Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 02, 2018 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | mram | |
Entity Registrant Name | EVERSPIN TECHNOLOGIES INC | |
Entity Central Index Key | 1,438,423 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 17,094,074 | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 31,438 | $ 12,950 |
Accounts receivable, net | 5,582 | 4,041 |
Inventory | 9,482 | 9,837 |
Prepaid expenses and other current assets | 436 | 590 |
Total current assets | 46,938 | 27,418 |
Property and equipment, net | 4,438 | 3,946 |
Other assets | 73 | 73 |
Total assets | 51,449 | 31,437 |
Current liabilities: | ||
Accounts payable | 2,847 | 2,920 |
Accrued liabilities | 8,588 | 3,748 |
Deferred income on shipments to distributors | 1,720 | |
Current portion of long-term debt | 4,472 | 3,987 |
Total current liabilities | 15,907 | 12,375 |
Long-term debt, net of current portion | 7,928 | 8,178 |
Total liabilities | 23,835 | 20,553 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2018 and December 31, 2017 | ||
Common stock, $0.0001 par value per share; 100,000,000 shares authorized; 17,065,846 and 12,817,201 shares issued and outstanding as of September 30, 2018 and December 31, 2017 | 2 | 1 |
Additional paid-in capital | 158,125 | 128,422 |
Accumulated deficit | (130,513) | (117,539) |
Total stockholders' equity | 27,614 | 10,884 |
Total liabilities and stockholders' equity | $ 51,449 | $ 31,437 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Condensed Balance Sheets | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,065,846 | 12,817,201 |
Common stock, shares outstanding | 17,065,846 | 12,817,201 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Total revenue | $ 11,518 | $ 9,008 | $ 37,136 | $ 25,813 |
Cost of sales | 6,109 | 3,753 | 17,235 | 10,549 |
Gross profit | 5,409 | 5,255 | 19,901 | 15,264 |
Operating expenses: | ||||
Research and development | 6,453 | 6,420 | 19,706 | 19,236 |
General and administrative | 2,913 | 3,031 | 9,461 | 8,669 |
Sales and marketing | 1,582 | 1,112 | 4,661 | 3,331 |
Total operating expenses | 10,948 | 10,563 | 33,828 | 31,236 |
Loss from operations | (5,539) | (5,308) | (13,927) | (15,972) |
Interest expense | (229) | (178) | (662) | (584) |
Other income, net | 139 | 40 | 315 | 83 |
Loss on extinguishment of debt | (246) | |||
Net loss and comprehensive loss | $ (5,629) | $ (5,446) | $ (14,274) | $ (16,719) |
Net loss per common share, basic and diluted | $ (0.33) | $ (0.43) | $ (0.88) | $ (1.35) |
Weighted-average shares used to compute net loss per common share, basic and diluted | 16,944,660 | 12,559,812 | 16,130,882 | 12,425,390 |
Product sales | ||||
Total revenue | $ 10,469 | $ 8,323 | $ 29,283 | $ 22,171 |
Licensing, royalty and other revenue | ||||
Total revenue | $ 1,049 | $ 685 | $ 7,853 | $ 3,642 |
Condensed Statement of Cash Flo
Condensed Statement of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (14,274) | $ (16,719) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,069 | 837 |
Loss on disposal of property and equipment | 19 | |
Stock-based compensation | 2,064 | 1,511 |
Non-cash loss on extinguishment of debt | 185 | |
Non-cash interest expense | 286 | 188 |
Compensation expense related to vesting of common stock to GLOBALFOUNDRIES | 709 | 1,224 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,876) | (527) |
Inventory | 309 | (2,628) |
Prepaid expenses and other current assets | 154 | 320 |
Other assets | (11) | |
Accounts payable | (140) | (333) |
Accrued liabilities | 4,840 | 1,109 |
Deferred income on shipments to distributors | 323 | |
Shipping term reversal | (39) | |
Net cash used in operating activities | (6,879) | (14,521) |
Cash flows from investing activities | ||
Purchases of property and equipment | (1,513) | (2,170) |
Net cash used in investing activities | (1,513) | (2,170) |
Cash flows from financing activities | ||
Proceeds from the issuance of common stock, net of offering costs | 24,524 | |
Proceeds from debt | 1,000 | 12,000 |
Payments on debt | (1,000) | (8,356) |
Payments of debt issuance costs | (49) | |
Payments on capital lease obligation | (8) | (7) |
Proceeds from exercise of stock options and purchase of shares in employee stock purchase plan | 2,364 | 1,218 |
Net cash provided by financing activities | 26,880 | 4,806 |
Net increase (decrease) in cash and cash equivalents | 18,488 | (11,885) |
Cash and cash equivalents at beginning of period | 12,950 | 29,727 |
Cash and cash equivalents at end of period | 31,438 | 17,842 |
Supplementary cash flow information: | ||
Interest paid | 370 | 396 |
Non-cash investing and financing activities: | ||
Purchase of property and equipment in accounts payable | 183 | $ 764 |
Issuance of warrants with debt | $ 43 |
Organization and Nature of Busi
Organization and Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization and Nature of Business | |
Organization and Nature of Business | 1. Organization and Nature of Business Everspin Technologies, Inc. (the Company) was incorporated in Delaware on May 16, 2008. The Company’s magnetoresistive (MRAM) solutions offer the persistence of non-volatile memory with the speed and endurance of random access memory (RAM) and enable the protection of mission critical data particularly in the event of power interruption or failure. The Company’s MRAM solutions allow its customers in the industrial, automotive and transportation, and enterprise storage markets to design high performance, power efficient and reliable systems without the need for bulky batteries or capacitors. Ability to continue as a going concern The Company believes that its existing cash and cash equivalents as of September 30, 2018, coupled with its anticipated growth and sales levels will be sufficient to meet its anticipated cash requirements for at least the next twelve months from the financial statement issuance date. The Company’s future capital requirements will depend on many factors, including its growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products. The Company may be required at some point in the future to seek additional equity or debt financing, to sustain operations beyond that point, and such additional financing may not be available on acceptable terms or at all. If the Company is unable to raise additional capital or generate sufficient cash from operations to adequately fund its operations, it will need to curtail planned activities to reduce costs. Doing so will likely harm its ability to execute on its business plan. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period or for any other future year. The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10-K filed with the SEC. Use of Estimates The preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory, income taxes, and stock-based compensation. Actual results could differ from those estimates and assumptions. Accounts receivable, net The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales. At September 30, 2018, the allowance for product returns and the allowance for price concessions were $230,000 and $362,000, respectively. At December 31, 2017, the allowance for product returns and the allowance for price concessions were $147,000 and $0, respectively. Accounts receivable, net consisted of the following (in thousands): September 30, December 31, 2018 2017 Trade accounts receivable $ 5,687 $ 4,188 Unbilled accounts receivable 487 — Allowance for accounts receivable (592) (147) Accounts receivable, net $ 5,582 $ 4,041 Concentration of Credit Risk Financial instruments that potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents that are held by a financial institution in the United States and accounts receivable. Amounts on deposit with a financial institution may at times exceed federally insured limits. The Company maintains its cash accounts with high credit quality financial institutions and, accordingly, minimal credit risk exists with respect to the financial institutions. Significant customers are those which represent more than 10% of the Company’s total revenue or net accounts receivable balance at each respective balance sheet date. For the purposes of this disclosure, the Company defines “customer” as the entity that is purchasing the products or licenses directly from the Company, which includes the distributors of the Company’s products in addition to end customers that the Company sells to directly. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: Revenue Revenue Accounts Receivable, net Three Months Ended Nine Months Ended As of As of September 30, September 30, September 30, December 31, Customers 2018 2017 2018 2017 2018 2017 Customer A 13 % * 13 % * * 11 % Customer B 13 % 16 % 13 % 14 % * * Customer C 10 % 18 % * 17 % * * Customer D 10 % * * * 11 % * Customer E * * 14 % * * * Customer F * * * * 17 % * Customer G * * * * 12 % * Customer H * * * * * 15 % Customer I * * * 10 % * 10 % * Fair Value of Financial Instruments The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2—Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The carrying value of accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments. As of September 30, 2018, based on Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value. The Company’s financial instruments consist of Level 1 assets. Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 assets consist of highly liquid money market funds that are included in cash equivalents. The following tables sets forth the fair value of the Company’s financial assets measured at fair value on a recurring basis (in thousands): September 30, 2018 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 31,683 $ — $ — $ 31,683 Total assets measured at fair value $ 31,683 $ — $ — $ 31,683 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 13,369 $ — $ — $ 13,369 Total assets measured at fair value $ 13,369 $ — $ — $ 13,369 Revenue Recognition The Company recognizes revenue when a customer obtains control of the promised products or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and price concessions, and any taxes collected from customers, which are subsequently remitted to governmental authorities. Nature of Products and Services The Company’s revenue is derived from the sale of MRAM-based products in discrete unit form, licenses of and royalties on its MRAM and magnetic sensor technology, the sale of backend foundry services and design services to third parties. Sales of products in discrete unit form are recognized at a point in time, revenue related to licensing agreements is recognized when the Company has delivered control of the technology, revenue related to royalty agreements is recognized in the period in which sales generated from products sold using the Company’s technology occurs, sales of backend foundry services are recognized over time, and design services to third parties are recognized either at a point in time or over time, depending on the nature of the services. Product Revenue For products sold in their discrete form, the Company either sells its products directly to original equipment manufacturers (OEMs), original design manufacturers (ODMs) and contract manufacturers (CMs), or through a network of distributors, who in turn sell to those customers. For sales directly to OEMs, ODMs and CMs, revenue is recognized when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer. The Company sells the majority of its products to its distributors at a uniform list price. However, distributors may resell the Company’s products to end customers at a very broad range of individually negotiated price points. Distributors are provided with price concessions subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price. The price concessions are based on a variety of factors, including customer, product, quantity, geography and competitive differentiation. Price protection rights grant distributors the right to a credit in the event of declines in the price of the Company’s products. Under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors’ outstanding accounts receivable balance. The credits are on a per unit basis and are not given to the distributor until the distributor provides information regarding the sale to their end customer. The Company estimates these credits and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of an allowance for price concessions due to distributors. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales. Revenue on shipments to distributors is recorded when control of the products has been transferred to the distributor. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates its product return liability by analyzing its historical returns, current economic trends and changes in customer demand and acceptance of products. The Company has received insignificant returns to date and believes that returns of its products will continue to be minimal. At the time of shipment to distributors, the Company records a trade receivable for the selling price as there is a legally enforceable obligation of the distributor to pay for the product delivered, an allowance is recorded for the estimated discount that will be provided to the distributor, and the net of these amounts is recorded as revenue on the statement of operations. License Revenue For licenses of technology, recognition of revenue is dependent upon whether the Company has delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestones amounts to become due from the customer. The terms of such agreements include payment to the Company of one or more of the following: non-refundable upfront fees; and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations for the Company once the license has been transferred to the customer. The transaction price in each agreement is allocated to the identified performance obligations based on the standalone selling price (SSP) of each distinct performance obligation. Judgment is required to determine SSP. In instances where SSP is not directly observable, such as when a license or service is not sold separately, SSP is determined using information that may include market conditions and other observable inputs. Revenue from non-refundable up-front payments is recognized when the license is transferred to the customer and the Company has no other performance obligations. Royalties Revenue from sales-based royalties from licenses of the Company’s technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part). Other Revenue For certain revenue streams, the Company recognizes revenue based on the pattern of transfer of the services. The Company uses the input method of measuring costs incurred to date compared to total estimated costs to be incurred under the contract as this method most faithfully depicts its performance. The Company will record an unbilled receivable (within accounts receivable, net) for the portion of the work that has been completed but not invoiced at the end of each reporting period. Revenue from milestone payments must be estimated using either the expected value method or the most likely amount method. At the inception of each agreement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability or achievement of each such milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. Net Loss per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, less shares subject to repurchase, without consideration of potentially dilutive securities. Diluted net loss per common share is the same as basic net loss per common share since the effect of potentially dilutive securities is anti-dilutive. Prior Period Reclassifications Certain amounts in the prior period have been reclassified to conform with current period presentation. There was no impact on total revenue or net loss for the prior period. Recently Adopted Pronouncements ASU No. 2014-09, Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. The new standard permits adoption either by using (i) a full retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of its accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Topic 606 permits the application of certain practical expedients. The Company’s billing practices approximate the Company’s performance as measured by an output method, where each output represents the completion of a performance obligation. Accordingly, the Company utilizes the invoice practical expedient as defined in Topic 606, resulting in recognition of revenue in the amount that the Company has the right to invoice. The Company incurs direct and incremental costs of obtaining contracts and such costs are expensed as incurred, as the life of the underlying contract is less than one year. Accordingly, the Company has concluded, based on the structure of its contracts, no adjustments are necessary under Topic 606. As a result of the adoption of the new standard, the Company changed its accounting policy for revenue recognition and the details of the significant changes and quantitative impact of the changes are disclosed below. Distributor sales - Some of the Company's contracts with distributors provide the distributor with certain concessions and price protection credits. Under Topic 605, Revenue, these concessions and price protection credits were not fixed or determinable and, as a result, the associated revenue was deferred until delivery of the product to the end customer. At the time of shipment to distributors, the Company recorded a trade receivable for the selling price as there was a legally enforceable obligation of the distributor to pay for the product delivered, inventory was reduced by the carrying value of goods shipped, and the net of these amounts, the gross profit, was recorded as deferred income on shipments to distributors on the balance sheet. Under Topic 606, the Company recognizes revenue from sales to distributors upon delivery of the product to the distributor and estimates the amount of the concessions and price protection credits at the point of revenue recognition. Accordingly, the balance of the deferred income on shipments to distributors was eliminated as a cumulative effect adjustment of implementing Topic 606 as of January 1, 2018, net of the Company’s estimate of concessions and price protection credits for those contracts. Performance obligations delivered over time –Topic 605 permitted straight-line recognition of revenue for performance obligations that were delivered over time. The new revenue standard requires an entity to recognize revenue based on the pattern of transfer of the services. Entities must use either an input method or an output method to measure progress toward complete satisfaction of a performance obligation. The Company determined that the input method of measuring costs incurred to date compared to total estimated costs to be incurred under the contract most faithfully depicts its performance. Under Topic 606, the Company will record an unbilled receivable (within accounts receivable, net) for the portion of the service that has been completed but not invoiced at the end of each reporting period. Milestone payments – Topic 605 permitted recognition using the milestone method, whereby revenue was recognized upon the completion of substantive milestones once the customers acknowledge the milestones have been met and the collection of the amounts is reasonably assured. The milestone method no longer exists under the new revenue standard. Revenue from milestone payments must be estimated using either the expected value method or the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. The adoption of Topic 606 did not have an impact on milestone revenue recorded to date as the performance obligations related to such milestones were completed as of the adoption date. Sales-based royalties – Topic 605 permitted recognition of royalties when reported to the Company, which generally coincided with the receipt of payment. Under the new revenue standard, revenue generated from sales-based royalties from licenses of technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part). The change in revenue recognition upon adoption of Topic 606 resulted in a decrease in the accumulated deficit balance of $1.3 million on January 1, 2018. The following table summarizes the impact of adopting Topic 606 on select unaudited condensed balance sheet line items (in thousands): Balances without the adoption of September 30, 2018 As reported Adjustments Topic 606 Accounts receivable, net $ 5,582 $ (630) $ 4,952 Inventory 9,482 58 9,540 Total current assets 46,938 (572) 46,366 Total assets 51,449 (572) 50,877 Deferred income on shipments to distributors — 2,917 2,917 Total current liabilities 15,907 2,917 18,824 Total liabilities 23,835 2,917 26,752 Accumulated deficit (130,513) (3,489) (134,002) Total liabilities and stockholders’ equity 51,449 (572) 50,877 The following table summarizes the impact of adopting Topic 606 on select unaudited condensed statement of operations line items (in thousands, except per share data): Balances without the adoption of Three Months Ended September 30, 2018 As reported Adjustments Topic 606 Product sales $ 10,469 $ (1,330) $ 9,139 Licensing, royalty, and other revenue 1,049 (72) 977 Total revenue 11,518 (1,402) 10,116 Cost of sales 6,109 (541) 5,568 Gross profit 5,409 (861) 4,548 Loss from operations (5,539) (861) (6,400) Net loss and comprehensive loss (5,629) (861) (6,490) Net loss per common share, basic and diluted (0.33) (0.05) (0.38) Balances without the adoption of Nine Months Ended September 30, 2018 As reported Adjustments Topic 606 Product sales $ 29,283 $ (2,748) $ 26,535 Licensing, royalty, and other revenue 7,853 (169) 7,684 Total revenue 37,136 (2,917) 34,219 Cost of sales 17,235 (728) 16,507 Gross profit 19,901 (2,189) 17,712 Loss from operations (13,927) (2,189) (16,116) Net loss and comprehensive loss (14,274) (2,189) (16,463) Net loss per common share, basic and diluted (0.88) (0.14) (1.02) The following table summarizes the impact of adopting Topic 606 on select unaudited condensed statement of cash flows line items (in thousands): Balances without the adoption of Nine Months Ended September 30, 2018 As reported Adjustments Topic 606 Cash flows from operating activities Net loss $ (14,274) $ (2,189) $ (16,463) Adjustments to reconcile net loss to net cash used in operating activities: Accounts receivable (1,876) 965 (911) Inventory 309 (12) 297 Shipping term reversal (39) 1,236 1,197 ASU No. 2017-09, Compensation-Stock Compensation In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting, which is intended to amend the scope of modification accounting for share-based payment arrangements. The amendments in the update provide guidance on types of changes to the terms or conditions of share-based payment awards that would require the Company to apply modification accounting under ASC 718, Compensation-Stock Compensation. This ASU is effective for annual reporting periods beginning after December 15, 2017, and early adoption was permitted. The Company adopted this standard on January 1, 2018, and the impact of its adoption on the Company’s financial statements was not material. ASU No. 2016-15, Statement of Cash Flows In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. The standard is effective for fiscal years and interim periods beginning after December 15, 2017. The standard should be applied retrospectively and early adoption was permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2018, and the impact of its adoption on the Company’s financial statements was not material. Recently Issued Pronouncements In February 2016, the FASB issued ASU No. 2016‑02, Leases, which establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 Leases and ASU No. 2018-11, Leases (Topic 842) Targeted Improvements. ASU 2018-10 clarifies how to apply certain aspects of ASU 2016-02. ASU 2018-11 provides entities with an additional transition method to adopt Topic 842. Under the new transition method, an entity initially applies the new leases standard at the adoption date, versus at the beginning of the earliest period presented, and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the impact that the adoption of ASU No. 2016‑02 will have on its financial statements and related disclosures along with ASU 2018-10 and ASU 2018-11. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718, (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606. The Company is currently evaluating the impact that the adoption of ASU 2018-07 will have on its financial statements and related disclosures. In August 2018, the Securities and Exchange Commission (SEC) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018; however, in light of the proximity of the effective date to the filing date for most filers’ quarterly reports, the SEC will allow a filer’s first presentation of the changes in stockholders’ equity to be included in its Form 10-Q for the quarter that begins after the effective date. The Company will begin to present a statement of changes in stockholders’ equity in its quarterly financial statements beginning on January 1, 2019. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Revenue | 3. Revenue Adoption of ASU No. 2014-09 On January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605. The Company sells the majority of its products to its distributors, but does recognize some revenue under licensing and royalty agreements. The following table presents the Company’s revenues disaggregated by sales channel, (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Distributor $ 9,692 $ 26,223 Non-distributor 1,826 10,913 Total revenue $ 11,518 $ 37,136 All of the Company's performance obligations and associated revenue are generally transferred to customers at a point in time, with the exception of certain revenue streams which are performed over time commensurate with the delivery of service. The following table presents the Company’s revenues disaggregated by timing of recognition (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Point in time $ 10,613 $ 34,729 Over time 905 2,407 Total revenue $ 11,518 $ 37,136 The following table presents the Company’s revenues disaggregated by type (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Product sales $ 10,469 $ 29,283 License fees — 5,000 Royalties 144 446 Other revenue 905 2,407 Total revenue $ 11,518 $ 37,136 The Company recognizes revenue in three primary geographic regions: North America; Europe, Middle East and Africa (EMEA); and Asia-Pacific and Japan (APJ). The following table presents the Company’s revenues disaggregated by the geographic region to which the product is delivered or licensee is located (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 North America $ 2,104 $ 6,214 EMEA 2,749 7,896 APJ 6,665 23,026 Total revenue $ 11,518 $ 37,136 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2018 | |
