| PROSPECTUS SUPPLEMENT | Filed pursuant to Rule |
| (To Prospectus dated April 14, 2021) | 424(b)(3) of the Rules and |
| | Regulations Under the |
| | Securities Act of 1933 |
| | Registration Statement No. 333-260390 |
VALENS SEMICONDUCTOR LTD.
Ordinary Shares
Warrants to Purchase Ordinary Shares
Recent Developments
This prospectus supplement, together with the prospectus, is to be used by the selling shareholders listed in the prospectus in connection with offers and sales from time to time of the ordinary shares and warrants to purchase ordinary shares of Valens Semiconductor Ltd.
May 11, 2022
Key Financial and Business Highlights
| · | Record quarterly revenues of $21.6 million, up 61.8% from Q1 2021 and up 4.3% from Q4 2021 |
| · | Q1 2022 GAAP gross margin was 71.4% compared to 71.3% in Q1 2021 (non-GAAP gross margin was 72.1% compared to 71.8% in Q1 2021) |
| · | Q1 2022 GAAP Net Loss was $(5.1) million, better than the $(6.4) million in Q1 2021, and Adjusted EBITDA loss in the first quarter was $(4.1) million, compared with $(4.3) million in Q1 2021 |
| – | Increased the number of OEMs, Tier 1s and Tier 2s evaluating the company’s MIPI A-PHY VA7000 chipset to more than 30, doubling OEMs to eight |
| – | Announced partnership with OMNIVISION, a leading Tier 2 supplier for in-vehicle camera sensors, for a MIPI A-PHY compliant camera solution for Advanced Driver-Assistance Systems (ADAS) applications |
| – | Joined the Logitech Collaboration Program to develop a solution using Valens technology and products in Logitech’s USB peripheral suite of products for both onsite and remote hybrid settings, e.g., in classrooms and corporate meeting rooms |
| – | Increased demand for the Stello VS3000, Valens’ newest audio-video product family, with leading audio-video manufacturers embedding it in additional products, addressing various end-markets |
| · | Met all demand from customers, in a severely supply constrained environment |
| · | Strong balance sheet with $165.5 million in cash, cash equivalents and short-term deposits as of March 31, 2022 |
VALENS SEMICONDUCTOR LTD.
SUMMARY OF FINANCIAL RESULTS
(U.S. Dollars in thousands, except per share amounts)
(Unaudited)
| | | Three Months Ended March 31, |
| | | 2022 | | 2021 |
| Revenues | | | 21,620 | | | | 13,364 | |
| Gross Profit | | | 15,440 | | | | 9,532 | |
| Gross Margin | | | 71.4 | % | | | 71.3 | % |
| Net loss | | | (5,050 | ) | | | (6,376 | ) |
| Cash, cash equivalents and short-term deposits1 | | | 165,522 | | | | 57,564 | |
| Net cash used in operating activities | | | (8,403 | ) | | | (3,208 | ) |
| Non-GAAP Financial Data | | | | | | | | |
| Non-GAAP Gross Margin2 | | | 72.1 | % | | | 71.8 | % |
| Adjusted EBITDA3 | | | (4,086 | ) | | | (4,303 | ) |
Loss per share4 (in U.S. Dollars) | | | (0.02 | ) | | | (0.42 | ) |
____________________
1 As of the last day of the period.
2 GAAP Gross Profit excluding share-based compensation and depreciation expenses, divided by revenue. For the three months ended March 31, 2022, and 2021, share-based compensation and depreciation expenses were $140 thousand and $57 thousand respectively.
3 Adjusted EBITDA is defined as net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. Please refer to the appendix at the end of this press release for a reconciliation to the most directly comparable measure in accordance with GAAP.
