What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-07 · 116 added, 74 removed, 421 unchanged (31% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEET S

September 30,

(In thousands, except share

37 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION S

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands, except per share amounts)

Cost of revenues

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Net unrealized gain on available-for-sale investments

Net unrealized gain (loss) on available-for-sale investments

Total comprehensive loss

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

GSI TECHNOLOGY, INC.

Comprehensive

1 unchanged sentence

Income (Loss)

Three months ended June 30, 2020

Three months ended September 30, 2020

(In thousands, except share amounts)

Balance, March 31, 2020

Balance, June 30, 2020

Issuance of common stock under employee stock option plans

Stock-based compensation expense

Net unrealized gain on available-for-sale investments

Net unrealized loss on available-for-sale investments

Balance, September 30, 2020

Three months ended September 30, 2019

Balance, June 30, 2019

Three months ended June 30, 2019

Issuance of common stock under employee stock option plans

Stock-based compensation expense

Net unrealized gain on available-for-sale investments

Balance, September 30, 2019

Comprehensive

Stockholders'

Income (Loss)

Six months ended September 30, 2020

(In thousands, except share amounts)

Balance, March 31, 2020

1 unchanged sentence

Stock-based compensation expense

Net unrealized loss on available-for-sale investments

Balance, September 30, 2020

Six months ended September 30, 2019

Balance, March 31, 2019

Issuance of common stock under employee stock option plans

Stock-based compensation expense

Net unrealized gain on available-for-sale investments

Balance, June 30, 2019

Balance, September 30, 2019

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW S

Three Months Ended June 30,

Six Months Ended September 30,

(In thousands)

17 unchanged sentences

Purchases of property and equipment

Net cash provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

4 unchanged sentences

Cash and cash equivalents at end of the period

Non-cash financing activities:

Non-cash investing and financing activities:

Purchases of property and equipment through accounts payable and

Operating lease right-of-use assets exchanged for lease obligations

Supplemental cash flow information:

11 unchanged sentences

However, these financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

The consolidated results of operations for the three months ended June 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year.

The consolidated results of operations for the six months ended September 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year.

Significant accounting policies

6 unchanged sentences

These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.

The Company continues to monitor its operations and government recommendations and have made modifications to its normal operations because of the COVID-19 global pandemic.

The Company continues to monitor its operations and government recommendations and has made modifications to its normal operations because of the COVID-19 global pandemic.

The Company has instituted many preventative measures and is regularly evaluating those measures and others as it continues to better understand its current and future operating environment.

6 unchanged sentences

related to shelter in place restrictions that require a significant number of its customer contacts to work from home.

The Company’s results for the quarter ended June 30, 2020 demonstrate the challenges that the Company is facing during the COVID-19 global pandemic, which has restricted the activities of the Company’s sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors.

The Company’s results for the three month and six month periods ended September 30, 2020 demonstrate the challenges that the Company is facing during the COVID-19 global pandemic, which has restricted the activities of the Company’s sales force and distributors, reduced customer demand and caused the postponement of investment in certain customer sectors.

These challenges are also impacting the Company as it enters new markets and engages with target customers.

16 unchanged sentences

The Company is currently evaluating the impact that this guidance will have upon its financial position and results of operations, if any .

In August 2018, FASB issued ASU No.

In August 2018, the FASB issued ASU No.

2018-13, “Fair Value Measurement (Topic 820):

44 unchanged sentences

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of revenues.

Warranty costs and the accrued warranty liability were not material as of June 30, 2020.

The majority of the Company’s revenue is derived from sales of SRAM products which represent approximately 98% of total revenues in the three months ended June 30, 2020.

Warranty costs and the accrued warranty liability were not material as of September 30, 2020.

The majority of the Company’s revenue is derived from sales of SRAM products which represent approximately 98% of total revenues in the six months ended September 30, 2020.

Nokia, the Company’s largest customer, purchases products directly from the Company and through contract manufacturers and distributors.

Based on information provided to the Company by its contract manufacturers and distributors, purchases by Nokia represented approximately 27% of the Company’s net revenues in the three months ended June 30, 2020.

Based on information provided to the Company by its contract manufacturers and distributors, purchases by Nokia represented approximately 39% and 46% of the Company’s net revenues in the six months ended September 30, 2020 and 2019, respectively.

See “Note 12 — Segment and Geographic Information” for revenue by shipment destination.

The following table presents the Company’s revenue disaggregated by customer type.

