Form 10-K ADEPT TECHNOLOGY INC For: Jun 30
Tweet
Share
E-mailTable of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended June 30, 2015
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 0-27122
ADEPT TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 94-2900635 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| 5960 Inglewood Drive, Pleasanton, CA | 94588 | |
| (Address of principal executive office) | (Zip Code) | |
Registrant’s telephone number, including area code: (925) 245-3400
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Name of each exchange on which registered | |
| Common Stock, $0.001 par value |
NASDAQ Capital Market |
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ |
Accelerated filer x | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the common equity was last sold on the Nasdaq Capital Market as of the last business day of the registrant’s most recently completed second fiscal quarter (December 27, 2014) was $92,400,000. Shares of common stock held by each officer and director and by each person who beneficially owns 10% or more of common equity of the registrant may be deemed to be affiliates of the registrant.
As of August 15, 2015, approximately 14.6 million shares of the registrant’s common stock, $0.001 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for the 2015 Annual Meeting of Stockholders to be filed subsequently, referred to as the Proxy Statement, are incorporated by reference into Parts I, II, and III hereof of this Annual Report on Form 10-k. Except as expressly incorporated by reference, the registrant’s proxy statement shall not be deemed to be part of this report.
Table of Contents
ADEPT TECHNOLOGY, INC.
ANNUAL REPORT ON FORM 10-K
i
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements principally but not exclusively in the sections entitled “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Controls and Procedures.” In some cases, you can identify forward-looking statements by terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “predict,” “potential,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on these statements. We discuss many of these risks and uncertainties in this Annual Report on Form 10-K in greater detail under the heading “Risk Factors.” Also, these statements represent our estimates and assumptions only as of the date of the filing of this Annual Report on Form 10-K with the SEC, and we undertake no obligation to publicly update or revise these forward-looking statements.
In this report, unless the context indicates otherwise, the terms “Adept,” the “Company,” “we,” “us,” and “our” refer to Adept Technology, Inc., a Delaware corporation, and its subsidiaries.
This report contains trademarks and trade names of Adept and other companies. Adept has 203 trademarks of which 12 are registered trademarks, some of which include the Adept Technology logo. Our trademarks include (among others): Adept ® , AIM ® , HexSight ® , AdeptVision ® , Motivity ® , Adept Cobra™, AdeptQuattro™, AdeptViper™, Adept Python™, Adept SmartServo™, AdeptOne™, AdeptSix™, Adept Anyfeeder™, Adept ACE™, Adept PAC™, SoftPic™, Lynx™, Enterprise Manager™, Motivity™, Seekur™, and PatrolBot™.
| ITEM 1. | BUSINESS |
Adept is a global, robotics-based automation supplier. Through our integrated offerings of both industrial and mobile robots we help our customers improve the speed, quality and efficiency of their production environments. We design and manufacture industrial (fixed) and mobile robots along with a complementary suite of control and vision systems and software which are used for assembly, packaging, handling, testing and logistics applications in both fixed repetitive and unstructured environments. These products are offered to our customers along with a broad range of service and support options.
Adept helped pioneer the robotics industry, and with more than 30 years of operating expertise, we continue to lead in the development of innovative robotics solutions to meet the changing needs of automation. Our robotic solutions are targeted at automated applications and processes that require precision, flexibility and high productivity. Through sales to systems integrators, distributors, original equipment manufacturer (“OEM”) partners and end-user companies, we provide flexible, cost-effective robotics systems , software and services to a variety of markets, including electronics, food, semiconductor, warehouse/logistics, medical, and automotive.
Our headquarters are located in Pleasanton, California, and we maintain facilities in New Hampshire, Ohio, France, Germany, Singapore and China for business operations, sales and customer support. We were founded and incorporated in California in 1983 and reincorporated in Delaware in 2005. Our common stock is traded on the NASDAQ Capital Market under the symbol “ADEP.”
We operate in two segments: Robotics and Services and Support. Revenue from our Robotics segment accounted for approximately 78% of our total revenues in each of fiscal 2015, 2014 and 2013. Revenue from our Services and Support segment accounted for approximately 22% of our total revenues in each of fiscal 2015, 2014 and 2013. Additional information for these segments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.
1
Table of Contents
Overview
Key benefits of automation include improved process control, efficiency and productivity, higher and more consistent quality, and improved traceability. For decades, industries such as automotive assembly and electronics have used robotic systems in their manufacturing operations to stay competitive, reduce costs and provide a safer environment for workers. Such industries are heavily dependent on automation to manufacture, assemble and package their products. In many other industries, the use of automation is only just beginning, spurred by changes in the regulatory and competitive environment, and always with a focus on achieving greater productivity at a lower cost.
We classify robots into two categories, fixed (industrial) robots (multi-axis) and mobile robots (autonomous vehicles). Adept manufactures both types of robots and offers many options such as vision and automation control software and related hardware, parts feeding and enterprise-level software. Each application typically has specific capability requirements and the broad technical depth at Adept allows us to offer a diverse selection of products into existing and new high-growth opportunities.
The industrial robots we supply include:
| • | SCARA (Selective Compliance Assembly Robot Arm)/four axis |
| • | Articulated/six axis |
| • | Parallel/three or four axis |
| • | Cartesian/up to 24 axis |
The mobile robots we supply include:
| • | Autonomous mobile robots for the transportation of materials |
| • | Autonomous mobile robots with an integrated conveyor |
| • | Autonomous mobile robots with integrated collaborative SCARA for the handling and transport of materials |
| • | Autonomous mobile robots for research applications in a non-commercial environment |
Robotic automation continues to be a key enabler for a broad range of applications and industries. Adept robots are ideal in situations that are either hazardous or too repetitive/tedious for human labor, applications that require high precision and speed, or autonomous transportation of goods, including:
| • | Manufacturing parts assembly |
| • | Handling - parts/food/packages |
| • | Packaging |
| • | Transporting/logistics |
| • | Warehouse - order fulfillment |
| • | Testing |
| • | Dispensing |
Markets
Semiconductor
In a semiconductor fab, the two main cost reduction challenges are labor and yield. The Adept Lynx ® mobile robot allows labor to be redeployed to high value-add tasks in a fab. The Lynx also reduces delivery errors and damage of SMIF pods (containing expensive semiconductor wafers); eliminates rough handling of SMIF pods; eliminates human and other contaminants, and improves cycle time with automated, optimized wafer movement, all of which improves product yield. Adept’s mobile robots provide unique, cost-effective solutions for both of these challenges.
2
Table of Contents
Packaging
The demand for consumer packaged goods (CPG) continues to increase, as factors such as expediency, variety and safety have become more important to consumers. Additionally, automated packaging can deliver benefits such as convenience, branding or market differentiation. Increased use of packaging in various consumer products is fueling the need for automation to address the challenges that arise in the packaging process. These challenges include the need for flexibility, the need to maintain a clean or sterile environment, the ability to process high volumes and the ability to track products that are perishable or that may pose future unknown risks. Cost considerations are also an important catalyst for automated packaging, particularly in applications such as food, where products are often packaged locally for various reasons including freshness, regional branding or specific regulatory requirements. Automation is often a more cost efficient alternative to maintaining a relatively larger number of employees as productivity can be achieved more quickly, in less space and with less risk of contamination.
Electronics
The combination of high product volumes and continual price erosion in the electronics market has long created demand for the use of automation to ensure the highest yields at the lowest cost. Automation solutions are used to help manufacture and assemble a host of electronic products such as computer disk drives, cell phones and printer cartridges and components. This market is very cyclical in terms of its investment in automation technology, with periods of significant investment in adding capacity or enhancing existing systems typically followed by periods of relatively low investment. As the product lifecycle for consumer electronics continues to shorten, manufacturers need increasingly flexible automation lines enabled by robotic solutions.
Industrial
Automation enables important benefits in the industrial market, including higher yields, better and more consistent quality and lower cost. For example, in assembly applications, automation can provide the speed and precision required to handle small, high-volume components such as sensors and electronic components. In industrial manufacturing applications, the automation of machine tools and other industrial equipment provides a more productive and safer environment while allowing human labor to be re-deployed to higher value added tasks. This is particularly true in the use of mobile robots to autonomously transport goods within a factory, increasing efficiency. Additionally, automation plays an important role in containing costs in high labor cost regions such as Europe, where governmental policies have encouraged industrial manufacturing to remain local.
Logistics/Warehouse
One of the largest sectors where logistics is of primary consideration is in warehousing and distribution. Managers of these processes are faced with multiple operational and environmental challenges while simultaneously facing ever increasing customer requirements. Automation is often a financially attractive alternative to manual processes not only for labor cost savings, but also due to the potential improvements in productivity, order accuracy, reduced space requirements, increased volume capacity, and control of inventory. While this growth in automation is occurring, there is also a need for supply chains to become more agile to serve rapidly changing markets. To address these divergent requirements, automation is being required to offer heightened levels of flexibility. This is increasingly achieved through the use of mobile robot technologies such as the Lynx mobile robot to autonomously transport materials as instructed directly by the warehouse management systems (WMS) software.
Food
Driven by global competition, changes in consumer buying habits and tightening of governmental safety and hygiene requirements, food processors worldwide are turning from hard automation and manual packing towards robotics in order to achieve food safety, lower cost, manufacturing flexibility and improved sanitation in their food packaging lines. Labor shortages and high turnover are further driving food manufacturers towards
3
Table of Contents
automated solutions. Primary food packaging sectors, where robots come in direct contact with food, include raw and processed meats and poultry, seafood, raw and processed fruits and vegetables, baked goods and confectionary. Secondary food application sectors, where packaged food is placed into larger packages, include kitting, cartoning and palletizing.