Balance Sheet Components | |
Balance Sheet Components | 4. Balance Sheet Components Inventory Inventory consisted of the following (in thousands): September 30, December 31, 2018 2017 Raw materials $ 232 $ 682 Work-in-process 8,525 7,970 Finished goods 725 1,185 Total inventory $ 9,482 $ 9,837 Accrued Liabilities Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2018 2017 Accrued payroll-related expenses $ 1,485 $ 1,331 Accrued joint development agreement expenses 4,711 749 Accrued inventory 1,038 897 Deferred rent 382 230 Accrued sales commissions payable to sales representatives 104 75 Other 868 466 Total accrued liabilities $ 8,588 $ 3,748 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 5. Commitments and Contingencies Operating Leases During 2017, the Company entered into a lease for 27,974 square feet of office space for its corporate headquarters located in Chandler, Arizona. The lease expires in January 2022, however the Company has the option to renew the lease through August 2024. Rent expense is recognized on a straight-line basis over the term of the leases and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. In April 2018, the Company entered into a lease termination agreement that released the Company from any further obligations on its previous headquarters’ space in Chandler, Arizona. The remaining unamortized balance of deferred rent of $18,000 was written off and a lease termination fee of $43,000 was recognized as rent expense on the unaudited condensed statement of operations and comprehensive loss. The Company leases office and lab space for its design facility located in Austin, Texas. The lease expires in January 2022. The Company has another operating lease for its Arizona manufacturing facility, which includes office and fabrication space. This lease is cancellable upon 24 months’ notice by either of the parties. The lease originally expired in January 2020, however it could be further extended through January 2021 if an option to extend was initiated by the lessor. In August 2018, the Company amended its lease agreement for its Arizona manufacturing facility to extend the lease term through January 2021. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt | |
Debt | 6. Debt 2017 Credit Facility On May 4, 2017, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (2017 Credit Facility) for a $12.0 million term loan. The term loan provided for interest at a floating rate equal to the prime rate minus 0.75%. The term loan provided for a period of interest-only payments through April 30, 2018, followed by fixed principal and interest payments based on either a 24-month amortization schedule or a 36-month amortization schedule if the Company met certain sales milestones. As of December 31, 2017, the Company determined it would not meet the sales milestones and as such the term loan was based on a 24-month amortization schedule. An end of term fee of 6% of the amount borrowed must be made when the loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise. On July 6, 2018, the Company entered into the First Amendment to the 2017 Credit Facility (the Amended Credit Facility). The Amended Credit Facility extends the period of interest-only payments through December 31, 2018, followed by fixed principal and interest payments based on either a 24-month or a 36-month amortization schedule if the Company achieves certain milestones. As of September 30, 2018, the Company determined it would not meet the milestones, as such the Amended Credit Facility will be based on a 24-month amortization schedule. The Amended Credit Facility provides for interest at a floating rate equal to the prime rate minus 0.75%. As of September 30, 2018, the interest rate was 4.50%. The terms of the Amended Credit Facility include the refund of $1.0 million in principal payments previously made by the Company. An end of term fee of 7% of the amount borrowed must be made when the loan is prepaid or repaid, whether at maturity or as a result of a prepayment or acceleration or otherwise. The additional payment is being accreted using the effective interest method. As of September 30, 2018, the effective interest rate under the Amended Credit Facility was 7.52%. Borrowings under the Amended Credit Facility mature in December 2020. In conjunction with the Amended Credit Facility, outstanding warrants held by SVB to purchase 9,229 shares of the Company’s common stock at $26.00 per share were cancelled. The Company subsequently issued a warrant to SVB for the purchase of 9,375 shares of the Company’s common stock at an exercise price of $8.91 per share. The warrant can be exercised at any time and expires five years after the date of issuance. The Company estimated the fair value of the warrant as $43,000 on the date of issuance using the Black-Scholes option pricing model. The warrant was recorded as a discount to the debt and will be amortized into interest expense over the remaining term of the loan using the effective interest method. Security for the Amended Credit Facility includes all of the Company’s assets except for intellectual property. The Company is required to comply with certain covenants under the Amended Credit Facility, including requirements to maintain a minimum liquidity ratio, meet certain revenue targets, and restrictions on certain actions without the consent of the lender, such as limitations on its ability to engage in mergers or acquisitions, sell assets, enter into transactions involving related parties, incur indebtedness or grant liens or negative pledges on its assets, make loans or make other investments. Under these covenants, the Company is prohibited from paying cash dividends with respect to its capital stock. The Company was in compliance with all covenants at September 30, 2018. The Amended Credit Facility contains a material adverse effect clause which provides that an event of default will occur if, among other triggers, an event occurs that could reasonably be expected to result in a material adverse effect on the Company’s business, operations or condition, or on the Company’s ability to perform its obligations under the term loan. As of September 30, 2018, management does not believe that it is probable that the clause will be triggered within the next twelve months, and therefore the term loan is classified as long-term. The carrying value of the Company’s Amended Credit Facility at September 30, 2018 was as follows (in thousands): Current Long-Term Portion Debt Total Debt, including end of term fee $ 4,500 $ 8,340 $ 12,840 Less: Discount attributable to end of term fee, warrant, and debt issuance costs (38) (425) (463) Net carrying value of debt $ 4,462 $ 7,915 $ 12,377 The carrying value of the Company’s 2017 Credit Facility at December 31, 2017 was as follows (in thousands): Current Long-Term Portion Debt Total Debt, including end of term fee $ 4,000 $ 8,720 $ 12,720 Less: Discount attributable to end of term fee and debt issuance costs (23) (563) (586) Net carrying value of debt $ 3,977 $ 8,157 $ 12,134 The table below includes the principal repayments due under the Amended Credit Facility as of September 30, 2018 (in thousands): Principal Repayment 2018 (remaining three months) $ — 2019 6,000 2020 6,840 Total principal repayments $ 12,840 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders’ Equity | |
Stockholders’ Equity | 7. Stockholders’ Equity In February 2018, the Company completed a follow-on underwritten public offering of its common stock under its Registration Statement filed in November 2017 (File No. 333-221331), selling 3,772,447 shares of its common stock at an offering price of $7.00 per share for proceeds of $24.5 million, net of $1.9 million of underwriting discounts and commissions and other offering costs. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | 8. Stock-Based Compensation The following table summarizes the stock option and award activity for the nine months ended September 30, 2018: Options Outstanding Weighted- Weighted- Options and Average Average Awards Exercise Remaining Aggregate Available for Number of Price Per Contractual Intrinsic Grant Options Share Life (years) Value (In thousands) Balance—December 31, 2017 83,929 1,593,195 $ 8.88 6.6 $ 1,997 Immaterial prior period adjustment (1,026) 13,784 4.54 Options authorized 1,084,516 — — RSUs granted (75,700) — — RSUs cancelled/forfeited 1,900 — — Options granted (384,165) 384,165 8.73 Options exercised — (446,141) 4.95 $ 1,903 Options cancelled/forfeited 44,784 (50,469) 7.68 Balance—September 30, 2018 754,238 1,494,534 $ 7.70 8.3 $ 992 Options exercisable—September 30, 2018 567,298 $ 6.52 7.2 $ 877 The total grant date fair value of options vested was $510,000 and $236,000 during the three months ended September 30, 2018 and 2017, respectively, and $1.4 million and $1.1 million during the nine months ended September 30, 2018 and 2017, respectively. The weighted-average grant date fair value of employee options granted during the three months ended September 30, 2018 and 2017 was $4.48 and $9.22 per share, respectively, and during the nine months ended September 30, 2018 and 2017 was $4.56 and $7.80 per share, respectively. 2016 Employee Stock Purchase Plan In January 2018, there was an increase of 128,172 shares reserved for issuance under the Company’s Employee Stock Purchase Plan (ESPP). The Company had 291,659 shares available for future issuance under the Company’s ESPP as of September 30, 2018. Employees purchased 20,057 shares for $137,000 during the nine months ended September 30, 2018. Employees purchased 17,924 shares for $122,000 during the nine months ended September 30, 2017. Modification of Stock Awards In February 2018, the Company modified the terms of 400,000 vested and unvested stock option awards granted to the Chief Executive Officer, by reducing their exercise price from $16.25 per share to $7.64 per share. There was no change to any of the other terms of the option awards. The modification resulted in an incremental value of $600,000 being allocated to the options, of which $63,000 was recognized to expense immediately based on options that were vested at the time of the modification. The remaining incremental value of $537,000 attributable to unvested options will be recognized over the remaining vesting term through September 2021. Restricted Stock Units The following table summarizes Restricted Stock Units (RSUs) activity for the nine months ended September 30, 2018: RSUs Outstanding Weighted- Average Number of Grant Date Restricted Stock Fair Value Per Units Share Balance—December 31, 2017 30,680 $ 10.55 Granted 75,700 8.59 Vested (10,000) 16.25 Cancelled/forfeited (1,900) 8.39 Balance—September 30, 2018 94,480 $ 8.42 The fair value of RSUs is determined on the date of grant based on the market price of the Company’s common stock on that date. As of September 30, 2018, there was $645,000 of unrecognized stock-based compensation expense related to RSUs to be recognized over a weighted-average period of 3.0 years. Stock-based Compensation Expense The Company recognized stock-based compensation expense from awards granted to employees and non-employees under its equity incentive plans and from its ESPP as follows, excluding amounts related to GLOBALFOUNDRIES, Inc. (GF) (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 132 $ 122 $ 378 $ 367 General and administrative 504 499 1,403 938 Sales and marketing 86 51 283 206 Total $ 722 $ 672 $ 2,064 $ 1,511 As of September 30, 2018, there was $5.5 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 2.8 years. Employee Stock-based Compensation Stock-based compensation expense for employees was $716,000 and $685,000 for the three months ended September 30, 2018 and 2017, respectively, and $2.0 million and $1.4 million for the nine months ended September 30, 2018 and 2017, respectively. The Company estimated the fair value of each option using the Black-Scholes option-pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the assumptions below. Each of these inputs is subjective and its determination generally requires significant judgment. Option Plan ESPP Nine Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Expected volatility 51.9-53.5 % 47.2-61.1 % 59.5 - 87.8 % 49.3 - 66.2 % Risk-free interest rate 2.64-2.94 % 1.93-2.10 % 0.94-2.11 % 0.5 - 1.0 % Expected term (in years) 5.7-6.1 5.8-6.1 0.5 - 1.0 0.5 - 0.6 Dividend yield — % — % — % — % Non-employee Stock-based Compensation Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options vest. During the three and nine months ended September 30, 2018, the Company granted stock options to non-employees to purchase 1,200 and 8,400 shares of common stock, respectively. During the three and nine months September 30, 2017, the Company granted stock option to non-employees to purchase 12,800 shares of common stock. As of September 30, 2018, options to purchase 46,272 shares of common stock were outstanding with a weighted-average exercise price of $9.11 per share. Stock-based compensation expense for non-employees was $6,000 and $(13,000) for the three months ended September 30, 2018 and 2017, respectively, and $50,000 and $86,000 for the nine months ended September 30, 2018 and 2017, respectively. |
