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Transphorm Announces Third Quarter Fiscal 2022 Revenue Increased 129% Year-Over-Year, Driven by Record Product Sales

Company to Host a Webcast Today at 2:00 p.m. PT to Review the Quarterly Results and Provide a Business Update

Transphorm, Inc. (OTCQX: TGAN)—a pioneer in and global supplier of high reliability, high performance gallium nitride (GaN) power conversion products, announced today financial results for the Company’s third quarter fiscal 2022 ended December 31, 2021.

Third Quarter Fiscal 2022 and Recent Highlights

  • Product revenue increased sequentially for the eighth consecutive quarter and grew 220% year-over-year to a quarterly record of $3.6 million.
  • Shipped over one million SuperGaN® Gen IV FETs for 45 W to 300 W power adapter and fast charger applications in December 2021.
  • Increased total design-ins for power adapters and fast chargers to over 50 (with over 20 in production) and total design-ins for higher power (300 Watt – 4 Kilowatt) to over 30 (with over 20 in production).
  • Closed a $12.9 million non-brokered private placement of common stock at $7.71 per share in December, bringing the total amount of equity financings closed during the quarter to more than $45 million.
  • Cash and equivalents as of December 31, 2021 was $41.0 million.

Primit Parikh, Transphorm’s President and Co-founder, commented, “We are thrilled to have achieved our 8th consecutive quarter of record product revenue as well as demonstrated a key capability benchmark of shipping over 1 million adapter GaN products in December 2021. As overall demand for GaN solutions is accelerating, our sales pipeline continues to expand rapidly driven by our products’ unique, easy-to-interface GaN architecture, our world-leading GaN portfolio with a broad range of power capabilities (45 Watt - 5 Kilowatt already powering our customers’ systems today, scalable to 100 Kilowatt plus in the future), and our products’ established real-world performance and reliability. Our emphasis going forward is to capitalize on this momentum, grow our ecosystem of solution partners, and expand our manufacturing capacity with strong focus on providing a total supply chain solution to customers.”

Cameron McAulay, CFO of Transphorm, stated, “Over the past two quarters we have completed multiple equity financings from a combination of strategic and institutional investors, resulting in a significant increase in both the Company’s cash position and stockholders’ equity at quarter end. This additional capital provides expanded operational flexibility in support of our future anticipated growth, and we believe the Company’s strengthened balance sheet satisfies all of the financial qualification requirements for uplisting to the NASDAQ. As such, we expect and look forward to providing a definitive update on this important milestone in the near future.”

Third Quarter Fiscal 2022 Financial Results

Revenue for the third quarter fiscal 2022 was $4.6 million, compared to $11.3 million in the second quarter fiscal 2022 ended September 30, 2021 and $2.0 million in the third quarter fiscal 2021 ended December 31, 2020. Revenue for the quarter reflected record product sales from ramping shipments of GaN devices for a broad range of power conversion applications, with the sequential change from the prior quarter having included $8 million of licensing revenue related to a development project with a manufacturing partner. Excluding licensing, revenue increased 39% sequentially over the prior quarter.

Operating expenses on a GAAP basis were $5.4 million in the third quarter fiscal 2022, compared to $5.1 million in the prior quarter and $4.5 million in the third quarter fiscal 2021. Third quarter fiscal 2022 operating expenses consisted of R&D expenses of $1.6 million and SG&A expenses of $3.8 million. On a non-GAAP basis, operating expenses in the third quarter fiscal 2022 were $4.4 million, compared with non-GAAP operating expenses of $4.5 million in the prior quarter and $3.7 million in the third quarter fiscal 2021.

GAAP net loss for the third quarter fiscal 2022 was ($4.2) million, or ($0.08) per share, compared to GAAP net income of $6.0 million, or $0.14 per diluted share, in the prior quarter, and GAAP net loss of ($4.7) million, or ($0.13) per share, in the third quarter fiscal 2021. On a non-GAAP basis, net loss for the third quarter fiscal 2022 was ($4.3) million, or ($0.09) per share, compared to non-GAAP net income of $3.6 million, or $0.09 per share, in the prior quarter, and non-GAAP net loss of ($4.7) million, or ($0.13) per share, in the third quarter fiscal 2021.

Cash and equivalents as of December 31, 2021 was $41.0 million, compared to $2.5 million at September 30, 2021.

