UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
Amendment No. 1
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 22, 2014
INVENSENSE, INC.
(Exact
name of Registrant as specified in its charter)
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Delaware |
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001-35269 |
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01-0789977 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
1745 Technology Drive, Suite #200
San Jose, California
(Address of principal executive offices)
(408) 988-7339
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Explanatory Note
On July 28, 2014, InvenSense, Inc. (the Company) filed a Current Report on Form 8-K (the Original Form 8-K) to
report that, on July 22, 2014, the Company completed the acquisition of all the outstanding shares of Movea SA, a company formed under the laws of France (Movea), pursuant to a Share Purchase Agreement with Movea, certain members of
management of Movea and Movea shareholders. This Current Report on Form 8-K/A amends the Original Form 8-K to provide the financial statements and pro forma financial information described under Item 9.01 below.
Item 9.01 Financial Statements and Exhibits.
(a)
Financial Statements of Business Acquired
The Audited Financial Statements of Movea as of and for the year ended December 31,
2013, and accompanying notes are included as Exhibit 99.1 to this Current Report on Form 8-K/A.
(b) Pro Forma Financial Information
The following Unaudited Pro Forma Combined Condensed Financial Statements of the Company are included as Exhibit 99.2 to this Current Report on
Form 8-K/A and incorporated herein by reference:
i. |
Unaudited Pro Forma Combined Condensed Balance Sheet as of March 30, 2014 |
ii. |
Unaudited Pro Forma Combined Condensed Statement of Operations for the year ended March 30, 2014 |
iii. |
Notes to the Unaudited Pro Forma Combined Condensed Financial Statements |
(d) Exhibits
The following exhibits are being filed with this Current Report on Form 8-K/A:
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Exhibit No. |
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Description |
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23.1 |
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Consent of Independent Auditors |
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99.1 |
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Audited consolidated financial statements of Movea S.A. as of and for the year ended December 31, 2013 |
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99.2 |
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Unaudited pro forma financial information as of March 30, 2014 and for the year ended March 30, 2014 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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InvenSense, Inc. |
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By: |
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/s/ Mark P. Dentinger |
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Mark P. Dentinger |
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Chief Financial Officer |
Dated: September 30, 2014
EXHIBIT INDEX
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Exhibit No. |
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Description |
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23.1 |
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Consent of Independent Auditors |
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99.1 |
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Audited consolidated financial statements of Movea S.A. as of and for the year ended December 31, 2013 |
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99.2 |
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Unaudited pro forma financial information as of March 30, 2014 and for the year ended March 30, 2014 |
Exhibit 23.1
Consent of Independent Public Accounting Firm
The President
Movea S.A.S.:
We consent to the incorporation by reference in the registration statements (No. 333-178036 and 333-192368) on Form S-8 of Invensense, Inc. of our report
dated August 4, 2014, with respect to the consolidated balance sheet of Movea S.A.S as of December 31, 2013, and the related consolidated statements of operations and cash flows for the year then ended, which report appears in Amendment
No.1 to the Form 8-K of Invensense Inc. filed on September 30, 2014.
Our report dated August 4, 2014 contains emphasis of matter paragraphs that
state that:
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As discussed in Note 2)a) to the consolidated financial statements, no comparative financial information is presented as these consolidated financial statements are prepared for the first time and solely for the purpose
of Invensense Inc. which, in accordance with Rule 3-05 of regulation S-X, is required to present only one year of Movea S.A.S audited consolidated financial statements. Our opinion is not modified with respect to this matter; |
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Accounting principles generally accepted in France vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature of such
differences is presented in Note 23 to the consolidated financial statements. |
Lyon, France
September 30, 2014
KPMG Audit
A division of KPMG S.A.
/s/ Stéphane Devin
Stéphane Devin
Partner
Exhibit 99.1
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KPMG Audit |
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Téléphone : |
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+33 (0)4 37 64 76 00 |
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51, rue de Saint-Cyr |
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Télécopie : |
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+33 (0)4 37 64 76 09 |
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CS 60409 |
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Site internet : |
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www.kpmg.fr |
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69338 Lyon Cedex 09 |
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France |
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Independent Auditors Report
The President
Movea S.A.S.:
Report on the Financial Statements
We have audited the
accompanying consolidated financial statements of Movea S.A.S and its subsidiary, which comprise the consolidated balance sheet as of December 31, 2013, and the related consolidated statement of operations and cash flows for the year then
ended, and the related notes to the consolidated financial statements.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with French generally accepted
accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
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KPMG S.A. cabinet français membre de KPMG International, une coopérative de droit suisse |
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Société anonyme dexpertise
comptable - commissariat aux comptes à directoire et conseil de surveillance.
Inscrite au Tableau de lordre à
Paris sous le n° 14-30080101 et à la Compagnie des Commissaires aux Comptes de Versailles, |
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Siège social ; KPMG S.A.
Immeuble lé Palatin 3, cours du Triangle
92939 Paris La Défense Cedex Capital : 5 497 100 Code APE 6920 Z
775726417 R.C.S. Nanterre TVA Union Européenne FR 77 775 726
417 |
Opinion
In our
opinion, the consolidated financial statements referred to above present fairly in all material respects, the financial position of Movea S.A.S and its subsidiary as of December 31, 2013, and the results of their operations and their cash flows
for the year then ended in accordance with French generally accepted accounting principles.
Emphasis of Matters
As discussed in Note 2)a) to the consolidated financial statements, no comparative financial information is presented as these consolidated financial
statements are prepared for the first time and solely for the purpose of Invensense International Inc. which, in accordance with Rule 3-05 of regulation S-X, is required to present only one year of Movea S.A.S audited consolidated financial
statements. Our opinion is not modified with respect to this matter.
Accounting principles generally accepted in France vary in certain significant
respects from accounting principles generally accepted in the United States of America. Information relating to the nature of such differences is presented in Note 23 to the consolidated financial statements.
Lyon, France
August 4, 2014
KPMG Audit
A division of KPMG S.A.
Stéphane Devin
Partner
Movea S.A.
Consolidated Financial Statements
Year ended December 31, 2013
1/22
Table of Contents
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Page |
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Consolidated Balance Sheet |
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3 |
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Consolidated Statement of Operations |
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4 |
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Consolidated Statement of Cash Flows |
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5 |
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Notes to the Consolidated Financial Statements |
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6 |
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2/22
Consolidated Balance Sheet
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(in ) |
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December 31, 2013 |
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Assets |
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Fixed Assets |
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Intangible assets (note 3) |
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467,586 |
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Property, plant and equipment (note 3) |
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191,010 |
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Deposits (note 3) |
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37,022 |
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Total Fixed Assets |
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695,618 |
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Current Assets |
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Trade accounts receivable, net (note 5) |
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829,671 |
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Inventories, net (note 4) |
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23,758 |
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Other receivables (note 6) |
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2,296,403 |
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Prepaid expenses |
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110,337 |
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Cash and cash equivalents (note 8) |
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1,150,607 |
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Total Current Assets |
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4,410,776 |
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Total Assets |
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5,106,394 |
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Shareholders Equity and Liabilities |
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Shareholders Equity (note 9) |
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Share capital |
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296,348 |
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Additional paid-in capital |
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16,271,353 |
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Accumulated deficit |
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(12,071,375 |
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Exchange translation difference |
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13,395 |
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Net income (loss) |
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(4,305,516 |
) |
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Total Shareholders Equity |
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204,205 |
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Liabilities |
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Provisions (note 10) |
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152 |
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Interest free debt (note 11) |
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1,512,270 |
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Financial debt (note 11) |
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711,639 |
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Trade accounts payable and accrued expenses (note 12) |
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1,400,135 |
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Deferred revenue (note 2 r)) |
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307,013 |
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Other liabilities (note 13) |
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970,980 |
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Total Liabilities |
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4,902,189 |
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Total Shareholders Equity and Liabilities |
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5,106,394 |
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See accompanying notes to consolidated financial statements
3/22
Consolidated Statement of Operations
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(in ) |
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Year ended December 31, 2013 |
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Revenues (note 16) |
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2,281,259 |
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Other operating income (note 17) |
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857,626 |
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Total revenues |
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3,138,885 |
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Purchase of merchandise |
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63,692 |
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Other external costs |
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3,521,391 |
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Personnel costs, including social charges (note 18) |
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4,566,074 |
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Taxes other than income tax |
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62,170 |
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Depreciation and amortization expense, |
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367,194 |
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Release of provisions net of allowances |
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(88,146 |
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Total operating expenses |
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8,492,375 |
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Operating income (loss) |
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(5,353,490 |
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Financial income |
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16,496 |
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Financial expense |
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93,876 |
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Net financial income (expense) (note 20) |
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(77,380 |
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Net extraordinary income (expense) |
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(17,968 |
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Income (loss) before income taxes |
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(5,448,838 |
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Income tax expense (credit) (note 7) |
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(1,143,322 |
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Net income (loss) |
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(4,305,516 |
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Net loss per share: |
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Basic |
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(0.15 |
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Diluted (note 2q) |
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(0.15 |
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See accompanying notes to consolidated financial statements.
