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GIGOPTIX, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) You should read the following discussion and analysis in conjunction with our consolidated financial statements and the related notes included elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2013. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2013 and this Quarterly Report on Form 10-Q. We assume no obligation to update the forward-looking statements or such risk factors. This Quarterly Report on Form 10-Q and the documents incorporated herein by reference include forward-looking statements within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are also made in reliance upon the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Overview We are a leading fabless supplier of high speed semiconductor components that enable end-to-end information streaming over optical and wireless networks. Our products address long haul and metro telecommunications applications as well as emerging high-growth opportunities for Cloud and datacenter connectivity, interactive applications for consumer electronics, and the industrial, defense and avionics industries. The business is made up of two product lines: our High-Speed Communications (HSC) product line and our Industrial product line. Through our HSC product line we offer a broad portfolio of high performance optical and wireless components to telecommunications (telecom) and data communications (datacom) customers, including (i) mixed signal radio frequency integrated circuits (RFIC); (ii) 10 to 400 gigabit per second (Gbps) laser and optical drivers and trans-impedance amplifiers (TIA) for telecom, datacom, and consumer electronic fiber-optic applications; (iii) power amplifiers and transceivers for microwave and millimeter monolithic microwave integrated circuit (MMIC) wireless applications including power amplifiers and transceiver chips at frequencies higher than 50 GHz; (iv) integrated systems in a package (SIP) solutions for both fiber-optic and wireless applications; and (v) radio frequency (RF) chips for various consumer applications such as global navigation satellite systems (GNSS). The HSC product line also partners with key customers on development projects that generate engineering project revenue and helps to position us for future product revenues with these key customers. Through our Industrial product line, we offer a wide range of digital and mixed-signal application specific integrated circuit (ASIC) solutions for industrial, military, avionics, medical and communications markets. The Industrial product line partners with ASIC customers on development projects that generate engineering project revenue and which generally lead to future product revenues with these ASIC customers. We focus on the specification, design, development and sale of analog semiconductor integrated circuits (ICs), multi-chip module (MCM) solutions, and digital and mixed signal ASICs, as well as wireless communications MMICs and modules. We believe we are an industry leader in the fast growing market for electronic solutions that enable high-bandwidth optical connections found in telecom, datacom and storage systems, and, increasingly, in consumer electronics and computing systems. Since inception, we have expanded our customer base with the acquisition and integration of six businesses with complementary products and customers. In so doing, we have expanded our device product line in multiple areas, growing our communication device offering from a few leading 10Gbps ultra-long haul optical drivers at our inception in July 2007 to a line of products today that include: drivers, receivers and TIAs for 10 to 400Gbps optical applications; power amplifiers; and custom ASICs spanning 0.6um to 65nm technology nodes. Our direct sales force is based in three countries and is supported by a significant number of channel representatives and distributors that sell our products throughout North America, Europe, Japan and Asia. During the third quarter of 2014, we acquired substantially all of the assets of Tahoe RF Semiconductor, Inc. (Tahoe RF) by assuming approximately $446,000 of liabilities of Tahoe RF. Through the acquisition, we have added RF/analog RFIC technology to our product portfolio and 10 employees to our team, primarily RF engineers focused on the high growth areas of E-Band and V-Band technologies. Historically, we have incurred net losses. For the nine months ended September 28, 2014 and the year ended December 31, 2013, we incurred net losses of $4.7 million and $1.9 million, respectively. For the nine months ended September 28, 2014, we had cash outflows from operations of $812,000. For the year ended December 31, 2013, we had cash inflows from operations of $3.3 million. As of September 28, 2014 and December 31, 2013, we had an accumulated deficit of $101.2 million and $96.4 million, respectively. 20 -------------------------------------------------------------------------------- Table of Contents Recent Accounting Pronouncements In June 2014, the Financial Accounting Standard Board (FASB) issued an accounting standard update clarifying the accounting guidance on how to account for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. This standard is effective for periods beginning after December 15, 2015 and early adoption is permitted. We do not expect the adoption will have a material impact on our condensed consolidated financial statements. In May 2014, the FASB issued an accounting standard clarifying the principles for recognizing revenue by amending the FASB Accounting Standards Codification and creating a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This standard is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. We are currently evaluating the impact of the adoption on our condensed consolidated financial statements. Results of Operations Revenue Revenue for the periods reported was as follows (in thousands, except percentages): Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Product $ 7,812 $ 6,505 $ 21,692 $ 17,835 Development fees and other 672 831 2,215 3,253 Total revenue $ 8,484 $ 7,336 $ 23,907 $ 21,088 Increase, period over period $ 1,148 $ 2,819 Percentage increase, period over period 16 % 13 % Total revenue for the three months ended September 28, 2014 was $8.5 million, an increase of $1.1 million or 16%, compared with $7.3 million for the three months ended September 29, 2013. For the three months ended September 28, 2014, 92% of our revenue was contributed by product revenue and 8% of our revenue was contributed by development fees and other revenue. For the three months ended September 29, 2013, 89% of our revenue was contributed by product revenue and 11% of our revenue was contributed by development fees and other revenue. Product revenue for the three months ended September 28, 2014 was $7.8 million, an increase of $1.3 million or 20%, compared with $6.5 million for the three months ended September 29, 2013. The increase in product revenue during the three months ended September 28, 2014 was due to the increased demand for both our Industrial and HSC products. Development fees and other revenue for the three months ended September 28, 2014 was $672,000, a decrease of $159,000 or 19%, compared with $831,000 for the three months ended September 29, 2013. We experienced a decrease in development fees and other revenue primarily due to a decrease in the number and size of development projects in our HSC product line. Total revenue for the nine months ended September 28, 2014 was $23.9 million, an increase of $2.8 million or 13%, compared with $21.1 million for the nine months ended September 29, 2013. For the nine months ended September 28, 2014, 91% of our revenue was contributed by product revenue and 9% of our revenue was contributed by development fees and other revenue. For the nine months ended September 29, 2013, 85% of our revenue was contributed by product revenue and 15% of our revenue was contributed by development fees and other revenue. Product revenue for the nine months ended September 28, 2014 was $21.7 million, an increase of $3.9 million or 22%, compared with $17.8 million for the nine months ended September 29, 2013. The increase in product revenue during the nine months ended September 28, 2014 was due to increased revenue from our HSC and Industrial product lines. Development fees and other revenue for the nine months ended September 28, 2014 was $2.2 million, compared with $3.3 million for the nine months ended September 29, 2013. We experienced a decrease in development fees and other revenue primarily due to a decrease in the number and size of development projects in our HSC and Industrial product line. 21 -------------------------------------------------------------------------------- Table of Contents Cost of Revenue and Gross Profit Cost of revenue and gross profit for the periods presented was as follows (in thousands, except percentages): Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Total cost of revenue $ 3,482 $ 2,985 $ 10,095 $ 8,199 Gross profit $ 5,002 $ 4,351 $ 13,812 $ 12,889 Gross margin 59 % 59 % 58 % 61 % Increase, period over period 651 923 Percentage increase, period over period 15 % 7 % Gross profit consists of revenue less cost of revenue. Cost of revenue consists primarily of the costs to manufacture saleable chips, including outsourced wafer fabrication and testing; costs of direct materials; equipment depreciation; costs associated with procurement, production control and quality assurance; fees paid to our offshore manufacturing vendors; reserves for potential excess or obsolete material; allocated facilities costs; costs related to stock-based compensation; accrued costs associated with potential warranty returns; and amortization of certain identified intangible assets. Amortization expense of identified intangible assets, namely existing technology, is presented within cost of revenue, as the intangible assets were determined to be directly attributable to revenue generating activities. Gross profit for the three months ended September 28, 2014 was $5.0 million, or a gross margin of 59%, which was comparable to a gross profit of $4.4 million or a gross margin of 59%, for the three months ended September 29, 2013. Gross profit for the nine months ended September 28, 2014 was $13.8 million, or a gross margin of 58%, compared to a gross profit of $12.9 million, or a gross margin of 61%, for the nine months ended September 29, 2013. The decrease in gross margin is primarily due to lower revenue from development projects. We record revenue from non-recurring engineering projects associated with product development that we enter into with certain customers. In general, these projects are associated with complex technology development, and as such we do not have certainty about our ability to achieve the program milestones. Achievement of the milestone is dependent on our performance and is typically contingent upon acceptance by the customer. The payment associated with achieving the milestone is generally commensurate with our effort or the value of the deliverable and is nonrefundable. Therefore, we record the expenses related to these projects in the periods incurred and recognize revenue only when we have earned the revenue and achieved the development milestones. Revenue from these projects is typically recorded at 100% gross margin because the costs associated with these projects are expensed as incurred and generally included in research and development expense. These efforts generally benefit our overall product development programs beyond the specific project requested by our customer. Development project revenue and other non-product revenue for the three months ended September 28, 2014 was $672,000 compared with $831,000 for the three months ended September 29, 2013. Excluding the revenue and gross profit associated with development programs and other non-product revenue, gross margin was 55% and 54% for the three months ended September 28, 2014 and September 29, 2013, respectively. Development project revenue and other non-product revenue for the nine months ended September 28, 2014 was $2.2 million compared with $3.3 million for the nine months ended September 29, 2013. Excluding the revenue and gross profit associated with development programs and other non-product revenue, gross margin was 53% and 54% for the nine months ended September 28, 2014 and September 29, 2013, respectively. Research and Development Expense Research and development expense for the periods presented was as follows (in thousands, except percentages): Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Research and development expense $ 3,257 $ 3,984 $ 10,357 $ 10,397 Percentage of revenue 38 % 54 % 43 % 49 % Decrease, period over period $ (727 ) $ (40 ) Percentage decrease, period over period -18 % 0 % 22-------------------------------------------------------------------------------- Table of Contents Research and development expenses are expensed as incurred. Research and development expense consists primarily of salaries and related expenses for research and development personnel, consulting and engineering design, non-capitalized tools and equipment, engineering related semiconductor masks, depreciation for equipment, engineering expenses paid to outside technology development suppliers, allocated facilities costs and expenses related to stock based compensation. Research and development expense for the three months ended September 28, 2014 was $3.3 million compared to $4.0 million for the three months ended September 29, 2013, a decrease of $727,000 or 18%. Research and development costs decreased as compared to the third quarter of 2013 primarily due to $730,000 decrease in materials and project-related services. Research and development expense for the nine months ended September 28, 2014 and September 29, 2013 were comparable at $10.4 million. For the nine months ended September 28, 2014 compared to the nine months ended September 29, 2013, there was a $249,000 decrease in materials and project-related services partially offset by an increase of $216,000 in personnel related expenses. We expect research and development expense to increase from the third quarter of 2014 to the fourth quarter of 2014 due to increased materials and project-related expenses to develop new products. Selling, General and Administrative Expense Selling, general and administrative expense for the periods presented was as follows (in thousands, except percentages): Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Selling, general and administrative expense $ 2,388 $ 2,483 $ 7,353 $ 6,877 Percentage of revenue 28 % 34 % 31 % 33 % Increase (Decrease), period over period $ (95 ) $ 476 Percentage increase (decrease), period over period -4 % 7 % Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, accounting, finance, sales, marketing and administration personnel, professional fees, allocated facilities costs, promotional activities and expenses related to stock-based compensation. Selling, general and administrative expense for the three months ended September 28, 2014 was $2.4 million compared to $2.5 million for the three months ended September 29, 2013, a decrease of $95,000 or 4%. Selling, general and administrative expense decreased as compared to the third quarter of 2013 primarily due to a $283,000 decrease in personnel related expenses, partially offset by a $239,000 increase in stock-based compensation. Selling, general and administrative expense for the nine months ended September 28, 2014 was $7.4 million compared to $6.9 million for the nine months ended September 29, 2013, an increase of $476,000 or 7%. Selling, general and administrative expense increased as compared to 2013 primarily due to a $473,000 increase in stock-based compensation and a $144,000 increase in personnel related expenses, partially offset by a $106,000 decrease in employees' travel-related expenses. We expect selling, general and administrative expense to be comparable in absolute dollars from the third quarter of 2014 to the fourth quarter of 2014. Restructuring Expense, Net Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Restructuring expense $ 36 $ - $ 343 $ 950 Percentage of revenue 0 % 0 % 1 % 5 % Increase (decrease), period over period $ 36 $ (607 ) Percentage increase (decrease), period over period 100 % -64 % During the three months ended September 28, 2014, we recorded $36,000 in restructuring expenses to reduce headcount in our engineering team. The component of the restructuring charge included $36,000 of cash expenses for severance, benefits and payroll taxes and other costs associated with employee terminations. During the second quarter of 2014, we recorded $307,000 in restructuring expenses in order to end our lease in the Bothell, Washington location and reduce our headcount. The components of the restructuring charge included $43,000 of cash expenses for cleanup services, $210,000 of restricted cash and rent deposit forfeiture to move out of the Bothell facility, $45,000 of cash expenses for severance, benefits and payroll taxes and other costs associated with employee terminations, and $9,000 of non-cash expenses associated with the acceleration restricted stock units ("RSUs"). 23 -------------------------------------------------------------------------------- Table of Contents During the nine months ended September 29, 2013, we recorded $950,000 in restructuring expenses. The components of the restructuring charge included $662,000 of non-cash expenses associated with the acceleration of stock options and RSUs and $288,000 of cash expenses for severance, benefits and payroll taxes and other costs associated with employee terminations. No restructuring expenses were incurred in the three months ended September 29, 2013. Special Litigation-Related Expense (Income) During the nine months ended September 28, 2014, we incurred no special litigation-related expenses. During the three months ended September 29, 2013, we incurred a special litigation-related benefit of $5.7 million, which was due to a $7.3 million one-time litigation settlement for the settlement of the lawsuit against M/A-Com Technology Solution, Inc., its subsidiary, Optomai, and three former GigOptix employees (the Optomai case) partially offset by $1.6 million of legal fees associated with the Optomai case. During the nine months ended September 29, 2013, we incurred a special litigation-related benefit of $4.8 million, which was due to a $7.3 million one-time litigation settlement for the Optomai case, partially offset by $2.5 million of legal fees associated with the Optomai case and $108,000 of legal fees associated with the Advantech case. Interest Expense, Net and Other Income, Net Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Interest expense, net $ (9 ) $ (27 ) $ (36 ) $ (106 ) Other income, net 35 3 45 259 Total $ 26 $ (24 ) $ 9 $ 153 Interest expense, net and other income, net consist primarily of gains and losses related to foreign currency transactions, gains and losses related to property and equipment disposals, interest on line of credit borrowings, interest on capital leases and amortization of loan fees in connection with our Silicon Valley Bank line of credit and loan. Interest expense, net for the three months ended September 28, 2014 was $9,000 compared to $27,000 for the three months ended September 29, 2013. Interest expense, net decreased as compared to the third quarter of 2013 primarily due to a $12,000 decrease in interest on capital leases. Interest expense, net for the nine months ended September 28, 2014 was $36,000 compared to $106,000 for the nine months ended September 29, 2013. Interest expense, net decreased as compared to the third quarter of 2013, primarily due to a $35,000 decrease in interest on capital leases and $19,000 decrease in loan fees. Other income, net for the three and nine months ended September 28, 2014 was income of $35,000 and $45,000, respectively, which primarily consisted of $29,000 and $33,000 gain on foreign currency exchange, respectively. Other income, net for the nine months ended September 29, 2013 was income of $259,000, which primarily consisted of $160,000 gain on sale of property and equipment, $95,000 gain on sale of materials and $12,000 from the change in the fair value of liability warrants. Provision for Income Taxes Three Months Ended Nine Months Ended September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013 Provision for income taxes $ 8 $ 1 $ 39 $ 28 Percentage of revenue 0 % 0 % 0 % 0 % Increase, period over period $ 7 $ 11 Percentage increase, period over period 700 % 39 % Income tax expense was $8,000 and $1,000 for three months ended September 28, 2014 and September 29, 2013, respectively, and our effective tax rate was less than 1% for those periods. The income tax provision for the three months ended September 28, 2014 and September 29, 2013 were due primarily to state taxes and foreign taxes due. We have incurred book losses in all tax jurisdictions and have a full valuation allowance against such losses. 24 -------------------------------------------------------------------------------- Table of Contents Income tax expense was $39,000 and $28,000 for nine months ended September 28, 2014 and September 29, 2013, respectively, and our effective tax rate was less than 1% for those periods. The income tax provision for the nine months ended September 28, 2014 and September 29, 2013 were due primarily to state taxes and foreign taxes due. We have incurred book losses in all tax jurisdictions and have a full valuation allowance against such losses. Loss on Equity Investment In February 2014, together with Fundação CPqD - Centro De Pesquisa e Desenvolvimento em Telecomunicações ("CPqD"), we incepted a new joint venture, of which we own 49% and CPqD owns 51%, BrPhotonics Produtos Optoeletrônicos LTDA. ("BrP"). It is based in Campinas, Brazil. BrP will be a provider of advanced high-speed devices for optical communications and integrated transceiver components for information networks and is engaged in research and development of Silicon-Photonics ("SiPh") advanced electro-optical products. For the three and nine months ended September 28, 2014, our allocated portion of BrP's operating results was a loss of $125,000 and $456,000 respectively. Liquidity and Capital Resources Cash and cash equivalents and cash flow data for the periods presented were as follows (in thousands): September 28, December 31, 2014 2013Cash and cash equivalents $ 18,119 $ 20,377 Nine Months Ended September 28, 2014 September 29, 2013 Net cash provided by (used in) operating activities $ (812 ) $ 4,231 Net cash used in investing activities $ (786 ) $ (1,159 ) Net cash provided by (used in) financing activities $ (607 ) $ 1,974 Public Offering On December 19, 2013, we entered into an underwriting agreement (the "Underwriting Agreement") with Roth Capital Partners, LLC as representative of several underwriters to the Underwriting Agreement relating to a public offering of an aggregate of 8,325,000 shares (the "Shares") of our common stock, par value $0.001 per share at a public offering price of $1.42 per share. The Shares are accompanied by the associated rights to purchase shares of Series A Junior Preferred Stock, par value $0.001 per share, created by the Rights Agreement, dated December 16, 2011, between us and the American Stock Transfer & Trust Company, LLC, as Rights Agent (the "Rights Agreement"). Under the terms of the Underwriting Agreement, we granted the underwriters a 30 day option to purchase up to an additional 1,248,750 shares of common stock to cover over-allotments. On December 24, 2013, we completed our public offering of 9,573,750 newly issued shares of common stock at a price to the public of $1.42 per share. The number of shares sold in the offering included the underwriter's full exercise on December 24, 2013 of their over-allotment option of 1,248,750 shares of common stock. The net proceeds from the offering was approximately $12.3 million which consisted of $12.5 million after underwriting discounts, commissions and expenses less an additional $250,000 for legal, accounting, registration and other transaction costs related to the public offering. Operating Activities Operating activities used cash of $812,000 in the nine months ended September 28, 2014. Our net loss from continuing operations, adjusted for depreciation, stock-based compensation, loss on equity investment, non-cash restructuring expense and other non-cash items, was an income of $1.9 million. The remaining use of $2.7 million of cash was primarily due to an increase in accounts receivable, net of $2.7 million, an increase in prepaid and other assets of $702,000, a decrease in accrued compensation of $118,000 and a decrease in other current liabilities of $419,000, which were partially offset by a decrease in inventories of $351,000 and an increase in accounts payable of $916,000. Operating activities provided cash of $4.2 million in the nine months ended September 29, 2013. This resulted from a net loss of $424,000 and non-cash gain on sale of property and equipment of $133,000, and we experienced cash usage for working capital for an increase in accounts receivable, net of $2.1 million, an increase in inventories of $437,000, an increase in prepaid and other current assets of $521,000, a decrease in accrued restructuring of $89,000, and a decrease in other current and long-term liabilities of $137,000. These decreases were offset by an increase in accounts payable of $1.3 million, an increase in accrued compensation of $675,000 and non-cash expenses for stock-based compensation of $3.3 million and depreciation and amortization of $2.8 million. In addition, we incurred a special litigation-related benefit of $4.8 million, which was due to a $7.3 million one-time litigation settlement for the Optomai case, partially offset by $2.5 million of legal fees associated with the Optomai case. 25 -------------------------------------------------------------------------------- Table of Contents Investing Activities Net cash used in investing activities for the nine months ended September 28, 2014 was $786,000 and consisted of purchases of property and equipment. Net cash used in investing activities for the nine months ended September 29, 2013 was $1.2 million and consisted of $1.3 million of purchases of property and equipment partially offset by $160,000 of proceeds from sale of property and equipment. Financing Activities Net cash used in financing activities for the nine months ended September 28, 2014 was $607,000 and consisted primarily of $379,000 of taxes paid related to net share settlement of equity awards, $283,000 for capital lease payments and a $176,000 payment of debt assumed in our acquisition of Tahoe RF, partially offset by $231,000 proceeds from issuance of stock. Net cash provided by financing activities for the nine months ended September 29, 2013 was $2.0 million and consisted primarily of $2.4 million of net proceeds from our line of credit facilities with Silicon Valley Bank, partially offset by $319,000 for capital lease payments and $111,000 for taxes paid related to net share settlement of equity awards. Material Commitments The following table summarizes our future net cash obligations for current debt, operating leases, and capital leases, in thousands of dollars, as of September 28, 2014: Contractual Obligations as of One to Three Three to September 28, 2014: Total Less than One Year Years Five Years Operating lease obligations $ 1,235 $ 141 $ 970 $ 124 Capital lease obligations (including interest) 11 1 7 3 Total $ 1,246 $ 142 $ 977 $ 127 Except for the future cash obligations above, GigOptix did not have any material commitments for capital expenditures as of September 28, 2014. Impact of Inflation and Changing Prices on Net Sales, Revenue and Income Inflation and changing prices have not had a material impact on the materials used in our production process during the periods and at balance sheet dates presented in this report. Off-Balance Sheet Arrangements GigOptix does not use off-balance-sheet arrangements with unconsolidated entities, nor does it use other forms of off-balance-sheet arrangements such as special purpose entities and research and development arrangements. Accordingly, GigOptix is not exposed to any financing or other risks that could arise if it had such relationships. WHERE YOU CAN FIND MORE INFORMATION Our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended are available on our website at http://www.gigoptix.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with the SEC. The information contained on our website is not a part of this Quarterly Report on Form 10-Q. Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to also use the following social media channels as a means of disclosing information about the company, our services and other matters and for complying with our disclosure obligations under Regulation FD: 26 -------------------------------------------------------------------------------- Table of Contents GigOptix Twitter Account (https://twitter.com/GigOptix) The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. Further, the references to the URLs for these websites are intended to be inactive textual references only. You can also read and copy any document that we file, including this Annual Report on Form 10-K, at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Call the SEC at 1-800-SEC-0330 for information on the operation of the Public Reference Room. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can electronically access our SEC filings there. Additionally, the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, by our predecessor registrant Lumera are also available at http://www.sec.gov. 27-------------------------------------------------------------------------------- Table of Contents |