Webcast

Transphorm will host a webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to review the Company’s third quarter fiscal 2022 results and provide a business update. The webcast can be accessed by all interested parties in the Investor Relations Events & Webcast section of Transphorm’s website at https://www.transphormusa.com/en/investors/. Investors and analysts may also join the conference call by dialing: 1-888-440-4368 and +1-646-960-0856 for international callers and providing the conference ID: 8060388.

A replay and the supporting presentation materials will be available on the day of the conference call and for approximately 90 days in the Investor Relations section of the Company’s website. Additionally, a telephone replay of the conference call will be available approximately two hours after the conclusion of the call and through February 16, 2022. The telephone replay can be accessed by dialing +1-800-770-2030 and entering the conference ID: 8060388.

About Transphorm

Transphorm, Inc., a global leader in the GaN revolution, designs and manufactures high performance and high reliability GaN semiconductors for high voltage power conversion applications. Having one of the largest Power GaN IP portfolios of more than 1,000 owned or licensed patents, Transphorm produces the industry’s first JEDEC and AEC-Q101 qualified high voltage GaN semiconductor devices. The Company’s vertically integrated device business model allows for innovation at every development stage: design, fabrication, device, and application support. Transphorm’s innovations are moving power electronics beyond the limitations of silicon to achieve over 99% efficiency, 40% more power density and 20% lower system cost. Transphorm is headquartered in Goleta, California and has manufacturing operations in Goleta and Aizu, Japan. For more information, please visit www.transphormusa.com. Follow us on Twitter @transphormusa and WeChat @ Transphorm_GaN.

Non-GAAP Financial Measures

This press release includes and makes reference to certain non-GAAP financial measures. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Transphorm believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations. Transphorm believes that these non-GAAP financial measures provide additional insight into Transphorm’s ongoing performance and core operational activities and has chosen to provide these measures for more consistent and meaningful comparison between periods. These measures should only be used to evaluate Transphorm’s results of operations in conjunction with the corresponding GAAP measures. The non-GAAP results exclude the effect of stock-based compensation, depreciation, amortization, change in fair value of promissory note and other income in joint venture.

A reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this press release.

Forward-Looking Statements

This press release contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning industry acceptance of GaN technology, the Company’s intention to grow its ecosystem of solution partners, expand its manufacturing capacity and provide a total supply chain solution to customers, the Company’s pipeline and future anticipated growth, and the Company’s expectations regarding uplisting its common stock to the NASDAQ. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “plan,” “believe,” “intend,” “look forward,” and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: risks related to Transphorm’s operations, such as additional financing requirements and access to capital; competition; the ability of Transphorm to protect its intellectual property rights; and other risks set forth in the Company’s filings with the Securities and Exchange Commission. Except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Transphorm, Inc.
Condensed Consolidated Balance Sheets
(in thousands except share and per share data)
 
December 31, 2021

(unaudited)
September 30, 2021

(unaudited)
March 31, 2021

(audited)
Assets
Current assets:
Cash and cash equivalents

$

40,467

 

$

1,988

 

$

9,500

 

Restricted cash

 

500

 

 

500

 

 

-

 

Accounts receivable, net, including related parties

 

2,489

 

 

1,585

 

 

1,618

 

Inventory

 

5,956

 

 

4,774

 

 

2,223

 

Prepaid expenses and other current assets

 

1,249

 

 

1,329

 

 

953

 

Total current assets

 

50,661

 

 

10,176

 

 

14,294

 

Property and equipment, net

 

1,897

 

 

1,761

 

 

1,360

 

Goodwill

 

1,250

 

 

1,286

 

 

1,302

 

Intangible assets, net

 

691

 

 

765

 

 

914

 

Investment in joint venture

 

61

 

 

89

 

 

-

 

Other assets

 

282

 

 

259

 

 

274

 

Total assets

$

54,842

 

$

14,336

 

$

18,144

 

 
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and accrued expenses

$

4,749

 

$

4,047

 

$

3,140

 

Deferred revenue

 

267

 

 

607

 

 

505

 

Development loan

 

-

 

 

-

 

 

10,000

 

Revolving credit facility, including accrued interest

 

368

 

 

184

 

 

10,150

 

Unfunded commitment in joint venture

 

-

 

 

-

 

 

1,866

 

Accrued payroll and benefits

 

1,239

 

 

1,447

 

 

1,410

 

Promissory note

 

-

 

 

15,597

 