4/22
Consolidated Statement of Cash Flows
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(in ) |
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Year ended December 31, 2013 |
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Cash flows operating activities: |
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Net income (loss) |
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(4,305,516 |
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Adjustments to reconcile net loss to net cash used for operating activities: |
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Depreciation & amortization expense |
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303,219 |
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Changes in provisions |
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(24,171 |
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Deferred income taxes |
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(3,846 |
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Changes in working capital |
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Changes in working capital |
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(305,953 |
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Net cash used for operating activities |
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(4,333,267 |
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Cash flows investing activities: |
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Capital expenditures intangible assets |
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(14,355 |
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Capital expenditures property, plant and equipment |
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(163,181 |
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Proceeds from disposals of investments |
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3,079 |
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Net cash used for investing activities |
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(174,457 |
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Cash flows financing activities: |
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Proceeds from increase in share capital |
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2,499,997 |
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Net changes in financial loans |
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9,789 |
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Proceeds from R&D refundable advances |
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1,005,584 |
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Net cash provided by financing activities |
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3,515,370 |
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Effect of exchange rate changes on cash and cash equivalents |
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157,708 |
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Change in cash and cash equivalents |
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(837,646 |
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Cash and cash equivalents, beginning of period |
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1,988,253 |
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Cash and cash equivalents, end of period |
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1,150,607 |
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See accompanying notes to consolidated financial statements.
5/22
Notes to the Consolidated Financial Statements
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1) |
Company Legal Structure, Nature of Business and Significant Events |
Company Legal
Structure
Movea is a French limited liability company (Société Anonyme) with a Board of Directors, subject to the
provisions of the French Code of Commerce.
Nature of Business
The Company commercializes its technology, which turns sensor data into meaningful information, in the form of licenses or royalties, and
provides subsequent development and support services to its customers. Its target markets are digital TV (DTV - connected TVs and set-top boxes), sports (specific products such as the Babolat racquet or standard wearable devices) and
mobile (the Movea Sensorhub product range).
Revenue in 2013 is mainly derived from DTV business, but the mobile market is growing.
Significant Events of the Period
Following the second tranche of funding decided in July 2012, proceeds from a capital increase amounting to 2.5 million were
received in June 2013
Significant Subsequent Events
InvenSense has completed the acquisition of Movea SA on July 22, 2014. On that date the Companys legal structure was changed from a
S.A. Société Anonyme to a S.A.S. Société par Actions Simplifiée. As a result of this change, the Company no longer has a Board of Directors and is now headed by a President.
On July 30, 2014 Invensense issued a letter of support to Movea S.A whereby Invensense confirmed that it is their intention, as long as
the Company remains within the Invensense Group, to continue to support the Company, if need be, so as to enable it to meet its liabilities as they fall due and to carry on its normal business without any significant curtailment to operations. The
Company relied on the terms of this letter to close the consolidated financial statements of the Company as of and for the year ended December 31, 2013 on a going concern basis.
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2) |
Summary of Significant Accounting Policies and Methods |
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a) |
Under French law Movea S.A. has never been required to prepare consolidated financial statements. These consolidated financial statements have been prepared voluntarily for the first time in the context of the
acquisition of Movea and its subsidiaries (individually or collectively referred to as the Company) by Invensense International Inc. in July 2014. |
The consolidated financial statements of Movea for the year ended December 31, 2013 have been prepared in accordance with generally
accepted accounting principles in France, including Rule 99-02 of the French Accounting Standards Board (Comité de la Réglementation Comptable - CRC).
No comparative financial information is presented as these consolidated financial statements are prepared for the first time and solely for the
purpose of Invensense International Inc. which, in accordance with Rule 3-05 of regulation S-X, is required to present only one year of Movea S.A. audited consolidated financial statements.
6/22
Entities subject to control by the Company (depending principally on voting rights of more than
50%) have been included in the consolidated financial statements.
The list of entities included in the consolidated financial statements
is as follows:
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Name |
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Registered office |
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Control % |
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Method of consolidation |
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Movea S.A. |
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Grenoble |
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N/A |
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Parent company |
Movea Inc |
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San Francisco |
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100 |
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Fully consolidated |
The Company opened a branch office in South Korea in August 2013. The corresponding expenses are directly
included in the financial statements of Movea S.A. since the branch office is not an independent legal entity.
The preparation of financial statements in conformity with French generally
accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and of revenue and
expenses during the period. Actual results could differ from those estimates.
Significant estimates, judgments and assumptions made on the
basis of information available at the reporting date mainly concern revenue recognition (note i) and research and development project subsidies (note j).
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c) |
Translation of Foreign Subsidiaries Financial Statements |
The balance sheet and
statements of operations and cash flows of Movea Inc., whose functional currency is the US dollar, are translated into the reporting currency of Movea S.A. (Euro) at the applicable exchange rates (i.e., the closing rate for balance sheet items, and
the average annual rate for statements of operations and cash flows items). Resulting translation gains and losses are recorded in the foreign currency translation adjustment in shareholders equity.
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d) |
Property, Plant and Equipment and Intangible Assets |
Property, plant and equipment and
intangible assets are stated at their acquisition cost. Depreciation and amortization are computed principally using the straight-line method based on the estimated useful lives of the related assets. Estimated useful lives are as follows:
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Estimated useful lives |
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Intangible Assets |
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Patents |
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10 years |
Licenses |
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3 to 5 years |
Software |
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1 year |
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Property, plant and equipment |
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Industrial machinery and equipment |
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3 to 4 years |
Leasehold improvements |
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4 to 5 years |
IT equipment |
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2 to 4 years |
Furnitures |
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3 to 4 years |
7/22
Raw materials and merchandise are recorded at purchase cost.
Finished goods and work in progress are recorded at their production cost.
When applicable, an inventory depreciation equal to the excess of the gross value determined in the manner indicated above and estimated net
realizable value is accounted for.
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f) |
Accounts Receivable, Net |
Accounts receivable are recorded at their nominal value. A provision
is recorded when the recoverable amount is lower than the carrying amount on a case by case analysis.
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g) |
Cash and Cash Equivalents |
Cash and cash equivalents include cash balances and short-term
highly liquid investments with original maturities of three months or less at the time of purchase and are stated at cost.
Contingencies and charges arising from claims, litigation, fines, etc. are provided
for when an obligation exists at balance sheet date, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Movea revenue model is to license its technology/software (technology access fees or
license fees), adapt the clients environment to fit in the technology (service/porting fees) and collect royalties on the products which are sold to end users and include Movea technology.
Software licenses:
Software revenue results from Royalties and/or from Technology Access Fees.
Royalties are recognized:
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upon the delivery of or access to the license when the royalty is fixed (without any relation to the volumes sold), is non-refundable, and is with no further commitment of the Company in this respect with regard to its
customer (pre-paid royalties), or |
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based on the statements reported by the customers when the royalty is calculated on volumes sold. In addition, royalties on volumes for which the Company has not yet obtained the customer statement are accrued, as
estimated by the Company (post-paid royalties). |
Technology access fees are recognized in accordance with the terms of the
contract, usually upon delivery of the software or access to the technology, as the Company has made full performance and has no further commitment to the customer.
Services
Revenue for
services is recognized using the percentage of completion method, based on the milestones defined in the contract or, if no milestones are defined, based on the number of days worked over the total estimated number of days necessary to complete the
services.