4 See reconciliation of GAAP to non-GAAP financial measures.
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollars in thousands, except share and per share amounts)
(Unaudited)
| | | Three Months Ended March 31, |
| | | 2022 | | 2021 |
| REVENUES | | | 21,620 | | | | 13,364 | |
| COST OF REVENUES | | | (6,180 | ) | | | (3,832 | ) |
| GROSS PROFIT | | | 15,440 | | | | 9,532 | |
| OPERATING EXPENSES: | | | | | | | | |
| Research and development expenses | | | (14,127 | ) | | | (10,398 | ) |
| Sales and marketing expenses | | | (4,209 | ) | | | (3,110 | ) |
| General and administrative expenses | | | (4,301 | ) | | | (2,178 | ) |
| TOTAL OPERATING EXPENSES | | | (22,637 | ) | | | (15,686 | ) |
| OPERATING LOSS | | | (7,197 | ) | | | (6,154 | ) |
| Change in fair value of Forfeiture Shares | | | 2,604 | | | | — | |
| Financial expenses, net | | | (115 | ) | | | (167 | ) |
| LOSS BEFORE INCOME TAXES | | | (4,708 | ) | | | (6,321 | ) |
| INCOME TAXES | | | (346 | ) | | | (55 | ) |
| LOSS AFTER INCOME TAXES | | | (5,054 | ) | | | (6,376 | ) |
| Equity in earnings of investee | | | 4 | | | | — | |
| NET LOSS | | | (5,050 | ) | | | (6,376 | ) |
| EARNINGS PER SHARE DATA: | | | | | | | | |
BASIC AND DILUTED NET LOSS PER ORDINARY SHARE5 (in U.S. Dollars) | | | (0.05 | ) | | | (0.93 | ) |
| WEIGHTED AVERAGE NUMBER OF SHARES USED | | | | | | | | |
| IN CALCULATION OF NET LOSS PER ORDINARY | | | 97,150,054 | | | | 10,834,415 | |
____________________
5 See note 4.
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands)
(Unaudited)
| ASSETS | | March 31, 2022 | | December 31, 2021 |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents | | | 44,994 | | | | 56,791 | |
| Short-term deposits | | | 120,528 | | | | 117,568 | |
| Trade accounts receivable | | | 10,213 | | | | 7,095 | |
| Inventories | | | 12,466 | | | | 9,322 | |
| Prepaid expenses and other current assets | | | 7,737 | | | | 8,255 | |
| TOTAL CURRENT ASSETS | | | 195,938 | | | | 199,031 | |
| LONG-TERM ASSETS: | | | | | | | | |
| Property and equipment, net | | | 2,791 | | | | 2,741 | |
| Operating lease right-of-use asset6 | | | 4,729 | | | | — | |
| Other assets | | | 724 | | | | 828 | |
| TOTAL LONG-TERM ASSETS | | | 8,244 | | | | 3,569 | |
| TOTAL ASSETS | | | 204,182 | | | | 202,600 | |
| | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | |
CURRENT LIABILITIES7 | | | 19,442 | | | | 15,699 | |
| LONG-TERM LIABILITIES: | | | | | | | | |
| Forfeiture shares | | | 2,054 | | | | 4,658 | |
| Non-current operating leases8 | | | 2,648 | | | | — | |
| Other long-term liabilities | | | 46 | | | | 46 | |
| TOTAL LONG-TERM LIABILITIES | | | 4,748 | | | | 4,704 | |
| TOTAL LIABILITIES | | | 24,190 | | | | 20,403 | |
| | | | | | | | | |
| SHAREHOLDERS’ EQUITY | | | 179,992 | | | | 182,197 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | | 204,182 | | | | 202,600 | |
____________________
6 As of January 1, 2022, the company has implemented the FASB ASU No. 2016-02, Leases (ASC 842), on the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors).