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Contract manufacturers

2 unchanged sentences

The following table sets forth the computation of basic and diluted net loss per share:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands, except per share amounts)

Denominators:

6 unchanged sentences

The following shares of common stock underlying outstanding stock options, determined on a weighted average basis, were excluded from the computation of diluted net loss per share as they had an anti-dilutive effect:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Shares underlying options and ESPP shares

NOTE 4—BALANCE SHEET DETAIL

June 30, 2020

September 30, 2020

March 31, 2020

3 unchanged sentences

Inventory at distributors

June 30, 2020

September 30, 2020

March 31, 2020

3 unchanged sentences

Allowances for doubtful accounts and other

June 30, 2020

September 30, 2020

March 31, 2020

5 unchanged sentences

Other prepaid expenses and other current assets

June 30, 2020

September 30, 2020

March 31, 2020

6 unchanged sentences

Accumulated depreciation

Depreciation expense was $296,000 and $306,000 for the three months ended June 30, 2020 and 2019, respectively.

June 30, 2020

Depreciation expense was $287,000 and $305,000 for the three months ended September 30, 2020 and 2019, respectively, and $590,000 and $611,000 for the six months ended September 30, 2020 and 2019, respectively.

September 30, 2020

March 31, 2020

1 unchanged sentence

Other assets:

The following tables summarize the components of intangible assets and related accumulated amortization balances at June 30, 2020 and March 31, 2020 (in thousands):

As of June 30, 2020

The following tables summarize the components of intangible assets and related accumulated amortization balances at September 30, 2020 and March 31, 2020 (in thousands):

As of September 30, 2020

Intangible assets:

3 unchanged sentences

Product designs

Amortization of intangible assets included in cost of revenues was $58,000 and $58,000 for the three months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):

Amortization of intangible assets included in cost of revenues was $59,000 and $58,000 for the three months ended September 30, 2020 and 2019, respectively, and $117,000 and $116,000 for the six months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, the estimated future amortization expense of intangible assets in the table above is as follows (in thousands):

Fiscal year ending March 31,

2021 (Remaining nine months)

June 30, 2020

2021 (Remaining six months)

September 30, 2020

March 31, 2020

11 unchanged sentences

The Company assesses goodwill for impairment on an annual basis on the last day of February in the fourth quarter of its fiscal year.

The Company had a goodwill balance of $8.0 million as of both March 31, 2020 and June 31, 2020.

The Company had a goodwill balance of $8.0 million as of both March 31, 2020 and September 30, 2020.

The goodwill resulted from the acquisition of MikaMonu Group Ltd.

4 unchanged sentences

NOTE 6—INCOME TAXES

The current portion of the Company’s unrecognized tax benefits was $0 at both June 30, 2020 and March 31, 2020.

The long-term portion at June 30, 2020 and March 31, 2020 was $326,000 and $613,000, respectively, of which the timing of the resolution is uncertain.

As of June 30, 2020, $2.8 million of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets.

As of June 30, 2020, the Company’s net deferred tax assets of $9.9 million were subject to a valuation allowance of $9.9 million.

The current portion of the Company’s unrecognized tax benefits was $0 at both September 30, 2020 and March 31, 2020.

The long-term portion at September 30, 2020 and March 31, 2020 was $327,000 and $613,000, respectively, of which the timing of the resolution is uncertain.

As of September 30, 2020, $2.8 million of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets.

As of September 30, 2020, the Company’s net deferred tax assets of $10.8 million were subject to a valuation allowance of $10.8 million.

As of March 31, 2020, the Company’s net deferred tax assets of $9.4 million were subject to a valuation allowance of $9.4 million.

6 unchanged sentences

Fiscal years 2013 through 2020 remain open to examination by federal tax authorities, and fiscal years 2012 through 2020 remain open to examination by California tax authorities.

During the quarter ended June 30, 2020, the Company settled an income tax audit in Israel for fiscal years 2016 through 2019 that resulted in a discrete tax provision of

$479,000 and a tax liability of $713,000 that is included in accrued expenses and other liabilities on the condensed consolidated balance sheets as of June 30, 2020.

The Company’s estimated annual effective income tax rate, including discrete items, was approximately (4.0%) and (8.7%) as of June 30, 2020 and 2019, respectively.

The annual effective tax rates as of June 30, 2020 and 2019 vary from the United States statutory income tax rate primarily due to valuation allowances in the United States, whereby pre-tax losses do not result in the recognition of corresponding income tax benefits and expenses and the foreign tax differential.

During the quarter ended June 30, 2020, the Company

settled an income tax audit in Israel for fiscal years 2016 through 2019 that resulted in a discrete tax provision of $479,000 and a tax liability of $713,000 as of June 30, 2020 that was paid in the quarter ended September 30, 2020.

The Company’s estimated annual effective income tax rate, including discrete items, was approximately (3.3%) and (2.3%) as of September 30, 2020 and 2019, respectively.