Maintenance fees are recognized on a pro-rata basis over the term of the contract.
The respective amounts of revenue allocated to each element are as stated in the contract.
8/22
Products or parts:
Movea may occasionally sell products or parts. Revenue is recognized upon shipment, in conformity with incoterm conditions.
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j) |
Research & Development (R&D) Expenditure |
Accounting policy
All research costs are expensed as incurred. The Company elected not to capitalize development expenditures.
Subsidies
The Company
receives R&D subsidies for its participation in R&D consortium projects. Income on R&D subsidies is recognized on a percentage of completion basis over the duration of the corresponding projects. Engineers record their time using
dedicated software, which gives the combination of time spent and status of deliverables enabling the calculation of the percentage of completion on each project.
Income recognized does not correspond to the amount of subsidies received during the year, which depends on each projects payment plan.
The shortfall of the accumulated cash received over the income recognized on subsidized R&D projects based on the percentage of completion is booked to other receivable. The excess of the accumulated cash received over the income recognized on
subsidized R&D projects based on the percentage of completion is booked to other liability.
Conditional refundable advances
The Company may also receive conditional refundable advances in combination with R&D consortium projects subsidies. These advances
will be reimbursed and bear interest only if the outcome of the corresponding R&D project generates revenue. Such advances are initially accounted for as debt for the amount received and will be recognized to income if and when it becomes
certain that the repayment conditions are not met. No interest is accrued until it is probable that repayment conditions are met.
France: Employee benefits (principally sickness and pensions) are managed
through periodic contributions to French Social Security and do not require any accrual.
The Company is also required to pay retirement
indemnities to employees, in accordance with French law, based on the length of service and final salary. The benefit is paid as a lump-sum at retirement and is expressed as a multiple of monthly salary.
The principal assumptions used in the determination of such benefits (under the prospective method) are described below:
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Annual increase in salary: 2%; |
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Employee retirement age : 62 years; |
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Annual discount rate : 2.25%; |
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Mortality: French national statistical institute (INSEE) mortality table TV 88/90. |
The Company
has opted not to accrue for this lump-sum retirement benefits (approximately 20 000 at December 31, 2013).
9/22
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l) |
Income Tax, Current and Deferred |
Deferred taxes are recorded in the statement of operations
and the balance sheet using the liability method in respect of temporary differences between the book and taxable values of certain assets and liabilities.
Tax benefits resulting from tax loss carry-forwards are recognized if it is more likely than not that they will be recovered within the
foreseeable future.
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m) |
Share-Based Compensation |
The Company has issued warrants (BSA and
BSPCE) and stock options (SO). Under French rules:
|
|
|
The amounts received by the Company upon issuance of the BSA, BSPCE and SO warrants are accounted for in shareholders equity ; |
|
|
|
No other entry is recorded in the accounts as long as the warrants or stock options have not been exercised. |
Extraordinary items are:
|
|
|
either ordinary items of abnormal amount and occurrence; or |
|
|
|
items with the following characteristics : |
|
|
|
Unusual compared with the economic activity of the entity. |
|
o) |
Foreign Exchange Differences |
At the year-end, assets and liabilities denominated in foreign
currencies are converted to Euros using the closing exchange rate. Resulting gains or losses are recorded in the consolidated statement of operations.
As an exception to this method, the exchange differences on an item that, in substance, forms part of the net investment in a consolidated
foreign subsidiary are included in equity until the disposal or liquidation of the net investment. This applies to debt payable or receivable for which settlement is neither planned nor expected in the foreseeable future and which constitutes in
substance an increase or decrease in the net investment of the group in this foreign enterprise
Basic earnings per share corresponds to the net income or loss divided by
the weighted-average number of shares outstanding during the financial period (see note 9).
Diluted earnings per share is the division of
the net income by the sum of the weighted-average number of shares outstanding and the maximal number of shares that may be issued on exercise of warrants or stock options (see note 9).
If the result for the year is a loss, diluted earnings per share is equal to basic earnings per share in accordance with the OECs French
accounting opinion # 27 § 3.
|
q) |
Prepaid Expenses and Deferred Revenue |
Prepaid expenses concern only operating expenses.
Deferred revenue concern sales invoices for which revenue recognition has been deferred.
10/22
There is only one operating segment in the Group and its performance is
shown in the consolidated statement of operations.
Intangible assets and Property, plant and equipment are as follows at December 31,
2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 () |
|
Gross value |
|
|
Accumulated depreciation and amortization |
|
|
Net book value |
|
Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Licenses, Patents & Software |
|
|
1,774,674 |
|
|
|
1,307,088 |
|
|
|
467,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,774,674 |
|
|
|
1,307,088 |
|
|
|
467,586 |
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
Industrial machinery and equipment |
|
|
68,407 |
|
|
|
63,533 |
|
|
|
4,874 |
|
Leasehold improvements |
|
|
85,197 |
|
|
|
12,298 |
|
|
|
72,899 |
|
IT equipment |
|
|
208,794 |
|
|
|
132,604 |
|
|
|
76,190 |
|
Furniture |
|
|
80,864 |
|
|
|
43,817 |
|
|
|
37,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
443,262 |
|
|
|
252,252 |
|
|
|
191,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net book value of intangible assets is mainly composed of the Technicolor license ( 448,000) at December 31,
2013.
Changes in the gross values of fixed assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
() |
|
At December 31, 2012 |
|
|
Additions |
|
|
Disposals |
|
|
At December 31, 2013 |
|
Licenses, patents and software |
|
|
1,760,319 |
|
|
|
14,355 |
|
|
|
0 |
|
|
|
1,774,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Intangible assets |
|
|
1,760,319 |
|
|
|
14,355 |
|
|
|
0 |
|
|
|
1,774,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012 |
|
|
Additions |
|
|
Disposals |
|
|
At December 31, 2013 |
|
Industrial machinery and equipment |
|
|
68,407 |
|
|
|
0 |
|
|
|
0 |
|
|
|
68,407 |
|
Leasehold improvements |
|
|
44,636 |
|
|
|
85,197 |
|
|
|
44,636 |
|
|
|
85,197 |
|
IT equipment |
|
|
186,941 |
|
|
|
61,004 |
|
|
|
39,151 |
|
|
|
208,794 |
|
Furniture |
|
|
76,354 |
|
|
|
16,980 |
|
|
|
12,470 |
|
|
|
80,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Property, plant and equipment |
|
|
376,337 |
|
|
|
163,181 |
|
|
|
96,256 |
|
|
|
443,262 |
|
|
|
|
|
|
|
|
At December 31, 2012 |
|
|
Additions |
|
|
Disposals |
|
|
At December 31, 2013 |
|
Deposits |
|
|
33,700 |
|
|
|
3,322 |
|
|
|
0 |
|
|
|
37,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,170,356 |
|
|
|
180,858 |
|
|
|
96,256 |
|
|
|
2,254,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Main additions in 2013 result from:
|
|
intangible assets: software licenses for R&; |
|
|
property, plant and equipment: fitting out of Movea SA new offices and acquisition of furniture. |
11/22
Main disposals in 2013 result from:
|
|
property, plant and equipment: disposal of leasehold improvements of the former offices in France and California. Furniture was also disposed of in California since the new office is fully furnished. |
Changes in accumulated depreciation and amortization were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
() |
|
At December 31, 2012 |
|
|
Amortization expense |
|
|
Release on disposal |
|
|
At December 31, 2013 |
|
Licenses, patents and software |
|
|
1,031,841 |
|
|
|
275,247 |
|
|
|
0 |
|
|
|
1,307,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Intangible assets |
|
|
1,031,841 |
|
|
|
275,247 |
|
|
|
0 |
|
|
|
1,307,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012 |
|
|
Depreciation expense |
|
|
Release on disposal |
|
|
At December 31, 2013 |
|
Industrial machinery and equipment |
|
|
52,083 |
|
|
|
11,451 |
|
|
|
0 |
|
|
|
63,534 |
|
Leasehold improvements |
|
|
20,303 |
|
|
|
14,624 |
|
|
|
22,628 |
|
|
|
12,198 |
|
IT equipment |
|
|
122,407 |
|
|
|
49,045 |
|
|
|
38,850 |
|
|
|
132,602 |
|
Furniture |
|
|
33,597 |
|
|
|
16,827 |
|
|
|
6,607 |
|
|
|
43,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Property, plant and equipment |
|
|
228,390 |
|
|
|
91,947 |
|
|
|
68,085 |
|
|
|
252,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,260,231 |
|
|
|
367,194 |
|
|
|
68,085 |
|
|
|
1,559,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories are as follows at December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 () |
|
Gross Value |
|
|
Inventory depreciation |
|
|
Net Book Value |
|
Raw materials, consumables |
|
|
36,043 |
|
|
|
18,022 |
|
|
|
18,021 |
|
Merchandise |
|
|
45,509 |
|
|
|
45,509 |
|
|
|
0 |
|
Finished goods |
|
|
5,737 |
|
|
|
0 |
|
|
|
5,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
87,289 |
|
|
|
63,531 |
|
|
|
23,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012 |
|
|
Additions |
|
|
Utilizations and reclassifications |
|
|
At December 31, 2013 |
|
Change in inventory depreciation |
|
|
65,695 |
|
|
|
0 |
|
|
|
2,164 |
|
|
|
63,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The inventory reserve represents 50% of raw materials, consumables and 100% of merchandises.
