Valens Semiconductor Ltd 6-K, filed Nov 7, 2024
Valens Semiconductor Ltd. (VLN)
About this 6-K
Valens Semiconductor Ltd filed this 6-K on November 7, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16
OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November
Commission File Number:
(Exact name of registrant as specified in its charter)
8 Hanagar St. POB 7152
Hod Hasharon 4501309
Israel
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
Exhibit 99.1 to this report, furnished on Form 6-K, is incorporated by reference into the Registrant’s registration statements on Form F-3 (File No. 333-260390) and Form S-8 (File Nos. 333-259849, 333-269250 and 333-276520).
1
TABLE OF CONTENTS
| ITEM | ||
| 99.1 | Condensed Consolidated Financial Statements (Unaudited) as of and for the three and nine months ended September 30, 2024 | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded with the Inline XBRL document). |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VALENS SEMICONDUCTOR LTD. | |||
| By: | /s/ Gideon Ben-Zvi | ||
| Name: | Gideon Ben-Zvi | ||
| Title: | Chief Executive Officer | ||
Date: November 7, 2024
3
Exhibit 99.1
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
SEPTEMBER 30, 2024
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of September 30, 2024
CONTENTS
| Page | ||
| CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - IN U.S. DOLLARS ($): | ||
| Balance sheets | 2-3 | |
| Statements of operations | 4 | |
| Statements of changes in shareholder’s equity | 5 | |
| Statements of cash flows | 6 | |
| Notes to consolidated financial statements | 7-24 |
1
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(U.S. dollars in thousands, except for number of shares and par value)
| September 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | ||||||||
| Short-term deposits | ||||||||
| Trade accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| LONG-TERM ASSETS: | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| TOTAL LONG-TERM ASSETS | ||||||||
| TOTAL ASSETS | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
2
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Unaudited)
(U.S. dollars in thousands, except for number of shares and par value)
| September 30, 2024 | December 31, 2023 | |||||||
| Liabilities and Shareholders’ Equity | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade accounts payable | ||||||||
| Accrued compensation | ||||||||
| Current maturities of operating leases liabilities | ||||||||
| Other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES: | ||||||||
| Forfeiture shares, par value: | ||||||||
| Non-current operating leases liabilities | ||||||||
| Earnout liability | ||||||||
| Other long-term liabilities | ||||||||
| TOTAL LONG-TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENT LIABILITIES (note 7) | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Ordinary shares, par value: | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
3
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(U.S. dollars in thousands, except share and per share amounts)
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| REVENUES | ||||||||||||||||
| COST OF REVENUES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in earnout liability | ( | ) | ( | ) | ||||||||||||
| TOTAL OPERATING EXPENSES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of Forfeiture Shares | ||||||||||||||||
| Financial income, net | ||||||||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS AFTER INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| EQUITY IN EARNINGS OF INVESTEE | ||||||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Basic and diluted net loss per ordinary share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of shares and vested RSUs used in computing net loss per ordinary share | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
4
VALENS SEMICONDUCTOR LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(U.S. dollars in thousands, except share data)
| Nine months ended September 30, 2024 | ||||||||||||||||||||
| Ordinary shares | Additional paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in capital | Deficit | Total | ||||||||||||||||
| Balance as of January 1, 2024 | (*) | ( | ) | |||||||||||||||||
| Exercise of options and vesting of RSUs | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of September 30, 2024 | (**) | ( | ) | |||||||||||||||||
| Nine months ended September 30, 2023 | ||||||||||||||||||||
| Ordinary shares | Additional paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in capital | Deficit | Total | ||||||||||||||||
| Balance as of January 1, 2023 | (*) | ( | ) | |||||||||||||||||
| Exercise of options and vesting of RSUs | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of September 30, 2023 | (*) | ( | ) | |||||||||||||||||
| Three months ended September 30, 2024 | ||||||||||||||||||||
| Ordinary shares | Additional paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in capital | Deficit | Total | ||||||||||||||||
| Balance as of July 1, 2024 | (*) | ( | ) | |||||||||||||||||
| Exercise of options and vesting of RSUs | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of September 30, 2024 | (**) | ( | ) | |||||||||||||||||
| Three months ended September 30, 2023 | ||||||||||||||||||||
| Ordinary shares | Additional paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in capital | Deficit | Total | ||||||||||||||||
| Balance as of July 1, 2023 | (*) | ( | ) | |||||||||||||||||