Flexible Manufacturing
As manufacturers worldwide strive to respond to both B2B and B2C markets that are constantly demanding new and more varied products, designing processes that support multiple product lines or numerous short life-cycle products are major challenges. Companies that manufacture consumer products have SKUs that number in the hundreds or thousands with updates, changeovers and short delivery times requiring high adaptability. Faster, more accurate and multi-arm robotic cells bring the ability to run different products on a production line, perform a wide variety of repeatable tasks, and handle multiple applications, contributing greatly to flexible work cells. These capabilities, along with more sophisticated robotic end effectors, flexible feeders instead of SKU specific bowl feeders and autonomous indoor vehicles instead of hard conveyances, are enabling efficient product changeover and flexibility that reduce costs and time to market. The Lynx Cart Transporter enables the automated replenishment of parts/components line-side along with WIP movement and finished goods delivery.
Scientific and Academic Research
Governments promote funding for robotics research as a way to increase manufacturing competitiveness and productivity. Investigations are carried out within university engineering and computer science departments, as well as standalone government and military research labs. Disciplines include mapping and navigation, machine vision, multi-robot systems control, human-robot interaction, mobile manipulation and robot-enabled medical applications. When possible, laboratories will use pre-built robotic assemblies in favor of developing specialized hardware. Platforms are programmable with open architecture and can be modified for specific investigations and integrated with customized effectors and sensors.
Market Applications
Adept designs and manufactures industrial and mobile robots along with related control and vision systems and software for a diverse group of customers:
| Market |
Application |
Adept Product | ||
| Semiconductor |
Solar | Cobra™, Viper™, Python™, Quattro™, HornetTM | ||
| Wafer Transport | Lynx ® , Enterprise Manager™, Cobra™, Viper™ | |||
| Reticle Handling | Lynx ® , Enterprise Manager™, Cobra™ | |||
| Packaging |
Kitting | Cobra™, Viper™, Python™, Quattro™, HornetTM | ||
| Cartoning | Cobra™, Viper™, Python™, Quattro™, HornetTM | |||
| Palletizing | Viper™ | |||
4
Table of Contents
| Market |
Application |
Adept Product | ||
| Electronics |
Assembly | Cobra™, Viper™, Python™, AnyFeeder™, Flexibowl ® | ||
| Packaging | Cobra™, Viper™, Python™, Quattro™, HornetTM | |||
| Line Side Replenishment | Lynx ® ™, Lynx Cart Transporter, Enterprise Manager™ | |||
| WIP Replenishment | Lynx ® ™, Enterprise Manager™ | |||
| Transport of Finished Goods | Lynx ® ™, Enterprise Manager™ | |||
| Industrial |
Component Assembly | Cobra™, Viper™, Python™, AnyFeeder™, Flexibowl ® | ||
| Material Transfer | Cobra™, Viper™, Python™, Quattro™, HornetTM | |||
| Machine Tending | Viper™ | |||
| Line Side Replenishment | Lynx ® ™, Lynx Cart Transporter, Enterprise Manager™ | |||
| WIP Replenishment | Lynx ® ™, Enterprise Manager™ | |||
| Transport of Finished Goods | Lynx ® ™, Enterprise Manager™ | |||
| Logistics/Warehouse |
Order fulfillment | Lynx ® , Enterprise Manager™ | ||
| Inventory picking | Lynx ® , Enterprise Manager™, Cobra™, Viper™ | |||
| WIP Replenishment | Lynx ® , Enterprise Manager™ | |||
| Food |
Primary Packaging | Quattro™, Cobra™, HornetTM | ||
| Secondary Packaging | Quattro™, Cobra™, Viper™, HornetTM | |||
| Palletizing | Viper™ | |||
| Transport of Finished Goods | Lynx ® ™, Enterprise Manager™ | |||
| Flexible Manufacturing |
Assembly | Cobra™, Viper™, Python™, Quattro, HornetTM | ||
| Dispensing | Cobra™, Viper™ | |||
| Flexible Feeding | AnyFeeder™, Flexibowl ® | |||
| Line Side Replenishment | Lynx ® ™, Lynx Cart Transporter, Enterprise Manager™ | |||
| WIP Replenishment | Lynx ® ™, Enterprise Manager™ | |||
Products
Industrial (Fixed) Robots
Adept Quattro Parallel Robots
The Adept Quattro™ robot is the world’s fastest parallel robot. The patented four-arm design, advanced control algorithms, embedded amplifier, and large work envelope make Quattro™ the ideal robot for high-speed assembly, processing, packaging, and other manufacturing applications. Quattro™ comes with a 650 or 800 mm reach, a minimal footprint, and delivers sustainable, smooth motions at high speeds. The Adept Quattro™ s650HS version is USDA-accepted for meat and poultry processing.
5
Table of Contents
Adept Viper 6-axis Articulated Robots
The Adept Viper™ robot is a high-performance 6-axis robot with a 650, 850, 1300, or 1700 mm reach. Adept Viper robots have the added flexibility afforded by their 6-axis design. Adept Viper robots include the Adept’s controls, equipping each with conveyor tracking and vision guidance capabilities. Viper robots are available in wash-down configurations, and the Viper s650 and s850 are available in cleanroom configurations.
Adept Cobra SCARA Robots
The Adept Cobra™ robot is a high-performance four-axis SCARA robot with a 350, 600, or 800 mm reach. Adept Cobra robots offer an industry-leading combination of speed, accuracy and repeatability. Adept Cobra s-Series robots (s350, s600, s800 and s800 inverted) include the Adept SmartController, equipping each with conveyor tracking and vision guidance capabilities. Adept eCobra robots feature embedded controls and amplifiers in the robot’s base, simplifying the design, reducing the cost, and increasing the footprint efficiency. eCobra robots are available in three performance tiers: Lite, Standard, and Pro, each designed for specific application speed and complexity.
Adept Python Cartesian Robots
Adept Python™ linear modules are designed for scalability and flexibility. Adept Python modules incorporate unique design features, making them one of the most robust modules for single-axis, dual- axis, three-axis, or four-axis applications with rotation, gantry, and cantilever configurations. Adept Python modules are easily configured into multi axis robots and are delivered as a fully-assembled and tested system. All Python modules are available in both cleanroom and ESD versions.
Adept Hornet Parallel Robots
The Hornet 565 is a parallel robot for high-speed picking and packaging applications. Adept’s controls are fully embedded into the base of the robot, reducing floor space and installation costs and complexity. The Hornet 565 features a hygienic design that minimizes contamination risks, including a standard IP65 rating and corrosion resistant materials for easy wash down. The Hornet is part of Adept’s complete robotic packaging solution that includes integrated high-speed conveyor tracking, powerful vision guidance, and easy-to-use application software created specifically for the packaging market.
Mobile Robots
Adept Lynx
The Adept Lynx ® is an autonomous indoor vehicle with a configurable payload for the transport and handling of goods. The Lynx includes Mobile Planner™, Adept’s proprietary self-navigation software ideal for use in crowded and highly dynamic environments, tight hallways and applications where a highly flexible, fully autonomous vehicle is advantageous. Adept OEM partners and payload developers (integrators) enjoy access to a reliable drive system, an on-board power supply, automated self-charging, and I/O for integrating payload hardware onto the mobile platform. The Adept Lynx is capable of transporting up to 130 kg with an uninterrupted runtime of up to 10 hours a day and a rapid recharge cycle less than 4 hours.
Adept Lynx Courier
The Adept Lynx ® Courier is an intelligent mobile transporter that combines a high payload autonomous platform with an onboard controller and software for map generation and vehicle guidance. Material transports can be initiated from a wireless call box located at operator stations and dispatched using pre-programmed destination buttons located on the vehicle. The Lynx Courier, with its wireless communication capability and payload compartment, can be used for applications in logistics, warehouse, offices, biotech, and manufacturing facilities. The Adept Lynx Courier reduces or eliminates manual transport tasks, shortens turnaround time, and increases operational efficiency by re-applying labor from moving goods to higher-value tasks.
6
Table of Contents
Adept Lynx Transporter-Semi
The Adept Lynx ® Transporter-Semi combines a Lynx autonomous indoor vehicle with a multi-wafer pod carrier to move wafer pods throughout a semiconductor fab. It is designed to transport up to four wafer pods in a dynamic cleanroom environment while operating safely and collaboratively alongside people. The vehicle’s on-board intelligence eliminates the need for additional infrastructure such as tracks, reflectors, floor tape, cameras or magnets. The Lynx Transporter improves production yield by eliminating human-generated dust particles and by following instructions from the fab production software system, ensuring no errors in the location of wafer pods. It enables implementation of lean methodologies in the workflow and allows redeployment of a limited labor pool to higher value-add tasks.
Adept Lynx Handler-Semi
The Adept Lynx ® Handler-Semi combines a Lynx autonomous indoor vehicle with a collaborative 4-axis robot to produce a highly versatile mobile robot designed to pick, place and move semiconductor wafer pods throughout a wafer fab. The Lynx Handler can exchange wafer pods from a variety of processing equipment, stockers and storage (work in progress, or WIP) racks. The Lynx Handler moves nimbly within narrow aisles, operates safely alongside people, and operates collaboratively within a fleet of Lynx vehicles. The vehicle’s on-board intelligence eliminates the need for additional infrastructure such as tracks, reflectors, floor tape, cameras or magnets. The Lynx Handler-Semi improves production yield by eliminating human-generated dust particles and by following instructions from the fab production software system, ensuring no errors in the physical handling or the identification of wafer pods.
Adept Lynx Conveyor
The Adept Lynx ® Conveyor combines a Lynx autonomous indoor vehicle with a motorized conveyor platform, producing a highly versatile mobile robot designed to receive, transport and deliver materials or goods throughout warehouses, distribution centers and manufacturing environments. The vehicle’s on-board intelligence eliminates the need for additional infrastructure such as tracks, reflectors, floor tape, cameras or magnets. The Lynx Conveyor moves nimbly within narrow aisles and operates safely alongside people. As an alternative to fixed conveyors, the Lynx Conveyor offers flexibility to existing work environments where material flow changes periodically. It also dramatically reduces manual transport tasks, shortens turnaround time, enables lean workflow processes and increases operational efficiency by allowing redeployment of personnel to higher value-add tasks.