12/22
|
5) |
Trade Accounts Receivable, Net |
Trade accounts receivable are as follows at December 31, 2013:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Trade accounts receivable (invoices issued) |
|
|
851,455 |
|
Allowance for doubtful accounts |
|
|
(21,784 |
) |
|
|
|
|
|
Net |
|
|
829,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
() |
|
At December 31, 2012 |
|
|
Additions |
|
|
Utilizations and reclassifications |
|
|
At December 31, 2013 |
|
Change in bad debt allowance |
|
|
92,131 |
|
|
|
21,784 |
|
|
|
92,131 |
|
|
|
21,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The bad debt allowance concerns a receivable from customer Kaser.
Other receivables were as follows at December 31, 2013:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Deferred tax |
|
|
3,998 |
|
Social charges receivable |
|
|
11,182 |
|
Tax receivable |
|
|
214,514 |
|
Tax credit (including R&D tax credit) |
|
|
1,173,586 |
|
Advances to suppliers |
|
|
8,004 |
|
Other income receivable |
|
|
885,119 |
|
|
|
|
|
|
Total |
|
|
2,296,403 |
|
|
|
|
|
|
Research Tax Credit
In
France, companies are entitled to claim a research tax credit which is based on eligible R&D costs incurred by the Company. Movea has applied for such a credit. As a general rule, the tax credit can be deducted from the income tax liability
during a period of three years, or reimbursed by the tax authorities after the three year period if not utilized or earlier if the Company meets certain criteria. Specifically, Movea qualifies as a JEI (Jeune Entreprise Innovante) under
French rules, which allows the Company to request the immediate reimbursement of the tax credit.
Under current French law, the immediate reimbursement
will be maintained as long as Movea has less than 250 employees and generates revenue of under 50 million.
The reimbursement usually occurs in
April or May of the following year.
The 2012 research tax credit was received in 2013, amounting to 1,225,000
As of December 31, 2013 the following tax credits were recorded, totaling 1,173,586:
|
|
1,100,000 for the research tax credit; |
|
|
32,752 for the competitiveness tax credit (CICE); |
|
|
34,434 for the innovation tax credit; |
|
|
6,400 for the apprenticeship tax credit. |
All these tax credits were received in the second quarter of
2014.
13/22
In accordance with French GAAP the tax credits are recorded in the income statement as income tax credit (except
for the CICE which is recorded within personnel costs) in the year the underlying eligible expenses are incurred.
Other Income Receivable
This represents the shortfall of the accumulated cash received over the income recognized on subsidized R&D projects based on the percentage of completion
(see note 2 j)).
The income tax expense (credit) consists of the following:
|
|
|
|
|
() |
|
31 December 2013 |
|
Current income tax (credit) |
|
|
(1,139,476 |
) |
Deferred income tax (credit) |
|
|
(3,846 |
) |
|
|
|
|
|
Total |
|
|
(1,143,322 |
) |
|
|
|
|
|
Deferred tax assets at December 31, 2013 are as follows:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Tax losses carried forward |
|
|
0 |
|
Other temporary differences |
|
|
3,846 |
|
|
|
|
|
|
Net deferred tax asset |
|
|
3,846 |
|
|
|
|
|
|
As at December 31, 2013 the Company had 15,201,983 from Movea SA and $7,473,837 (5,419,358) from Movea
Inc. of accumulated net operating losses that are available to offset future taxable income and which may be carried forward indefinitely.
No deferred
tax asset resulting from these loss carry forwards has been recognized at December 31, 2013 as it is not considered likely that they will be recovered within the foreseeable future.
Income tax expense (credit) in 2013 differed from the amount computed by applying the French statutory income tax rate of 33.33% to pre-tax income (loss), as
a result of the following:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Loss before income taxes: |
|
|
(5,448,838 |
) |
|
|
|
|
|
Expected income tax expense (credit) at French statutory tax rate |
|
|
(1,816,098 |
) |
Research tax credit |
|
|
(1,100,000 |
) |
Income tax Movea Inc. |
|
|
1,358 |
|
Unrecognized deferred tax assets on tax loss for the year |
|
|
1,848,850 |
|
Other tax credits |
|
|
(73,586 |
) |
|
|
|
|
|
Actual income tax expense (credit) |
|
|
(1,139,476 |
) |
|
|
|
|
|
In France, companies may benefit from tax credits based on the research costs of the year (see note 6).
14/22
|
8) |
Cash and Cash Equivalents |
Cash and cash equivalents as at December 31, 2013 are composed of the
following bank balances:
Changes in shareholders equity over the year ended December 31,
2013 are as follows :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
Additional Paid In Capital |
|
|
Retained Earnings |
|
|
Foreign
Currency
Translation Adjustment |
|
|
Total
Stockholders equity |
|
|
|
No shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012 |
|
|
26 063 376 |
|
|
|
260,634 |
|
|
|
13,807,070 |
|
|
|
(12,071,375 |
) |
|
|
54,907 |
|
|
|
2,051,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in share capital through exercise of warrants |
|
|
3 571 425 |
|
|
|
35,714 |
|
|
|
2,464,283 |
|
|
|
|
|
|
|
|
|
|
|
2,499,997 |
|
Foreign exchange translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(41,512 |
) |
|
|
(41,512 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,305,516 |
) |
|
|
|
|
|
|
(4,305,516 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013 |
|
|
29 634 801 |
|
|
|
296,348 |
|
|
|
16,271,353 |
|
|
|
(16,376,891 |
) |
|
|
13,395 |
|
|
|
204,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
The Company was
incorporated in 2007; Additional shares were issued for cash in subsequent financing operations and through exercise of warrants. At December 31, 2013, the issued share capital consisted of 6 000,000 common shares and 23,634,801 preferred
shares, with a par value of 0.01.
Pre-emptive Subscription Rights
Shareholders and certain directors have pre-emptive rights to subscribe for additional shares issued by the Company for cash on a pro rata basis.
Shareholders may waive such pre-emptive subscription rights at an extraordinary general meeting of shareholders under certain circumstances. Pre-emptive subscription rights, if not previously waived, are transferable during the subscription period
relating to a particular offer of shares.
The Company has issued warrants in the form of BSA Bons de souscription dactions and
BSPCE Bons de souscription de parts de créateur dentreprise, and stock-options (SO).