Significant Agreements
Significant Agreements | 9 Months Ended |
Sep. 30, 2018 | |
Significant Agreements | |
Significant Agreements | 9. Significant Agreements GLOBALFOUNDRIES, Inc. Joint Development Agreement On October 17, 2014, the Company entered into a Joint Development Agreement (JDA) with GF, for the joint development of the Company’s Spin Transfer Torque MRAM (STT-MRAM) technology. The term of the agreement is the later of four years from the effective date or until the completion, termination or expiration of the last statement of work entered into pursuant to the JDA. The JDA also states that the specific terms and conditions for the production and supply of the developed STT-MRAM technology would be pursuant to a separate manufacturing agreement entered into between the parties. In October 2018, the Company entered into the Third Amendment to the JDA with GF (Note 11), which extended the term of the JDA until December 2019. Under the JDA, each party licenses its relevant intellectual property to the other party. For certain jointly developed works, the parties have agreed to follow an invention allocation procedure to determine ownership. In addition, GF possesses the exclusive right to manufacture the Company’s discrete and embedded STT-MRAM devices developed pursuant to the agreement until the earlier of three years after the qualification of the MRAM device for a particular technology node or four years after the completion of the relevant statement of work under which the device was developed. For the same exclusivity period associated with the relevant device, GF agreed not to license intellectual property developed in connection with the JDA to named competitors of the Company. Generally, unless otherwise specified in the agreement or a statement of work, the Company and GF share project costs, which do not include personnel or production qualification costs, equally under the JDA. If GF manufactures, sells or transfers to customers wafers containing production quantified STT-MRAM devices that utilize certain design information, GF will be required to pay the Company a royalty. The term of the agreement is four years and is extended until the completion of any development work, if later. The Company incurred project costs, recognized as research and development expense, of $1.6 million and $850,000 for the three months ended September 30, 2018 and 2017 respectively, and $5.9 million and $4.1 million for the nine months ended September 30, 2018 and 2017 respectively. The Company entered into a Statement of Work (SOW) and an Amendment to the SOW, under the JDA with GF effective August 2016 and June 2018, respectively. The Company was eligible to receive milestone payments from SOW and its Amendment for an aggregate of $1.6 million and $1.0 million, respectively. The Amendment was accounted for as a separate contract rather than a modification of the SOW, as the Company had completed its performance obligations under the SOW as of December 31, 2017. The Company recognized revenue from GF of $300,000 in the three months ended September 30, 2018. There was no revenue recognized from GF for the three months ended September 30, 2017. The Company recognized revenue from GF of $800,000 and $1.2 million in the nine months ended September 30, 2018 and 2017, respectively. On October 21, 2014, GF participated, along with other investors, in the Company’s Series B redeemable convertible preferred stock financing and purchased 192,307 shares at $26.00 per share. Contemporaneously, the Company sold 461,538 shares of its common stock to GF at a discounted price of $0.00026 per share. The common shares vest upon the achievement of a goal as set forth in the Statement of Work #1 (the SOW) under the JDA. The unvested common shares are subject to repurchase by the Company, if the JDA is terminated for any reason, for a one-year period after such termination, at a price that is the lower of the original price paid by GF or the fair value of the Company’s common stock as of the date of repurchase. The Company has determined that the issuance of these shares of common stock to GF represents compensation for services to be provided under the JDA. Accordingly, the shares are accounted for similar to a stock award granted to a non-employee of the Company and are remeasured to their fair value as they vest. A total of 211,538 shares of common stock became vested on August 21, 2016, the designated Initial Measurement Date. The remaining shares vest on a monthly basis thereafter. Subsequent to the Initial Measurement Date through September 30, 2018, an additional 211,538 shares of common stock became vested. As of September 30, 2018, there were 9,615 shares unvested that were subject to repurchase. The Company recognized non-cash compensation expense of $247,000 and $508,000 during the three months ended September 30, 2018 and 2017, respectively, and $709,000 and $1.2 million during the nine months ended September 30, 2018 and 2017, respectively, in research and development expense related to the vesting of the shares of common stock. The Company recognizes compensation expense based on the estimated fair value of the common stock at each reporting period, which was $7.68 and $7.50 per share as of September 30, 2018 and December 31, 2017, respectively. Silterra Malaysia Sdn. Bhd. Joint Collaboration Agreement In September 2018, the Company entered into a Joint Collaboration Agreement (JCA) with Silterra Malaysia Sdn. Bhd. (Silterra), and another third party. The JCA will create additional manufacturing capacity for the Company’s Toggle MRAM products. Initial production is expected to start in 2020. Under the JCA the Company will pay non-recurring engineering costs of $1.0 million. During the three and nine months ended September 30, 2018, the Company paid $0.5 million of JCA costs. License Agreement In March 2018, the Company entered into a global cross-license agreement with a customer pursuant to which the Company granted a worldwide, non-exclusive, non-transferable, irrevocable, royalty-bearing license under the Company’s patents to use, sell, import and export the Company’s products. Under the cross-license agreement, the Company received a non-refundable license fee and is entitled to quarterly royalty payments based upon low single digits of the average selling price of products covered under the license agreement. The license was transferred to the customer and the Company recognized the non-refundable license fee during the nine months ended September 30, 2018. The cross-license agreement will remain in effect until the licensed patents have expired, been abandoned, or ruled invalid. |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Net Loss Per Common Share | |
Net Loss Per Common Share | 10. Net Loss Per Common Share The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (5,629) $ (5,446) $ (14,274) $ (16,719) Denominator: Weighted-average common shares outstanding 16,970,266 12,700,802 16,185,122 12,595,015 Less: weighted-average unvested common shares subjected to repurchase (25,606) (140,990) (54,240) (169,625) Weighted-average common shares outstanding used to calculate net loss per common share, basic and diluted 16,944,660 12,559,812 16,130,882 12,425,390 Net loss per common share, basic and diluted $ (0.33) $ (0.43) $ (0.88) $ (1.35) The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the periods presented, because their inclusion would be anti-dilutive: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Options to purchase common stock 1,494,534 1,595,415 1,494,534 1,595,415 Restricted stock units 94,480 10,000 94,480 10,000 Common stock subject to repurchase 9,615 125,000 9,615 125,000 Common stock warrants 27,836 27,690 27,836 27,690 Total 1,626,465 1,758,105 1,626,465 1,758,105 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 11. Subsequent Events In October 2018, the Company entered into the Third Amendment to the JDA with GF (Third Amendment). The Third Amendment is effective as of January 1, 2018 and extends the term of the JDA to December 2019. In the event a statement of work is executed that extends beyond the term, the JDA will be extended for an additional three months after the statement of work is completed. Under the Third Amendment, the Company has revised the cost structure of the arrangement to allow GF to spend as needed. Additionally, costs for the Company are capped at $5.8 million. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period or for any other future year. The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10-K filed with the SEC. |
Use of Estimates | Use of Estimates The preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory, income taxes, and stock-based compensation. Actual results could differ from those estimates and assumptions. |
Accounts receivable, net | Accounts receivable, net The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales. At September 30, 2018, the allowance for product returns and the allowance for price concessions were $230,000 and $362,000, respectively. At December 31, 2017, the allowance for product returns and the allowance for price concessions were $147,000 and $0, respectively. Accounts receivable, net consisted of the following (in thousands): September 30, December 31, 2018 2017 Trade accounts receivable $ 5,687 $ 4,188 Unbilled accounts receivable 487 — Allowance for accounts receivable (592) (147) Accounts receivable, net $ 5,582 $ 4,041 |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents that are held by a financial institution in the United States and accounts receivable. Amounts on deposit with a financial institution may at times exceed federally insured limits. The Company maintains its cash accounts with high credit quality financial institutions and, accordingly, minimal credit risk exists with respect to the financial institutions. Significant customers are those which represent more than 10% of the Company’s total revenue or net accounts receivable balance at each respective balance sheet date. For the purposes of this disclosure, the Company defines “customer” as the entity that is purchasing the products or licenses directly from the Company, which includes the distributors of the Company’s products in addition to end customers that the Company sells to directly. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable, net are as follows: Revenue Revenue Accounts Receivable, net Three Months Ended Nine Months Ended As of As of September 30, September 30, September 30, December 31, Customers 2018 2017 2018 2017 2018 2017 Customer A 13 % * 13 % * * 11 % Customer B 13 % 16 % 13 % 14 % * * Customer C 10 % 18 % * 17 % * * Customer D 10 % * * * 11 % * Customer E * * 14 % * * * Customer F * * * * 17 % * Customer G * * * * 12 % * Customer H * * * * * 15 % Customer I * * * 10 % * 10 % * |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2—Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The carrying value of accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments. As of September 30, 2018, based on Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s variable interest rate debt, excluding unamortized debt issuance costs, approximates fair value. The Company’s financial instruments consist of Level 1 assets. Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 assets consist of highly liquid money market funds that are included in cash equivalents. The following tables sets forth the fair value of the Company’s financial assets measured at fair value on a recurring basis (in thousands): September 30, 2018 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 31,683 $ — $ — $ 31,683 Total assets measured at fair value $ 31,683 $ — $ — $ 31,683 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 13,369 $ — $ — $ 13,369 Total assets measured at fair value $ 13,369 $ — $ — $ 13,369 |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when a customer obtains control of the promised products or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue is recognized net of allowances for returns and price concessions, and any taxes collected from customers, which are subsequently remitted to governmental authorities. Nature of Products and Services The Company’s revenue is derived from the sale of MRAM-based products in discrete unit form, licenses of and royalties on its MRAM and magnetic sensor technology, the sale of backend foundry services and design services to third parties. Sales of products in discrete unit form are recognized at a point in time, revenue related to licensing agreements is recognized when the Company has delivered control of the technology, revenue related to royalty agreements is recognized in the period in which sales generated from products sold using the Company’s technology occurs, sales of backend foundry services are recognized over time, and design services to third parties are recognized either at a point in time or over time, depending on the nature of the services. Product Revenue For products sold in their discrete form, the Company either sells its products directly to original equipment manufacturers (OEMs), original design manufacturers (ODMs) and contract manufacturers (CMs), or through a network of distributors, who in turn sell to those customers. For sales directly to OEMs, ODMs and CMs, revenue is recognized when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer. The Company sells the majority of its products to its distributors at a uniform list price. However, distributors may resell the Company’s products to end customers at a very broad range of individually negotiated price points. Distributors are provided with price concessions subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price. The price concessions are based on a variety of factors, including customer, product, quantity, geography and competitive differentiation. Price protection rights grant distributors the right to a credit in the event of declines in the price of the Company’s products. Under these circumstances, the Company remits back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors’ outstanding accounts receivable balance. The credits are on a per unit basis and are not given to the distributor until the distributor provides information regarding the sale to their end customer. The Company estimates these credits and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of an allowance for price concessions due to distributors. The Company estimates credits to distributors based on the historical rate of credits provided to distributors relative to sales. Revenue on shipments to distributors is recorded when control of the products has been transferred to the distributor. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates its product return liability by analyzing its historical returns, current economic trends and changes in customer demand and acceptance of products. The Company has received insignificant returns to date and believes that returns of its products will continue to be minimal. At the time of shipment to distributors, the Company records a trade receivable for the selling price as there is a legally enforceable obligation of the distributor to pay for the product delivered, an allowance is recorded for the estimated discount that will be provided to the distributor, and the net of these amounts is recorded as revenue on the statement of operations. License Revenue For licenses of technology, recognition of revenue is dependent upon whether the Company has delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestones amounts to become due from the customer. The terms of such agreements include payment to the Company of one or more of the following: non-refundable upfront fees; and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations for the Company once the license has been transferred to the customer. The transaction price in each agreement is allocated to the identified performance obligations based on the standalone selling price (SSP) of each distinct performance obligation. Judgment is required to determine SSP. In instances where SSP is not directly observable, such as when a license or service is not sold separately, SSP is determined using information that may include market conditions and other observable inputs. Revenue from non-refundable up-front payments is recognized when the license is transferred to the customer and the Company has no other performance obligations. Royalties Revenue from sales-based royalties from licenses of the Company’s technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part). Other Revenue For certain revenue streams, the Company recognizes revenue based on the pattern of transfer of the services. The Company uses the input method of measuring costs incurred to date compared to total estimated costs to be incurred under the contract as this method most faithfully depicts its performance. The Company will record an unbilled receivable (within accounts receivable, net) for the portion of the work that has been completed but not invoiced at the end of each reporting period. Revenue from milestone payments must be estimated using either the expected value method or the most likely amount method. At the inception of each agreement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability or achievement of each such milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. |
Net Loss per Common Share | Net Loss per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, less shares subject to repurchase, without consideration of potentially dilutive securities. Diluted net loss per common share is the same as basic net loss per common share since the effect of potentially dilutive securities is anti-dilutive. |
Prior Period Reclassifications | Prior Period Reclassifications Certain amounts in the prior period have been reclassified to conform with current period presentation. There was no impact on total revenue or net loss for the prior period. |
Recently Adopted Pronouncements and Recently Issued Pronouncements | Recently Adopted Pronouncements ASU No. 2014-09, Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. The new standard permits adoption either by using (i) a full retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018 using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of its accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Topic 606 permits the application of certain practical expedients. The Company’s billing practices approximate the Company’s performance as measured by an output method, where each output represents the completion of a performance obligation. Accordingly, the Company utilizes the invoice practical expedient as defined in Topic 606, resulting in recognition of revenue in the amount that the Company has the right to invoice. The Company incurs direct and incremental costs of obtaining contracts and such costs are expensed as incurred, as the life of the underlying contract is less than one year. Accordingly, the Company has concluded, based on the structure of its contracts, no adjustments are necessary under Topic 606. As a result of the adoption of the new standard, the Company changed its accounting policy for revenue recognition and the details of the significant changes and quantitative impact of the changes are disclosed below. Distributor sales - Some of the Company's contracts with distributors provide the distributor with certain concessions and price protection credits. Under Topic 605, Revenue, these concessions and price protection credits were not fixed or determinable and, as a result, the associated revenue was deferred until delivery of the product to the end customer. At the time of shipment to distributors, the Company recorded a trade receivable for the selling price as there was a legally enforceable obligation of the distributor to pay for the product delivered, inventory was reduced by the carrying value of goods shipped, and the net of these amounts, the gross profit, was recorded as deferred income on shipments to distributors on the balance sheet. Under Topic 606, the Company recognizes revenue from sales to distributors upon delivery of the product to the distributor and estimates the amount of the concessions and price protection credits at the point of revenue recognition. Accordingly, the balance of the deferred income on shipments to distributors was eliminated as a cumulative effect adjustment of implementing Topic 606 as of January 1, 2018, net of the Company’s estimate of concessions and price protection credits for those contracts. Performance obligations delivered over time –Topic 605 permitted straight-line recognition of revenue for performance obligations that were delivered over time. The new revenue standard requires an entity to recognize revenue based on the pattern of transfer of the services. Entities must use either an input method or an output method to measure progress toward complete satisfaction of a performance obligation. The Company determined that the input method of measuring costs incurred to date compared to total estimated costs to be incurred under the contract most faithfully depicts its performance. Under Topic 606, the Company will record an unbilled receivable (within accounts receivable, net) for the portion of the service that has been completed but not invoiced at the end of each reporting period. Milestone payments – Topic 605 permitted recognition using the milestone method, whereby revenue was recognized upon the completion of substantive milestones once the customers acknowledge the milestones have been met and the collection of the amounts is reasonably assured. The milestone method no longer exists under the new revenue standard. Revenue from milestone payments must be estimated using either the expected value method or the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. The adoption of Topic 606 did not have an impact on milestone revenue recorded to date as the performance obligations related to such milestones were completed as of the adoption date. Sales-based royalties – Topic 605 permitted recognition of royalties when reported to the Company, which generally coincided with the receipt of payment. Under the new revenue standard, revenue generated from sales-based royalties from licenses of technology are recognized at the later of when (1) the sale occurs or (2) the performance obligation to which some or all of the sales-based royalty has been allocated is satisfied (in whole or in part). The change in revenue recognition upon adoption of Topic 606 resulted in a decrease in the accumulated deficit balance of $1.3 million on January 1, 2018. The following table summarizes the impact of adopting Topic 606 on select unaudited condensed balance sheet line items (in thousands): Balances without the adoption of September 30, 2018 As reported Adjustments Topic 606 Accounts receivable, net $ 5,582 $ (630) $ 4,952 Inventory 9,482 58 9,540 Total current assets 46,938 (572) 46,366 Total assets 51,449 (572) 50,877 Deferred income on shipments to distributors — 2,917 2,917 Total current liabilities 15,907 2,917 18,824 Total liabilities 23,835 2,917 26,752 Accumulated deficit (130,513) (3,489) (134,002) Total liabilities and stockholders’ equity 51,449 (572) 50,877 The following table summarizes the impact of adopting Topic 606 on select unaudited condensed statement of operations line items (in thousands, except per share data): Balances without the adoption of Three Months Ended September 30, 2018 As reported Adjustments Topic 606 Product sales $ 10,469 $ (1,330) $ 9,139 Licensing, royalty, and other revenue 1,049 (72) 977 Total revenue 11,518 (1,402) 10,116 Cost of sales 6,109 (541) 5,568 Gross profit 5,409 (861) 4,548 Loss from operations (5,539) (861) (6,400) Net loss and comprehensive loss (5,629) (861) (6,490) Net loss per common share, basic and diluted (0.33) (0.05) (0.38) Balances without the adoption of Nine Months Ended September 30, 2018 As reported Adjustments Topic 606 Product sales $ 29,283 $ (2,748) $ 26,535 Licensing, royalty, and other revenue 7,853 (169) 7,684 Total revenue 37,136 (2,917) 34,219 Cost of sales 17,235 (728) 16,507 Gross profit 19,901 (2,189) 17,712 Loss from operations (13,927) (2,189) (16,116) Net loss and comprehensive loss (14,274) (2,189) (16,463) Net loss per common share, basic and diluted (0.88) (0.14) (1.02) The following table summarizes the impact of adopting Topic 606 on select unaudited condensed statement of cash flows line items (in thousands): Balances without the adoption of Nine Months Ended September 30, 2018 As reported Adjustments Topic 606 Cash flows from operating activities Net loss $ (14,274) $ (2,189) $ (16,463) Adjustments to reconcile net loss to net cash used in operating activities: Accounts receivable (1,876) 965 (911) Inventory 309 (12) 297 Shipping term reversal (39) 1,236 1,197 ASU No. 2017-09, Compensation-Stock Compensation In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting, which is intended to amend the scope of modification accounting for share-based payment arrangements. The amendments in the update provide guidance on types of changes to the terms or conditions of share-based payment awards that would require the Company to apply modification accounting under ASC 718, Compensation-Stock Compensation. This ASU is effective for annual reporting periods beginning after December 15, 2017, and early adoption was permitted. The Company adopted this standard on January 1, 2018, and the impact of its adoption on the Company’s financial statements was not material. ASU No. 2016-15, Statement of Cash Flows In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. The standard is effective for fiscal years and interim periods beginning after December 15, 2017. The standard should be applied retrospectively and early adoption was permitted, including adoption in an interim period. The Company adopted this standard on January 1, 2018, and the impact of its adoption on the Company’s financial statements was not material. Recently Issued Pronouncements In February 2016, the FASB issued ASU No. 2016‑02, Leases, which establishes a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease-term of more than twelve months. This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 Leases and ASU No. 2018-11, Leases (Topic 842) Targeted Improvements. ASU 2018-10 clarifies how to apply certain aspects of ASU 2016-02. ASU 2018-11 provides entities with an additional transition method to adopt Topic 842. Under the new transition method, an entity initially applies the new leases standard at the adoption date, versus at the beginning of the earliest period presented, and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the impact that the adoption of ASU No. 2016‑02 will have on its financial statements and related disclosures along with ASU 2018-10 and ASU 2018-11. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718, (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606. The Company is currently evaluating the impact that the adoption of ASU 2018-07 will have on its financial statements and related disclosures. In August 2018, the Securities and Exchange Commission (SEC) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018; however, in light of the proximity of the effective date to the filing date for most filers’ quarterly reports, the SEC will allow a filer’s first presentation of the changes in stockholders’ equity to be included in its Form 10-Q for the quarter that begins after the effective date. The Company will begin to present a statement of changes in stockholders’ equity in its quarterly financial statements beginning on January 1, 2019. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of accounts receivable net | Accounts receivable, net consisted of the following (in thousands): September 30, December 31, 2018 2017 Trade accounts receivable $ 5,687 $ 4,188 Unbilled accounts receivable 487 — Allowance for accounts receivable (592) (147) Accounts receivable, net $ 5,582 $ 4,041 |
Schedule of Revenue and Accounts Receivable for Each Significant Customer | Revenue Revenue Accounts Receivable, net Three Months Ended Nine Months Ended As of As of September 30, September 30, September 30, December 31, Customers 2018 2017 2018 2017 2018 2017 Customer A 13 % * 13 % * * 11 % Customer B 13 % 16 % 13 % 14 % * * Customer C 10 % 18 % * 17 % * * Customer D 10 % * * * 11 % * Customer E * * 14 % * * * Customer F * * * * 17 % * Customer G * * * * 12 % * Customer H * * * * * 15 % Customer I * * * 10 % * 10 % * |
Schedule of Fair Value of Financial Assets Measured on Recurring Basis | The following tables sets forth the fair value of the Company’s financial assets measured at fair value on a recurring basis (in thousands): September 30, 2018 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 31,683 $ — $ — $ 31,683 Total assets measured at fair value $ 31,683 $ — $ — $ 31,683 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 13,369 $ — $ — $ 13,369 Total assets measured at fair value $ 13,369 $ — $ — $ 13,369 |
Schedule of impact of adopting Topic 606 | The following table summarizes the impact of adopting Topic 606 on select unaudited condensed balance sheet line items (in thousands): Balances without the adoption of September 30, 2018 As reported Adjustments Topic 606 Accounts receivable, net $ 5,582 $ (630) $ 4,952 Inventory 9,482 58 9,540 Total current assets 46,938 (572) 46,366 Total assets 51,449 (572) 50,877 Deferred income on shipments to distributors — 2,917 2,917 Total current liabilities 15,907 2,917 18,824 Total liabilities 23,835 2,917 26,752 Accumulated deficit (130,513) (3,489) (134,002) Total liabilities and stockholders’ equity 51,449 (572) 50,877 The following table summarizes the impact of adopting Topic 606 on select unaudited condensed statement of operations line items (in thousands, except per share data): Balances without the adoption of Three Months Ended September 30, 2018 As reported Adjustments Topic 606 Product sales $ 10,469 $ (1,330) $ 9,139 Licensing, royalty, and other revenue 1,049 (72) 977 Total revenue 11,518 (1,402) 10,116 Cost of sales 6,109 (541) 5,568 Gross profit 5,409 (861) 4,548 Loss from operations (5,539) (861) (6,400) Net loss and comprehensive loss (5,629) (861) (6,490) Net loss per common share, basic and diluted (0.33) (0.05) (0.38) Balances without the adoption of Nine Months Ended September 30, 2018 As reported Adjustments Topic 606 Product sales $ 29,283 $ (2,748) $ 26,535 Licensing, royalty, and other revenue 7,853 (169) 7,684 Total revenue 37,136 (2,917) 34,219 Cost of sales 17,235 (728) 16,507 Gross profit 19,901 (2,189) 17,712 Loss from operations (13,927) (2,189) (16,116) Net loss and comprehensive loss (14,274) (2,189) (16,463) Net loss per common share, basic and diluted (0.88) (0.14) (1.02) The following table summarizes the impact of adopting Topic 606 on select unaudited condensed statement of cash flows line items (in thousands): Balances without the adoption of Nine Months Ended September 30, 2018 As reported Adjustments Topic 606 Cash flows from operating activities Net loss $ (14,274) $ (2,189) $ (16,463) Adjustments to reconcile net loss to net cash used in operating activities: Accounts receivable (1,876) 965 (911) Inventory 309 (12) 297 Shipping term reversal (39) 1,236 1,197 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue | |
Schedule of disaggregation of revenue | The following table presents the Company’s revenues disaggregated by sales channel, (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Distributor $ 9,692 $ 26,223 Non-distributor 1,826 10,913 Total revenue $ 11,518 $ 37,136 All of the Company's performance obligations and associated revenue are generally transferred to customers at a point in time, with the exception of certain revenue streams which are performed over time commensurate with the delivery of service. The following table presents the Company’s revenues disaggregated by timing of recognition (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Point in time $ 10,613 $ 34,729 Over time 905 2,407 Total revenue $ 11,518 $ 37,136 The following table presents the Company’s revenues disaggregated by type (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Product sales $ 10,469 $ 29,283 License fees — 5,000 Royalties 144 446 Other revenue 905 2,407 Total revenue $ 11,518 $ 37,136 The Company recognizes revenue in three primary geographic regions: North America; Europe, Middle East and Africa (EMEA); and Asia-Pacific and Japan (APJ). The following table presents the Company’s revenues disaggregated by the geographic region to which the product is delivered or licensee is located (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 North America $ 2,104 $ 6,214 EMEA 2,749 7,896 APJ 6,665 23,026 Total revenue $ 11,518 $ 37,136 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Balance Sheet Components | |
Schedule of Inventory | Inventory consisted of the following (in thousands): September 30, December 31, 2018 2017 Raw materials $ 232 $ 682 Work-in-process 8,525 7,970 Finished goods 725 1,185 Total inventory $ 9,482 $ 9,837 |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2018 2017 Accrued payroll-related expenses $ 1,485 $ 1,331 Accrued joint development agreement expenses 4,711 749 Accrued inventory 1,038 897 Deferred rent 382 230 Accrued sales commissions payable to sales representatives 104 75 Other 868 466 Total accrued liabilities $ 8,588 $ 3,748 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt | |
Summary of Debt | The carrying value of the Company’s Amended Credit Facility at September 30, 2018 was as follows (in thousands): Current Long-Term Portion Debt Total Debt, including end of term fee $ 4,500 $ 8,340 $ 12,840 Less: Discount attributable to end of term fee, warrant, and debt issuance costs (38) (425) (463) Net carrying value of debt $ 4,462 $ 7,915 $ 12,377 The carrying value of the Company’s 2017 Credit Facility at December 31, 2017 was as follows (in thousands): Current Long-Term Portion Debt Total Debt, including end of term fee $ 4,000 $ 8,720 $ 12,720 Less: Discount attributable to end of term fee and debt issuance costs (23) (563) (586) Net carrying value of debt $ 3,977 $ 8,157 $ 12,134 |
Summary of Principal Repayments of Credit Facility | The table below includes the principal repayments due under the Amended Credit Facility as of September 30, 2018 (in thousands): Principal Repayment 2018 (remaining three months) $ — 2019 6,000 2020 6,840 Total principal repayments $ 12,840 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Summary of Stock Option Activity | Options Outstanding Weighted- Weighted- Options and Average Average Awards Exercise Remaining Aggregate Available for Number of Price Per Contractual Intrinsic Grant Options Share Life (years) Value (In thousands) Balance—December 31, 2017 83,929 1,593,195 $ 8.88 6.6 $ 1,997 Immaterial prior period adjustment (1,026) 13,784 4.54 Options authorized 1,084,516 — — RSUs granted (75,700) — — RSUs cancelled/forfeited 1,900 — — Options granted (384,165) 384,165 8.73 Options exercised — (446,141) 4.95 $ 1,903 Options cancelled/forfeited 44,784 (50,469) 7.68 Balance—September 30, 2018 754,238 1,494,534 $ 7.70 8.3 $ 992 Options exercisable—September 30, 2018 567,298 $ 6.52 7.2 $ 877 |
Schedule of Restricted Stock Unit Activity | RSUs Outstanding Weighted- Average Number of Grant Date Restricted Stock Fair Value Per Units Share Balance—December 31, 2017 30,680 $ 10.55 Granted 75,700 8.59 Vested (10,000) 16.25 Cancelled/forfeited (1,900) 8.39 Balance—September 30, 2018 94,480 $ 8.42 |
Summary of Stock-Based Compensation Expense | The Company recognized stock-based compensation expense from awards granted to employees and non-employees under its equity incentive plans and from its ESPP as follows, excluding amounts related to GLOBALFOUNDRIES, Inc. (GF) (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 132 $ 122 $ 378 $ 367 General and administrative 504 499 1,403 938 Sales and marketing 86 51 283 206 Total $ 722 $ 672 $ 2,064 $ 1,511 |
Schedule of Fair Value Assumptions | Option Plan ESPP Nine Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Expected volatility 51.9-53.5 % 47.2-61.1 % 59.5 - 87.8 % 49.3 - 66.2 % Risk-free interest rate 2.64-2.94 % 1.93-2.10 % 0.94-2.11 % 0.5 - 1.0 % Expected term (in years) 5.7-6.1 5.8-6.1 0.5 - 1.0 0.5 - 0.6 Dividend yield — % — % — % — % |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Net Loss Per Common Share | |
Computation of Basic and Diluted Net Loss Per Share | The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (5,629) $ (5,446) $ (14,274) $ (16,719) Denominator: Weighted-average common shares outstanding 16,970,266 12,700,802 16,185,122 12,595,015 Less: weighted-average unvested common shares subjected to repurchase (25,606) (140,990) (54,240) (169,625) Weighted-average common shares outstanding used to calculate net loss per common share, basic and diluted 16,944,660 12,559,812 16,130,882 12,425,390 Net loss per common share, basic and diluted $ (0.33) $ (0.43) $ (0.88) $ (1.35) |
Schedule of Potentially Dilutive Securities Excluded from Diluted Net Loss Per Common Share | Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Options to purchase common stock 1,494,534 1,595,415 1,494,534 1,595,415 Restricted stock units 94,480 10,000 94,480 10,000 Common stock subject to repurchase 9,615 125,000 9,615 125,000 Common stock warrants 27,836 27,690 27,836 27,690 Total 1,626,465 1,758,105 1,626,465 1,758,105 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Accounts receivable, net (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts receivable, net | ||
Trade accounts receivable | $ 5,687,000 | $ 4,188,000 |
Unbilled accounts receivable | 487,000 | |
Allowance for accounts receivable | 592,000 | 147,000 |
Accounts receivable, net | 5,582,000 | 4,041,000 |
Non-distributor | ||
Accounts receivable, net | ||
Allowance for accounts receivable | 230,000 | 147,000 |
Distributor | ||
Accounts receivable, net | ||
Allowance for accounts receivable | $ 362,000 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Revenue and Accounts Receivable for Each Significant Customer (Details) - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenue | Customer A | |||||
Concentration risk | |||||
Concentration risk percentage | 13.00% | 13.00% | |||
Revenue | Customer A | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | |||