Adept Lynx Cart Transporter
The Adept Lynx ® Cart Transporter combines a Lynx autonomous indoor vehicle with an automated latching mechanism and a removable caster-based cart platform, enabling the Lynx to automatically engage move and disengage a movable cart. For operations such as line-side replenishment, WIP movement and finished goods movement the Lynx Cart Transporter remains continuously active while carts filled with material are being loaded/unloaded. The Lynx Cart Platform can be configured with shelving, flow racks or operate as a tote mover. The vehicle’s on-board intelligence eliminates the need for additional infrastructure such as tracks, reflectors, floor tape, cameras or magnets. The Lynx Cart Transporter operates safely alongside people. It also significantly reduces manual transport tasks, moves labor to higher value jobs by replacing humans pushing carts, reduces the possibility of workplace injuries, and improves efficiency and productivity with continuous workflow.
Adept Enterprise Manager
When multiple Lynx ® vehicles operate within an area, to achieve high levels of efficiency they require a management system capable of supervising the fleet and interfacing with the operational environment and its associated infrastructure. Enterprise Manager provides the critical role of managing activities for traffic control and job allocation by communicating with existing IT systems, interfacing with I/O on internal devices and equipment, and storing navigation parameters for the entire system. Adept Enterprise Manager is a management system that operates on Adept‘s Enterprise Manager 1100 hardware and uses a systems-network approach for the coordination of autonomous indoor vehicles while providing traceability, job allocation, and traffic control across the entire fleet.
7
Table of Contents
Controllers
Adept SmartController
The Adept SmartController™ is an ultra-compact robot motion controller, featuring distributed architecture for scalability, embedded software for real-time operations, high-speed communication for belt encoder and camera support, and a fast processor for high performance. The Adept SmartController™ integrates robots with conveyors, cameras, end of arm tooling, and software.
Adept SmartVision
The Adept SmartVision vision processor is a ruggedized, industrial computer optimized for demanding machine vision applications. It is compatible with a wide range of GigE and USB 3.0 machine vision cameras. AdeptSight software adds powerful vision tools that quickly identify and inspect randomly oriented products and provides their precise location to the robot.
Software
Adept ACE
Adept ACE (Automation Control Environment) is PC-based software for configuring, calibrating, and managing equipment in a workcell. The software features an integrated, point-and-click development environment for Adept’s entire product portfolio of robots and controls. Adept ACE provides an effective way to deploy applications without lengthy, overly complicated programming. Managing single- and multi-robot systems, machine vision, conveyors, feeders, and device I/O assignment is done through a user-friendly, PC-based interface. ACE also features a powerful 3D emulator that allows complete system configuration and testing in a virtual environment.
ACE PackXpert
ACE PackXpert™ is a powerful software package designed to rapidly deploy packaging automation solutions. The software wizard walks the user through the configuration of packaging applications and generates all of the underlying robot programming; synchronizing cameras, conveyors, grippers and robots. ACE PackXpert also features a powerful 3D emulator that allows complete system configuration and testing in a virtual environment.
AdeptSight
AdeptSight™ is an extension of Adept ACE, designed for vision guidance and inspection applications. AdeptSight™ makes it easy to calibrate and synchronize cameras, conveyors, grippers and robots. The software is capable of identifying randomly oriented products of various sizes and colors at very fast cycle times.
Adept ePLC Connect
The Adept ePLC Connect server software provides seamless connectivity with a customer supplied Programmable Logic Controller (PLC). All robotic application programs and locations are defined and reside within the user’s PLC. The ePLC Connect software runs on the Adept SmartController and interprets PLC ladder logic programming, and commands the robot to move accordingly. Customers new to robotics can install, program, operate and support high-performance robots with the familiar interface and programming language of their existing PLC.
Infeeds
Adept AnyFeeder
The Adept AnyFeeder™ paired with an Adept robot and integrated vision guidance supports a high degree of product variation and brings true flexibility to part feeding. Using an AnyFeeder to present parts to a robot increases the overall throughput of the system and improves the cost-per-pick ratio. AnyFeeders are designed to handle a wide array of loose small parts, including parts of different shapes and materials, minimizing product changeover times and increasing line utilization.
8
Table of Contents
Adept FlexiBowl
The Adept FlexiBowl™ is an innovative feed solution for use with any Adept robot and vision system. The feeder is designed to handle a wide array of loose small parts, including parts of different shapes and materials. The feeder is capable of carefully and quickly feeding parts that are tangled or made of different materials such as rubber or silicone or parts that are fragile, cylindrical or even oiled. Utilizing a direct-drive motor, the Adept FlexiBowl operates reliably and quietly and is easy to operate. Its circular band tracking permits the removal of parts during movement, delivering higher throughput, and its unique design delivers a more flexible and efficient alternative to traditional vibration feeders. The Adept FlexiBowl is available in a 350 mm and 500 mm diameter models.
Sales and Marketing
Adept markets and sells its products worldwide through a network of systems integrators, distributors and OEMs as well as through its direct sales force directly to end customers. Systems integrators and OEMs may add their own application-specific hardware and software to Adept products, resulting in solutions that are sold to companies across a range of industries.
No one customer accounted for greater than 10% of total revenues in any of the years ended June 30, 2015, 2014 and 2013. Our business is not generally dependent upon any single customer, such that the loss of a single customer in the future would not be expected to have a material adverse effect on the Company. For information regarding revenue from external customers, see our Consolidated Financial Statements for each of the years in the three year period ended June 30, 2015, which are included in Items 15(a)(1) and (2) in this Annual Report on Form 10-K and incorporated by reference herein.
To support our sales efforts we maintain application technology centers around the world, where our team of application engineers collaborates with customers to validate robotic concepts and test technologies. Locations include facilities in the Pleasanton, California; Amherst, New Hampshire; Cincinnati, Ohio; Dortmund, Germany; Annecy, France, Shanghai, China and Singapore.
Service and Support
We maintain customer support and field service staff in major markets within the United States, Europe, and Asia. Adept supplements our staff by using in-market distributors. This organization works intimately with customers, system integrators and independent representatives to service equipment. We also train customers to use our products and explore additional applications of our technologies.
Adept offers on-site field service, comprehensive training courses, applications support, field upgrades, factory repair and remanufactured products. Many of Adept’s customers have manufacturing facilities that are operated 24 hours a day. Adept provides year round 24/7 support to customers. We provide parts and service warranties on our equipment, software and services. Warranties on some of our products and services may be shorter or longer than one year.
Research and Development
We focus our research and development efforts on the development of an integrated product line, which reduces the cost of factory automation, enhances performance, and improves ease of use for our customers. Research and development activities are focused on the design of our motion and vision control hardware and the robotic mechanisms that utilize them along with advanced software for vision, motion control and applications.
In both our primary research and development facility in Pleasanton, California, our development facilities in Amherst, New Hampshire, and Annecy, France, we focus on the development of motion controls, mobile robots, robot arms, robot mechanisms, vision software, autonomous navigation software, and real-time application software.
9
Table of Contents
We have devoted, and intend to devote in the future, a significant portion of our resources to research and development programs. As of June 30, 2015, we had 43 employees engaged in research, development and engineering. Our research, development and engineering expenses were $7.4 million in fiscal 2015, $6.8 million in fiscal 2014, and $7.6 million in fiscal 2013.
Manufacturing
One of our core manufacturing strategies is to tightly control our supply of key parts, components, sub-assemblies and outsourcing partners. We primarily utilize vertical integration when we have proprietary internal capabilities that are not available from external sources in a cost-effective manner. We believe this is essential to maintain high quality products and enable rapid development and deployment of new products and technologies. We provide customers with 24-hour technical expertise and quality that is International Organization for Standardization (“ISO”) certified at our principal manufacturing sites.
We have a strong commitment to quality and customer satisfaction. We design and produce many of our own components and sub- assemblies in order to retain intellectual property, performance and product innovation quality. We have also outsourced certain components, sub-assemblies and finished goods where we can maintain our high quality standards while improving our cost structure.
We proactively monitor single source supply parts, and we endeavor to ensure that adequate inventory is available to maintain manufacturing schedules should the supply of any part be interrupted. Although we seek to reduce our dependence on sole or limited source suppliers, we have not qualified a second source for some of these products and the partial or complete loss of certain of these sources could have a materially negative impact on our results of operations and could damage customer relationships.
Intellectual Property
Because our success and competitiveness depends to an extent on the technical expertise, creativity, and knowledge of our personnel, we utilize patent, trademark, copyright, and trade secret protection to safeguard our competitive position. At June 30, 2015, we had 31 patents issued and current on various innovations in the field of robotics, motion control, and machine vision technology. In addition, we use non-disclosure agreements with customers, suppliers, employees, and consultants. We attempt to protect our intellectual property by restricting access to proprietary information through a combination of technical and internal security measures. There can be no assurance, however, that any of the above measures will be adequate to protect the proprietary technology of Adept. Further, effective patent, trademark, copyright, and trade secret protection may be unavailable in certain foreign countries.
Competition
The market for robotics-based automation is very competitive. Adept competes against a number of global companies, including ABB, Epson, Fanuc, Kuka, Yaskawa, Denso, Motoman, Staubli, Amazon (Kiva), Aethon, MetraLabs Seegrid, Savant and Neobotix. We also compete with individual country-based vendors. We compete globally based on our integrated industrial/mobile product offering, performance capability, capacity, reliability, cost of ownership, and performance advantages for the widest range of commercial and scientific research applications. Other considerations by our customers include warranty, global service and support and distribution.