The shareholders of Movea have
authorized the board of directors to grant warrants and stock options to employees, members of the board of the French parent company and other contributors. Each BSA, BSPCE and SO entitles the holder to subscribe to one common share of Movea. For
sake of simplification, BSA, BSPCE, and SO are collectively referred to hereafter as options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan name |
|
BCE 0910 1 (obj) |
|
|
BCE 0910 2 |
|
Date |
|
Board dated Sept. 7, 2011 |
|
|
Board dated Nov. 16, 2011 |
|
|
Board dated May 18, 2011 |
|
|
Board dated Sept. 7, 2011 |
|
Total |
|
|
265 750 |
|
|
|
15 000 |
|
|
|
263 500 |
|
|
|
565 750 |
|
Exercise price |
|
|
0,54 |
|
|
|
0,54 |
|
|
|
0,54 |
|
|
|
0,54 |
|
End of validity |
|
|
Sept 23, 2015 |
|
|
|
Sept 23, 2015 |
|
|
|
Sept 23, 2015 |
|
|
|
Sept 23, 2015 |
|
|
|
|
|
|
Vesting conditions |
|
|
on objective |
|
|
|
on objective |
|
|
|
over 4 years, 1/4 per year |
|
|
|
over 4 years, 1/4 per year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GRANTED |
|
|
265 750 |
|
|
|
15 000 |
|
|
|
263 500 |
|
|
|
565 750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL FORFEITED/EXPIRED |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL VALID |
|
|
265 750 |
|
|
|
15 000 |
|
|
|
263 500 |
|
|
|
565 750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15/22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan name |
|
SO 0910 2 |
|
|
SO 09101 (obj) |
|
Date |
|
Board dated May 18, 2011 |
|
|
Board dated Sept. 7, 2011 |
|
|
Board dated Nov. 16, 2011 |
|
|
Board dated Sept. 7, 2011 |
|
Total |
|
|
104 000 |
|
|
|
280 000 |
|
|
|
68 000 |
|
|
|
100 000 |
|
Exercise price |
|
|
0,54 |
|
|
|
0,54 |
|
|
|
0,54 |
|
|
|
0,54 |
|
End of validity |
|
|
Sept 23, 2015 |
|
|
|
Sept 23, 2015 |
|
|
|
Sept 23, 2015 |
|
|
|
Sept 23, 2015 |
|
Vesting conditions |
|
|
over 4 years, 1/4 per year |
|
|
|
over 4 years, 1/4 per year |
|
|
|
over 4 years, 1/4 per year |
|
|
|
on objective |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GRANTED |
|
|
104 000 |
|
|
|
280 000 |
|
|
|
68 000 |
|
|
|
100 000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL FORFEITED/EXPIRED |
|
|
0 |
|
|
|
70 000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL VALID |
|
|
104 000 |
|
|
|
210 000 |
|
|
|
68 000 |
|
|
|
100 000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan name |
|
BCE05 12 |
|
|
BSA 0512 |
|
|
SO 0512 |
|
|
|
Board dated |
|
|
Board dated |
|
|
Board dated |
|
|
Board dated |
|
|
Board dated |
|
|
Board dated |
|
Date |
|
Sept. 18, 2012 |
|
|
June 13, 2013 |
|
|
Nov. 20, 2013 |
|
|
Sept. 18, 2012 |
|
|
Sept. 18, 2012 |
|
|
Nov. 20, 2013 |
|
Total |
|
|
396 000 |
|
|
|
194 000 |
|
|
|
918 000 |
|
|
|
60 000 |
|
|
|
15 000 |
|
|
|
20 000 |
|
Exercise price |
|
|
0,63 |
|
|
|
0,63 |
|
|
|
0,63 |
|
|
|
0,63 |
|
|
|
0,63 |
|
|
|
0,63 |
|
End of validity |
|
|
June 15, 2017 |
|
|
|
June 15, 2017 |
|
|
|
June 15, 2017 |
|
|
|
June 15, 2017 |
|
|
|
June 15, 2017 |
|
|
|
June 15, 2017 |
|
Vesting conditions |
|
|
over 4 years 1/8 th every 6 months |
|
|
|
over 4 years 1/8 th every 6 months |
|
|
|
over 4 years 1/8 th every 6 months |
|
|
|
over 4 years, 1/4 per year |
|
|
|
over 4 years, 1/4 per year |
|
|
|
over 4 years, 1/4 per year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL GRANTED |
|
|
396 000 |
|
|
|
194 000 |
|
|
|
918 000 |
|
|
|
60 000 |
|
|
|
15 000 |
|
|
|
20 000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL FORFEITED/EXPIRED |
|
|
30 000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL VALID |
|
|
366 000 |
|
|
|
194 000 |
|
|
|
918 000 |
|
|
|
60 000 |
|
|
|
15 000 |
|
|
|
20 000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013 all options have been granted.
Provisions amount to 152 as at December 31, 2013 and pertain to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in provisions () |
|
At January 1, 2013 |
|
|
Additions |
|
|
Utilizations and reclassifications |
|
|
At December 31, 2013 |
|
Provision for warranty and litigation |
|
|
19,617 |
|
|
|
0 |
|
|
|
19,617 |
|
|
|
0 |
|
Provision for deferred tax |
|
|
0 |
|
|
|
152 |
|
|
|
0 |
|
|
|
152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
19,617 |
|
|
|
152 |
|
|
|
19,617 |
|
|
|
152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Starting in September 2013, the Company has been subject to an examination by the French tax administration covering fiscal
years 2010, 2011 and 2012. At the end of 2013 an assessment was sent to the Company for 2010 alone. The final 2010 assessment resulted in tax claimed of 36,000 with a penalty of 19,000. These tax assessments are disputed by the Company.
The Company did not book any provision considering that the argumentation of the Tax administration was not valid and that it would not result in a probable cash outflow.
The final assessments for 2011 and 2012 did not have any negative financial outcome.
16/22
|
11) |
Conditional R&D advances and Financial Debt |
Financial debt consists in:
Bank loans
Bank loans at December 31, 2013 comprise
two loans granted by BNP Paribas with outstanding balances amounting to .709,789:
|
|
loan of .700,000 agreed in December 2012, repayable over 3 years. In 2013, repayments on this loan amounted to .226,000. Then loan carries a fixed interest rate of 3.20%.; |
Security in the form of a pledge over Company goodwill in the amount of .700,000 was granted in favor of BNP Paribas;
|
|
loan of .250,000 agreed in September 2013 repayable over 3 years. In 2013, repayments on this loan amounted to .13,000. The loan carries a fixed interest rate of 3.30%. |
Conditional R&D refundable advances
R&D projects
are funded either through subsidies or refundable advances which will be reimbursed only if the outcome of the corresponding R&D project generates revenue. The Company has two outstanding refundable advances at December 31, 2013, whose
detailed terms and conditions for reimbursement are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From |
|
Interest rate |
|
|
Reimbursement over |
|
|
As of dec 31, 2013 () |
|
|
Terms of reimbursement |
|
Add-on |
|
|
|
|
|
|
PRIIM-BPI |
|
|
2,45 |
% |
|
|
5 years - yearly |
|
|
|
1,113,529 |
|
|
Starting in June 2014 if yearly turnover = 15 M
Plan : 80 K in year 1, 140 K in year 2, 320 K in year 3, 440 K in year 4, 470 K in year 5 |
|
0,8% of Priim only turnover estimate was 20% of total turnover.
Cap : 3,7 M ends in 2020 |
|
|
|
|
|
|
PVAA-BPI |
|
|
2,49 |
% |
|
|
5 years - yearly |
|
|
|
398,741 |
|
|
Starting in 2015 if PVAA turnover=2 M
Plan : 80 K in year 1, 90 K in year 2, 110 K in year 3, 110 K in year 4, 110 K in year 5 |
|
No |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
1,512,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
Rate
The R&D refundable advances are interest-free. In case of reimbursement an interest rate will be applied, from the date the reimbursement starts and until
its completion.
Terms for reimbursement
The R&D
refundable advances will be reimbursed only if the conditions for reimbursement are met.
These conditions consist in revenue achievements, either revenue
directly generated by the funded project, or total revenue of the Company.
In case of change of control, the funding entity can request anticipated
reimbursement.
If the conditions are not met, the refundable advances are turned into subsidies and recorded to the statement of operations.
Add-on
In case of commercial success of the Priim
project, additional commissions can be paid to the funding entity in excess of the advances amount.
17/22
|
12) |
Trade Accounts Payable and Accrued Expenses |
Trade accounts payable and accrued expenses amount to
.1,400,135 as at December 31, 2013 and are broken down as follows:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Trade accounts payable |
|
|
1,321,135 |
|
Trade accrued expenses |
|
|
79,000 |
|
|
|
|
|
|
Total |
|
|
1,400,135 |
|
|
|
|
|
|
Other liabilities amount to 970,780 as at December 31, 2013 and can be
broken down as follows:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Employees and social charge organizations |
|
|
679 950 |
|
Other |
|
|
291,030 |
|
|
|
|
|
|
Total |
|
|
970,780 |
|
|
|
|
|
|
Employee-related payables include
|
|
amounts due to employees: accrued vacation and accrued bonuses related to the second semester of 2013; |
|
|
employers payroll contributions (payment of social contributions related to December and/or to the fourth quarter of 2013 was made in January 2014); |
|
|
annual employer tax accruals (taxe dapprentissage, formation continue, fongecif). |
Other includes:
|
|
The excess of the accumulated cash received over the income recognized on subsidized R&D projects based on the percentage of completion is booked to other liability (see note 2 j)). |
18/22
|
14) |
Maturity of Receivables and Liabilities |
The breakdown by maturity is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in |
|
() |
|
At December 31, 2013 |
|
|
Less than 1 year |
|
|
1 to 5 years |
|
|
More than 5 years |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
37,022 |
|
|
|
37,022 |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
829,671 |
|
|
|
829,671 |
|
|
|
|
|
|
|
|
|
Other receivables |
|
|
2,296,406 |
|
|
|
2,296,406 |
|
|
|
|
|
|
|
|
|
Prepaid expense |
|
|
110,337 |
|
|
|
110,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,273,436 |
|
|
|
3,273,436 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest free debt (*) |
|
|
1,512,266 |
|
|
|
80,000 |
|
|
|
1,322,266 |
|
|
|
110,000 |
|
Financial debt |
|
|
709,789 |
|
|
|
317,025 |
|
|
|
392,764 |
|
|
|
|
|
Accrued interest |
|
|
1,850 |
|
|
|
1,850 |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
1,400,135 |
|
|
|
1,400,135 |
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
970,980 |
|
|
|
970,980 |
|
|
|
|
|
|
|
|
|
Deferred revenue |
|
|
307,013 |
|
|
|
307,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,902,033 |
|
|
|
3,077,003 |
|
|
|
1,715,030 |
|
|
|
110,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) |
If conditions for reimbursement are met. See note 11). |
The Company does not lease any significant facility or equipment under an operating or
capital lease other than its offices in Grenoble, France and Pleasanton, California (annual rental expenses of 226,698 in 2013).
Revenue recognition policy is described in the note 2 i).
Revenues by country are as follows for the year ended December 31, 2013:
|
|
|
|
|
() |
|
2013 |
|
France |
|
|
772,258 |
|
Other countries |
|
|
1,509,001 |
|
|
|
|
|
|
Total |
|
|
2,281,259 |
|
|
|
|
|
|
Deferred revenue at December 31, 2013 mainly consists in:
|
|
prepaid royalties 2014 for customer Babolat. These royalties have been invoiced and paid 2013; |
|
|
techno access license and prepaid royalties for customer Neurosky. These license and royalties have been invoiced in 2013, but final delivery of the license was not completed prior to year end. |
19/22
The Company receives R&D subsidies for its participation in R&D consortium
projects. The R&D subsidies are recognized on a percentage of completion basis over the duration of the corresponding projects, representing income of 847,842 in 2013 (see note 2 j)).
|
18) |
Personnel costs, including social charges |
Gross employee remuneration and the Companys related
social charges amount to 3,428,069 and 1,138,005 respectively, for the year ended December 31, 2013.
Average headcount is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Headcount |
|
|
|
2013 |
|
|
Movea SA |
|
|
Movea Inc. |
|
Company managers and Engineers |
|
|
43 |
|
|
|
40 |
|
|
|
3 |
|
Other staff |
|
|
5 |
|
|
|
3 |
|
|
|
2 |
|
Total |
|
|
48 |
|
|
|
43 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19) |
Research and Development Expenditure |
The gross amount of research and development expenditure incurred
by the Company for the year ended December 31, 2013 amounts to 4.5 million, which represents 62% of total operating expenses.
These
costs are only incurred in Movea SA (France). Movea Inc. has no research activity.
|
20) |
Net Financial Income/Expense |
Financial income and expense in 2013 are detailed as follows:
|
|
|
|
|
() |
|
December 31, 2013 |
|
Foreign exchange gains |
|
|
8,682 |
|
Other financial income |
|
|
7,814 |
|
|
|
|
|
|
Total financial income |
|
|
16,496 |
|
|
|
|
|
|
|
|
Foreign exchange losses |
|
|
(47,941 |
) |
Interest |
|
|
(45,936 |
) |
|
|
|
|
|
Total financial expense |
|
|
(93,877 |
) |
|
|
|
|
|
Under the French accounting regulation n° 2010-02, we inform you that there are no
significant transactions that have not been made under normal market conditions either with related parties or with shareholders or members of the board of directors.
20/22
|
22) |
Remuneration of Senior Executives |
|
|
|
|
|
() |
|
2013 |
|
Board |
|
|
23,040 |
|
Directors |
|
|
247,090 |
|
|
|
|
|
|
|
23) |
Summary of Differences between French GAAP and US GAAP |
The consolidated financial statements have
been prepared in accordance with French GAAP which, as applied by the Company, differs in certain significant respects from accounting principles generally accepted in the United States of America (US GAAP).
Accounting for Revenue Recognition
Refer to note 2 i)
for revenue recognition policy under French GAAP.
Under US GAAP, ASC Subtopic 985-605, Software - Revenue Recognition, provides the main
authoritative guidance regarding revenue recognition for software transactions. Specifically:
|
|
if an arrangement to deliver software or a software system, either alone or together with other products or services, requires significant production, modification, or customization of software, the entire arrangement
should be accounted for in conformity with ASC Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts; |
|
|
if contract accounting does not apply, ASC Subtopic 985-605, Software - Revenue Recognition, specifies four criteria that must be met prior to recognizing revenue for a single-element arrangement or for the individual
elements within the scope of ASC Subtopic 985-605 in a multiple-element arrangement. The four revenue recognition criteria are set out in paragraph 985-605-25-3 as follows: |
|
|
|
Persuasive evidence of an arrangement exists; |
|
|
|
The vendors fee is fixed or determinable; |
|
|
|
Collectibility is probable |
In addition, the Companys contracts usually include some or all of the
following elements: software licenses, maintenance and support, integration services, technology access fees, and royalties. Such arrangements would qualify as multiple elements arrangements. Prior to applying the above guidance, these multiple
element arrangements would need to be evaluated for separation under the guidance of ASC Subtopic 605-25. For elements within the scope of ASC Subtopic 985-605, the fee should be allocated to the various
elements based on vendor-specific objective evidence of fair value, regardless of any separate prices stated within the contract for each element. Vendor-specific objective evidence of fair value is limited to the following:
|
|
The price charged when the same element is sold separately; |
|
|
For an element not yet being sold separately, the price established by management having the relevant authority; it must be probable that the price, once established, will not change before introduction of the element
into the marketplace. |
;
Share based
payments
Under French GAAP, no compensation expense is recognized in connection with the grant of options.
Under US GAAP, these transactions are in the scope of ASC topic 718 concerning share base payments transactions with employees and ASC topic 505-50 for
non employees. The Company has to measure goods or services received in a share-based payment transaction using a fair value-based measure. They are recognized over the period in which they are received and measured based on the grant-date fair
value of the equity instruments granted.
21/22
R&D refundable advances
Refer to note 2 j) for recognition and measurement policy under French GAAP.
There is no specific US GAAP guidance on the accounting for grants and more specifically on the accounting for conditional R&D refundable advances
from government sponsored agencies. Under US GAAP, according to ASC subtopic 30-10, loans received solely for cash are also generally initially measured based on the cash proceeds, which is similar to the initial accounting applied to
conditional R&D refundable advances under French GAAP. Furthermore, according to the Companys management, at the date these financial statements are approved, there are remote chances that the repayment conditions of conditional R&D
refundable advances will ever be met. In these circumstances, no significant difference between French GAAP and US GAAP in the accounting for these conditional R&D refundable advances as of and for the year ended December 31, 2013 has
been identified.
;
Research Tax Credit
As indicated in note 6, under French GAAP, the Research Tax Credit is booked as a credit to the income tax caption within the income statement.