| Exercise of options and vesting of RSUs | ||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of September 30, 2023 | (*) | ( | ) | |||||||||||||||||
| (*) |
| (**) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
5
VALENS SEMICONDUCTOR LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(U.S. dollars in thousands)
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
| Income and expense items not involving cash flows: | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Exchange rate differences | ||||||||||||||||
| Interest on short-term deposits | ( | ) | ( | ) | ||||||||||||
| Change in fair value of Forfeiture Shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in earnout liability | ||||||||||||||||
| Reduction in the carrying amount of ROU assets | ||||||||||||||||
| Equity in earnings of investee, net of dividend received | ||||||||||||||||
| Changes in operating assets and liabilities, net of effects of businesses acquired: | ||||||||||||||||
| Trade accounts receivable | ||||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||||
| Inventories | ||||||||||||||||
| Other assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Trade accounts payable | ( | ) | ( | ) | ||||||||||||
| Accrued compensation | ( | ) | ||||||||||||||
| Other current liabilities | ( | ) | ( | ) | ||||||||||||
| Change in operating lease liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other long-term liabilities | ( | ) | ( | ) | ||||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Investment in short-term deposits | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Maturities of short-term deposits | ||||||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cash paid for business combination, net of cash acquired (note 3) | ( | ) | ||||||||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Exercise of stock options | ||||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||||||||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | ||||||||||||||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | ||||||||||||||||
| SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION - | ||||||||||||||||
| Cash paid for taxes | ||||||||||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
| Trade accounts payable on account on property and equipment | ||||||||||||||||
| Fair value of earnout liability assumed in business combination | ||||||||||||||||
| Operating lease liabilities arising from obtaining operating right-of-use assets | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
6
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - GENERAL:
| a. | Valens Semiconductor Ltd. (hereafter “Valens”, and together with its wholly owned subsidiaries, the “Company”), was incorporated in Israel in 2006. |
As of September 30, 2021, the Company began trading on the New York Stock Exchange under the Symbol “VLN”.
Please also refer to Note 1(c) in the consolidated financial statement for the year ended December 31, 2023.
Valens is a leading provider of semiconductor products (chips), operates in the Audio-Video and Automotive industries, renowned for its Physical Layer (PHY) technology, enabling resilient high-speed connectivity over simple, low-cost infrastructure. Valens is the inventor of the HDBaseT Technology, which enables the converged delivery of ultra-high-definition digital video and audio, Ethernet, control signals, USB and power through a single cable. In the audio-video space, Valens’ HDBaseT technology enables plug-and-play digital connectivity between ultra-HD video sources and remote displays. In the automotive domain, Valens’ product offering includes both symmetric and asymmetric connectivity technology for high bandwidth transmission of native interfaces over a single low-cost wires and connectors. Valens’ advanced PHY technology for the auto industry provides the safety and resilience required to handle the noisy automotive environment, addressing the needs of Advanced driver-assistance systems (ADAS), Automotive Data Solutions (ADS), infotainment, telematics and backbone connectivity.
| b. | On October 7, 2023, Hamas launched a series of attacks on civilian and military targets in Southern and Central Israel, to which the Israel Defense Forces have responded. In addition, both Hezbollah and the Houthi movement have attacked military and civilian targets in Northern Israel, to which Israel has responded, including through increased air and ground operations in Lebanon. In addition, the Houthi movement has attacked international shipping lanes in the red sea. Further, on April 13, 2024, and on October 1, 2024, Iran launched a series of drone and missile strikes against Israel, to which Israel has responded. How long and how severe the current conflict in Gaza, Northern Israel, Lebanon or the broader region becomes is unknown at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups in the region may escalate in the future into a greater regional conflict. To date our operations and financial results have not been materially affected. We expect that the current conflict in the Gaza Strip, Lebanon and the security escalation in Israel will not have a material impact on our business results in the short term. However, since this is an event beyond our control, its continuation or cessation may affect our expectations. We continue to monitor political and military developments closely and examine the consequences for our business, results of operations and financial condition. |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
| a. | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting.
Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the information contained herein reflects all adjustments necessary for a fair statement of our results of operations, financial position, cash flows, and shareholders’ equity. All such adjustments are of a normal, recurring nature.
7
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
The results of operations for the nine and three months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements that were included in Form 20-F for the year ended December 31, 2023.
The carrying value of cash and cash equivalents, accounts receivables, deposits and accounts payable (included in the condensed consolidated balance sheets) approximates their fair value because of their generally short maturities.
There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2023 other than as stated below.
| b. | Business combination |
The Company allocates the fair value of consideration transferred in a business combination to the assets acquired and the liabilities assumed in the acquired business based on their fair values at the acquisition date. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. The excess of the fair value of the consideration transferred over the fair value of the assets acquired, liabilities assumed in the acquired business is recorded as goodwill. The fair value of the consideration transferred may include a combination of cash and earn out payments. The allocation of the consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. The cumulative impact of revisions during the measurement period is recognized in the reporting period in which the revisions are identified. The Company includes the results of operations of the businesses that it has acquired in its consolidated results prospectively from the respective dates of acquisition.
| c. | Intangible assets |
Goodwill
Goodwill reflects the excess of the consideration transferred at the business combination date over the fair values of the identifiable net assets acquired. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company allocates goodwill to its reporting units based on the reporting unit expected to benefit from the business combination. The primary items that generate goodwill include the value of the synergies between the acquired company and the Company and the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. ASC 350 allows an entity to first assess qualitative factors to determine whether a quantitative goodwill impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. Examples of events or circumstances that may be indicative of impairment include but are not limited to: macroeconomic and industry conditions, overall financial performance and adverse changes in legal, regulatory, market share and other relevant entity specific events.
8
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
An entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative goodwill impairment test. This would not preclude the entity from performing the qualitative assessment in any subsequent period. The quantitative assessment compares the fair value of the reporting unit to its carrying value, including goodwill.
The Company determines the fair value of its reporting units using a discounted cash flow model, which utilizes key assumptions such as projected revenues, cost of revenues and operating expenses. These assumptions are determined by the Company’s management utilizing its internal operating plan, growth rates for revenues and operating expenses and margin assumptions. An additional key assumption under this approach is the discount rate, based on the weighted average cost of capital, which is adjusted for current risk-free rates of capital, current market interest rates, and the evaluation of a risk premium relevant to the business segment.
If the Company’s assumptions relative to revenue growth rates, cost of revenues and operating expenses were to change, the Company’s fair value calculation may change, which could result in impairment. If the Company’s assumptions relative to the discount rate and the evaluation of risk premium growth rates were to change, the Company’s fair value calculation may change, which could result in impairment. The Company uses the income approach to determine the fair value of the reporting units because it considers the anticipated future financial performance of the reporting units. Accordingly, changes in the assumptions described above could have a material impact on the Company’s consolidated results of operations.
The Company’s goodwill is tested for impairment at least on an annual basis and whenever events or changes in circumstances indicate the carrying value of a reporting unit may not be recoverable. When necessary, the Company records charges for impairments of goodwill for the amount by which the carrying amount of the respective reporting unit exceeds its fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.
The goodwill identified in Acroname’s acquisition is assigned to the Audio Video segment (which was recorded in the acquisition of Acroname). The goodwill is deductible for tax purposes.
Other Intangible Assets
Definite life intangible assets are amortized using the straight-line method over their estimated period of useful life. Amortization of core technology is recorded under cost of revenues. Amortization of customer relationships is recorded under sales and marketing expenses.
9
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
| d. | New Accounting Pronouncements |
New accounting pronouncements effective in future periods:
Improvements to Reportable Segments Disclosures
In November 2023, the FASB issued ASU 2023-07 “Segment Reporting–Improvements to Reportable Segments Disclosures (Topic 280)” to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss; (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (3) require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods; (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures; and (5) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure or measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of these amendments on its consolidated financial statements.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740)–Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU require that public entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU also requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid disaggregated by federal, state, and foreign taxes, (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, (3) income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign, and (4) income tax expense or benefit from continuing operations disaggregated by federal, state, and foreign. For the Company, the amendments in this “ASU are effective for annual periods beginning after December 15, 2025, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of the adoption of these amendments on its consolidated financial statements.
10
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 3 - BUSINESS COMBINATION
On
May 31, 2024 (The “Closing date”), the Company closed a purchase transaction with the shareholders of Acroname Inc. (“Acroname”),
a US company specializing in advanced automation and control technologies, to acquire
| U.S. dollars in thousands | ||||
| Cash payment | ||||
| Fair value of earnout liability (*) | ||||
| Total consideration | ||||
| (*) |
The
results of operations of Acroname have been included in the consolidated financial statements since the Closing date. The amounts of revenues
and net loss related to Acroname that are included in the Company’s consolidated statements of operations for the period starting
from the Closing date to September 30, 2024, are $
The Company accounted for the transaction in accordance with Accounting Standard Codification (“ASC”) 805, Business Combinations, and following the transaction, the Company consolidates all assets and liabilities included in the transaction in accordance with ASC 810, Consolidation.
In
the second quarter of 2024, the Company incurred $
Accounting guidance provides that the allocation of the purchase price may be adjusted for up to one year from the date of the acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The primary area of the purchase price allocation that is not yet finalized is related to intangible assets, inventory, certain tax matters and the related impact on goodwill.
11
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 3 - BUSINESS COMBINATION (continued):
| Allocation | ||||
| of Purchase | ||||
| Price | ||||
| U.S. dollars in thousands | ||||
| Cash and cash equivalents | ||||
| Accounts Receivables | ||||
| Inventory (1) | ||||
| Other current assets | ||||
| Property and equipment | ||||
| Operating lease right-of-use assets | ||||
| Core Technology (2) | ||||
| Customer relationships (3) | ||||
| Goodwill (4) | ||||
| Total assets acquired | ||||
| Operating leases liabilities | ( | ) | ||
| Other liabilities | ( | ) | ||
| Total liabilities assumed | ( | ) | ||
| Net assets acquired | ||||
| (1) |
| (2) |
| (3) |
| (4) |
12
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 3 - BUSINESS COMBINATION (continued):
The
following unaudited pro forma summary presents condensed consolidated information of the Company as if the business combination had occurred
on January 1, 2023. The pro forma results below include the impact of certain adjustments related to the amortization of tangible and
intangible assets, transaction-related costs, and the related income tax effects.
| Unaudited Pro-forma | ||||||||||||||||
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
NOTE 4 - INVENTORIES:
| September 30, 2024 | December 31, 2023 | |||||||
| U.S. dollars in thousands | ||||||||
| Work in process | ||||||||
| Finished goods | ||||||||
Inventories write-downs amounted to
$
NOTE 5 - LEASES:
During April 2024, the Company signed
an amendment to the lease agreement for its office space in Hod Hasharon, Israel, regarding
The Company concluded that it is reasonably certain that it will exercise the renewal option. Accordingly, such renewal option was included in determining the lease term.