Seasonality
Historically, orders have been lower in the first half of our fiscal year and higher in the second half of our fiscal year, with a decline during the first quarter of each fiscal year due, in part, to the concentration of sales into the European market, which typically experiences a pronounced summer holiday season. Revenues in each quarter will vary based on European market seasonality and on the particular timing of major programs to key customers.
10
Table of Contents
Foreign Operations
We have facilities in Germany, France, China and Singapore. See “Properties” for a further discussion of our offices and facilities and “Risk Factors” for a discussion of the risks of our international operations.
Employees
At June 30, 2015, we had 170 employees. Of the total, 43 were engaged in research, development and engineering, 45 in sales and marketing, 33 in service and support, 28 in operations, and 21 in administration.
See Part III of this Form 10-K regarding information about our Executive Officers.
Government Regulation
As of June 30, 2015, we have no principal products or services pending government approval. Furthermore, there are no existing or probable government regulations material to our business. We have one product with USDA accreditation for use in meat and poultry packaging.
Availability of SEC Filings
We make available through our website our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports free of charge as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission. Our Internet address is www.adept.com. Our Form 10-K and proxy statement are made available on our website promptly after filing with the SEC and many of our corporate governance documents, including our Code of Business Conduct, are also available on our corporate website. The content on our website is not, nor should be deemed to be, incorporated by reference into this Annual Report on Form 10-K. Additionally, documents filed by us with the SEC may be read and copied at the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Our filings with the SEC are also available to the public through the SEC’s website at www.sec.gov.
11
Table of Contents
| ITEM 1A. | RISK FACTORS |
Our operating results fluctuate due to factors that are difficult to forecast, are often out of our control, and can be volatile.
Our past operating results may not accurately indicate our future performance. Our operating results have fluctuated significantly in the past, and could fluctuate in the future. Factors that may contribute to fluctuations include:
| • | changes in aggregate capital spending, cyclicality and other economic conditions, or demand in the industries we serve; |
| • | impact of our restructuring and cost-management activities on our operations; |
| • | management of our working capital; |
| • | changes in our products’ market acceptance or demand; |
| • | new products or changes in pricing, by us, our distribution channels, or our competitors; |
| • | pricing and availability of components and raw materials; |
| • | changes in our product mix from quarter to quarter affecting our gross margins; |
| • | our failure to manufacture a sufficient volume of products in a timely and cost-effective manner; |
| • | our inability to decrease certain fixed costs and expenses to address changes in demand; |
| • | currency exchange rate fluctuations; |
| • | shifts in geographic concentration of our sales; |
| • | seasonality; |
| • | our ability to expand our product offerings; and |
| • | extraordinary events such as litigation, claims, information security breaches or mergers and acquisitions. |
We generally recognize revenues upon shipment, or in certain cases upon receipt by customers. As a result, our revenues and results of operations are affected by the timing of orders received and shipped. A significant percentage of our shipments occur in the last month of each quarter, making reliable forecasting of demand level for our products for a particular quarter difficult. Further, an order cancellation, reduction or delay in shipments near the end of a fiscal period may cause sales to fall below expectations and harm our operating results for that period. We have and may also enter into agreements requiring us to accept certain orders meeting agreed criteria and to hold specified levels of inventory. To address this, we periodically stock inventory levels of completed robots, machine controllers and certain strategic components. As a result, our operating results vary, our stock price is volatile, and we may not be able to achieve or sustain our profitability on a quarterly or annual basis.
We have experienced operating losses and negative cash flow in the past, and have limited liquidity resources, which could impair our ability to invest in growth and adversely affect our operations.
We have experienced operating losses and negative cash flow, and if our projected revenue fails to increase or our expenses exceed current expectations, we may not be able to take advantage of market opportunities, adequately respond to competitive pressures or fully execute our business plan. In 2012, we raised approximately $3.1 million in connection with a public offering of common stock, $7.6 million of net proceeds in connection with our redeemable convertible preferred stock financing which has been fully converted into common stock and in June 2015, raised approximately $7.9 million of net proceeds in connection with a registered common stock offering. These financings increased our cash resources and allowed us to pay off outstanding balances under our line of credit, but our liquidity remains limited and restrictions and tax consequences may limit our
12
Table of Contents
access to existing cash balances from our foreign operations. We have historically relied on our line of credit and funds generated from those financings and operating activities to sustain and grow our business. We do not anticipate paying any dividends on our common stock. If we are unable to obtain sufficient capital on favorable terms, it could undermine our ability to pursue expansion opportunities and could limit the working capital available to our business, harming our operating results.
Our restructuring and cost-management efforts may not be effective, might have unintended consequences, and could negatively impact our business.
We have restructured our operations in response to changes in the economic environment, our industry and demand, including restructuring programs in the second quarters of fiscal years 2012 and 2013 to streamline operations, consolidate facilities and reduce our work force, and continue to manage costs in light of our revenue levels. We reviewed and aligned our strategic priorities and rebalanced our investments to maintain sufficient liquidity and to focus on growth in our core markets. Despite our planning, some cost-cutting measures could have unexpected negative consequences, including loss of key personnel, or the loss of customers.
In connection with our restructurings, we reduced our work force and experienced additional attrition, which may expose the Company to legal claims against the Company and loss of necessary human resources. If we face costly employee or contract termination claims, our operations and prospects could be harmed.
If we are unable to build and effectively integrate our new management team and sales and engineering teams, our business could be harmed.
Our management team, including our Chief Executive Officer, Chief Financial Officer and Chief Business Development and Strategy Officer and other non-executive officers have all worked with the Company for less than three years and we continue to expand our sales and engineering teams with new personnel. Integrating new management and technical personnel into existing operations always carries risk. If we are unable to effectively build our new management team or integrate our new team members, our operations and prospects could be harmed.
We depend on outsourced manufacturing and information technology capabilities and single source suppliers, and if we experience disruptions in this supply or prices increase, our business may suffer.
We outsource most of our manufacturing functions, and obtain many key components, materials and mechanical sub-systems from sole or single source suppliers. We have limited contracts or guaranteed supply arrangements with these suppliers, and the lack of alternate sources and lengthy qualification process for replacement suppliers involves significant risks. These risks include whether or not new suppliers will provide adequate quantities with sufficient quality on a timely basis, and the risk that supplier pricing may be higher than anticipated. If we are unable to obtain necessary items on a timely basis, at acceptable prices, and of sufficient quality, we could lose current or future business. In the past, we have experienced quality control or specification problems with certain components provided by sole source suppliers, and have had to design around flawed items. Any quality issues could result in customer dissatisfaction, lost sales, or increased warranty costs, and could harm our results of operations.
Any significant price increase or disruption of our supply sources could interrupt our product shipments, require reengineering, and damage customer relationships. If our suppliers cease manufacturing components that we require, we may need to purchase a significant amount of inventory that could lead to an increased risk of inventory obsolescence. Finally, if we incorrectly forecast product mix for a particular period and we are unable to obtain sufficient supplies of any components or mechanical sub-systems on a timely and cost-effective basis due to long procurement lead times, our business could be substantially impaired.
13
Table of Contents
Global economic conditions affecting our customers and suppliers may also negatively affect our financial results by decreasing our revenues and increasing our risk of credit-related losses.
The global economic downturn created a widespread slowdown in capital investment, manufacturing, and demand for consumer products particularly in the disk-drive and solar markets. In response, our suppliers have or may increase their prices or reduce their output. Some of our customers (including systems integrators) have, and may continue to, defer, reduce or cease to place orders for our products, or may delay or default on their payment obligations, reducing our revenues or increasing our credit losses, which would negatively affect our financial results.
Our inability to accurately forecast, or react quickly and adequately to increases or decreases in demand for our products could harm our business and results of operations.
Intelligent automation systems using our products can range in price from $25,000 to $500,000. Accordingly, our success depends upon the capital expenditure budgets of our customers, which tend to be cyclical. The economic downturn during the Great Recession resulted in cutbacks in capital spending in some of our major markets, and our business has been, and may continue to be, negatively affected. Industry downturns have been characterized by reduced demand for devices and equipment, production over-capacity, and accelerated declines in average selling prices. During periods of declining demand, we previously implemented worldwide restructuring programs to realign our business and lower our expenses. However, our ability to reduce expenses is limited by our need to retain and motivate key employees, and by our need for continued investment in product engineering, research and development. We also have extensive ongoing customer service and support requirements, must maintain inventory to satisfy potential customer commitments, and have certain fixed administrative costs. Further, our failure to effectively manage product transitions or accurately forecast customer demand, in terms of both volume and configuration, may lead to an increased risk of excess or obsolete inventory.
We also must maintain the ability to quickly increase our manufacturing capacity upon an increase in orders or general upturn in any of our markets. Typically, upturns in markets such as disk drive or electronics have been characterized by abrupt demand increases, and production under-capacity. We must be able to ramp up in times of increased demand and hire sufficiently to service our customers.
Our international operations and reliance on foreign suppliers subject us to risks outside of our control that may harm our operating results.
We have significant and expanding operations outside the United States, including a presence in Asia. A substantial majority of our revenue is derived from non-U.S. sales: international sales represented 80% and 77% of revenues for fiscal 2015 and fiscal 2014, respectively. We expect that revenue from our international sales and operations will continue to be a significant portion of our total revenue. We also purchase some critical components from foreign suppliers. As a result, our operating results are subject to the risks inherent in international sales, purchases, and operations, including:
| • | difficulties ensuring compliance with applicable regulatory regimes; |
| • | unexpected changes in regulatory requirements; |
| • | political, military, and economic instability or turmoil; |
| • | restrictive governmental actions, such as tariff regulations and other trade barriers; |
| • | transportation costs and delays; |
| • | local rules favoring local business and organized labor; |
| • | longer payment cycles and greater difficulty collecting accounts receivables from foreign jurisdictions; |
| • | potentially adverse tax rates and tax treatment of our intercompany transactions; and |
| • | difficulty obtaining appropriate personnel. |
14
Table of Contents
We face exposure to fluctuations in foreign currency exchange rates, as a significant portion of our revenues, expenses, assets, and liabilities are denominated in foreign currencies. Additionally, we make foreign currency-denominated purchases from some suppliers, and thus remain subject to the transaction exposures that arise from foreign exchange movements between the date that the transactions are recorded and the date cash is paid. Continued fluctuations in foreign currencies could negatively impact us.