Under US GAAP, the Research Tax Credit would qualify as a government grant as it involves the receipt of cash (refundable tax credit) by the Company for
past research and development costs. The tax credit does not depend on current or future taxable income. ASC Topic 740 does not address accounting for government grants. However, in practice, under US GAAP, the Research Tax Credit would be
accounted for within operating income.
Retirement indemnities
Movea S.A.S. employees are entitled to receive, on retirement, a lump sum payment as defined under the applicable industry collective wage agreement. As
indicated in note 2 k) to these financial statements, the Company has opted not to accrue for this employees retirement indemnity obligation under French GAAP.
Under US GAAP, compensation cost for this retirement benefit should be recognized in the period in which the employee renders services and the Company
should recognize on its consolidated balance sheet the present value of the projected benefit obligation determined by applying an actuarial valuation method.
22/22
Exhibit 99.2
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
On July 22, 2014, InvenSense International, Inc., a company formed under the laws of the Cayman Islands and a wholly-owned subsidiary of
InvenSense, Inc. (the Company), completed its previously announced acquisition of all the outstanding shares of Movea SA, a company formed under the laws of France (Movea), pursuant to a Share Purchase Agreement
(Purchase Agreement) with Movea, certain members of management of Movea and Movea shareholders. The Company paid $60.9 million in cash as consideration for the acquisition. An additional $13.0 million in cash will be payable contingent
upon the achievement of certain milestones prior to the one year anniversary of the closing of the acquisition.
In addition, pursuant to
the Purchase Agreement, the Company granted restricted stock units for shares of its common stock (each a Movea Equity Award) to certain Movea employees, having an aggregate value of $6.6 million. The Movea Equity Awards were granted on
August 15, 2014 under the Companys 2011 Stock Incentive Plan.
For the purpose of the unaudited pro forma combined condensed
financial statements, the acquisition was assumed to have occurred as of April 1, 2013, with respect to the unaudited pro forma combined condensed statement of operations for the fiscal year ended March 30, 2014 and as of March 30,
2014 with respect to the unaudited pro forma combined condensed balance sheet. The pro forma adjustments are based upon available information and assumptions that the Company believes are reasonable.
The preliminary allocation of the purchase price used in the unaudited pro forma condensed combined financial statements is based upon
preliminary estimates. These preliminary estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) as we finalize the valuations of the net tangible and intangible assets acquired and
liabilities assumed in connection with our acquisition of Movea.
The acquisition has been accounted for using the acquisition method of
accounting in accordance with Accounting Standards Codification (ASC) 805 - Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and
identifiable intangible assets and liabilities assumed based on their fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill. The purchase price allocation is based on
estimates, assumptions, third party valuations and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, purchase price allocation and adjustments reported herein will
remain preliminary until the Company has all of the information necessary to finalize the allocation of the purchase price, and the final acquisition accounting adjustments could differ materially from the pro-forma adjustments presented herein. Any
increase or decrease in the fair value of Moveas tangible and identifiable intangible assets and liabilities, as compared to the information shown herein, would also change the portion of purchase price allocable to goodwill and could impact
the operating results of the Company due to differences in amortization related to these assets and liabilities. The Company intends to complete the purchase price allocation within twelve months of the closing of the acquisition.
The unaudited pro forma combined condensed financial information has been provided to comply with the presentation of certain financial
information relating to Movea in satisfaction of the requirements of Rule 3-05 of Regulation S-X, as required to be filed pursuant to Items 9.01(a) and 9.01(b) of Form 8-K. The unaudited pro forma combined condensed financial information is for
informational purposes only and does not purport to represent what the Companys actual results would have been if the acquisition had been completed as of the date indicated above, or that may be achieved in the future. The unaudited pro forma
combined condensed statement of operations does not include the effects of any cost savings from operating efficiencies or synergies that may result from the acquisition.
The unaudited pro forma combined condensed financial statements, including the notes thereto, should be read in conjunction with the
Companys historical financial statements included in the Companys annual report on Form 10-K for the year ended March 30, 2014, filed on May 29, 2014 with the SEC, as well as audited financial statements as of and for the year
ended December 31, 2013 and related notes of Movea that are attached as Exhibit 99.1 to this Current Report on Form 8-K/A.
INVENSENSE, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical |
|
|
|
|
|
|
|
|
|
|
|
InvenSense March 30, 2014 |
|
|
Movea March 30, 2014 |
|
|
Pro Forma Adjustments |
|
|
|
|
Pro Forma Combined |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,025 |
|
|
$ |
663 |
|
|
$ |
(5,897 |
) |
|
a) |
|
$ |
20,791 |
|
Short-term investments |
|
|
91,307 |
|
|
|
|
|
|
|
(36,043 |
) |
|
a) |
|
|
55,264 |
|
Accounts receivable |
|
|
39,009 |
|
|
|
610 |
|
|
|
(59 |
) |
|
b) |
|
|
39,560 |
|
Inventories |
|
|
73,032 |
|
|
|
33 |
|
|
|
(33 |
) |
|
b) |
|
|
73,032 |
|
Prepaid expenses and other current assets |
|
|
19,587 |
|
|
|
3,575 |
|
|
|
|
|
|
|
|
|
23,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
248,960 |
|
|
|
4,881 |
|
|
|
(42,032 |
) |
|
|
|
|
211,809 |
|
Property and equipment, net |
|
|
25,239 |
|
|
|
233 |
|
|
|
|
|
|
|
|
|
25,472 |
|
Intangible assets, net |
|
|
35,360 |
|
|
|
|
|
|
|
7,200 |
|
|
c) |
|
|
42,560 |
|
Goodwill |
|
|
50,952 |
|
|
|
|
|
|
|
63,763 |
|
|
d) |
|
|
114,715 |
|
Long-term investments |
|
|
128,755 |
|
|
|
|
|
|
|
(18,960 |
) |
|
a) |
|
|
109,795 |
|
Other assets |
|
|
5,469 |
|
|
|
617 |
|
|
|
|
|
|
b) |
|
|
6,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
494,735 |
|
|
$ |
5,731 |
|
|
$ |
9,971 |
|
|
|
|
$ |
510,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
18,964 |
|
|
$ |
2,009 |
|
|
$ |
|
|
|
|
|
$ |
20,973 |
|
Accrued liabilities |
|
|
14,985 |
|
|
|
1,742 |
|
|
|
9,018 |
|
|
b), e) |
|
|
25,745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
33,949 |
|
|
|
3,751 |
|
|
|
9,018 |
|
|
|
|
|
46,718 |
|
|
|
|
|
|
|
Long-term debt |
|
|
135,583 |
|
|
|
550 |
|
|
|
|
|
|
|
|
|
136,133 |
|
Other long-term liabilities |
|
|
11,375 |
|
|
|
2,383 |
|
|
|
|
|
|
|
|
|
13,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
180,907 |
|
|
|
6,684 |
|
|
|
9,018 |
|
|
|
|
|
196,609 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
215,958 |
|
|
|
24,222 |
|
|
|
(24,222 |
) |
|
b) |
|
|
215,958 |
|
Accumulated other comprehensive (loss) |
|
|
(38 |
) |
|
|
(490 |
) |
|
|
490 |
|
|
b) |
|
|
(38 |
) |
Retained earnings |
|
|
97,908 |
|
|
|
(24,685 |
) |
|
|
24,685 |
|
|
b) |
|
|
97,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
313,828 |
|
|
|
(953 |
) |
|
|
953 |
|
|
b) |
|
|
313,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
494,735 |
|
|
$ |
5,731 |
|
|
$ |
9,971 |
|
|
|
|
$ |
510,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
INVENSENSE, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical |
|
|
|
|
|
|
|
|
|
|
|
InvenSense March 30, 2014 |
|
|
Movea March 30, 2014 |
|
|
Pro Forma Adjustments |
|
|
|
|
Pro Forma Combined |
|
Net revenue |
|
$ |
252,533 |
|
|
$ |
3,176 |
|
|
$ |
|
|
|
|
|
$ |
255,709 |
|
Cost of revenue |
|
|
127,724 |
|
|
|
28 |
|
|
|
1,440 |
|
|
f) |
|
|
129,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
124,809 |
|
|
|
3,148 |
|
|
|
(1,440 |
) |
|
|
|
|
126,517 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
48,431 |
|
|
|
3,523 |
|
|
|
1,021 |
|
|
g) |
|
|
52,975 |
|
Selling, general and administrative |
|
|
51,344 |
|
|
|
6,406 |
|
|
|
468 |
|
|
g) |
|
|
58,218 |
|
Litigation settlement |
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
114,775 |
|
|
|
9,929 |
|
|
|
1,489 |
|
|
|
|
|
126,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
10,034 |
|
|
|
(6,781 |
) |
|
|
(2,929 |
) |
|
|
|
|
324 |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) |
|
|
(4,012 |
) |
|
|
(78 |
) |
|
|
|
|
|
|
|
|
(4,090 |
) |
Other income, net |
|
|
167 |
|
|
|
(60 |
) |
|
|
|
|
|
|
|
|
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
|
(3,845 |
) |
|
|
(138 |
) |
|
|
|
|
|
|
|
|
(3,983 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
6,189 |
|
|
|
(6,919 |
) |
|
|
(2,929 |
) |
|
|
|
|
(3,659 |
) |
|
|
|
|
|
|
Income taxprovision |
|
|
70 |
|
|
|
|
|
|
|
|
|
|
h) |
|
|
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
6,119 |
|
|
$ |
(6,919 |
) |
|
$ |
(2,929 |
) |
|
|
|
$ |
(3,729 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share allocable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.04 |
) |
Diluted |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.04 |
) |
Weighted average shares outstanding used in computing net income(loss) per share allocable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
86,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
86,520 |
|
Diluted |
|
|
89,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
86,520 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
INVENSENSE, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
STATEMENTS
1. Description of
Transaction
On July 22, 2014, InvenSense International, Inc., a company formed under the laws of the Cayman Islands and a
wholly-owned subsidiary of InvenSense, Inc. (the Company), completed its previously announced acquisition of all the outstanding shares of Movea SA, a company formed under the laws of France (Movea), pursuant to a Share
Purchase Agreement (Purchase Agreement) with Movea, certain members of management of Movea and Movea shareholders. The Company paid $60.9 million in cash as consideration for the acquisition. An additional $13.0 million in cash will be
payable contingent upon the achievement of certain milestones prior to the one year anniversary of the closing of the acquisition.