13
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 6 - INTANGIBLE ASSETS:
| Useful Life (in Years) | Gross carrying amount as of the business combination date | Accumulated amortization for the period | Net carrying amount as of September 30, 2024 | |||||||||||||
| Core technology | ||||||||||||||||
| Customer relationships | ||||||||||||||||
| Total Intangible assets |
| Remainder of 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and thenafter | ||||
| Total |
NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES:
| a. | Noncancelable Purchase Obligations |
The Company depends upon third party
subcontractors for manufacturing of wafers, packaging and final tests. As of September 30, 2024 and December 31, 2023 the total value
of open purchase orders acknowledged by such manufacturing contractors was approximately $
The Company has noncancelable purchase
agreements for certain IP embedded in the Company’s products as well as certain agreement for the license of development tools used by
the development team. As of September 30, 2024, and December 31, 2023, the total value of non-paid amounts related to such agreements
totaled to $
| b. | Legal proceedings |
As of September 30, 2024, and to date, the Company is not a party to, or subject to the provisions of any order, writ, injunction, judgment or decree of any court or governmental agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate.
| c. | On March 26, 2024, the Company received a complaint from a customer regarding allegedly damaged chips due to a certain batch production incident, that customer embedded in its product. The company identified and remedied the production process. |
On September 10, 2024, the customer
sent a cost claim letter in the amount of $
14
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 7 - COMMITMENTS AND CONTINGENT LIABILITIES: (continued):
As of September 30, 2024, the Company has recorded a relevant provision in its books, within its other current liabilities. The Company believes that it will be able to obtain reimbursement from its product liability insurance, however the Company has not yet recorded such as asset in its books.
NOTE 8 - OTHER CURRENT LIABILITIES:
| September 30, 2024 | December 31, 2023 | |||||||
| U.S. dollars in thousands | ||||||||
| Accrued vacation | ||||||||
| Taxes payable | ||||||||
| Estimated accrual for a certain batch production incident | ||||||||
| Accrued expenses and other | ||||||||
NOTE 9 - FORFEITURE SHARES:
| a. | On September 29, 2021 (the “Closing Date”, please refer to note 1c of the financial statements
as of December 31, 2023), |
The Company performed a Monte-Carlo simulation to calculate the fair value of such shares.
On September 30,
2024,
| September 30, 2024 | December 31, 2023 | |||||||
| Stock price | ||||||||
| Expected term (years) | ||||||||
| Expected volatility | ||||||||
| Risk-free interest rate | ||||||||
| b. |
| Nine months ended September 30, 2024 | Year ended December 31, 2023 | |||||||
| U.S. dollars in thousands | ||||||||
| Balance at beginning of period | ||||||||
| Changes in fair value | ( | ) | ( | ) | ||||
| Balance at end of the period | (*) | |||||||
| (*) |
15
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 10 - EARNOUT LIABILITY
The Company shall
be obligated to pay Acroname’s former shareholders earn out payments of up to $
The Company recorded
earn out liability in connection with these payments at fair value on the acquisition date. The Company performed a Monte-Carlo simulation
to calculate the fair value of earnout liability. The fair value of the earnout liability was computed using the following key assumptions:
discount rate of
Each reporting period thereafter, the Company revalues the earn-out liability and records the changes in their fair value in the consolidated statements of operations and comprehensive loss.
Changes in the fair value of earnout liability can result from adjustments to the discount rates, revenues, profitability targets and achievement of mutual development project. This fair value measurement represents Level 3 measurements, as they are based on significant inputs not observable in the market. Significant judgment is required in determining the assumptions utilized as of the acquisition date and for each subsequent period. Accordingly, changes in the assumptions described above could have a material impact on the Company’s consolidated results of operations.
Each reporting period thereafter, the Company will revalue earnout liability and record the changes in the fair value in consolidated statements of operations. Significant changes in unobservable inputs, mainly the probability of success and cash flows projected, could result in material changes to the earnout liability.
| September 30, 2024 | ||||
| Discount rate | ||||
| Expected term (years) | ||||
| Expected volatility | ||||
| Risk-free interest rate | ||||
| Nine months ended September 30, 2024 | Year ended December 31, 2023 | |||||||
| U.S. dollars in thousands | ||||||||
| Fair value at the beginning of the year | ||||||||
| Initial recognition of earnout liability | ( | ) | ||||||
| Change in fair value of earnout liability | ( | ) | ||||||
| Fair value at the end of the year | ( | ) | ||||||
16
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 11 - STOCK-BASED COMPENSATION:
Stock Options
As of September 30, 2024, and December
31, 2023, the number of ordinary shares included in the Company’s option plans totaled to
As of September 30, 2024, the unrecognized
compensation costs related to those unvested stock options are $
| Nine months ended | ||||||||
| September 30, 2024 | ||||||||
| Number of Options | Weighted- Average Exercise price | |||||||
| Options outstanding as of December 31, 2023 | $ | |||||||
| Granted during the period | $ | |||||||
| Exercised during the period | ( | ) | $ | |||||
| Forfeited during the period | ( | ) | $ | |||||
| Options outstanding as of September 30, 2024 | $ | |||||||
| Options exercisable as of September 30, 2024 | $ | |||||||
| Outstanding as of September 30, 2024 | Exercisable as of September 30, 2024 | |||||||||||||||||||||||||||||||||
| Range of exercise prices | Number outstanding | Weighted average remaining contractual term | Weighted average exercise price | Aggregate intrinsic value (U.S. dollars in thousands) | Number Exercisable | Weighted average remaining contractual term | Weighted Average exercise price | Aggregate intrinsic value (U.S. dollars in thousands) | ||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
| $ | $ | $ | - | |||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||||||||||
17
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 11 - STOCK-BASED COMPENSATION (continued):
| For the nine months ended on September 30, 2024 | For the nine months ended on September 30, 2023 | |||||||
| Expected term | ||||||||
| Expected volatility | ||||||||
| Expected dividend rate | ||||||||
| Risk-free rate | ||||||||
During the nine months period ended
on September 30, 2024,
As of September 30, 2024, the unrecognized
compensation costs related to unvested stock options was $
The weighted-average fair value of
the options that were granted during the period ended September 30, 2024 was $
The total intrinsic value of options
exercised during the period of nine months ended September 30, 2024 and 2023 was $
.
| Nine months Ended September 30 | Three months Ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Research and development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation | ||||||||||||||||
18
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 11 - STOCK-BASED COMPENSATION (continued):
Restricted Stock Units
| Number of RSUs | Weighted- Average Grant Date Fair Value | |||||||
| RSUs outstanding at the beginning of the year | $ | |||||||
| Granted during the period | $ | |||||||
| Vested during the period | ( | ) | $ | |||||
| Forfeited during the period | ( | ) | $ | |||||
| Outstanding at the end of the period | $ | |||||||
As of September 30, 2024, the unrecognized compensation
cost related to unvested RSUs totaled to approximately $
During the nine months ended on September
30, 2024
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Research and development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation-RSUs | ||||||||||||||||
19
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 12 - NET LOSS PER ORDINARY SHARE:
| Nine months Ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Basic net loss per ordinary share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares and vested RSUs – basic and diluted | ||||||||||||||||
| Basic and dilutive net loss per common share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Options | ||||||||||||||||
| Restricted Stock Units | ||||||||||||||||
| Private Warrants | ||||||||||||||||
| Public Warrants | ||||||||||||||||
| Forfeiture Shares | ||||||||||||||||
NOTE 13 - FINANCIAL INCOME, NET
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Foreign currency exchange differences | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest income on short-term deposits | ||||||||||||||||
| Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total financial income, net | ||||||||||||||||
20
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 14 - SEGMENT AND REVENUE BY GEOGRAPHY AND BY MAJOR CUSTOMER:
| a. | For the purpose of evaluating financial performance and allocating resources, the CODM reviews financial
information presented on a consolidated basis accompanied by disaggregated information about revenues, gross profit and operating loss
by the |
| Nine months ended on September 30, 2024 | ||||||||||||
| Audio-Video | Automotive | Consolidated | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Revenues | ||||||||||||
| Gross profit | ||||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Change in earnout liability | ( | ) | ( | ) | ||||||||
| Segment operating profit (loss) | ( | ) | ( | ) | ( | ) | ||||||
| Change in fair value of Forfeiture Shares | ||||||||||||
| Financial income, net | ||||||||||||
| Loss before taxes on income | ( | ) | ||||||||||
| Depreciation and Amortization expenses | ||||||||||||
| Stock-based compensation | ||||||||||||
| Nine months ended on September 30, 2023 | ||||||||||||
| Audio-Video | Automotive | Consolidated | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Revenues | ||||||||||||
| Gross profit | ||||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Segment operating profit (loss) | ( | ) | ( | ) | ||||||||
| Change in fair value of Forfeiture Shares | ||||||||||||
| Financial expenses, net | ||||||||||||
| Loss before taxes on income | ( | ) | ||||||||||
| Depreciation and Amortization expenses | ||||||||||||
| Stock-based compensation | ||||||||||||
21
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 14 - SEGMENT AND REVENUE BY GEOGRAPHY AND BY MAJOR CUSTOMER (continued):
| Three months ended on September 30, 2024 | ||||||||||||
| Audio-Video | Automotive | Consolidated | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Revenues | ||||||||||||
| Gross profit | ||||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Change in earnout liability | ( | ) | ( | ) | ||||||||
| Segment operating profit (loss) | ( | ) | ( | ) | ( | ) | ||||||
| Change in fair value of Forfeiture Shares | ||||||||||||
| Financial income, net | ||||||||||||
| Loss before taxes on income | ( | ) | ||||||||||
| Depreciation and Amortization expenses | ||||||||||||
| Stock-based compensation | ||||||||||||
| Three months ended on September 30, 2023 | ||||||||||||
| Audio-Video | Automotive | Consolidated | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Revenues | ||||||||||||
| Gross profit | ||||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Segment operating profit (loss) | ( | ) | ( | ) | ( | ) | ||||||
| Change in fair value of Forfeiture Shares | ||||||||||||
| Financial income, net | ||||||||||||
| Loss before taxes on income | ( | ) | ||||||||||
| Depreciation and Amortization expenses | ||||||||||||
| Stock-based compensation | ||||||||||||
22
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 14 - SEGMENT AND REVENUE BY GEOGRAPHY AND BY MAJOR CUSTOMER (continued):
| b. | Geographic Revenues |
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Israel | ||||||||||||||||
| China | ||||||||||||||||
| Hong Kong | ||||||||||||||||
| Hungary | ||||||||||||||||
| United States | ||||||||||||||||
| Portugal | ||||||||||||||||
| Germany | ||||||||||||||||
| Mexico | ||||||||||||||||
| Other | ||||||||||||||||
| c. | Supplemental data - Major Customers: |
| September 30, 2024 | December 31, 2023 | |||||||
| Accounts Receivable | % of Account Receivable | |||||||
| Customer A | | % | | % | ||||
| Customer B | % | % | ||||||
| Customer C | % | % | ||||||
| Customer D | % | % | ||||||
| Customer E | % | % | ||||||
| Customer F | % | % | ||||||
| Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | % of Revenues | |||||||||||||||
| Customer D | % | % | % | % | ||||||||||||
| Customer C | % | % | % | % | ||||||||||||
| Customer F | % | % | % | % | ||||||||||||
| Customer A | % | % | % | % | ||||||||||||
| Customer G | % | % | % | % | ||||||||||||
23
VALENS SEMICONDUCTOR LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(continued)
NOTE 14 - SEGMENT AND REVENUE BY GEOGRAPHY AND BY MAJOR CUSTOMER (continued):
| d. |
| September 30, 2024 | December 31, 2023 | |||||||
| U.S. dollars in thousands | ||||||||
| Domestic (Israel) | ||||||||
| China | ||||||||
| USA | ||||||||
| Other | ||||||||
NOTE 15 - RELATED PARTY TRANSACTIONS
During the nine months ended on September
30, 2024, the Company granted
In addition, during the nine months
ended September 30, 2024 the Company granted
The fair value of the stock options
that were granted during the nine months ended September 30, 2024 is $
24