The annual effective tax rates as of September 30, 2020 and 2019 vary from the United States statutory income tax rate primarily due to valuation allowances in the United States, whereby pre-tax losses do not result in the recognition of corresponding income tax benefits and expenses and the foreign tax differential.

NOTE 7—FINANCIAL INSTRUMENTS

5 unchanged sentences

The fair value of available-for-sale securities included in the Level 1 category is based on quoted prices that are readily and regularly available in an active market.

As of June 30, 2020, the Level 1 category included money market funds of $29.0 million, which were included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

As of September 30, 2020, the Level 1 category included money market funds of $24.7 million, which were included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date;

2 unchanged sentences

The fair value of available-for-sale securities included in the Level 2 category is based on the market values obtained from an independent pricing service that were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers.

As of June 30, 2020, the Level 2 category included short-term investments $13.6 million and long-term investments of $4.9 million, which were comprised of certificates of deposit, government and agency securities.

As of September 30, 2020, the Level 2 category included short-term investments $12.1 million and long-term investments of $8.7 million, which were comprised of certificates of deposit, government and agency securities.

Valuations based on inputs that are unobservable and involve management judgment and the reporting entity’s own assumptions about market participants and pricing.

As of June 30, 2020, the Company’s Level 3 financial instruments measured at fair value on the Condensed Consolidated Balance Sheets consisted of the contingent consideration liability related to the acquisition of MikaMonu.

As of September 30, 2020, the Company’s Level 3 financial instruments measured at fair value on the Condensed Consolidated Balance Sheets consisted of the contingent consideration liability related to the acquisition of MikaMonu.

The fair value of the contingent consideration liability was initially determined as of the acquisition date using unobservable inputs.

These inputs included the estimated amount and timing of future cash flows, the probability of success (achievement of the various contingent events) and a risk-adjusted discount rate of approximately 14.8% used to adjust the probability-weighted cash flows to their present value.

Significant increases (decreases) in any of those inputs in isolation would result in a significantly higher (lower) fair value measurement.

Generally, changes used in the assumptions for future cash flows and probability of success would be accompanied by a directionally similar change in the fair value measurement and expense.

Conversely, changes in the risk-adjusted discount rate would be accompanied by a directionally opposite change in the related fair value measurement and expense.

Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is re-measured to fair value with changes recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

During the most recent re-measurement of the contingent consideration liability as of March 31, 2020, the Company used a risk-adjusted discount rate of approximately 14.5% to adjust the probability-weighted cash flows to their present value using probabilities ranging from 0% to 10% for the remaining contingent events.

The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at June 30, 2020 and March 31, 2020 in the amount of $3.9 million and $3.9 million, respectively.

The contingent consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at September 30, 2020 and March 31, 2020 in the amount of $3.9 million and $3.9 million, respectively.

The fair value of financial assets measured on a recurring basis is as follows (in thousands):

3 unchanged sentences

and Liabilities

June 30, 2020

September 30, 2020

Money market funds

9 unchanged sentences

Contingent consideration

The following table sets forth the changes in fair value of contingent consideration for the three months ended June 30, 2020 and June 30, 2019:

Three Months Ended June 30,

The following table sets forth the changes in fair value of contingent consideration for the six months ended September 30, 2020 and September 30, 2019:

Six Months Ended September 30,

(In thousands)

6 unchanged sentences

Investments in available-for-sale securities are reported at fair value with unrecognized gains (losses), net of tax, as a component of accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets.

The Company had money market funds of $29.0 million and $14.1 million at June 30, 2020 and March 31, 2020, respectively, included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

The Company had money market funds of $24.7 million and $14.1 million at September 30, 2020 and March 31, 2020, respectively, included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when declines are determined to be other-than-temporary.

The following table summarizes the Company’s available-for-sale investments:

June 30, 2020

September 30, 2020

(In thousands)

5 unchanged sentences

Certificates of deposit

Supranational obligations

Total long-term investments

8 unchanged sentences

Total long-term investments

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position as of March 31, 2020.

There were no gross unrealized losses on the Company’s investments as of June 30, 2020.

September 30, 2020

Less Than 12 Months

12 Months or Greater

(In thousands)

Supranational obligations

March 31, 2020

6 unchanged sentences

Subject to normal credit risks, the Company has the ability to realize the full value of all these investments upon maturity.

The deferred tax liability related to unrecognized gains and losses on short-term and long-term investments was $(39,000) and $(30,000) at June 30, 2020 and March 31, 2020, respectively.