Revenue | Customer B | |||||
Concentration risk | |||||
Concentration risk percentage | 13.00% | 16.00% | 13.00% | 14.00% | |
Revenue | Customer C | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 18.00% | 17.00% | ||
Revenue | Customer C | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Revenue | Customer D | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Revenue | Customer D | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | ||
Revenue | Customer E | |||||
Concentration risk | |||||
Concentration risk percentage | 14.00% | ||||
Revenue | Customer E | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | ||
Revenue | Customer F | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Revenue | Customer G | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Revenue | Customer H | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Revenue | Customer I | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Revenue | Customer I | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | 10.00% | ||
Accounts Receivable, net | Customer A | |||||
Concentration risk | |||||
Concentration risk percentage | 11.00% | ||||
Accounts Receivable, net | Customer A | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable, net | Customer B | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | |||
Accounts Receivable, net | Customer C | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | |||
Accounts Receivable, net | Customer D | |||||
Concentration risk | |||||
Concentration risk percentage | 11.00% | ||||
Accounts Receivable, net | Customer D | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable, net | Customer E | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | 10.00% | |||
Accounts Receivable, net | Customer F | |||||
Concentration risk | |||||
Concentration risk percentage | 17.00% | ||||
Accounts Receivable, net | Customer F | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable, net | Customer G | |||||
Concentration risk | |||||
Concentration risk percentage | 12.00% | ||||
Accounts Receivable, net | Customer G | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable, net | Customer H | |||||
Concentration risk | |||||
Concentration risk percentage | 15.00% | ||||
Accounts Receivable, net | Customer H | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable, net | Customer I | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% | ||||
Accounts Receivable, net | Customer I | Maximum | |||||
Concentration risk | |||||
Concentration risk percentage | 10.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Fair Value of Financial Assets and Liabilities Measured on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value | ||
Total assets measured at fair value | $ 31,683 | $ 13,369 |
Level 1 | ||
Fair Value | ||
Total assets measured at fair value | 31,683 | 13,369 |
Money Market Funds | ||
Fair Value | ||
Money market funds | 31,683 | 13,369 |
Money Market Funds | Level 1 | ||
Fair Value | ||
Money market funds | $ 31,683 | $ 13,369 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue Recognition - Condensed Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies | ||
Accumulated deficit | $ (130,513) | $ (117,539) |
Current assets: | ||
Accounts receivable, net | 5,582 | 4,041 |
Inventory | 9,482 | 9,837 |
Total current assets | 46,938 | 27,418 |
Total assets | 51,449 | 31,437 |
Current liabilities: | ||
Deferred income on shipments to distributors | 1,720 | |
Total current liabilities | 15,907 | 12,375 |
Total liabilities | 23,835 | 20,553 |
Stockholders' equity: | ||
Accumulated deficit | (130,513) | (117,539) |
Total liabilities and stockholders' equity | 51,449 | 31,437 |
ASU 2014-09 | Balances without the adoption of Topic 606 | ||
Summary of Significant Accounting Policies | ||
Accumulated deficit | (134,002) | |
Current assets: | ||
Accounts receivable, net | 4,952 | |
Inventory | 9,540 | |
Total current assets | 46,366 | |
Total assets | 50,877 | |
Current liabilities: | ||
Deferred income on shipments to distributors | 2,917 | |
Total current liabilities | 18,824 | |
Total liabilities | 26,752 | |
Stockholders' equity: | ||
Accumulated deficit | (134,002) | |
Total liabilities and stockholders' equity | 50,877 | |
ASU 2014-09 | Adjustments | ||
Summary of Significant Accounting Policies | ||
Accumulated deficit | (3,489) | 1,300 |
Current assets: | ||
Accounts receivable, net | (630) | |
Inventory | 58 | |
Total current assets | (572) | |
Total assets | (572) | |
Current liabilities: | ||
Deferred income on shipments to distributors | 2,917 | |
Total current liabilities | 2,917 | |
Total liabilities | 2,917 | |
Stockholders' equity: | ||
Accumulated deficit | (3,489) | $ 1,300 |
Total liabilities and stockholders' equity | $ (572) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Recognition - Condensed Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Summary of Significant Accounting Policies | ||||
Total revenue | $ 11,518 | $ 37,136 | ||
Total cost of sales | 6,109 | $ 3,753 | 17,235 | $ 10,549 |
Gross profit | 5,409 | 5,255 | 19,901 | 15,264 |
Loss from operations | (5,539) | (5,308) | (13,927) | (15,972) |
Net loss and comprehensive loss | $ (5,629) | $ (5,446) | $ (14,274) | $ (16,719) |
Net loss per common share, basic and diluted | $ (0.33) | $ (0.43) | $ (0.88) | $ (1.35) |
Product sales | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | $ 10,469 | $ 29,283 | ||
Licensing, royalty and other revenue | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | 1,049 | 7,853 | ||
ASU 2014-09 | Balances without the adoption of Topic 606 | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | 10,116 | 34,219 | ||
Total cost of sales | 5,568 | 16,507 | ||
Gross profit | 4,548 | 17,712 | ||
Loss from operations | (6,400) | (16,116) | ||
Net loss and comprehensive loss | $ (6,490) | $ (16,463) | ||
Net loss per common share, basic and diluted | $ (0.38) | $ (1.02) | ||
ASU 2014-09 | Adjustments | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | $ (1,402) | $ (2,917) | ||
Total cost of sales | (541) | (728) | ||
Gross profit | (861) | (2,189) | ||
Loss from operations | (861) | (2,189) | ||
Net loss and comprehensive loss | $ (861) | $ (2,189) | ||
Net loss per common share, basic and diluted | $ (0.05) | $ (0.14) | ||
ASU 2014-09 | Product sales | Balances without the adoption of Topic 606 | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | $ 9,139 | $ 26,535 | ||
ASU 2014-09 | Product sales | Adjustments | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | (1,330) | (2,748) | ||
ASU 2014-09 | Licensing, royalty and other revenue | Balances without the adoption of Topic 606 | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | 977 | 7,684 | ||
ASU 2014-09 | Licensing, royalty and other revenue | Adjustments | ||||
Summary of Significant Accounting Policies | ||||
Total revenue | $ (72) | $ (169) |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Revenue Recognition - Condensed Statement of Cash flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (14,274) | $ (16,719) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Accounts receivable | (1,876) | (527) |
Inventory | 309 | $ (2,628) |
Shipping term reversal | (39) | |
ASU 2014-09 | Balances without the adoption of Topic 606 | ||
Cash flows from operating activities | ||
Net loss | (16,463) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Accounts receivable | (911) | |
Inventory | 297 | |
Shipping term reversal | 1,197 | |
ASU 2014-09 | Adjustments | ||
Cash flows from operating activities | ||
Net loss | (2,189) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Accounts receivable | 965 | |
Inventory | (12) | |
Shipping term reversal | $ 1,236 |
Revenue - Disaggregated by Sale
Revenue - Disaggregated by Sales Channel (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of Revenue | ||
Revenue | $ 11,518 | $ 37,136 |
Non-distributor | ||
Disaggregation of Revenue | ||
Revenue | 1,826 | 10,913 |
Distributor | ||
Disaggregation of Revenue | ||
Revenue | $ 9,692 | $ 26,223 |
Revenue - Disaggregated by Timi
Revenue - Disaggregated by Timing of Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of Revenue | ||
Revenue | $ 11,518 | $ 37,136 |
Point in time | ||
Disaggregation of Revenue | ||
Revenue | 10,613 | 34,729 |
Over time | ||
Disaggregation of Revenue | ||
Revenue | $ 905 | $ 2,407 |
Revenue - Disaggregated by Type
Revenue - Disaggregated by Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of Revenue | ||
Revenue | $ 11,518 | $ 37,136 |
Product sales | ||
Disaggregation of Revenue | ||
Revenue | 10,469 | 29,283 |
License fee | ||
Disaggregation of Revenue | ||
Revenue | 5,000 | |
Royalties | ||
Disaggregation of Revenue | ||
Revenue | 144 | 446 |
Other revenue | ||
Disaggregation of Revenue | ||
Revenue | $ 905 | $ 2,407 |
Revenue - Disaggregated by Geog
Revenue - Disaggregated by Geographic Region (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018USD ($)region | Sep. 30, 2018USD ($)region | |
Disaggregation of Revenue | ||
Number of primary geographic regions | region | 3 | 3 |
Revenue | $ 11,518 | $ 37,136 |
North America | ||
Disaggregation of Revenue | ||
Revenue | 2,104 | 6,214 |
EMEA | ||
Disaggregation of Revenue | ||
Revenue | 2,749 | 7,896 |
APAC | ||
Disaggregation of Revenue | ||
Revenue | $ 6,665 | $ 23,026 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory | ||
Raw materials | $ 232 | $ 682 |
Work-in-process | 8,525 | 7,970 |
Finished goods | 725 | 1,185 |
Total inventory | $ 9,482 | $ 9,837 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accrued liabilities | ||
Accrued payroll-related expenses | $ 1,485 | $ 1,331 |
Accrued joint development agreement expenses | 4,711 | 749 |
Accrued inventory | 1,038 | 897 |
Deferred rent | 382 | 230 |
Accrued sales commissions payable to sales representatives | 104 | 75 |
Other | 868 | 466 |
Total accrued liabilities | $ 8,588 | $ 3,748 |
Commitments and Commitments (De
Commitments and Commitments (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Apr. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($)ft² | |
Commitments and Contingencies | |||
Deferred rent | $ 382,000 | $ 230,000 | |
Previous Headquarters | |||
Commitments and Contingencies | |||
Area of operating lease (in sq feet) | ft² | 27,974 | ||
Write off of unamortized deferred rent | $ 18,000 | ||
Lease termination fee | $ 43,000 | ||
Arizona manufacturing facility | |||
Commitments and Contingencies | |||
Period to cancel lease upon notice | 24 months |
Debt - 2017 Facility - Addition
Debt - 2017 Facility - Additional Information (Details) | Jul. 06, 2018USD ($)payment$ / sharesshares | May 04, 2017USD ($)payment | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017payment |
Debt | |||||
Gain on extinguishment of debt | $ (246,000) | ||||
2017 Credit Facility | |||||
Debt | |||||
Loan agreement amount | $ 12,000,000 | ||||
Interest rate | 7.52% | ||||
Number of interest and principal payments | payment | 24 | 24 | |||
Reimbursement of principal payments | $ 1,000,000 | ||||
End-of-term fee (as a percent) | 7.00% | 6.00% | |||
Number of shares the warrant can be converted to | shares | 9,375 | ||||
Warrant exercise price | $ / shares | $ 8.91 | ||||
Warrant exercise expiration period | 5 years | ||||
Fair value of warrants | $ 43,000 | ||||
2017 Credit Facility | Minimum | |||||
Debt | |||||
Number of interest and principal payments | payment | 24 | 24 | |||
2017 Credit Facility | Maximum | |||||
Debt | |||||
Number of interest and principal payments | payment | 36 | 36 | |||
2017 Credit Facility | Prime Rate | |||||
Debt | |||||
Interest rate, negative basis spread percentage | 0.75% | 0.75% | |||
Interest rate | 4.50% | ||||
SVB Credit Facility | |||||
Debt | |||||
Number of shares the warrant can be converted to that was cancelled | shares | 9,229 | ||||
Warrant exercise price | $ / shares | $ 26 |
Debt - Carrying Value (Details)
Debt - Carrying Value (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt | ||
Net carrying value of debt, Current Portion | $ 4,472 | $ 3,987 |
Net carrying value of debt, Long-term debt | 7,928 | 8,178 |
2017 Credit Facility | ||
Debt | ||
Debt, including end of term fee, Current Portion | 4,500 | 4,000 |
Less: Discount attributable to end of term fee, warrant and debt issuance costs | (38) | (23) |
Net carrying value of debt, Current Portion | 4,462 | 3,977 |
Debt, including end of term fee, Long-term debt | 8,340 | 8,720 |
Less: Discount attributable to warrants, end of term fee and debt issuance costs, Long-term debt | (425) | (563) |
Net carrying value of debt, Long-term debt | 7,915 | 8,157 |
Debt, including end of term fee, Total | 12,840 | 12,720 |
Less: Discount attributable to warrants, end of term fee and debt issuance costs, Total | (463) | (586) |
Net carrying value of debt, Total | $ 12,377 | $ 12,134 |
Debt - Summary of Principal Rep
Debt - Summary of Principal Repayments of 2017 Credit Facility (Details) - 2017 Credit Facility $ in Thousands | Sep. 30, 2018USD ($) |
Debt | |
2,019 | $ 6,000 |
2,020 | 6,840 |
Total principal repayments | $ 12,840 |
Stockholders' Equity - (Details