7 Includes $2,000 thousand of current maturities of operating leases; see footnote 6.
8 See footnote 6.
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
(Unaudited)
| | | Three Months Ended March 31, |
| | | 2022 | | 2021 |
| CASH FLOW FROM OPERATING ACTIVITIES | | | | |
| Net loss for the period | | | (5,050 | ) | | | (6,376 | ) |
Adjustments to reconcile net loss to net cash used in
operating activities: | | | | | | | | |
| Income and expense items not involving cash flows: | | | | | | | | |
| Depreciation | | | 320 | | | | 256 | |
| Stock-based compensation | | | 2,791 | | | | 1,595 | |
| Exchange rate differences | | | 471 | | | | 314 | |
| Interest from short-term deposits | | | (163 | ) | | | 182 | |
| Change in fair value of forfeiture shares | | | (2,604 | ) | | | — | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Operating lease right of use asset | | | 420 | | | | — | |
| Operating lease liabilities | | | (501 | ) | | | — | |
| Trade accounts receivable | | | (3,118 | ) | | | 3,242 | |
| Prepaid expenses and other current assets | | | 518 | | | | (1,130 | ) |
| Inventories | | | (3,144 | ) | | | (789 | ) |
| Long-term assets | | | 104 | | | | (5 | ) |
| Current liabilities | | | 1,553 | | | | (490 | ) |
| Other long-term liabilities | | | — | | | | (7 | ) |
| Net cash used in operating activities | | | (8,403 | ) | | | (3,208 | ) |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Investment in short-term deposits | | | (18,252 | ) | | | — | |
| Maturities of short-term deposits | | | 15,500 | | | | 17,000 | |
| Purchase of property and equipment | | | (180 | ) | | | (378 | ) |
| Net cash provided by (used in) investing activities | | | (2,932 | ) | | | 16,622 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Exercise of options | | | 54 | | | | 76 | |
| Net cash provided by financing activities | | | 54 | | | | 76 | |
Effect of exchange rate changes on cash and cash
equivalents | | | (516 | ) | | | (314 | ) |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | (11,797 | ) | | | 13,176 | |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | | | 56,791 | | | | 26,316 | |
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | | | 44,994 | | | | 39,492 | |
| | | | | | | | | |
| SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | |
| Cash paid for taxes | | | 56 | | | | 77 | |
| NON-CASH ACTIVITY | | | | | | | | |
| Trade accounts payable on account of property and equipment | | | 190 | | | | — | |
| Operating lease liabilities arising from obtaining operating right-of-use assets | | | 246 | | | | — | |
VALENS SEMICONDUCTOR LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(U.S. Dollars in thousands)
(Unaudited)
The following table provides a reconciliation of Net loss to Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as net profit (loss) before financial income (expense), net, income taxes, equity in earnings of investee and depreciation and amortization, further adjusted to exclude share-based compensation, which may vary from period-to-period. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.
| | | Three Months Ended March 31, |
| | | 2022 | | 2021 |
| | | | | |
| Net loss | | | (5,050 | ) | | | (6,376 | ) |
| Adjusted to exclude the following: | | | | | | | | |
| Change in fair value of Forfeiture Shares | | | (2,604 | ) | | | — | |
| Financial expense, net | | | 115 | | | | 167 | |
| Income taxes | | | 346 | | | | 55 | |
| Equity in earnings of investee | | | (4 | ) | | | — | |
| Depreciation | | | 320 | | | | 256 | |
| Share-based compensation expenses | | | 2,791 | | | | 1,595 | |
| Adjusted EBITDA | | | (4,086 | ) | | | (4,303 | ) |
VALENS SEMICONDUCTOR LTD.
RECONCILIATION OF GAAP TO NON-GAAP Tables
(U.S. Dollars in thousands)
(Unaudited)
The following tables provide a calculation of the GAAP Loss per share and reconciliation to Non-GAAP Loss per share.
| | | Three Months Ended March 31, |
| GAAP Loss per Share | | 2022 | | 2021 |
| | | | | |
| GAAP Net Loss | | | (5,050 | ) | | | (6,376 | ) |
| Adjusted to include the following: | | | | | | | | |
| Accrued dividend related to Preferred Shares | | | — | | | | (3,691 | ) |
| Total Loss used for computing Loss per Share | | | (5,050 | ) | | | (10,067 | ) |
| Earnings Per Share Data: | | | | | | | | |
| GAAP Loss per Share (in U.S. Dollars) | | | (0.05 | ) | | | (0.93 | ) |
| Weighted average number of shares used in calculation of net loss per share | | | 97,150,054 | | | | 10,834,415 | |
| | | Three Months Ended March 31, |
| Non-GAAP Loss per Share | | 2022 | | 2021 |
| | | | | |
| GAAP Net loss | | | (5,050 | ) | | | (6,376 | ) |
| Adjusted to exclude the following: | | | | | | | | |
| Stock based compensation | | | 2,791 | | | | 1,595 | |
| Depreciation | | | 320 | | | | 256 | |
| Total Loss used for computing Loss per Share | | | (1,939 | ) | | | (4,525 | ) |
| Earnings Per Share Data: | | | | | | | | |
| Non-GAAP Loss per Share (in U.S. Dollars) | | | (0.02 | ) | | | (0.42 | ) |
| Weighted average number of shares used in calculation of net loss per share | | | 97,150,054 | | | | 10,834,415 | |