 

-

 

Total current liabilities

 

6,623

 

 

21,882

 

 

27,071

 

Revolving credit facility

 

12,000

 

 

12,000

 

 

-

 

Promissory note

 

-

 

 

-

 

 

16,128

 

Total liabilities

 

18,623

 

 

33,882

 

 

43,199

 

Commitments and contingencies
Stockholders’ equity (deficit):
Common stock

 

5

 

 

4

 

 

4

 

Additional paid-in capital

 

210,841

 

 

150,843

 

 

144,201

 

Accumulated deficit

 

(173,639

)

 

(169,475

)

 

(168,403

)

Accumulated other comprehensive loss

 

(988

)

 

(918

)

 

(857

)

Total Stockholders’ equity (deficit)

 

36,219

 

 

(19,546

)

 

(25,055

)

Total liabilities and stockholders’ equity (deficit)

$

54,842

 

$

14,336

 

$

18,144

 

Transphorm, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands except share and per share data)
 
Three Months Ended Nine Months Ended
December 31,

2021
September 30,

2021
December 31,

2020
December 31,

2021
December 31,

2020
Revenue, net

$

4,604

 

$

11,303

 

$

2,013

 

$

19,123

 

$

10,271

 

Operating expenses:
Cost of goods sold

 

3,935

 

 

2,239

 

 

1,936

 

 

8,741

 

 

5,227

 

Research and development

 

1,609

 

 

1,591

 

 

1,453

 

 

5,023

 

 

4,118

 

Sales and marketing

 

976

 

 

825

 

 

581

 

 

2,488

 

 

1,656

 

General and administrative

 

2,852

 

 

2,714

 

 

2,490

 

 

8,309

 

 

7,236

 

Total operating expenses

 

9,372

 

 

7,369

 

 

6,460

 

 

24,561

 

 

18,237

 

(Loss) income from operations

 

(4,768

)

 

3,934

 

 

(4,447

)

 

(5,438

)

 

(7,966

)

Interest expense

 

187

 

 

220

 

 

191

 

 

611

 

 

571

 

Loss in joint venture

 

712

 

 

1,092

 

 

1,618

 

 

3,294

 

 

5,417

 

Changes in fair value of promissory note

 

-

 

 

(1,629

)

 

(973

)

 

(605

)

 

1,394

 

Other income, net

 

(1,503

)

 

(1,729

)

 

(571

)

 

(3,502

)

 

(1,626

)

(Loss) income before tax expense

 

(4,164

)

 

5,980

 

 

(4,712

)

 

(5,236

)

 

(13,722

)

Tax expense

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Net (loss) income

$

(4,164

)

$

5,980

 

$

(4,712

)

$

(5,236

)

$

(13,722

)

Net (loss) income per share - basic

$

(0.08

)

$

0.15

 

$

(0.13

)

$

(0.12

)

$

(0.38

)

Net (loss) income per share - diluted

$

(0.08

)

$

0.14

 

$

(0.13

)

$

(0.12

)

$

(0.38

)

Weighted average common shares outstanding - basic

 

49,147,630

 

 

41,196,139

 

 

35,719,749

 

 

43,671,321

 

 

35,338,132

 

Weighted average common shares outstanding - diluted

 

49,147,630

 

 

41,847,103

 

 

35,719,749

 

 

43,671,321

 

 

35,338,132

 

Transphorm, Inc.
Reconciliation of GAAP and Non-GAAP Financial Information (unaudited)
(in thousands except share and per share data)
 
Three Months Ended Nine Months Ended
December 31,

2021
September 30,

2021
December 31,

2020
December 31,

2021
December 31,

2020
GAAP net (loss) income

$

(4,164

)

$

5,980

 

$

(4,712

)

$

(5,236

)

$

(13,722

)

Adjustments:
Stock based compensation

 

848

 

 

511

 

 

705

 

 

1,856

 

 

1,393

 

Depreciation

 

142

 

 

134

 

 

130

 

 

399

 

 

377

 

Amortization

 

74

 

 

74

 

 

74

 

 

222

 

 

222

 

Changes in fair value of promissory note

 

-

 

 

(1,629

)

 

(927

)

 

(605

)

 

1,440

 

Other income

 

(1,222

)

 

(1,455

)

 

-

 

 

-

 

 

-

 

Total adjustments to GAAP net (loss) income

 

(158

)

 

(2,365

)