As we are subject to the regulatory regimes of numerous governments, we must ensure that our operations comply with all applicable requirements, including changing requirements affecting business and tax audits by foreign authorities. It is not possible to assess the associated amount of financial or operational exposure at this time.
In 2011, we opened a facility in Shanghai, China to capitalize on significant opportunities presented by the Asian markets. We face all the risks inherent in operating in a foreign emerging market where we have not previously operated a facility. Our China-based activities are subject to greater political, regulatory, legal and economic risks than those faced by other operations. There can be no assurance that our operations in China will be successful.
The long sales cycle, customer evaluation and implementation processes of our products may increase the costs of securing sales and reduce the predictability of our earnings.
Our products are technologically complex, and prospective customers generally must commit significant resources to test and evaluate performance, and to install and integrate our products into larger systems. As a result, our sales process is often subject to evaluation and approval delays typically associated with large capital expenditures. The sales cycles for our products often last for months or years, and orders expected in one quarter may shift to another or be canceled because of a customer’s budgetary constraints or internal acceptance reviews. Longer sales cycles require us to invest significant resources in attempting to secure sales that may not be realized in the short term, and therefore may delay or prevent revenue generation. The time required for our customers to incorporate our products into their system can also vary significantly, which further complicates our planning processes and reduces the predictability of our operating results.
Our failure to keep up with rapid technological change and new product development would harm our ability to compete.
The intelligent automation industry is characterized by rapid technological change and new product introductions and enhancements. We must anticipate trends in our customers’ industries and develop products before our customers’ products are commercialized, because many of our products are used by our customers to develop, manufacture, and test their own products. If we do not accurately predict our customers’ needs, we may invest substantial development resources in products that do not achieve broad market acceptance. Further, if we are unable to develop new and enhanced products meeting customers’ changing technical specifications on a timely and cost-effective basis, our products may become uncompetitive or obsolete. We also must make decisions about whether or not to develop and offer products to a given market, and if our judgment of that market is incorrect, our business could be harmed.
The market for intelligent automation products is intensely competitive, which may make it difficult to grow our business or to maintain or enhance our profitability.
Our competitors include robot, motion control, machine vision, and simulation software companies, many of which have substantially greater resources than we do. Our competitors in the robot market also include integrated manufacturers that produce robotics equipment for internal use, and also compete with our products for sales to other customers. Because they can generate substantial unit volumes to satisfy internal demand, these competitors may have greater pricing flexibility. During the recent economic downturn, we experienced aggressive price reductions and other accommodations by our competitors, in addition to increased price sensitivity by our customers. We believe that the principal competitive factors affecting the market for our products are:
| • | product features, functionality, and ease of use; |
15
Table of Contents
| • | price; |
| • | brand quality perception; |
| • | customer service; and |
| • | timeliness, predictability, and reliability of delivery. |
Increased competitive pressure and declining barriers to market entry could result in a loss of sales or market share or force us to lower prices. Failure to enhance our brand would impair our ability to increase or maintain our customer base, and we may not be able to compete successfully in the future.
The growth of our business consistent with our long-term model depends upon the successful execution of our mobile strategy and continued evolution towards collaborative automation in the markets we serve.
Our strategy is focused upon the market opportunity presented by the continuing evolution towards collaborative automation and our expectation of increased use of mobile automation technology in the markets we serve. This new and rapidly changing environment poses significant risks, including, among other things, unforeseen changes in market demand impacting customer adoption levels, difficulties in developing and delivering products addressing customer requirements, and having sufficient available capital which may affect our ability to grow our business to the degree and on the timeline consistent with our expectations. From time to time, other strategic alternatives are presented to us causing us to evaluate our business opportunities. Future developments in the market and any future alternatives presented, may impact our execution of our product development and commercialization strategy.
The growth of our business depends upon the successful development and commercial acceptance of our new products.
Our failure to develop, manufacture, and sell new products in quantities sufficient to offset a decline in revenue from existing products or to successfully manage product and related inventory transitions could harm our business. We depend upon a variety of factors to ensure that our new and enhanced products are successfully commercialized, including timely and efficient completion of design and development, implementation of manufacturing processes, and effective sales, marketing, and customer service. Because of the complexity of our products, significant delays may occur in introducing new products, or between a product’s initial introduction and volume production.
The development and commercialization of new products involve many difficulties, including:
| • | identifying new product opportunities; |
| • | retaining and hiring appropriate research and development personnel; |
| • | determining the product’s technical specifications; |
| • | successfully completing the development process; |
| • | successfully marketing the new product and achieving customer acceptance; |
| • | managing inventory levels; and |
| • | additional customer service and warranty costs associated with supporting new product introductions or affecting subsequent field upgrades. |
We must expend significant financial and management resources to develop new products. We cannot assure that we will receive meaningful revenue from these investments. If we are unable to continue to successfully develop new products in response to customer requirements or technological changes, or our new products are not commercially successful, our business may be harmed.
16
Table of Contents
Our acquisitions of MobileRobots and InMoTx expanded our business with new technologies and solutions for additional markets commencing in fiscal 2011. We had little or no experience in the mobile and certain packaging markets prior to these acquisitions and were unable to accurately forecast the future commercial acceptance of these product lines. This led to restructurings changing focus on our efforts on our core competencies and sources of revenue generation, with selective investment of resources in new businesses which take longer to build revenue, and we focused on our core and mobile businesses, altering our sales model for our packaging business to a channel focus. This focus and selective investment may negatively impact the growth of our new businesses and revenue potentially earned from related new products.
We generally have no long-term customer contracts and our backlog cannot be relied upon as a future indicator of sales.
We generally do not have long-term contracts with our customers, and existing contracts and purchase commitments may be canceled under certain circumstances. As a result, we are exposed to competitive price pressures on every order, and our agreements with customers do not provide assurance of future sales. Our customers are not required to make minimum purchases and may cease purchasing our products at any time without penalty. Our backlog should not be relied on as a measure of anticipated demand or future revenue, because the orders constituting our backlog may be subject to changes in delivery schedules or cancellation without significant penalty to the customer. Any reductions, cancellations or deferrals in customer orders would negatively impact our business.
We market and sell our products primarily through an indirect channel comprised of third-party resellers not under our control.
We believe that our ability to sell products to systems integrators and OEMs will continue to be important to our success. However, our relationships with these partners are generally not exclusive, and we cannot control the timing or amount of their procurement or marketing of our products. Some systems integrators and OEMs who sell our products also sell products of our competitors. If they choose to promote competing products or simply fail to market our products successfully, our revenue could decrease.
As we enter new geographic and applications markets, we must locate and establish relationships with systems integrators and OEMs to assist us in building sales in those markets. Because of product integration expenses and the large amount of training required, significant time and resources may be required to establish a profitable relationship with a systems integrator or OEM. We may not be successful in establishing or maintaining an effective relationship with new systems integrators or OEMs, which would adversely affect our business.
Any future acquisitions may disrupt our business and harm our operating results.
We have acquired technologies and companies in the past and may acquire other businesses and technologies to further our strategic objectives. These new businesses may require investment to introduce new products to customers without any guarantee of revenues sufficient to fund these investments and to make these businesses successful.
Acquisitions present risks, including:
| • | significant expenditures of cash and dilutive stock issuances; |
| • | difficulties in integrating product offerings, operations, or workforce; |
| • | difficulties in establishing and maintaining effective uniform standards, controls, procedures and policies; |
| • | the loss of key personnel or customers from either our current business or the acquired company’s business; |
17
Table of Contents
| • | adverse effects on existing supplier relationships; |
| • | disruptions of our on-going businesses and diversion of resources and management’s attention; |
| • | difficulties in realizing our financial and strategic objectives for the acquired business; |
| • | negative impact on results of operations due to goodwill impairment write-offs, amortization of intangible assets other than goodwill, or assumption of anticipated liabilities; |
| • | risks of entering new markets, geographic areas, and distribution channels in which we have limited or no previous experience; and |
| • | assumption of unanticipated liabilities, such as problems with the quality of the acquired company’s product. |
The risks above could significantly harm our business. The failure to successfully evaluate and execute acquisitions or adequately address these risks could materially harm our financial results.
Our products could have unknown defects which may give rise to claims against us, increase our expenses, or harm our reputation.
Our products and enhancements are complex and, despite testing, may contain defects, errors or performance problems. Any defects or errors could result in expensive and time-consuming design modifications or warranty charges, harmed customer relationships, and loss of market share. Newly released products, which have not seen as much use and testing in the marketplace as older products, are more susceptible to undetected defects. As we aim to generate increasing revenues from sales of recently released products, the negative impact on our business resulting from defects in such products could be significant.
The existence of any defects, errors, or failures in our products could also lead to product liability claims against us, our channel partners, or our customers. Although we maintain product liability insurance, the coverage limits of these policies may not adequately cover future claims. Any claim could result in significant legal defense costs, divert resources, harm our reputation, and damage our business.
Our failure to protect our intellectual property and proprietary technology may impair our competitive advantage.
Our success depends in part upon protecting our proprietary technology and trade secrets. We primarily rely on a combination of patents, trademarks, copyrights, trade secret protection, licenses, and nondisclosure agreements to protect our proprietary rights, but have not always sought patent, registration, or similar protection on our technology where it may have been available. The steps we have taken may not be sufficient to prevent the misappropriation of our intellectual property or to provide us with any commercial advantage. The process of obtaining patent protection can be time consuming and costly, and our ability to enforce our intellectual property rights is subject to uncertainty and litigation risks.
We may face costly intellectual property infringement claims.
Allegations of intellectual property infringement by our products may arise and could include claims against us, our manufacturers, suppliers, or customers. Because there are numerous patents in the automation industry, it is not always practicable to determine in advance whether a product or any of its components infringes intellectual property rights. As a result, we may be forced to respond to intellectual property infringement claims to protect our rights. Regardless of merit, these claims could consume management time, result in costly litigation, or cause product shipment delays. In settling these claims, we may be required to cease selling products or services, pay damages, redesign the challenged technology, or enter into unfavorable royalty or licensing agreements. Any of these could seriously harm our business.
18
Table of Contents
Information security breaches or business system disruptions may adversely affect our business.
We rely on our information technology infrastructure and management information systems to run our business, including for management of our supply chain, sale and delivery of products, reporting results of operations, collection and storage of personal data of our customers, employees and other stakeholders, and various other processes and transactions. Certain of these systems are managed by third-party service providers. Although we take measures to protect our information assets, our security measures may not detect or prevent every attempted breach. Although we have not experienced any material cybersecurity breach, we may be subject to information security breaches caused by, among other things, illegal hacking, computer viruses, or acts of vandalism or terrorism. A breach could result in an interruption in our operations, unauthorized publication of our confidential business or proprietary information, unauthorized release of customer or employee data, violation of privacy or other laws, and exposure to litigation, regulatory actions or statutory penalites. Any such breach could materially harm our business and operating results.
Our investments in certain new markets subject us to increased regulation and potential product liability, and there is no guarantee that we will be successful in these markets or that risks related to these industries will not have an adverse effect on our business.
Our systems and controls are sold in a variety of industries, including semiconductor, food, packaging and medical, among others. We have increased our strategic focus on sales for certain applications that are more highly regulated, including the automation of repetitive operations in diagnostic and pharmaceutical labs. As we seek sales in the medical and food packaging industries, we must ensure that our products and systems comply with applicable regulatory requirements. This will increase our costs and our failure to comply with these requirements could damage our ability to sell our products or subject us to regulatory actions or fines.
Our failure to comply with environmental laws and regulations could harm our business.
We are subject to a variety of environmental regulations relating to the use, storage, handling, and disposal of hazardous substances used in the manufacturing and assembly of our products. We believe that we are in compliance with material environmental regulations and have all necessary environmental permits. However, our failure to comply with present or future regulations could result in penalties or liabilities, and could curtail our operations.
Our success depends on our continuing ability to attract, train, motivate and retain highly-qualified personnel.
Our inability to attract, train, motivate, and retain qualified management, sales, and technical personnel could adversely affect our ability to design, manufacture, market and sell our products, and to meet our requirements as a public company. Many companies with which we compete for qualified personnel have greater resources than we do. In addition, in making employment decisions in the technology industry, job candidates often consider the value of the equity they receive in connection with their employment. Therefore, volatility in the price of our stock may adversely affect our ability to attract or retain technical personnel, which could harm our business.
Compliance with recently passed health care legislation and potential increases in the cost of providing health care plans to our employees may adversely affect our business.
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act became law in March 2010. These healthcare acts contain provisions that will affect employer-sponsored health care plans, but it remains uncertain whether and by how much these acts and related regulation will increase health care costs of employers. Significant annual increases in the cost of providing employee health coverage may adversely affect our business and results of operations.
19
Table of Contents
If we fail to maintain adequate internal controls over financial reporting, our business could be materially and adversely affected.
Under the Sarbanes-Oxley Act, our management must establish, maintain and make certain assessments and certifications regarding our disclosure controls and internal controls over financial reporting. We have dedicated significant resources to comply with these requirements, including significant actions to develop, evaluate, and test our internal controls, but cannot provide absolute assurances. A failure to maintain adequate internal controls could result in inaccurate or late reporting of our financial results, an investigation by regulatory authorities, a loss of investor confidence, a decrease in the trading price of our common stock and exposure to costly litigation or regulatory proceedings.
Our concentration of our equity ownership among few stockholders could adversely affect the liquidity and market price of our securities, and may permit a few stockholders to influence the results of stockholder decisions.
A small number of holders own the substantial majority of our outstanding equity. These securities are generally freely tradable or subject to registration statements, permitting their sale with little or no restriction. The potential sale of these securities creates meaningful overhang on the market for our securities and sales by any of these large holders would increase the current volatility of our common stock, the market price of which is affected by our low trading volume. This may affect the trading market for our stock, and could control the results of matters requiring stockholder approval, which may delay or prevent a change of control or negatively affect our stock price.
Stockholders may experience dilution of their ownership interests and the market price of our common stock may be depressed by future issuances of additional shares of our equity securities.
In June 2015, we issued 1,391,304 shares of common stock in a registered offering. We have also previously issued shares of convertible preferred stock, all of which was converted into common stock in 2014. We may issue additional common or preferred stock or other equity securities for various reasons, including financing our operations, fund acquisitions or hire or retain employees. Issuances of our equity securities, or the perception that such issuances may occur, could dilute the interests of our stockholders and have a material negative effect on the trading price of our common stock. The rights and preferences of any preferred stock we issue may decrease the perceived value, and thus the trading price, of our common stock. The preferred stock may be convertible at the holder’s option and the issuance of common stock upon such conversion could require us to issue a significant number of shares of our common stock and dilute existing shareholders.
At June 30, 2015, options to purchase or restricted stock units for approximately 1.7 million shares of our common stock were outstanding under our equity compensation plans, and approximately an additional 0.3 million shares of common stock were reserved for future grant and issuance under such plans. We can also issue shares under our employee stock purchase plan, which had approximately 0.2 million shares available for issuance at June 30, 2015. Shares of common stock issued under these plans are generally freely tradable in the public market, subject to certain limitations applicable to our affiliates. Option exercises and employee stock purchase plan purchases could increase the number of common shares outstanding and could adversely affect the prevailing market price of our common stock, due to our low trading volume. Our use of equity to raise additional financing or as consideration in connection with a future acquisition or other transaction could also result in the dilution of our stockholders’ equity interest.
Our stock price may fluctuate widely, making resale of our common stock difficult.
The market price of our common stock has fluctuated substantially. Our stock price may continue to fluctuate significantly in response to factors including:
| • | fluctuating operating results; |
| • | our liquidity needs and constraints; |
20
Table of Contents
| • | our restructuring activities and changes in management and other personnel; |
| • | changes in our business focus and operational organization; |
| • | our limited public float and the limited trading volume of our common stock on the NASDAQ Capital Market; |
| • | the business environment, including the operating results and stock prices of companies in the industries we serve; |
| • | general conditions in the intelligent automation and packaging industries; |
| • | the introduction of new products or changes in product pricing by us or our competitors; |
| • | litigation or claims relating to the volatility of our common stock, internal controls, proprietary rights or other matters; |
| • | developments in the financial markets; and |
| • | perceived dilution from stock issuances in financing or acquisition transactions. |
The effects of new regulations relating to conflict minerals may adversely affect our business.
We are subject to SEC requirements applicable to companies manufacturing or contracting for the manufacture of products which require specific minerals, known as conflict minerals. Such companies must disclose annually whether they used any conflict minerals originating from the Democratic Republic of Congo or adjoining countries. If a company uses conflict minerals from those countries or attests that no such conflict minerals are used, additional requirements are triggered. We may face increased costs of regulatory compliance, potential risks to our reputation, or difficulty satisfying any customers that insist on conflict-free products, which may harm our business.
Deploying a new enterprise resource planning system could interfere with our business or operations and could adversely impact our financial position, results of operations and cash flows.
We are in the process of deploying a new enterprise resource planning, or ERP, system. This project requires significant investment of capital and human resources, the re-engineering of many processes of our business and the attention of many employees who would otherwise be focused on other aspects of our corporate initiatives. Any disruptions, delays or deficiencies in the design and integration of the new ERP system could result in potentially much higher costs than we had anticipated and could adversely affect our ability to develop and commercialize products, provide services, manage our supply chain and fulfill contractual obligations, file reports with the SEC in a timely manner and/or otherwise operate our business, or otherwise impact our controls environment. Any of these consequences could have an adverse effect on our results of operations and financial condition.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
Not applicable.
| ITEM 2. | PROPERTIES |
Our headquarters and our U.S. research and development and manufacturing operations are located in two leased buildings of approximately 57,000 square feet in Pleasanton, California, covered by two lease agreements, both of which expire in December 2015. Other leased facilities include Amherst, New Hampshire; Cincinnati, Ohio; Dortmund, Germany; Annecy, France; Shanghai, China and Singapore. In July 2015 we entered a ten year lease for a 50,000 square foot facility to replace our two Pleasanton, California locations. All of our facilities are used by both of our two reportable business segments and are sufficient for our business needs in fiscal 2016.
21
Table of Contents
| ITEM 3. | LEGAL PROCEEDINGS |
From time to time, Adept is party to various legal proceedings or claims, either asserted or unasserted, which arise in the ordinary course of our business. We have reviewed pending legal matters and believe that the resolution of these matters will not have a material effect on our business, financial condition or results of operations.
Adept has in the past received communications from third parties asserting that we have infringed certain patents and other intellectual property rights of others, or seeking indemnification against alleged infringement. While it is not feasible to predict or determine the likelihood or outcome of any actual or potential actions from such assertions against us or other matters, we believe the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations or cash flows.
| ITEM 4. | Mine Safety Disclosure |
Not applicable
22
Table of Contents
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market for Registrant’s Common Stock and Related Stockholder Matters
Our common stock is traded on the NASDAQ Capital Market under the symbol ADEP.
