UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission File Number: 000-50838
NETLOGIC MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0455244 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1875 Charleston Rd.
Mountain View, CA 94043
(650) 961-6676
(Address and telephone number of principal executive offices)
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) had been subject to such filing requirements for the past 90 days. Yes ¨ No x
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x
The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, was 17,577,072 as of August 17, 2004.
FORM 10-Q
TABLE OF CONTENTS
2
PART I: INTERIM FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)
| June 30, 2004 |
December 31, 2003 |
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| ASSETS |
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| Current assets |
||||||||
| Cash and cash equivalents |
$ | 21,222 | $ | 13,155 | ||||
| Restricted cash |
— | 5,000 | ||||||
| Short-term investments |
574 | 2,995 | ||||||
| Accounts receivable, net |
2,414 | 4,062 | ||||||
| Inventories |
8,751 | 3,584 | ||||||
| Prepaid expenses and other current assets |
3,849 | 560 | ||||||
| Total current assets |
36,810 | 29,356 | ||||||
| Property and equipment, net |
1,841 | 2,031 | ||||||
| Other assets |
488 | 457 | ||||||
| Total assets |
$ | 39,139 | $ | 31,844 | ||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY |
||||||||
| Current liabilities |
||||||||
| Revolving line of credit |
$ | 10,470 | $ | 9,910 | ||||
| Accounts payable |
8,989 | 3,581 | ||||||
| Accrued liabilities |
4,512 | 8,118 | ||||||
| Deferred revenue |
— | 500 | ||||||
| Capital lease obligations, current |
202 | 351 | ||||||
| Convertible promissory notes |
5,189 | — | ||||||
| Total current liabilities |
29,362 | 22,460 | ||||||
| Capital lease obligations, long-term |
274 | 135 | ||||||
| Total liabilities |
29,636 | 22,595 | ||||||
| Commitments and contingencies (Note 10) |
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| Redeemable Convertible Preferred Stock: |
91,600 | 91,600 | ||||||
| Stockholders' (deficit) equity: |
||||||||
| Common stock |
41 | 36 | ||||||
| Additional paid-in capital |
20,094 | 10,686 | ||||||
| Notes receivable from stockholders |
(1,236 | ) | (1,620 | ) | ||||
| Deferred stock-based compensation |
(5,527 | ) | (4,300 | ) | ||||
| Accumulated deficit |
(95,469 | ) | (87,153 | ) | ||||
| Total stockholders' (deficit) equity |
(82,097 | ) | (82,351 | ) | ||||
| Total liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity |
$ | 39,139 | $ | 31,844 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(unaudited)
| Three months ended June 30, |
Six months ended June 30, |
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| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenue |
||||||||||||||||
| Product revenue |
$ | 11,250 | $ | 1,699 | $ | 19,015 | $ | 2,512 | ||||||||
| License and engineering service revenue |
626 | 3,005 | 1,128 | 3,005 | ||||||||||||
| Total revenue |
11,876 | 4,704 | 20,143 | 5,517 | ||||||||||||
| Cost of revenue |
||||||||||||||||
| Cost of product revenue |
6,335 | 1,109 | 11,905 | 1,767 | ||||||||||||
| Cost of license and engineering service revenue |
— | 3 | — | 3 | ||||||||||||
| Total cost of revenue |
6,335 | 1,112 | 11,905 | 1,770 | ||||||||||||
| Gross profit |
5,541 | 3,592 | 8,238 | 3,747 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Research and development |
4,390 | 4,035 | 8,474 | 7,712 | ||||||||||||
| Sales, general and administrative |
1,616 | 1,040 | 3,160 | 2,055 | ||||||||||||
| Stock-based compensation |
1,273 | 495 | 3,526 | 812 | ||||||||||||
| Total operating expenses |
7,279 | 5,570 | 15,160 | 10,579 | ||||||||||||
| Loss from operations |
(1,738 | ) | (1,978 | ) | (6,922 | ) | (6,832 | ) | ||||||||
| Interest income |
78 | 109 | 113 | 234 | ||||||||||||
| Interest expense |
(1,224 | ) | (31 | ) | (1,432 | ) | (61 | ) | ||||||||
| Other income (expense), net |
(28 | ) | (16 | ) | (76 | ) | (50 | ) | ||||||||
| Net loss |
$ | (2,912 | ) | $ | (1,916 | ) | $ | (8,317 | ) | $ | (6,709 | ) | ||||
| Net loss per common share; basic and diluted |
$ | (0.78 | ) | $ | (0.59 | ) | $ | (2.30 | ) | $ | (2.04 | ) | ||||
| Weighted average number of shares in per share calculation; basic and diluted |
3,742 | 3,241 | 3,611 | 3,282 | ||||||||||||
| (1) Cost of product revenue includes stock-based compensation |
(16 | ) | 25 | 101 | 60 | |||||||||||
| (2) Operating expense line item detail excludes stock based compensation: |
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| Research and development |
562 | 339 | 1,433 | 527 | ||||||||||||
| Sales, general and administrative |
711 | 156 | 2,093 | 285 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(unaudited)
| Six months ended June 30, |
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| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (8,317 | ) | $ | (5,837 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
842 | 1,011 | ||||||
| Issuance of stock options for services |
— | 3 | ||||||
| Issuance of warrants in conjunction with bridge loan |
223 | — | ||||||
| Non Cash interest expense |
984 | 13 | ||||||
| Provision for allowance for doubtful accounts |
174 | 12 | ||||||
| Amortization of deferred stock compensation |
3,627 | — | ||||||
| Change in current assets and liabilities: |
||||||||
| Accounts receivables, gross |
1,474 | (135 | ) | |||||
| Inventory |
(5,167 | ) | (989 | ) | ||||
| Prepaid expenses and other assets |
(3,320 | ) | (678 | ) | ||||
| Accounts payable |
5,408 | (1,366 | ) | |||||
| Accrued liabilities |
(3,606 | ) | (119 | ) | ||||
| Deferred revenue |
(500 | ) | (550 | ) | ||||
| Net cash used in operating activities |
(8,178 | ) | (8,635 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
(652 | ) | (722 | ) | ||||
| Purchase of short-term investments, net |
2,421 | (4,069 | ) | |||||
| Restricted Cash |
5,000 | — | ||||||
| Net cash (used in)/provided by investing activities |
6,769 | (4,791 | ) | |||||
| Cash flows from financing activities: |
||||||||
| Proceeds from convertible note |
7,650 | — | ||||||
| Principal payments on capital lease obligations |
(10 | ) | (32 | ) | ||||
| Purchase of restricted Common Stock for cash |
— | (48 | ) | |||||
| Proceeds from issuance of Common Stock |
895 | 33 | ||||||
| Proceeds from payment of notes receivable from stockholders |
382 | 47 | ||||||
| Proceeds from notes payable and lines of credit |
560 | 661 | ||||||
| Repayment of notes payable and lines of credit |
— | (607 | ) | |||||
| Net cash provided by financing activities |
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