As of June 30, 2020, contractual maturities of the Company’s available-for-sale investments were as follows:

The deferred tax liability related to unrecognized gains and losses on short-term and long-term investments was $(26,000) and $(30,000) at September 30, 2020 and March 31, 2020, respectively.

As of September 30, 2020, contractual maturities of the Company’s available-for-sale investments were as follows:

(In thousands)

6 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

June 30, 2020

September 30, 2020

March 31, 2020

6 unchanged sentences

The following table provides the details of lease costs:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

Operating lease cost

1 unchanged sentence

The following table provides other information related to leases:

Three Months Ended June 30,

Six Months Ended September 30,

(In thousands)

7 unchanged sentences

Operating leases

The following table provides the maturities of the Company’s operating lease liabilities as of June 30, 2020:

The following table provides the maturities of the Company’s operating lease liabilities as of September 30, 2020:

Operating Lease

(In thousands)

2021 (Remaining nine months)

2021 (Remaining six months)

Total undiscounted future cash flows

13 unchanged sentences

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of revenues.

Warranty costs and the accrued warranty liability were not material as of June 30, 2020 and March 31, 2020 and for the three months ended June 30, 2020 or 2019.

Warranty costs and the accrued warranty liability were not material as of September 30, 2020 and March 31, 2020 and for the three months ended September 30, 2020 or 2019.

NOTE 10—STOCK-BASED COMPENSATION

As of June 30, 2020, 2,417,454 shares of common stock were available for grant under the Company’s 2016 Equity Incentive Plan.

The following table summarizes the Company’s stock option activities for the three months ended June 30, 2020:

As of September 30, 2020, 1,849,761 shares of common stock were available for grant under the Company’s 2016 Equity Incentive Plan.

The following table summarizes the Company’s stock option activities for the six months ended September 30, 2020:

Number of Shares

1 unchanged sentence

Balance at March 31, 2020

Balance at June 30, 2020

Balance at September 30, 2020

Options vested and exercisable

Options vested and expected to vest

The weighted average fair value per underlying share of options granted during the three months ended June 30, 2020 and 2019 was $2.80 and $2.70, respectively.

Options outstanding by exercise price at June 30, 2020 were as follows:

The weighted average fair value per underlying share of options granted during the three months ended September 30, 2020 and 2019 was $2.24 and $2.90, respectively, and $2.34 and $2.88 for the six months ended September 30, 2020 and 2019, respectively.

Options outstanding by exercise price at September 30, 2020 were as follows:

Options Outstanding

3 unchanged sentences

The following table summarizes stock-based compensation expense by line item in the Condensed Consolidated Statements of Operations, all relating to employee stock plans:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In Thousands)

Cost of revenues

3 unchanged sentences

The Company estimates forfeitures at the time of grant and revises the original estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

No tax benefit related to stock-based compensation was recognized in the three months ended June 30, 2020 due to a full valuation allowance.

No tax benefit related to stock-based compensation was recognized in the six months ended September 30, 2020 due to a full valuation allowance.

There were no windfall tax benefits realized from exercised stock options in either of these periods.

Compensation cost capitalized within inventory at June 30, 2020 was immaterial.

As of June 30, 2020, the Company’s total unrecognized compensation cost was $4.5 million, which will be recognized over a weighted average period of 2.03 years.

Compensation cost capitalized within inventory at September 30, 2020 was immaterial.

As of September 30, 2020, the Company’s total unrecognized compensation cost was $5.1 million, which will be recognized over a weighted average period of 2.20 years.

The Company calculated the fair value of stock-based awards in the periods presented using the Black-Scholes option pricing model and the following weighted average assumptions:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Stock Option Plans:

7 unchanged sentences

NOTE 11—RELATED PARTY TRANSACTION

The Company incurred non-recurring engineering service expense of approximately $54,000 during the three months ended June 30, 2020 from Wistron Neweb Corp (“WNC”) in connection with the manufacture of single-APU PCIe boards, Gemini I™, to be used in the Company’s in-place associative computing product, Haydn Hsieh, a member of the Company’s board of directors, is the Chairman and Chief Strategy Officer of WNC.

The Company incurred non-recurring engineering service expense of approximately $84,000 during the six months ended September 30, 2020 from Wistron Neweb Corp (“WNC”) in connection with the manufacturing of single-APU PCIe boards, Gemini I™, to be used in the Company’s in-place associative computing product.

Haydn Hsieh, a member of the Company’s board of directors, is the Chairman and Chief Strategy Officer of WNC.

NOTE 12—SEGMENT AND GEOGRAPHIC INFORMATION

2 unchanged sentences

The following is a summary of net revenues by geographic area based on the location to which product is shipped:

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

(In thousands)

United States

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements