reflect the following equity transactions in connection with the Echelon acquisition.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Estimated gross proceeds from sale of common stock
|
|
$
|
40,000
|
|
Estimated underwriter discounts and commissions
|
|
|
(2,560
|
)
|
Estimated other offering expenses of sale of common stock
|
|
|
(150
|
)
|
|
|
|
|
|
Total
|
|
$
|
37,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-38
Table of Contents
-
h)
-
To
reclassify Echelon's prepaid expenses from other current assets.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Prepaid expenses
|
|
$
|
723
|
|
Other current assets
|
|
$
|
(723
|
)
|
-
i)
-
To
reclassify Echelon's accrued expenses from accounts payable.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Accrued expenses and other current liabilities
|
|
$
|
1,004
|
|
Accounts payable
|
|
$
|
(1,004
|
)
|
-
j)
-
To
reclassify Echelon's accrued compensation and benefits from accrued liabilities.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Accrued compensation and benefits
|
|
$
|
1,156
|
|
Accrued expenses and other current liabilities
|
|
$
|
(1,156
|
)
|
-
k)
-
To
reclassify Echelon's deferred rent liability from other non-current liabilities.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Deferred rent, non-current
|
|
$
|
32
|
|
Other non-current liabilities
|
|
$
|
(32
|
)
|
-
l)
-
To
reclassify Echelon's deferred tax liability from other non-current liabilities.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Deferred tax liability, non-current
|
|
$
|
365
|
|
Other non-current liabilities
|
|
$
|
(365
|
)
|
-
m)
-
Reflects
debt financing incurred in connection with S3 acquisition.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Gross borrowings
|
|
$
|
35,000
|
|
Debt discount
|
|
|
(117
|
)
|
|
|
|
|
|
|
|
$
|
34,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
n)
-
Reflects
payoff of term loan and line of credit with Western Alliance Bank.
|
|
|
|
|
(in thousands)
|
|
Amount
|
|
Cash
|
|
$
|
(13,353
|
)
|
Line of credit
|
|
$
|
1,500
|
|
Term loan payoffcurrent
|
|
$
|
1,225
|
|
Term loan payoffnon-current
|
|
$
|
10,628
|
|
S-39
Table of Contents
Note 6Pro Forma Adjustments for Condensed Combined Statements of Operations.
-
a)
-
Reflects
the adjustments to eliminate historical amortization expense and record new amortization expense based on the fair value of the identifiable acquired
intangible assets.
|
|
|
|
|
|
|
|
(in thousands)
|
|
Pro Forma
Year Ended
December 31, 2017
|
|
Pro Forma
Three Months
Ended
March 31, 2018
|
|
Elimination of Echelon's amortization of intangible assets
|
|
$
|
(122
|
)
|
$
|
(30
|
)
|
|
|
|
|
|
|
|
|
Net adjustment to cost of goods sold
|
|
$
|
(122
|
)
|
$
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
b)
-
Reflects
the adjustments to eliminate historical amortization expense and record new amortization expense based on the fair value of the identifiable acquired
intangible assets.
|
|
|
|
|
|
|
|
(in thousands)
|
|
Pro Forma
Year Ended
December 31, 2017
|
|
Pro Forma
Three Months
Ended
March 31, 2018
|
|
Amortization after fair value adjustment
(1)
|
|
$
|
1,910
|
|
$
|
478
|
|
|
|
|
|
|
|
|
|
Net adjustment to research and development expenses
|
|
$
|
1,910
|
|
$
|
478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amortization of intangible assets is based on the periods over which the economic benefits of the intangible assets are expected to be realized.
Amortization expense is allocated among cost of goods sold, research and development and selling, general and administrative expense based on the nature of the activities associated with the
intangible assets acquired. Refer to Note 4 of the "
Notes to Unaudited Pro Forma Condensed Combined Financial Information
" for additional
information on the useful lives of the acquired intangible assets expected to be recognized.
-
c)
-
Reflects
the adjustments to eliminate historical amortization expense and record new amortization expense based on the fair value of the identifiable acquired
intangible assets.
|
|
|
|
|
|
|
|
(in thousands)
|
|
Pro Forma
Year Ended
December 31, 2017
|
|
Pro Forma
Three Months
Ended
March 31, 2018
|
|
Elimination of Echelon's amortization of intangible assets
|
|
$
|
(107
|
)
|
$
|
(26
|
)
|
Amortization after fair value adjustment
(1)
|
|
|
627
|
|
|
157
|
|
|
|
|
|
|
|
|
|
Net adjustment to sales and marketing expenses
|
|
$
|
520
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amortization of intangible assets is based on the periods over which the economic benefits of the intangible assets are expected to be realized.
Amortization expense is allocated among cost of goods sold, research and development and selling, general and administrative expense based on the nature of the activities associated with the
intangible assets acquired. Refer to Note 4 of the "
Notes to Unaudited Pro Forma Condensed Combined Financial Information
" for additional
information on the useful lives of the acquired intangible assets expected to be recognized.
S-40
Table of Contents
-
d)
-
Reflects
adoption under the full retrospective method of the new revenue recognition guidance of ASU No. 2014-09,
Revenue from
Contracts with Customers
(Topic 606).
-
e)
-
Reflects
estimated transaction costs for both Adesto and Echelon.
-
f)
-
For
the purpose of computing pro forma basic and diluted earnings per share, the $40.0 million sale of common stock was assumed to be at a price per share of
$8.50 (based on the closing price on July 6, 2018), resulting in the issuance of 4,705,882 shares. In addition, Echelon's basic and diluted weighted average shares have been eliminated.
Note 7Pro Forma Net Income Per Share.
The pro forma basic and diluted net income per share presented in our unaudited pro forma condensed combined statement of operations is computed
based on the weighted-average number of shares outstanding.
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
Net loss from continuing operations, basic and diluted
|
|
$
|
(14,500
|
)
|
Pro forma weighted average shares outstanding, basic
|
|
|
23,297,190
|
|
Net effect of dilutive equity shares
|
|
|
|
|
Pro forma weighted average shares outstanding, diluted
|
|
|
23,297,190
|
|
Pro forma net loss from continuing operations per share:
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.62
|
)
|
Three Months Ended March 31, 2018
|
|
|
|
|
Net loss from continuing operations, basic and diluted
|
|
$
|
(5,145
|
)
|
Pro forma weighted average shares outstanding, basic
|
|
|
26,076,809
|
|
Net effect of dilutive equity shares
|
|
|
|
|
Pro forma weighted average shares outstanding, diluted
|
|
|
26,076,809
|
|
Pro forma net loss from continuing operations per share:
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.20
|
)
|
Note 8Description of the S3 Acquisition.
On May 9, 2018, Adesto completed its acquisition of 100% of the issued capital of S3, a private company limited by shares and
incorporated in Ireland, pursuant to the Share Purchase Agreement dated as of May 9, 2018. S3 is headquartered in Ireland and its subsidiaries are in the United States, Portugal and the Czech
Republic. S3 and its subsidiaries are engaged in the business of providing advanced mixed signal semiconductor devices and intellectual property to customers in the industrial and communications
markets.
The
aggregate consideration was approximately $35.0 million in cash and contingent consideration in the form of a $15.0 million earn-out. The earn-out is based on
achievement of certain milestones through 2019, including minimum total revenue targets, revenue derived from sales of semiconductor devices and new customer engagements with minimum value thresholds.
We financed the acquisition with cash and a new $35.0 million term loan under our new credit facility.
In
May 2018, we entered into and borrowed $35.0 million under the new credit facility described above that matures in May 2022. In connection with our entry into the new credit
facility, we terminated our credit facility with Western Alliance Bank, which included paying off the outstanding term loan with a principal amount owed of $12.0 million.
S-41
Table of Contents
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
FOR NON-U.S. HOLDERS OF OUR COMMON STOCK
The following summary describes the material U.S. federal income tax consequences of the acquisition, ownership and disposition of our common
stock acquired in this offering by Non-U.S. Holders (as defined below). This discussion does not address all aspects of U.S. federal income taxes, does not discuss the potential application of the
alternative minimum or Medicare Contribution tax and does not discuss state, local, U.S. federal gift and, except to the limited extent provided below, estate tax laws, or non-U.S. tax consequences
that may be relevant to Non-U.S. Holders in light of their particular circumstances.
Special
rules different from those described below may apply to certain Non-U.S. Holders that are subject to special treatment under the Internal Revenue Code of 1986, as amended, or
Code, such as:
-
-
insurance companies, banks and other financial institutions;
-
-
tax-exempt organizations (including private foundations) and tax-qualified retirement plans;
-
-
foreign governments and international organizations;
-
-
broker-dealers and traders in securities;
-
-
U.S. expatriates and certain former citizens or long-term residents of the United States;
-
-
persons who acquired our common stock as compensation for services;
-
-
persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);
-
-
"controlled foreign corporations," "passive foreign investment companies" and corporations that accumulate earnings to avoid U.S. federal
income tax;
-
-
persons that hold our common stock as part of a "straddle," "hedge," "conversion transaction," "synthetic security" or integrated investment or
other risk reduction strategy;
-
-
persons who hold our common stock as "qualified small business stock" within the meaning of Sections 1202 and/or 1045 of the Code; and
-
-
persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment
purposes).
Such
Non-U.S. Holders are urged to consult their tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.
In
addition, this discussion does not address the tax treatment of partnerships (or entities or arrangements that are treated as partnerships) or pass-through entities for U.S. federal
income tax purposes or partners in such partnerships (or investors in such pass-through entities). If a partnership, including any entity or arrangement treated as a partnership or a pass-through
entity for U.S. federal income tax purposes, owns shares of our common stock, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the
partner and the activities of the partnership. Such partners and partnerships should consult their tax advisors regarding the tax consequences of the acquisition, ownership and disposition of our
common stock.
The
discussion below is based upon the provisions of the Code, and Treasury regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified, possibly retroactively, and are subject to differing interpretations which could result in U.S. federal income tax consequences different from those discussed below. We
have not requested a ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the
IRS will agree
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with
such statements and conclusions or will not take a contrary position regarding the tax consequences of the acquisition, ownership, and disposition of our common stock, or that any such contrary
position would not be sustained by a court.
Persons considering the purchase of our common stock pursuant to this offering should consult their tax advisors concerning the U.S. federal income tax
consequences of the acquisition, ownership, and disposition of our common stock in light of their particular situations as well as any consequences arising under the laws of any other taxing
jurisdiction, including any state, local or non-U.S. tax consequences or any U.S. federal non-income tax consequences, and the possible application of tax treaties that might change the general
provisions.
For
the purposes of this discussion, a "Non-U.S. Holder" is, for U.S. federal income tax purposes, a beneficial owner of common stock that is neither a U.S. Holder nor a partnership or
other pass-through entity. A "U.S. Holder" means a beneficial owner of our common stock that is for U.S. federal income tax purposes (a) an individual citizen or resident of the United States
(as determined under U.S. federal income tax rules), (b) a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws
of the United States, any state thereof or the District of Columbia, (c) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (d) a trust
if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) have the
authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
If
you are an individual non-U.S. citizen, you may, in some cases, be deemed to be a resident alien (as opposed to a nonresident alien) by virtue of being present in the United States
for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Generally, for this purpose, all the
days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year, are counted.
Resident
aliens are generally subject to U.S. federal income tax as if they were U.S. citizens. Individuals who are uncertain of their status as resident or nonresident aliens for U.S.
federal income tax purposes are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership and disposition of our common stock.
Distributions
We do not expect to declare or make any distributions on our common stock in the foreseeable future. If we do make distributions on our common
stock, however, such distributions will constitute dividends for U.S. tax purposes to the extent made out of our current or accumulated earnings and profits (as determined under U.S. federal income
tax principles). Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a Non-U.S.
Holder's adjusted tax basis in our common stock. Any remaining excess will be treated as gain realized on the sale or exchange of our common stock as described below under the section titled
"Disposition of our Common Stock." The amount of any distribution of property other than cash will be the fair market value of that property on the date of distribution.
Any
distribution on our common stock that is treated as a dividend paid to a Non-U.S. Holder that is not effectively connected with the holder's conduct of a trade or business in the
United States will generally be subject to withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and the Non-U.S. Holder's
country of residence. To obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder generally will be required to provide us or our paying agent with a properly executed IRS
Form W-8BEN, IRS
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Form W-8BEN-E
or other appropriate form, certifying the Non-U.S. Holder's entitlement to benefits under that treaty. Such form must be provided prior to the payment of dividends and may be
required to be updated periodically. In the case of a Non-U.S. Holder that is an entity, Treasury Regulations and the relevant tax treaty provide rules to determine whether, for purposes of
determining the applicability of a tax treaty, dividends will be treated as paid to the entity or to those holding an interest in that entity. If a Non-U.S. Holder holds stock through a financial
institution or other agent acting on the holder's behalf, the Non-U.S. Holder will be required to provide appropriate documentation to such agent. The Non-U.S. Holder's agent may then be required to
provide certification to us or our paying agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you
should consult with your tax advisor to determine if you are able to obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS.
We
generally are not required to withhold tax on dividends paid to a Non-U.S. Holder that are effectively connected with the holder's conduct of a trade or business within the United
States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment that the holder maintains in the United States) if a properly executed IRS
Form W-8ECI, stating that the dividends are so connected, is furnished to us (or, if stock is held through a financial institution or
other agent, to the agent). In general, such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated rates applicable to U.S. persons,
unless a specific treaty exemption applies. A corporate Non-U.S. Holder receiving effectively connected dividends may also be subject to an additional "branch profits tax," which is imposed, under
certain circumstances, at a rate of 30% (or such lower rate as may be specified by an applicable treaty) on the corporate Non-U.S. Holder's effectively connected earnings and profits, subject to
certain adjustments.
See
also the section below titled "Foreign Accounts" for additional withholding rules that may apply to dividends paid to foreign financial institutions or non-financial
foreign entities.
Disposition of Our Common Stock
Subject to the discussion below under the sections titled "Backup Withholding and Information Reporting" and "Foreign
Accounts," a Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to gain realized on a sale or other disposition of our common stock unless (a) the gain is
effectively connected with a trade or business of the holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the holder
maintains in the United States), (b) the Non-U.S. Holder is a nonresident alien individual and is present in the United States for 183 or more days in the taxable year of the disposition and
certain other conditions are met, or (c) we are or have been a "United States real property holding corporation" within the meaning of Code Section 897(c)(2) at any time within the
shorter of the five-year period preceding such disposition or the holder's holding period in the common stock.
If
you are a Non-U.S. Holder described in (a) above, in general, you will be required to pay tax on the net gain derived from the sale at the regular graduated U.S. federal income
tax rates applicable to U.S. persons, unless a specific treaty provides otherwise. Corporate Non-U.S. Holders described in (a) above may also be subject to the additional branch profits tax at
a 30% rate or such lower rate as may be specified by an applicable income tax treaty. If you are an individual Non-U.S. Holder described in (b) above, you will be required to pay a flat 30% tax
on the gain derived from the sale, which gain may be offset by certain U.S. source capital losses (even though you are not considered a resident of the United States), provided you have timely filed
U.S. federal income tax returns with respect to such losses. With respect to (c) above, in general, we would be a U.S. real property holding corporation if interests in U.S. real estate
comprised (by fair market value) at least half of our business assets. We believe that we are not, and do not anticipate becoming, a U.S. real property holding corporation. However, there can be no
assurance that we will not become a U.S. real property holding
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corporation
in the future. Even if we are treated as a U.S. real property holding corporation, gain realized by a Non-U.S. Holder on a disposition of our common stock will not be subject to U.S.
federal income tax so long as (1) the Non-U.S. Holder owned, directly, indirectly or constructively, no more than five percent of our common stock at all times within the shorter of
(i) the five-year period preceding the disposition or (ii) the holder's holding period and (2) our common stock is regularly traded on an established securities market. There can
be no assurance that our common stock will continue to be regularly traded on an established securities market. See the section titled "Foreign Accounts" for additional information
regarding withholding rules that may apply to proceeds of a disposition of our common stock paid to foreign financial institutions or non-financial foreign entities.
U.S. Federal Estate Tax
The estates of noncitizen resident individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a
U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the
United States and the decedent's country of residence provides otherwise. The terms "resident" and "nonresident" are defined differently for U.S. federal estate tax purposes than for U.S. federal
income tax purposes. Investors are urged to consult their tax advisors regarding the U.S. federal estate tax consequences of the acquisition, ownership and disposition of our common stock.
Information Reporting and Backup Withholding
Generally, we or certain financial middlemen must report information to the IRS with respect to any distributions (whether or not they
constitute dividends) we make on our common stock including the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the Non-U.S. Holder to whom any
such distributions are paid. Pursuant to tax treaties or certain other agreements, the IRS may make its reports available to tax authorities in the recipient's country of residence.
Dividends
paid by us (or our paying agents) to a Non-U.S. Holder may also be subject to U.S. backup withholding. U.S. backup withholding generally will not apply to a Non-U.S. Holder who
provides a
properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or otherwise establishes an exemption, provided that the applicable withholding agent does not have actual
knowledge or reason to know the holder is a U.S. person.
Under
current U.S. federal income tax law, U.S. information reporting and backup withholding requirements generally will apply to the proceeds of a disposition of our common stock
effected by or through a U.S. office of any broker, U.S. or non-U.S., unless the Non-U.S. Holder provides a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or
otherwise meets documentary evidence requirements for establishing Non-U.S. Holder status or otherwise establishes an exemption. Generally, U.S. information reporting and backup withholding
requirements will not apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the United States through a non-U.S. office of a non-U.S. broker.
Information reporting and backup withholding requirements may, however, apply to a payment of disposition proceeds if the broker has actual knowledge, or reason to know, that the holder is, in fact, a
U.S. person. For information reporting purposes, certain brokers with substantial U.S. ownership or operations will generally be treated in a manner similar to U.S. brokers.
Backup
withholding is not an additional tax. If backup withholding is applied to you, you should consult with your tax advisor to determine whether you have overpaid your U.S. federal
income tax, and whether you are able to obtain a tax refund or credit of the overpaid amount.
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Foreign Accounts
In addition to, and separately from, the withholding rules described above, U.S. federal withholding taxes at a rate of 30% may apply under
Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance thereunder commonly known as the Foreign Account Tax Compliance Act, or FATCA, on certain types
of payments, including dividends and the gross proceeds of a disposition of our common stock, made to (A) a "foreign financial institution" (as defined for this purpose) unless such institution
(i) is exempt from FATCA withholding pursuant to an applicable intergovernmental agreement between the jurisdiction in which it is located and the United States, (ii) enters into an
agreement with the U.S. government to collect and provide to the U.S. tax authorities information regarding U.S. account holders of such institution or (iii) meets other exemptions or
(B) a "non-financial foreign entity" (as defined for this purpose), unless such entity (i) is exempt from FATCA withholding pursuant to an applicable intergovernmental agreement between
the jurisdiction in which it is located and the United States, (ii) provides the withholding agent with a certification identifying any "substantial U.S. owners" of the entity (as defined for
this purpose),
(iii) certifies that it does not have any substantial U.S. owners or (iv) meets other exemptions. Foreign financial institutions located in jurisdictions that have an intergovernmental
agreement with the United States governing FATCA may be subject to different rules.
Under
applicable Treasury Regulations and administrative guidance, FATCA withholding as described above currently applies to payments of dividends on our common stock, and will apply to
payments of gross proceeds from the sale or other disposition of our common stock if such disposition occurs after December 31, 2018.
Prospective
investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.
EACH
PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF
ANY PROPOSED CHANGE IN APPLICABLE LAW, AS WELL AS TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, NON-U.S. OR U.S. FEDERAL NON-INCOME TAX LAWS SUCH AS ESTATE AND GIFT TAX.
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UNDERWRITING
We and the underwriters for the offering named below have entered into an underwriting agreement with respect to the common stock being offered.
Subject to the terms and conditions of the underwriting agreement, each underwriter has severally agreed to purchase from us the number of shares of our common stock set forth opposite its name below.
Cowen and Company, LLC and Needham & Company, LLC are the representatives of the underwriters.
|
|
|
|
|
Underwriter
|
|
Number of Shares
|
|
Cowen and Company, LLC
|
|
|
2,579,500
|
|
Needham & Company, LLC
|
|
|
1,634,800
|
|
Canaccord Genuity LLC
|
|
|
1,286,400
|
|
Roth Capital Partners, LLC
|
|
|
1,031,800
|
|
The Benchmark Company, LLC
|
|
|
167,500
|
|
|
|
|
|
|
Total
|
|
|
6,700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent and that the underwriters have agreed, severally and not jointly,
to purchase all of
the shares sold under the underwriting agreement if any of these shares are purchased, other than those shares covered by the overallotment option described below. If an underwriter defaults, the
underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.
We
have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act of 1933, and to contribute to payments the underwriters may be
required to make in respect thereof.
The
underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other
conditions specified in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Overallotment Option to Purchase Additional Shares.
We have granted to the underwriters an option to purchase up to 1,005,000 additional
shares of
common stock at the public offering price, less the underwriting discount. This option is exercisable for a period of 30 days. The underwriters may exercise this option solely for the purpose
of covering overallotments, if any, made in connection with the sale of common stock offered hereby. To the extent that the underwriters exercise this option, the underwriters will purchase additional
shares from us in approximately the same proportion as shown in the table above.
Discounts and Commissions.
The following table shows the public offering price, underwriting discount and proceeds, before expenses to
us. These
amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.
We
estimate that the total expenses of the offering, excluding underwriting discount, will be approximately $350,000 and are payable by us.
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Per Share
|
|
Without
Over-Allotment
|
|
With Over
Allotment
|
|
Public offering price
|
|
$
|
6.000
|
|
$
|
40,200,000
|
|
$
|
46,230,000
|
|
Underwriting discount
|
|
|
0.384
|
|
|
2,572,800
|
|
|
2,958,720
|
|
Proceeds, before expenses, to Company
|
|
$
|
5.616
|
|
$
|
37,627,200
|
|
$
|
43,271,280
|
|
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The
underwriters propose to offer the shares of common stock to the public at the public offering price set forth on the cover of this prospectus. The underwriters may offer the shares
of common stock to securities dealers at the public offering price less a concession not in excess of $0.2304 per share. If all of the shares are not sold at the public offering price, the
underwriters may change the offering price and other selling terms. We have agreed to reimburse the underwriters for certain fees and expenses in connection with this offering, including the fees and
disbursements of counsel to the underwriters, up to an amount not to exceed $150,000.
Discretionary Accounts.
The underwriters do not intend to confirm sales of the shares to any accounts over which they have
discretionary authority.
Stabilization.
In connection with this offering, the underwriters may engage in stabilizing transactions, overallotment transactions,
syndicate
covering transactions, penalty bids and purchases to cover positions created by short sales.
-
-
Stabilizing transactions permit bids to purchase shares of common stock so long as the stabilizing bids do not exceed a specified maximum, and
are engaged in for the purpose of preventing or retarding a decline in the market price of the common stock while the offering is in progress.
-
-
Overallotment transactions involve sales by the underwriters of shares of common stock in excess of the number of shares the underwriters are
obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted
by the underwriters is not greater than the number of shares that they may purchase in the overallotment option. In a naked short position, the number of shares involved is greater than the number of
shares in the overallotment option. The underwriters may close out any short position by exercising their overallotment option and/or purchasing shares in the open market.
-
-
Syndicate covering transactions involve purchases of common stock in the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in
the open market as compared with the price at which they may purchase shares through exercise of the overallotment option. If the underwriters sell more shares than could be covered by exercise of the
overallotment option and, therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more likely to be created if the
underwriters are concerned that after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase in the offering.
-
-
Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by that
syndicate member is purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or
retarding a decline in
the market price of our common stock. As a result, the price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the
underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions may be effected on the Nasdaq
Stock Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.
Passive Market Making.
In connection with this offering, underwriters and selling group members may engage in passive market making
transactions in
our common stock on the Nasdaq Stock Market in accordance with Rule 103 of Regulation M under the Securities Exchange Act of 1934, as amended, during a period before the commencement of
offers or sales of common stock and extending through
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the
completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered
below the passive market maker's bid, such bid must then be lowered when specified purchase limits are exceeded.
Lock-Up Agreements.
Pursuant to certain "lock-up" agreements, we and our executive officers, directors and certain of our other
stockholders, have
agreed, subject to certain exceptions, not to offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of or announce the intention to otherwise dispose of, or enter into any
swap, hedge or similar agreement or arrangement that transfers, in whole or in part, the economic consequence of ownership of, directly or indirectly, or make any demand or request or exercise any
right with respect to the registration of, or file with the SEC a registration statement under the Securities Act relating to, any common stock or securities convertible into or exchangeable or
exercisable for any common stock without the prior written consent of Cowen and Company, LLC, for a period of 60 or 90 days after the date of the pricing of the offering.