The following table reflects the range of high and low sales prices for Adept common stock for each full quarterly period within the two most recent fiscal years as reported for trading on the NASDAQ Capital Market.
| Three Months Ended | ||||||||||||||||||||||||||||||||
| Jun 30, 2015 |
Mar 28, 2015 |
Dec 27, 2014 |
Sep 27, 2014 |
Jun 30, 2014 |
Mar 31, 2014 |
Dec 31, 2013 |
Oct 1, 2013 |
|||||||||||||||||||||||||
| Fiscal Year 2015 | Fiscal Year 2014 | |||||||||||||||||||||||||||||||
| High |
$ | 7.36 | $ | 9.67 | $ | 9.19 | $ | 11.13 | $ | 21.27 | $ | 21.90 | $ | 17.00 | $ | 7.50 | ||||||||||||||||
| Low |
$ | 5.38 | $ | 6.05 | $ | 6.60 | $ | 7.33 | $ | 9.78 | $ | 14.37 | $ | 6.53 | $ | 3.11 | ||||||||||||||||
At August 11, 2015, there were approximately 124 stockholders of record of our common stock.
To date, we have neither declared nor paid cash dividends on shares of our common stock. In addition, our line of credit restricts our ability to pay dividends on our common stock. Accordingly, our shareholders may not realize a return on their investment unless the trading price of our common stock appreciates.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item is incorporated by reference from our Proxy Statement.
23
Table of Contents
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total stockholder return of Adept Technology, Inc. relative to the cumulative total returns of the NASDAQ Composite Index, and an Industry Index/Peer Group index including eight other companies. The graph assumes an investment of $100.00 in our common stock and each index (including reinvestment of dividends) on June 30, 2010 and shown through June 30, 2015.
| * | $100 invested on 6/30/10 in stock or index, including reinvestment of dividends. |
| Fiscal year ending June 30. |
| 6/10 | 6/11 | 6/12 | 6/13 | 6/14 | 6/15 | |||||||||||||||||||
| Adept Technology, Inc. |
100.00 | 80.47 | 86.31 | 77.18 | 208.13 | 142.86 | ||||||||||||||||||
| NASDAQ Composite |
100.00 | 132.14 | 142.90 | 169.55 | 223.20 | 253.21 | ||||||||||||||||||
| Peer Group |
100.00 | 163.94 | 173.31 | 213.30 | 290.64 | 291.73 | ||||||||||||||||||
This peer group is comprised of the following companies: Brooks Automation Inc., Cognex Corporation, Cyberoptics Corporation, Esterline Technologies Corporation, Integralvision Inc., KLA Tencor Corporation, Nordson Corporation, and Perceptron Inc. The total return for each member of this peer group has been weighted according to each member’s stock market capitalization. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Adept under the Securities Act or the Securities Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
24
Table of Contents
| ITEM 6. | SELECTED FINANCIAL DATA |
The following table sets forth selected financial data for each of the fiscal years in the five year period ended June 30, 2015 (in thousands, except per share amounts):
| 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
| Revenues |
$ | 54,195 | $ | 57,540 | $ | 46,816 | $ | 66,219 | $ | 57,505 | ||||||||||
| Gross margin |
22,754 | 26,620 | 19,120 | 28,000 | 24,901 | |||||||||||||||
| Total operating expenses |
27,574 | 26,967 | 29,496 | 31,137 | 31,409 | |||||||||||||||
| Net loss attributable to common stockholders |
(5,009 | ) | (781 | ) | (10,348 | ) | (3,723 | ) | (6,764 | ) | ||||||||||
| Net loss per share attributable to common stockholders |
||||||||||||||||||||
| Basic |
(0.38 | ) | (0.07 | ) | (0.99 | ) | (0.40 | ) | (0.77 | ) | ||||||||||
| Diluted |
(0.38 | ) | (0.07 | ) | (0.99 | ) | (0.40 | ) | (0.77 | ) | ||||||||||
| Cash and cash equivalents |
8,508 | 7,600 | 6,274 | 8,722 | 8,627 | |||||||||||||||
| Total assets |
33,757 | 33,070 | 30,033 | 36,161 | 37,135 | |||||||||||||||
| Long-term liabilities and preferred stock |
297 | 560 | 8,199 | 845 | 5,661 | |||||||||||||||
| Stockholders’ equity |
24,111 | 20,167 | 9,580 | 18,344 | 18,822 | |||||||||||||||
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Adept is a global, leading provider of intelligent robots, autonomous mobile solutions and services that enable customers to achieve precision, speed, quality and productivity in their assembly, handling, packaging, testing, and logistical processes. With a comprehensive portfolio of high-performance motion controllers, application development software, vision-guidance technology and high-reliability robot mechanisms with autonomous capabilities, Adept provides specialized, cost-effective robotics systems and services to high-growth markets including medical, electronics, food and semiconductor; as well as to traditional industrial markets including machine tool automation and automotive components Through sales to system integrators, distributors, OEM partners and end-user companies, we sell our products and services into a few broad industries where we believe we can provide the best solutions for particular applications. We operate in two segments: Robotics and Services and Support.
Strategy
We develop innovative and proprietary products and solutions that meet the needs of our customers and that are based on our core expertise in industrial robots, vision guidance and autonomous vehicle technologies. In pursuit of our strategy, we intend to:
| • | Accelerate the launch of our mobile robot products into the global market— Our global markets for mobile products include flexible manufacturing, semiconductor, logistics and warehousing, and food. |
| • | Revitalize our core fixed robot business, including expanding our channels and accelerating our regional selling and marketing approach— Our global markets for our fixed products include small flexible manufacturing, food and packaging within our capacity range of 7.5 pounds and below. |
| • | Grow our services business— Offer our customers a broader selection of support solutions. |
Our Actions in Support of our Strategy
| • | We intend to integrate strategic relationships from core markets that will drive volume and visibility. |
| • | We intend to have collaborative new product development for innovative products. |
| • | We intend to continue to accelerate our service and support revenues with existing and new product offerings. |
| • | We have set specific sales objectives to leverage the cost of selling our products as we grow. |
25
Table of Contents
| • | We intend to scale our engineering resources, supply chain, and operations worldwide. |
| • | We continue to foster our culture by providing employees with clear direction, a focus on accountability and execution, and bottom line results. |
Results of Operations
Revenues
Revenue by segment is shown below (in thousands, except %):
| Year ended June 30, | ||||||||||||||||||||
| 2015 | % Change | 2014 | % Change | 2013 | ||||||||||||||||
| Robotics |
||||||||||||||||||||
| Revenues |
$ | 42,250 | (6 | )% | $ | 45,084 | 24 | % | $ | 36,353 | ||||||||||
| Percentage of total revenues |
78 | % | 78 | % | 78 | % | ||||||||||||||
| Services and Support |
||||||||||||||||||||
| Revenues |
11,945 | (4 | )% | 12,456 | 19 | % | 10,463 | |||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Percentage of total revenues |
22 | % | 22 | % | 22 | % | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Total Revenues |
$ | 54,195 | (6 | )% | $ | 57,540 | 23 | % | $ | 46,816 | ||||||||||
|
|
|
|
|
|
|
|||||||||||||||
Total revenues were $54.2 million, $57.5 million and $46.8 million in fiscal 2015, 2014 and 2013, respectively, representing a decrease of 6% in fiscal 2015 and an increase of 23% in fiscal 2014. Total revenues for fiscal 2015, calculated using foreign currency exchange rates for 2014, and for 2014, calculated using foreign currency exchange rates for 2013, decreased 1% from 2014 to 2015 and increased 20% from 2013 to 2014.
Robotics segment revenues were $42.3 million, $45.1 million and $36.4 million in fiscal 2015, 2014 and 2013, respectively, representing a decrease of 6% in fiscal 2015 and an increase of 24% in fiscal 2014. The decrease in fiscal 2015 was primarily due to changes in foreign currency rates, lower sales to the medical and pharmacy, solar and packaging markets, offset to some extent by higher sales to the automotive and disk drive markets. The increase in fiscal 2014 was primarily due to higher sales to the medical and pharmacy, consumer goods, solar and semiconductor, and appliance markets.
Services and support segment revenues were $11.9 million, $12.5 million, and $10.5 million in fiscal 2015, 2014 and 2013, respectively, representing a decrease of 4% in 2015 and an increase of 19% in fiscal 2014. The decrease in fiscal 2015 related primarily to foreign currency exchange rate changes. The increase in fiscal 2014 was primarily due to higher sales of service parts and other service related activities.
Revenue by geography is shown below (in thousands, except %):
| Year ended June 30, | ||||||||||||||||||||
| 2015 | % change | 2014 | % change | 2013 | ||||||||||||||||
| United States |
$ | 10,766 | (19 | )% | $ | 13,289 | 5 | % | $ | 12,708 | ||||||||||
| 20 | % | 23 | % | 27 | % | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Europe |
25,904 | — | % | 25,973 | 15 | % | 22,572 | |||||||||||||
| 48 | % | 45 | % | 48 | % | |||||||||||||||
| Asia |
15,548 | (1 | )% | 15,700 | 54 | % | 10,218 | |||||||||||||
| 29 | % | 27 | % | 22 | % | |||||||||||||||
| Other countries |
1,977 | (23 | )% | 2,578 | 96 | % | 1,318 | |||||||||||||
| 3 | % | 5 | % | 3 | % | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Total International |
43,429 | (2 | )% | 44,251 | 30 | % | 34,108 | |||||||||||||
| 80 | % | 77 | % | 73 | % | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Total Revenues |
$ | 54,195 | (6 | )% | $ | 57,540 | 23 | % | $ | 46,816 | ||||||||||
|
|
|
|
|
|
|
|||||||||||||||
26
Table of Contents
United States revenues were $10.8 million, $13.3 million, and $12.7 million in fiscal 2015, 2014 and 2013, respectively, representing a decrease of 19% in fiscal 2015 and an increase of 5% in fiscal 2014. The decrease in fiscal 2015 was primarily in the medical and pharmacy and packaging markets. The increase in fiscal 2014 was primarily in the medical and pharmacy, and research markets which offset a decline in the automotive market.