In
addition, pursuant to the Purchase Agreement, the Company granted restricted stock units for shares of its common stock (each a Movea Equity Award) to certain Movea employees, having an aggregate value of $6.6 million. The Movea Equity
Awards were granted on August 15, 2014 under the Companys 2011 Stock Incentive Plan.
The acquisition has been accounted for
using the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805 - Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is
allocated to the tangible assets and identifiable intangible assets and liabilities assumed based on their fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill. The
purchase price allocation is based on estimates, assumptions, third party valuations and other studies of the value of the acquired assets which have not progressed to a stage where there is sufficient information to make a definitive allocation.
Accordingly, the purchase price allocation and adjustments reported herein will remain preliminary until the Company has all of the information necessary to finalize the allocation of the purchase price, and the final acquisition accounting
adjustments could differ materially from the pro-forma adjustments presented herein. Any increase or decrease in the fair value of Moveas tangible and identifiable intangible assets and liabilities, as compared to the information shown herein,
would also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company due to differences in amortization related to these assets and liabilities. The Company intends to complete the purchase
price allocation within twelve months of the closing of the acquisition.
2. Basis of Pro Forma Presentation
The unaudited pro forma combined condensed balance sheet as of March 30, 2014 is based on the historical financial statements of the
Company and Moveas historical financial statements on U.S. generally accepted accounting principles, or GAAP and reflect adjustments resulting from the acquisition of Movea. The unaudited pro forma combined balance sheet as of March 30,
2014 is presented as if the acquisition had occurred on March 30, 2014.
The unaudited pro forma combined condensed statements of
operations for the year ended March 30, 2014 are based on the historical financial statements of the Company and Moveas historical financial statements on GAAP basis and reflect adjustments resulting from the acquisition of Movea. The
unaudited pro forma combined condensed statements of operations for the year ended March 30, 2014 are presented as if the acquisition had occurred on April 1, 2013.
The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of our consolidated results of
operations or financial position that would have been reported had the Movea acquisition been completed as of the dates presented, and should not be taken as a representation of our future consolidated results of operations or financial position.
The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and associated cost savings that we may achieve with respect to the combined companies.
3. Preliminary Purchase Price and Estimated Purchase Price Allocation
A summary of the estimated purchase price allocation to the fair value of assets acquired and liabilities assumed is as follows (in thousands):
|
|
|
|
|
Cash consideration |
|
$ |
60,900 |
|
Contingent consideration |
|
|
8,400 |
|
|
|
|
|
|
|
|
|
69,300 |
|
|
|
|
|
|
|
|
Preliminary allocation of purchase price as of July 22, 2014: |
|
|
|
|
Current assets |
|
$ |
3,082 |
|
Fixed assets |
|
|
209 |
|
Other non-current assets |
|
|
592 |
|
Developed technology |
|
|
7,200 |
|
Goodwill |
|
|
65,776 |
|
Current liabilities |
|
|
(4,862 |
) |
Long-tern liabilities |
|
|
(2,697 |
) |
|
|
|
|
|
Total preliminary purchase price |
|
$ |
69,300 |
|
|
|
|
|
|
The purchase price includes contingent consideration of $8 million payable in cash to Movea shareholders upon
a design win with a major smartphone manufacturer within 1 year of closing date, and $5 million payable in cash to Movea shareholders upon a specific product development milestone by December 2014. The fair value of the contingent consideration
($8.4 million) was derived from a probability weighted earn-out model of future contingent payments. The valuation of the contingent consideration was based on a collaborative effort of the Companys engineering and finance departments, and
third party valuation experts.
The following table represents the estimated useful lives of developed technology:
|
|
|
|
|
|
|
|
|
|
|
Estimated Fair Value (in thousands) |
|
|
Estimated Useful Life |
|
Developed technology |
|
$ |
7,200 |
|
|
|
5.00 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
7,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of developed technology was determined using a cost approach which includes an estimate of time
and expenses required to recreate the intangible asset. The fair value of developed technology was capitalized as of the acquisition date and will be amortized using a straight-line method to cost of revenue over the estimated useful life of 5
years.
4. Movea Financial Statements
The historical financial statements of Movea, as presented in the unaudited condensed pro forma financial statements, were derived from
financial statements prepared in accordance with the generally accepted accounting principles in France. As a result, certain adjustments were made to Moveas unaudited balance sheet as of March 30, 2014 and unaudited statement of
operations for the twelve months ended March 30, 2014 in order to conform to the generally accepted accounting principles in the United States. Such adjustments primarily affected revenue and stock-based compensation expense, resulting in a
$0.4 million adjustment to revenue and approximately $1.0 million adjustment to operating expenses related to stock-based compensation expenses. In addition, $1.9 million of R&D subsidies (other operating income under French GAAP) and $1.4
million of R&D tax credit (Income tax under French GAAP) were reclassified as reductions to Moveas operating expenses for the twelve months ended March 30, 2014.
5. Pro Forma Adjustments
The historical financial information has been adjusted to give the effect to pro forma events that are 1) directly attributable to the
acquisition, 2) factually supportable, and 3) with respect to the statement of operations, expected to have continued impact on the combined results of the companies. The following pro forma adjustments are included in the unaudited pro forma
combined condensed financial statements.
a) |
To record cash used in the acquisition of Movea. The Company sold approximately $36.0 million of short-term investments and approximately $19.0 million of long-term investments to raise part of the cash used in the
acquisition of Movea. |
b) |
To record adjustments to the carrying values of assets acquired and liabilities assumed from Movea to reflect their fair values. |
c) |
To record fair value of acquired intangible assets (developed technology). |
d) |
To record goodwill, which is measured as the excess of the purchase price over the fair value of net assets acquired from Movea. |
e) |
To record fair value of the contingent consideration of $8.4 million. |
f) |
To record amortization expense related to acquired intangible assets. |
g) |
To record stock-based compensation expense related to restricted stock units awarded to employees of Movea. The RSUs have a fair value of approximately $6.6 million and the related expense is recognized on a
straight-line basis over a 5 year requisite service period. |
h) |
The tax effect of the pro forma adjustments is not material since Movea has net operating losses. |
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