This
lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for common stock. It also applies to common stock owned now or acquired
later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. The exceptions permit us, among other things and subject to
restrictions, to: (a) issue common stock or options pursuant to any existing employee benefit plans and (b) issue common stock upon exercise of outstanding options or warrants. The
exceptions permit parties to the "lock-up" agreements, among other things and subject to restrictions, to: (a) make certain gifts, (b) make certain familial transfers, (c) if the
party is a corporation, partnership, limited liability company or other business entity, make transfers to any shareholders, partners, members of, or owners of similar equity
interests in, the party, or to an affiliate of the party, if such transfer is not for value, (d) exercise for cash stock options or restricted stock units for common stock, (e) to
transfer common stock in "sell-to-cover" transactions in full or partial payment of taxes or tax withholding obligations required to be paid or satisfied upon the settlement or exercise of any equity
award under an equity incentive plan and (f) establish a trading plan pursuant to Rule 10b5-1 under the Exchange Act. In addition, the lock-up provision will not restrict broker-dealers
from engaging in market making and similar activities conducted in the ordinary course of their business.
Cowen
and Company, LLC, in its sole discretion, may release our common stock and other securities subject to the lock-up agreements described above in whole or in part at any
time. When determining whether or not to release our common stock and other securities from lock-up agreements, Cowen and Company, LLC will consider, among other factors, the holder's reasons
for requesting the release, the number of shares for which the release is being requested and market conditions at the time of the request.
Canada.
The common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited
investors, as
defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the common stock must be made in accordance with an exemption from, or in a transaction
not subject to, the prospectus requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any
amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of
the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or
consult with a legal advisor.
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Pursuant
to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
United Kingdom.
Each of the underwriters has represented and agreed that:
-
-
it has not made or will not make an offer of the securities to the public in the United Kingdom within the meaning of section 102B of
the Financial Services and Markets Act 2000 (as amended) (FSMA) except to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by us of a prospectus pursuant to the Prospectus Rules of the Financial
Services Authority (FSA);
-
-
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to
engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of
the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to us; and
-
-
it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the securities
in, from or otherwise involving the United Kingdom.
Switzerland.
The securities will not be offered, directly or indirectly, to the public in Switzerland and this prospectus does not
constitute a
public offering prospectus as that term is understood pursuant to article 652a or 1156 of the Swiss Federal Code of Obligations.
European Economic Area.
In relation to each Member State of the European Economic Area (the "EEA") which has implemented the European
Prospectus
Directive (each, a "Relevant Member State"), an offer of our shares may not be made to the public in a Relevant Member State other than:
-
-
to any legal entity which is a qualified investor, as defined in the European Prospectus Directive;
-
-
to fewer 150 natural or legal persons (other than qualified investors as defined in the European Prospectus Directive), subject to obtaining
the prior consent of the relevant dealer or dealers nominated by us for any such offer, or;
-
-
in any other circumstances falling within Article 3(2) of the European Prospectus Directive,
provided
that no such offer of our shares shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the European Prospectus Directive or supplement prospectus
pursuant to Article 16 of the European Prospectus Directive and each person who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and
agreed to and with each of the underwriters and with us that it is a "qualified investor" within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the
European Prospectus Directive.
In
the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the European Prospectus Directive, each such financial intermediary
will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired
with a view to their offer or resale to, persons in circumstances which may give rise to an offer or any shares to the public other than their offer or resale in a Relevant Member State to qualified
investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.
For
the purposes of this description, the expression an "offer to the public" in relation to the securities in any Relevant Member State means the communication in any form and by any
means of
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sufficient
information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the expression may be varied in
that Relevant Member State by any measure implementing the European Prospectus Directive in that member state, and the expression "European Prospectus Directive" means Directive 2003/71/EC (and
amendments hereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State. The
expression 2010 PD Amending Directive means Directive 2010/73/EU.
Israel.
In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of common stock under
the Israeli
Securities Law, 5728 - 1968, which requires a prospectus to be published and authorized by the Israel Securities Authority, if it complies with certain provisions of Section 15 of
the Israeli Securities Law, 5728-1968, including, inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions (the "Addressed
Investors"); or (ii) the offer is made, distributed or directed to certain qualified investors defined in the First Addendum of the Israeli Securities Law, 5728 - 1968, subject to
certain conditions (the "Qualified Investors"). The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase securities in addition to
the 35 Addressed Investors. The company has not and will not take any action that would require it to publish a prospectus in accordance with and subject to the Israeli Securities Law,
5728 - 1968. We have not and will not distribute this prospectus or make, distribute or direct an offer to subscribe for our common stock to any person within the State of Israel, other
than to Qualified Investors and up to 35 Addressed Investors.
Qualified
Investors may have to submit written evidence that they meet the definitions set out in of the First Addendum to the Israeli Securities Law, 5728 - 1968. In
particular, we may request, as a condition to be offered common stock, that Qualified Investors will each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it
is an investor falling within one of the categories listed in the First Addendum to the Israeli Securities Law, 5728 - 1968; (ii) which of the categories listed in the First
Addendum to the Israeli Securities Law, 5728 - 1968 regarding Qualified Investors is applicable to it; (iii) that it will abide by all provisions set forth in the Israeli
Securities Law, 5728 - 1968 and the regulations promulgated thereunder in connection with the offer to be issued common stock; (iv) that the shares of common stock that it will be
issued are, subject to exemptions available under the Israeli Securities Law, 5728 - 1968: (a) for its own account; (b) for investment purposes only; and (c) not
issued with a view to resale within the State of Israel, other than in accordance with the provisions of the Israeli Securities Law, 5728 - 1968; and (v) that it is willing to
provide further evidence of its Qualified Investor status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a declaration
containing, inter alia, the Addressed Investor's name, address and passport number or Israeli identification number.
We
have not authorized and do not authorize the making of any offer of securities through any financial intermediary on our behalf, other than offers made by the underwriters and their
respective
affiliates, with a view to the final placement of the securities as contemplated in this document. Accordingly, no purchaser of the shares, other than the underwriters, is authorized to make any
further offer of shares on our behalf or on behalf of the underwriters.
Electronic Offer, Sale and Distribution of Shares.
A prospectus in electronic format may be made available on the websites maintained
by one or more
of the underwriters or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The
representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the
underwriters and selling group members that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the
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information
on these websites is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in
its capacity as underwriter, and should not be relied upon by investors.
Other Relationships.
Certain of the underwriters and their affiliates have provided, and may in the future provide, various investment
banking,
commercial banking and other financial services for us and our affiliates for which they have received, and may in the future receive, customary fees.
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LEGAL MATTERS
The validity of the shares of common stock offered hereby and certain legal matters in connection with this offering will be passed upon for us
by Fenwick & West LLP, Mountain View, California. Shearman & Sterling LLP, Menlo Park, California, is acting as counsel for the underwriters in connection with certain
legal matters relating to the shares of common stock offered by this prospectus supplement.