Stockholders' Equity - (Details) $ / shares in Units, $ in Millions | 1 Months Ended |
Feb. 28, 2018USD ($)$ / sharesshares | |
Sale of common stock | |
Number of shares sold | shares | 3,772,447 |
Offering price | $ / shares | $ 7 |
Proceeds from stock offering, net of offering costs | $ 24.5 |
Offering costs | $ 1.9 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Options and Awards Activity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Stock-based compensation | ||
Options and Awards Available for Grant, Outstanding, Beginning balance | 83,929 | |
Options and Awards Available for Grant, Options authorized | 1,084,516 | |
Options and Awards Available for Grant, RSUs granted | (75,700) | |
Options Available for Grant, RSUs cancelled/forfeited | 1,900 | |
Options and Awards Available for Grant, Options granted | (384,165) | |
Options Available for Grant, Options exercised | 0 | |
Options and Awards Available for Grant, Options cancelled/forfeited | 44,784 | |
Options and Awards Available for Grant, Outstanding, Ending balance | 754,238 | 83,929 |
Number of Options, Outstanding, Beginning balance | 1,593,195 | |
Number of Options, Options granted | 384,165 | |
Number of Options, Options exercised | (446,141) | |
Number of Options, Options cancelled/forfeited | (50,469) | |
Number of Options, Outstanding, Ending balance | 1,494,534 | 1,593,195 |
Number of Options, exercisable | 567,298 | |
Weighted - Average Exercise Price Per Share, Options outstanding, Beginning balance | $ / shares | $ 8.88 | |
Weighted - Average Exercise Price Per Share, Options granted | $ / shares | 8.73 | |
Weighted - Average Exercise Price Per Share, Options exercised | $ / shares | 4.95 | |
Weighted - Average Exercise Price Per Share, Options cancelled/forfeited | $ / shares | 7.68 | |
Weighted - Average Exercise Price Per Share, Options outstanding, Ending balance | $ / shares | 7.70 | $ 8.88 |
Weighted - Average Exercise Price Per Share, Options exercisable | $ / shares | $ 6.52 | |
Weighted - Average Remaining Contractual Life, Options outstanding | 8 years 3 months 18 days | 6 years 7 months 6 days |
Weighted - Average Remaining Contractual Life, Options exercisable | 7 years 2 months 12 days | |
Aggregate Intrinsic Value, Options outstanding | $ | $ 992 | $ 1,997 |
Aggregate Intrinsic Value, Options exercised | $ | 1,903 | |
Aggregate Intrinsic Value, Options exercisable | $ | $ 877 | |
Prior period adjustment | ||
Stock-based compensation | ||
Options and Awards Available for Grant, Outstanding, Beginning balance | (1,026) | |
Options and Awards Available for Grant, Outstanding, Ending balance | (1,026) | |
Number of Options, Outstanding, Beginning balance | 13,784 | |
Number of Options, Outstanding, Ending balance | 13,784 | |
Weighted - Average Exercise Price Per Share, Options outstanding, Beginning balance | $ / shares | $ 4.54 | |
Weighted - Average Exercise Price Per Share, Options outstanding, Ending balance | $ / shares | $ 4.54 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Feb. 28, 2018 | Jan. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Share-based Compensation | |||||||
Shares available for future issuance (in shares) | 754,238 | 754,238 | 83,929 | ||||
Number of stock options granted (in shares) | 384,165 | ||||||
Options remained outstanding | 1,494,534 | 1,494,534 | 1,593,195 | ||||
Total grant date fair value of options vested | $ 510,000 | $ 236,000 | $ 1,400,000 | $ 1,100,000 | |||
Unrecognized compensation expense, weighted-average period expected to be recognized | 2 years 9 months 18 days | ||||||
Weighted-average exercise price (per share) | $ 7.64 | $ 16.25 | $ 7.70 | $ 7.70 | $ 8.88 | ||
Stock-based compensation expense | $ 722,000 | $ 672,000 | $ 2,064,000 | $ 1,511,000 | |||
Immediate vesting | |||||||
Share-based Compensation | |||||||
Incremental modification value | $ 63,000 | ||||||
Remaining vesting | |||||||
Share-based Compensation | |||||||
Incremental modification value | $ 537,000 | ||||||
Chief Executive Officer | |||||||
Share-based Compensation | |||||||
Number of vested and unvested stock option award modified | 400,000 | ||||||
Incremental modification value | $ 600,000 | ||||||
Employees | |||||||
Share-based Compensation | |||||||
Weighted-average grant date fair value of options granted | $ 4.48 | $ 9.22 | $ 4.56 | $ 7.80 | |||
Stock-based compensation expense | $ 716,000 | $ 685,000 | $ 2,000,000 | $ 1,400,000 | |||
Non-Employee | |||||||
Share-based Compensation | |||||||
Number of stock options granted (in shares) | 12,800 | 12,800 | |||||
Options remained outstanding | 46,272 | 46,272 | |||||
Weighted-average exercise price (per share) | $ 9.11 | $ 9.11 | |||||
Stock-based compensation expense | $ 6,000 | $ (13,000) | $ 50,000 | $ 86,000 | |||
Options to Purchase Common Stock | Non-Employee | |||||||
Share-based Compensation | |||||||
Number of stock options granted (in shares) | 1,200 | 8,400 | |||||
2016 Employee Stock Purchase Plan | |||||||
Share-based Compensation | |||||||
Increase in number of shares available for grant | 128,172 | ||||||
Shares available for future issuance (in shares) | 291,659 | 291,659 | |||||
Number of shares issued (in shares) | 20,057 | 17,924 | |||||
Value of share issued | $ 137,000 | $ 122,000 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) | 9 Months Ended |
Sep. 30, 2018 | |
Weighted Average Exercise Price Per Share | |
Unrecognized stock-based compensation expense | $ 5,500,000 |
Unrecognized compensation expense, weighted-average period expected to be recognized | 2 years 9 months 18 days |
RSU | |
Number of Restricted Stock Units | |
Balance, beginning of period | 30,680 |
Granted | 75,700 |
Vested | (10,000) |
Cancelled/forfeited | (1,900) |
Balance, end of period | 94,480 |
Weighted Average Exercise Price Per Share | |
Balance, beginning of period (price per share) | $ 10.55 |
Granted (price per share) | 8.59 |
Vested (price per share) | 16.25 |
Cancelled/forfeited | 8.39 |
Balance, end of period (price per share) | $ 8.42 |
2016 Employee Incentive Plan | RSU | |
Weighted Average Exercise Price Per Share | |
Unrecognized stock-based compensation expense | $ 645,000 |
Unrecognized compensation expense, weighted-average period expected to be recognized | 3 years |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based compensation expense | ||||
Stock-based compensation expense | $ 722 | $ 672 | $ 2,064 | $ 1,511 |
Unrecognized stock-based compensation expense | 5,500 | $ 5,500 | ||
Unrecognized compensation expense, weighted-average period expected to be recognized | 2 years 9 months 18 days | |||
Research and Development | ||||
Share-based compensation expense | ||||
Stock-based compensation expense | 132 | 122 | $ 378 | 367 |
General and Administrative | ||||
Share-based compensation expense | ||||
Stock-based compensation expense | 504 | 499 | 1,403 | 938 |
Sales and Marketing | ||||
Share-based compensation expense | ||||
Stock-based compensation expense | $ 86 | $ 51 | $ 283 | $ 206 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Fair Value of Employee Stock Options (Details) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Options to Purchase Common Stock | ||
Share-based Compensation | ||
Expected volatility, Minimum | 51.90% | 47.20% |
Expected volatility, Maximum | 53.50% | 61.10% |
Risk-free interest rate, Minimum | 2.64% | 1.93% |
Risk-free interest rate, Maximum | 2.94% | 2.10% |
Minimum | Options to Purchase Common Stock | ||
Share-based Compensation | ||
Expected term (in years) | 5 years 8 months 12 days | 5 years 9 months 18 days |
Maximum | Options to Purchase Common Stock | ||
Share-based Compensation | ||
Expected term (in years) | 6 years 1 month 6 days | 6 years 1 month 6 days |
2016 Employee Stock Purchase Plan | ||
Share-based Compensation | ||
Expected volatility, Minimum | 59.50% | 49.30% |
Expected volatility, Maximum | 87.80% | 66.20% |
Risk-free interest rate, Minimum | 0.94% | 0.50% |
Risk-free interest rate, Maximum | 2.11% | 1.00% |
2016 Employee Stock Purchase Plan | Minimum | ||
Share-based Compensation | ||
Expected term (in years) | 6 months | 6 months |
2016 Employee Stock Purchase Plan | Maximum | ||
Share-based Compensation | ||
Expected term (in years) | 1 year | 7 months 6 days |
Significant Agreements (Details
Significant Agreements (Details) - USD ($) | Aug. 21, 2016 | Oct. 21, 2014 | Oct. 17, 2014 | Sep. 30, 2018 | Jun. 30, 2018 | Feb. 28, 2018 | Aug. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 |
Joint development agreement | |||||||||||||
Research and development expense | $ 6,453,000 | $ 6,420,000 | $ 19,706,000 | $ 19,236,000 | |||||||||
Number of shares sold | 3,772,447 | ||||||||||||
Non-cash compensation expense (income) | 709,000 | 1,224,000 | |||||||||||
Joint Development Agreement | Global Foundries | |||||||||||||
Joint development agreement | |||||||||||||
Agreement Term | 4 years | ||||||||||||
Period to Repurchase Shares | 1 year | ||||||||||||
Period of possession of exclusive right to manufacture after qualification of device | 3 years | ||||||||||||
Period of possession of exclusive right to manufacture after completion of device development work | 4 years | ||||||||||||
Research and development expense | 1,600,000 | 850,000 | 5,900,000 | 4,100,000 | |||||||||
Milestone payment due per the agreement | $ 1,000,000 | $ 1,600,000 | |||||||||||
Milestone revenue | $ 300,000 | 0 | $ 800,000 | 1,200,000 | |||||||||
Joint Development Agreement | Global Foundries | Common Stock | |||||||||||||
Joint development agreement | |||||||||||||
Number of shares sold | 461,538 | ||||||||||||
Shares sold, price per share | $ 0.00026 | ||||||||||||
Number of shares of common stock, vested | 211,538 | 211,538 | |||||||||||
Number of shares of common stock, unvested | 9,615 | 9,615 | 9,615 | 9,615 | |||||||||
Estimated fair value of common stock per share | $ 7.68 | $ 7.68 | $ 7.68 | $ 7.68 | $ 7.50 | ||||||||
Joint Development Agreement | Global Foundries | Research and Development | |||||||||||||
Joint development agreement | |||||||||||||
Non-cash compensation expense (income) | $ 247,000 | $ 508,000 | $ 709,000 | $ 1,200,000 | |||||||||
Joint Development Agreement | Global Foundries | Series B Redeemable Convertible Preferred Stock | |||||||||||||
Joint development agreement | |||||||||||||
Number of shares sold | 192,307 | ||||||||||||
Shares sold, price per share | $ 26 | ||||||||||||
Collaborative Agreement | Silterra | |||||||||||||
Joint development agreement | |||||||||||||
Non-recurring engineering cost obligation | $ 1,000,000 | ||||||||||||
JCA costs | $ 500,000 | $ 500,000 |
Net Loss Per Common Share - Com
Net Loss Per Common Share - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net loss | $ (5,629) | $ (5,446) | $ (14,274) | $ (16,719) |
Denominator: | ||||
Weighted-average common shares outstanding | 16,970,266 | 12,700,802 | 16,185,122 | 12,595,015 |
Less: weighted-average unvested common shares subjected to repurchase | (25,606) | (140,990) | (54,240) | (169,625) |
Weighted-average common shares outstanding used to calculate net loss per common share, basic and diluted | 16,944,660 | 12,559,812 | 16,130,882 | 12,425,390 |
Net loss per common share, basic and diluted | $ (0.33) | $ (0.43) | $ (0.88) | $ (1.35) |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Potentially Dilutive Securities Excluded from Diluted Net Loss Per Common Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities | ||||
Potentially dilutive securities excluded from diluted net loss per common share | 1,626,465 | 1,758,105 | 1,626,465 | 1,758,105 |
Options to Purchase Common Stock | ||||
Antidilutive Securities | ||||
Potentially dilutive securities excluded from diluted net loss per common share | 1,494,534 | 1,595,415 | 1,494,534 | 1,595,415 |
RSU | ||||
Antidilutive Securities | ||||
Potentially dilutive securities excluded from diluted net loss per common share | 94,480 | 10,000 | 94,480 | 10,000 |
Common Stock Subject to Repurchase | ||||
Antidilutive Securities | ||||
Potentially dilutive securities excluded from diluted net loss per common share | 9,615 | 125,000 | 9,615 | 125,000 |
Common Stock Warrants | ||||
Antidilutive Securities | ||||
Potentially dilutive securities excluded from diluted net loss per common share | 27,836 | 27,690 | 27,836 | 27,690 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 24 Months Ended | ||
Oct. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2019 | |
Subsequent events | ||||||
Research and development expense | $ 6,453,000 | $ 6,420,000 | $ 19,706,000 | $ 19,236,000 | ||
Global Foundries | Joint Development Agreement | ||||||
Subsequent events | ||||||
Research and development expense | $ 1,600,000 | $ 850,000 | $ 5,900,000 | $ 4,100,000 | ||
Subsequent Events | Global Foundries | Joint Development Agreement | ||||||
Subsequent events | ||||||
Additional extension related to an SOW that extends beyond the extended term | 3 months | |||||
Subsequent Events | Global Foundries | Joint Development Agreement | Forecast | Maximum | ||||||
Subsequent events | ||||||
Research and development expense | $ 5,800,000 |