 

(18

)

 

1,872

 

 

3,432

 

Non-GAAP net (loss) income

$

(4,322

)

$

3,615

 

$

(4,730

)

$

(3,364

)

$

(10,290

)

 
GAAP net (loss) income per share - basic

$

(0.08

)

$

0.15

 

$

(0.13

)

$

(0.12

)

$

(0.38

)

Adjustment

 

(0.01

)

 

(0.06

)

 

-

 

 

0.04

 

 

0.09

 

Non-GAAP net (loss) income per share - basic

$

(0.09

)

$

0.09

 

$

(0.13

)

$

(0.08

)

$

(0.29

)

 
GAAP net (loss) income per share - diluted

$

(0.08

)

$

0.14

 

$

(0.13

)

$

(0.12

)

$

(0.38

)

Adjustment

 

(0.01

)

 

(0.05

)

 

-

 

 

0.04

 

 

0.09

 

Non-GAAP net (loss) income per share - diluted

$

(0.09

)

$

0.09

 

$

(0.13

)

$

(0.08

)

$

(0.29

)

 
Weighted average common shares outstanding - basic

 

49,147,630

 

 

41,196,139

 

 

35,719,749

 

 

43,671,321

 

 

35,338,132

 

Weighted average common shares outstanding - diluted

 

49,147,630

 

 

41,362,489

 

 

35,719,749

 

 

43,671,321

 

 

35,338,132

 

 
Three Months Ended Nine Months Ended
December 31,

2021
September 30,

2021
December 31,

2020
December 31,

2021
December 31,

2020
GAAP operating expenses

$

5,437

 

$

5,130

 

$

4,524

 

$

15,820

 

$

13,010

 

Adjustments:
Stock based compensation

 

796

 

 

472

 

 

657

 

 

1,738

 

 

1,314

 

Depreciation

 

142

 

 

134

 

 

130

 

 

399

 

 

377

 

Amortization

 

74

 

 

74

 

 

74

 

 

222

 

 

222

 

Total adjustments to GAAP operating expenses

 

1,012

 

 

680

 

 

861

 

 

2,359

 

 

1,913

 

Non-GAAP operating expenses

$

4,425

 

$

4,450

 

$

3,663

 

$

13,461

 

$

11,097

 

Transphorm, Inc.
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
 

Nine Months Ended December 31,

 

2021

 

 

2020

 

Cash flows from operating activities:
Net loss

$

(5,236

)

$

(13,722

)

Adjustments to reconcile net loss to net cash used in operating activities:
Inventory write-off

 

202

 

 

266

 

Depreciation and amortization

 

621

 

 

599

 

Provision for doubtful accounts

 

-

 

 

110

 

Licensing revenue from a related party

 

(8,000

)

 

(5,000

)

Stock-based compensation

 

1,856

 

 

1,393

 

Interest cost

 

295

 

 

571

 

Gain on promissory note conversion

 

(1,222

)

 

-

 

Loss in joint venture

 

1,839

 

 

5,417

 

Changes in fair value of promissory note

 

(605

)

 

1,394

 

Changes in operating assets and liabilities:
Accounts receivable

 

(871

)

 

423

 

Inventory

 

(3,935

)

 

(808

)

Prepaid expenses and other current assets

 

204

 

 

320

 

Other assets

 

(8

)

 

197

 

Accounts payable and accrued expenses

 

1,359

 

 

63

 

Deferred revenue

 

(238

)

 

674

 

Accrued payroll and benefits

 

(171

)

 

139

 

Net cash used in operating activities

 

(13,910

)

 

(7,964

)

Cash flows from investing activities:
Purchases of property and equipment

 

(690

)

 

(58

)

Investment in joint venture

 

(3,765

)

 

(5,800

)

Net cash used in investing activities

 

(4,455

)

 

(5,858

)

Cash flows from financing activities:
Proceeds from stock option exercise

 

134

 

 

14

 

Proceeds from issuance of common stock

 

49,773

 

 

13,646

 

Net cash provided by financing activities

 

49,907

 

 

13,660

 

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

 

(75

)

 

208

 

Net increase in cash, cash equivalents and restricted cash

 

31,467

 

 

46

 

Cash, cash equivalents and restricted cash at beginning of period

 

9,500

 

 

14,648

 

Cash, cash equivalents and restricted cash at end of period

$

40,967

 

$

14,694

 

 

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