EXPERTS
The consolidated financial statements of Adesto Technologies Corporation as of December 31, 2017 and 2016 and for each of the three years
in the period ended December 31, 2017, incorporated in this prospectus supplement and the accompanying prospectus by reference to our
Annual Report on Form 10-K for the year ended December 31, 2017, have been so incorporated in reliance on the report of BPM LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
The
consolidated statement of assets acquired and liabilities assumed and related notes of S3 Asic Semiconductors Limited as of May 9, 2018, incorporated in this prospectus
supplement by reference to the Current Report on Form 8-K dated May 9, 2018, have been so incorporated in reliance on the report of BPM LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in auditing and accounting.
The
consolidated financial statements of Echelon Corporation as of December 31, 2017 and 2016 and for each of the two years in the period ended December 31, 2017,
incorporated in this prospectus supplement by reference to Echelon Corporation's Annual Report on Form 10-K for the year ended December 31, 2017, have been so incorporated in reliance on
the report of Armanino LLP, an independent registered public accounting firm, given on the authority of said experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and are required to file annual, quarterly
and other reports, proxy statements and other information with the SEC. You may request copies of these reports, proxy statements and other information without charge, by written or telephonic request
directed to Adesto Technologies Corporation, Attn: Investor Relations, 3600 Peterson Way, Santa Clara, California 95054, telephone number (408) 400-0578. You may also inspect and copy these
reports, proxy statements and other information at the public reference facilities maintained by the SEC in Washington, D.C., 100 F Street N.E., Washington, D.C. 20549. Copies of
such materials can be obtained from the SEC's public reference section at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at
(800) SEC-0330. Additionally, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and various other information about us. You may
also inspect the documents described herein at our principal executive offices, 3600 Peterson Way, Santa Clara, California 95054, during normal business hours.
Information
about us is also available at our website at http://www.adestotech.com. However, the information on, or that can be accessed through, our website is not a part of this
prospectus supplement or the accompanying prospectus and is not incorporated by reference into this prospectus supplement (other than those filings with the SEC that we specifically incorporate by
reference into this prospectus supplement or accompanying prospectus).
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INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file with the SEC, which means that we can disclose important information to
you by referring you to those other documents. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus, and information we file
later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under
Section 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the termination of any offering of securities made by this prospectus supplement and the accompanying
prospectus:
-
-
our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 13, 2018;
-
-
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 10, 2018;
-
-
our Current Reports on Form 8-K filed on April 30, 2018, May 15, 2018 (as amended on June 27, 2018),
June 21, 2018, June 29, 2018 and July 9, 2018 (only with respect to Items 8.01 and 9.01); and
-
-
the description of our common stock in our Registration Statement on Form 8-A (No. 001-37582) filed with the SEC on
October 5, 2015, and including any other amendments or reports filed for the purpose of updating such description.
We
will furnish without charge to you, on written or oral request, a copy of any or all of such documents that have been incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into the documents that this prospectus supplement or the accompanying prospectus incorporates by reference). Written or oral
requests for copies should be directed Adesto Technologies Corporation, Attn: Investor Relations, 3600 Peterson Way, Santa Clara, California 95054, telephone number
(408) 400-0578. See the section of this prospectus supplement entitled "Where You Can Find More Information" for information concerning how to read and obtain copies of materials that we file
with the SEC at the SEC's public offices.
Any
statement contained in this prospectus supplement, or in a document all or a portion of which is incorporated by reference in this prospectus supplement, shall be modified or
superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any document incorporated by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this prospectus supplement.
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PROSPECTUS
$40,000,000
Adesto Technologies Corporation
Common Stock
From time to time, we may offer up to $40,000,000 aggregate dollar amount of shares of our common stock in one or more offerings, in amounts, at
prices and on the terms that we will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus. The prospectus supplement and
any related free writing prospectus may also add, update or change information contained in this prospectus. The total amount of common stock will have an initial aggregate offering price of up to
$40,000,000.
You
should read this prospectus, the information incorporated, or deemed to be incorporated, by reference in this prospectus, and any applicable prospectus supplement and related free
writing prospectus carefully before you invest.
Our
common stock is traded on The Nasdaq Capital Market under the symbol "IOTS." On May 8, 2018 the last reported sales price for our common stock was $8.10 per share.
An investment in our common stock involves a high degree of risk. You should carefully consider the information under the heading "Risk Factors"
beginning on page 3 of this prospectus before investing in our commons stock.
Common
stock may be sold by us to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional information on the methods of
sale, you should refer to the section entitled "Plan of Distribution" in this prospectus. If any underwriters, dealers or agents are involved in the sale of any common stock with respect to which this
prospectus is being delivered, the names of such underwriters or agents and any applicable fees, discounts or commissions, details regarding options to purchase additional shares, if any, and the net
proceeds to us will be set forth in a prospectus supplement. The price to the public of the common stock and the net proceeds we expect to receive from such sale will also be set forth in a prospectus
supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is June 27, 2018
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the SEC) using a "shelf"
registration process. Under this shelf registration process, from time to time, we may sell the shares of our common stock in one or more offerings, up to a total dollar amount of $40,000,000. Each
time we sell common stock under this shelf registration process, we will provide a prospectus supplement that will contain specific information about the terms of the offering. We may also add, update
or change in the prospectus supplement any of the information contained in this prospectus. To the extent there is a conflict between the information contained in this prospectus and the prospectus
supplement, you should rely on the information in the prospectus supplement;
provided
that, if any statement in one of these documents is inconsistent
with a statement in another document having a later datefor example, a document incorporated by reference in this prospectus or any prospectus supplementthe statement in the
document having the later date modifies or supersedes the earlier statement. You should read both this prospectus and any prospectus supplement together with additional information described under the
next heading "Where You Can Find More Information."
You
should rely only on the information contained in or incorporated by reference into this prospectus or any applicable prospectus supplement. No dealer, salesperson or any other person
is authorized to give any information or to make any representation other than the information and representations contained in or incorporated by reference into this prospectus or any applicable
prospectus supplement. If different information is given or different representations are made, you may not rely on that information or those representations as having been authorized by us. You may
not imply from the delivery of this prospectus and any applicable prospectus supplement, nor from a sale made under this prospectus and any applicable prospectus supplement, that our affairs are
unchanged since the date of this prospectus and any applicable prospectus supplement or that the information contained in any document incorporated by reference is accurate as of any date other than
the date of the document incorporated by reference, regardless of the time of delivery of this prospectus and any applicable prospectus supplement or any sale of a security. This prospectus and any
applicable prospectus supplement may only be used where it is legal to sell the shares.
THIS PROSPECTUS MAY NOT BE USED TO OFFER AND SELL SHARES OF OUR COMMON STOCK UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
In
this prospectus, unless the context otherwise requires, the terms "Adesto," the "Company," "we," "us," and "our" refer to Adesto Technologies Corporation, a Delaware corporation, and
its consolidated subsidiaries.
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PROSPECTUS SUMMARY
This summary may not contain all the information that you should consider before investing in securities. You should read the entire prospectus
and the information incorporated by reference in this prospectus carefully, including "Risk Factors" and the financial data and related notes and other information incorporated by reference, before
making an investment decision.
Company Overview
We are a leading provider of application-specific, ultra-low power non-volatile memory, or NVM, products. We optimize our NVM products for
Internet of Things, or IoT, applications including current and next-generation Internet-connected devices in the consumer, industrial, medical and wearables markets. We combine our NVM design
capabilities with proprietary intellectual property and differentiated technology platforms to deliver high-performance products that dramatically reduce the overall energy consumption of our
customers' systems and extend battery life. Our products feature embedded intelligence in a small form factor and high reliability.
We
sell our products directly to leading original equipment manufacturers and original design manufacturers, or OEMs and ODMs, respectively, that manufacture products for our end
customers. In general, we work directly with our customers to have our NVM devices designed into and qualified for their products, which we refer to as design wins. Although we maintain direct sales,
support and development relationships with our end customers, most of our products are sold to those end customers through distributors.
We
offer six product families, DataFlash, Fusion Serial Flash, Standard Serial Flash, EcoXip, Mavriq and Moneta, which are manufactured using two technology platforms: industry-standard
"floating gate" technology and our proprietary Conductive Bridging Random Access Memory, or CBRAM, technology. We optimize our products to operate at a wide voltage range, allowing continued operation
even as the battery discharges and reaches very low power levels, where commodity NVM devices typically fail. Operating intelligence, such as low power mode, is designed into our products to help
systems save energy. Our products allow for greater storage efficiency than competing commodity NVM products in logging small packets of data for the IoT. This reduces microcontroller unit burden on
system resources and allows for less frequent re-write cycles, enabling dramatic increases in battery life and enhancing the reliability of the flash memory components. By incorporating power
management features in our NVM products, we enable our customers to reduce the number of included components and the overall footprint of their systems, thereby lowering the total cost of their
systems. Some of our new products can significantly improve system performance and power consumption by enabling the use of intelligent design to accelerate data handling capability between
microprocessor and memory components.
The Securities We May Offer
With this prospectus, we may offer shares of our common stock, par value $0.0001 per share. The aggregate offering price of common stock that we
offer with this prospectus will not exceed $40,000,000. Each time we offer shares of our common stock with this prospectus, we will provide offerees with a prospectus supplement that will contain the
specific terms of the shares being offered.
*
* *
We
were originally incorporated in California in January 2006, and reincorporated in Delaware in October 2015. Our principal executive offices are located at 3600 Peterson Way, Santa
Clara, California 95054 and our telephone number is (408) 400-0578. Our website is www.adestotech.com. The information contained on, or that can be accessed through, our website is not a
part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. The prospectus supplement will contain a discussion of the risks applicable to
an investment in our common stock. Prior to making a decision about investing in our common stock, you should carefully consider the specific factors discussed under the heading "Risk Factors" in the
applicable prospectus supplement, together with all of the other information contained or incorporated by reference in the prospectus supplement or appearing or incorporated by reference in this
prospectus. You should also consider the risks, uncertainties and assumptions discussed in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q and other filings
we make with the SEC from time to time, which are incorporated herein by reference in this prospectus, and may be amended, supplemented or superseded from time to time by other reports we file with
the SEC in the future. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial
may also affect our operations.
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FORWARD-LOOKING STATEMENTS
This prospectus and documents incorporated herein by reference contain "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future
performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. Such statements
include, but are not limited to, statements about future financial and operating results, plans, objectives, expectations and intentions, costs and expenses, interest rates, outcome of contingencies,
financial condition, results of operations, liquidity, cost savings, objectives of management, business strategies, debt financing, anticipated trends and challenges in our business and in the markets
in which we operate, the development and enhancement of our products to meet anticipated market needs, and other statements that are not historical facts. You can find many of these statements by
looking for words like "believes," "expects," "anticipates," "estimates," "may," "might," "should," "will," "could," "plan," "intend," "project," "seek" or similar expressions in this prospectus or in
documents incorporated by reference into this prospectus. We intend that such forward-looking statements be subject to the safe harbors created thereby.
These
forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions
prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. Factors that might cause such a difference include those
discussed in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as well as those discussed in this prospectus and in the documents incorporated by reference
into this prospectus. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus or, in the case of documents referred to or
incorporated by reference, the date of those documents.
All
subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act) and are required to file
annual, quarterly and other reports, proxy statements and other information with the SEC. You may inspect and copy these reports, proxy statements and other information at the public reference
facilities maintained by the SEC in Washington, D.C., 100 F Street N.E., Washington, D.C. 20549. Copies of such materials can be obtained from the SEC's public reference section at prescribed
rates. You may obtain information on the operation of the public reference rooms by calling the SEC at (800) SEC-0330. Additionally, the SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and various other information about us. You may also inspect the documents described herein at our principal executive offices, 3600 Peterson Way,
Santa Clara, California 95054, during normal business hours.
Information
about us is also available at our website at www.adestotech.com. However, the information on our website is not a part of this prospectus and is not incorporated by reference
into this prospectus.
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INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file with the SEC, which means that we can disclose important information to
you by referring you to those other documents. The information incorporated by reference is an important part of this prospectus, and
information we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC
under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the termination of any offering of securities made by this prospectus:
-
(1)
-
Our
Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 13, 2018 pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended, or the Exchange Act;
-
(2)
-
All
other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by our Annual Report referred to in
(1) above;
-
(3)
-
The
description of our common stock in our Registration Statement on Form 8-A (No. 001-37582) filed with the SEC on October 5, 2015, and
including any other amendments or reports filed for the purpose of updating such description; and
-
(4)
-
All
of our filings pursuant to the Exchange Act after the date of the initial registration statement and prior to the effectiveness of the registration statement.
Upon
written or oral request, we will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any or all of such
information that has been incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates). Written or oral requests for copies should be directed Adesto Technologies Corporation, Attn: Investor Relations, 3600 Peterson Way, Santa Clara, California 95054, telephone
number (408) 400-0578. See the section of this prospectus entitled "Where You Can Find More Information" for information concerning how to read and obtain copies of materials that we file with
the SEC at the SEC's public offices.
Any
statement contained in this prospectus, or in a document all or a portion of which is incorporated by reference, shall be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus, any prospectus supplement or any document incorporated by reference modifies or supersedes such statement. Any such statement so modified or
superseded shall not, except as so modified or superseded, constitute a part of this prospectus.
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USE OF PROCEEDS
We will retain broad discretion over the use of the net proceeds to us from the sale of our common stock under this prospectus. Unless otherwise
provided in the applicable prospectus supplement, we intend to use the net proceeds from the sale of common stock under this prospectus for general corporate purposes, which may include funding
research and development activities and sales and marketing activities, increasing our working capital, repaying debt, investments in or acquisitions of complementary businesses, products, services,
technologies or other assets and capital expenditures. We will set forth in the prospectus supplement our intended use for the net proceeds received from the sale of any securities. Pending the
application of the net proceeds, we intend to invest the net proceeds in short-term or long-term, investment-grade, interest-bearing securities.
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PLAN OF DISTRIBUTION
We may sell the shares of our common stock covered by this prospectus to one or more underwriters for public offering and sale by them, and may
also sell common stock to investors directly or through agents. We will name any underwriter or agent involved in the offer and sale of common stock in the applicable prospectus supplement. We have
reserved the right to sell or exchange common stock directly to investors on our own behalf in jurisdictions where we are authorized to do so. We may distribute the shares from time to time in one or
more transactions:
-
-
at a fixed price or prices, which may be changed;
-
-
at market prices prevailing at the time of sale;
-
-
at prices related to such prevailing market prices; or
-
-
at negotiated prices.
We
may directly solicit offers to purchase the shares of our common stock being offered by this prospectus. We may also designate agents to solicit offers to purchase shares of our
common stock from time to time. We will name in a prospectus supplement any agent involved in the offer or sale of
our common stock. Unless otherwise indicated in a prospectus supplement, an agent will be acting on a best efforts basis, and a dealer will purchase shares of our common stock as a principal for
resale at varying prices to be determined by the dealer.
If
we utilize an underwriter in the sale of the securities being offered by this prospectus, we will execute an underwriting agreement with the underwriter at the time of sale and we
will provide the name of any underwriter in the prospectus supplement that the underwriter will use to make resales of shares of our common stock to the public. In connection with the sale of shares
of our common stock, we, or the purchasers of our common stock for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The
underwriter may sell shares of our common stock to or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they may act as agent.
We
will provide in the applicable prospectus supplement any compensation we pay to underwriters, dealers, or agents in connection with the offering of shares of our common stock, and any
discounts, concessions or commissions allowed by underwriters to participating dealers. Underwriters, dealers and agents participating in the distribution of shares of our common stock may be deemed
to be underwriters within the meaning of the Securities Act of 1933 (the Securities Act), and any discounts and commissions received by them and any profit realized by them on resale of shares of our
common stock may be deemed to be underwriting discounts and commissions. We may enter into agreements to indemnify underwriters, dealers and agents against civil liabilities, including liabilities
under the Securities Act, and to reimburse them for certain expenses. We may grant underwriters who participate in the distribution of our common stock under this prospectus an option to purchase
additional shares of our common stock in connection with the distribution.
The
shares of our common stock we offer under this prospectus are listed on The Nasdaq Capital Market. To facilitate the offering of shares of our common stock, certain persons
participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. This may include short sales of shares of our common stock, which
involves the sale by persons participating in the offering of more shares of our common stock than we sold to them. In these circumstances, these persons would cover such short positions by making
purchases in the open market or by exercising their option to purchase additional shares of our common stock. In addition, these persons may stabilize or maintain the price of our common stock by
bidding for or purchasing shares of our common stock in the open market or by imposing penalty bids, whereby selling concessions allowed
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to
dealers participating in the offering may be reclaimed if shares of our common stock sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may
be to stabilize or maintain the market price of our common stock at a level above that which might otherwise prevail in the open market. These transactions may be discontinued at any time.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In addition, we may enter into derivative
transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell shares of our common stock covered by this prospectus and the applicable prospectus supplement, including short sale transactions. If so,
the third party may use shares of our common stock pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and they may use shares of
our common stock received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in these sale transactions will be an underwriter and will be
identified in the applicable prospectus supplement. In addition, we may otherwise loan or pledge shares of our common stock to a financial institution or other third party that in turn may sell the
securities short using this prospectus. The financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent
offering of other securities.
We
will file a prospectus supplement to describe the terms of any offering of shares of our common stock covered by this prospectus. The prospectus supplement will
disclose:
-
-
the terms of the offer;
-
-
the names of any underwriters, including any managing underwriters, as well as any dealers or agents;
-
-
the purchase price of the shares of our common stock from us;
-
-
the net proceeds to us from the sale of the shares of our common stock;
-
-
any delayed delivery arrangements;
-
-
any options under which underwriters, if any, may purchase additional shares of our common stock from us;
-
-
any underwriting discounts, commissions or other items constituting underwriters' compensation, and any commissions paid to agents;
-
-
any public offering price; and
-
-
other facts material to the transaction.
We
will bear all or substantially all of the costs, expenses and fees in connection with the registration of shares of our common stock under this prospectus. The underwriters, dealers
and agents may engage in transactions with us, or perform services for us, in the ordinary course of business.
LEGAL MATTERS
Fenwick & West LLP, Mountain View, California, will issue an opinion about certain legal matters with respect to the securities.
Any underwriters or agents will be advised about legal matters relating to any offering by their own counsel.
EXPERTS
The consolidated financial statements of Adesto Technologies Corporation as of December 31, 2017 and 2016 and for each of the three years
in the period ended December 31, 2017, incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2017, have been so
incorporated in reliance on the report of BPM LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
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Table of Contents
6,700,000 Shares
Common Stock
PROSPECTUS SUPPLEMENT
Joint Book-Running Managers
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Cowen
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Needham & Company
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Canaccord Genuity
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Roth Capital Partners
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Co-Manager
Benchmark
July 10, 2018
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