International revenues were $43.4 million, $44.3 million, and $34.1 million in fiscal 2015, 2014, and 2013, respectively, representing a decrease of 2% in fiscal 2015 and an increase of 30% in fiscal 2014. The decrease in fiscal 2015 was due primarily to changes in foreign currency exchange rates which impacted international revenues by approximately 7%. The increase in fiscal 2014 was primarily due to changes in foreign currency exchange rates which impacted international revenue by approximately 3% and to increases in the solar and semiconductor markets in Asia and Europe as well as other manufacturing markets in Asia and consumer goods in Europe.
Gross Margin
Gross margin was 42.0%, 46.3%, and 40.8%, for the years ended June 30, 2015, 2014, and 2013, respectively. Gross margin for fiscal 2015, calculated using foreign currency exchange rates for 2014, and for 2014, calculated using foreign currency exchange rates for 2013, was 43.8% and 43.1%, respectively. The changes in gross margin were due to 1) changes in foreign currency exchange rates, 2) an increase in the excess and obsolete inventory reserve of $0.9 million in fiscal 2013, and 3) product and customer mix.
We may experience significant fluctuations in our gross margin percentage from period to period due to changes in volume, changes in availability of components, changes in product configuration, increased price-based competition, changes in our sales mix and/or changes in operating costs. In particular, we expect that sales into the Asia market will have a negative impact as compared to sales into the United States or European markets. In addition, we expect that changes in currency valuations will continue to impact gross margin, as a significant portion of our revenues are in Euro and a portion of our components are paid for in Japanese yen.
Operating Expenses
For the years ended June 30, 2015, 2014, and 2013, total operating expenses were $27.6 million, $27.0 million, and $29.5 million, respectively, representing an increase of 2% in fiscal 2015 and a decrease of 9% in fiscal 2014. The increase in 2015 was primarily due to a 12% higher average headcount in 2015 compared to 2014, offset by lower stock compensation expense. The decrease in 2014 was primarily the result of restructuring and impairment of intangible assets and goodwill charges totaling $2.5 million in 2013 with no such charges in 2014, and to lower average headcount in 2014 as compared to 2013.
Research, Development and Engineering Expenses. For the years ended June 30, 2015, 2014, and 2013, research, development and engineering (“R&D”) expenses were $7.4 million, $6.8 million, and $7.6 million, respectively, representing an increase of 9% in fiscal 2015 and a decrease of 11% in fiscal 2014. The increase in 2015 was due to higher headcount during 2015. The decrease in fiscal 2014 was primarily due to lower average headcount for the year compared to the prior year.
Selling, General and Administrative Expenses. For the years ended June 30, 2015, 2014, and 2013, selling, general and administrative (“SG&A”) expenses were $19.7 million, $19.8 million, and $19.0 million, respectively, representing a decrease of 1% in fiscal 2015 and an increase of 4% in fiscal 2014. The increase in fiscal 2014 was due primarily to increased headcount related costs and commissions due to higher sales.
Amortization. For the years ended June 30, 2015, 2014, and 2013, amortization expense was $0.2 million, $0.2 million, and $0.4 million, respectively.
Restructuring charges. Operationally from time to time, Adept has undertaken restructuring and other cost reduction actions to support its financial model which emphasizes cost efficiency balanced with investments in the Company’s product initiatives and revenue generating activities. For the year ended June 30, 2013, restructuring charges were $0.8 million, and related primarily to a reduction in work force.
27
Table of Contents
Foreign Currency Exchange Gain (Loss). For the years ended June 30, 2015, 2014, and 2013, foreign currency exchange gain (loss) was $(0.5) million, $0.3 million, and $0, respectively, due to the effects of transactional movements in foreign currency exchange rates. As Adept conducts business on a global basis it is exposed to adverse or beneficial movements in foreign currency exchange rates. The dollar/euro and the dollar/yen markets currently present the largest foreign currency exchange rate risk for Adept.
Provision for (Benefit from) Income Taxes. For the years ended June 30, 2015, 2014, and 2013, the provision for (benefit from) income taxes was $(0.3) million, $0.3 million, and $(0.3) million, respectively, and related primarily to foreign taxes and minimum state taxes.
Liquidity and Capital Resources
Cash and cash equivalents were $8.5 million at June 30, 2015. During the year ended June 30, 2015, cash and cash equivalents increased by $0.9 million. Net cash used in operating activities was $8.1 million, representing net loss of $5.0 million and cash used for working capital of $4.9 million, offset by depreciation and amortization and stock-based compensation expense totaling $2.0 million. Net cash used in investing activities was $0.4 million, which primarily represented purchases of property and equipment. Net cash provided by financing activities of $8.4 million consisted of proceeds from common stock issued under public offering and employee stock plans.
Redeemable Convertible Preferred Stock
In 2013, the Company issued 8,000 shares of its Series A redeemable convertible preferred stock (the “redeemable convertible preferred stock”), par value $0.001 per share, at a price of $1,000 per share, subject to the terms of its Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (the “Certificate of Designations”) for net proceeds of $7.6 million. The Certificate of Designations set forth the terms, rights, provisions for conversion to common stock, obligations and preferences of the redeemable convertible preferred stock and provided that holders of the redeemable convertible preferred stock were entitled to receive dividends payable quarterly in arrears, at the election of Adept either in cash, or, subject to certain equity conditions, in common stock calculated based upon the volume weighted average price of the common stock for a period preceding the dividend date. Dividends on the redeemable convertible preferred stock accrued at the prime rate plus 3% up to a maximum amount of 4%. Each share of redeemable convertible preferred stock was convertible, at the option of the holder and upon certain mandatory conversion events, into common stock, at a conversion rate of $4.60 per common share (as adjusted for stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and similar events). In February 2014, all of the outstanding redeemable convertible preferred stock plus accrued dividends through the date of conversion was converted into 1.7 million shares of common stock of the Company.
Bank credit facility
In 2014, the Company entered into a Loan and Security Agreement (the “Agreement”) with a bank. Under the Agreement, as amended, the Company may borrow an amount not to exceed the lesser of (i) $10.0 million and (ii) $1.0 million plus 80% of eligible domestic and foreign subsidiary accounts receivable. The Agreement specifies the criteria for determining eligible accounts receivable and sets forth ongoing conditions precedent to the Company’s ability to borrow under the Agreement. Amounts borrowed under the Agreement may be repaid and reborrowed until its maturity on June 9, 2016, at which time all advances shall be immediately due and payable in full. Amounts borrowed under the Agreement shall bear interest at the prime rate plus 0.75%. Adept and certain of its subsidiaries have granted the bank a security interest in substantially all of their respective assets (excluding intellectual property) to secure the outstanding obligations under the Agreement.
The Agreement contains customary representations and warranties by the Company and customary affirmative and negative covenants, including, among other requirements, requirements as to permissible use of proceeds,
28
Table of Contents
restrictions on Adept’s ability to dispose of assets, make acquisitions, be acquired, undergo a change of control, incur indebtedness, grant liens, transfer funds to subsidiaries, make distributions to its stockholders, make investments, or enter into certain transactions with affiliates, subject to specified exceptions. Further, the Agreement contains a financial covenant that requires the Company to achieve certain minimum EBITDA levels specified in the Agreement.
The Agreement contains customary events of default that entitle the bank to accelerate Adept’s obligations and require repayment of the outstanding indebtedness, increase the applicable interest rate by an additional 4.00% per annum, and enforce the bank’s security interest against the collateral. These events of default include, among others, Adept’s breach of payment obligations or covenants, material misrepresentations, events constituting a material adverse change, and bankruptcy and insolvency defaults.
At June 30, 2015, the Company had no borrowings under the Agreement.
Through June 2014, the Company had a credit facility with a bank which was originally entered into in 2009, and was amended and restated in 2013 and amended in 2014. The credit facility provided for borrowings of up to $8 million at specified advance rates.
Off-Balance Sheet Arrangements
As of June 30, 2015, the Company did not have any material off-balance sheet arrangements.
Contractual Obligations and Commitments
The following is a summary of Adept’s contractual obligations as of June 30, 2015 (in thousands):
| Operating leases |
Purchase commitments |
Total | ||||||||||
| Less than 1 year |
$ | 1,748 | $ | 11,548 | $ | 13,296 | ||||||
| 1 to 3 years |
2,478 | 158 | 2,636 | |||||||||
| 3 to 5 years |
1,692 | 1,692 | ||||||||||
| More than 5 years |
5,260 | 5,260 | ||||||||||
|
|
|
|
|
|
|
|||||||
| Total |
$ | 11,178 | $ | 11,706 | $ | 22,884 | ||||||
|
|
|
|
|
|
|
|||||||
Critical Accounting Policies
Adept’s accounting policies are more fully described in Note 2 of the Notes to the Consolidated Financial Statements. The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to the Consolidated Financial Statements. We consider the accounting polices described below to be our critical accounting policies. These critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies.
Revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when persuasive evidence of an arrangement exists, shipment has occurred, the fee is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.
29
Table of Contents
Contracts and/or customer purchase orders are used to determine the existence of an arrangement. Shipping documents and customer acceptance, when applicable, are used to verify delivery. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company assesses collectibility based primarily on the creditworthiness of the customer as determined by credit checks and payment history. Revenue for orders is generally not recognized until the product is shipped and title has transferred to the buyer. The Company bears all costs and risks of loss or damage to the goods up to that point. The Company’s shipment terms typically provide that title passes to the buyer upon delivery of the goods to the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, delivery is deemed to occur when the carrier takes the goods into its charge from the place determined by the Company. Other shipment terms may provide that title passes to the buyer upon delivery of the goods to the buyer. Shipping and handling costs are included in cost of sales. Revenue from sales to distributors is recognized upon shipment, assuming all other criteria for revenue recognition have been met. Distributors do not have a right of return. Revenue from purchased extended warranty and post contract support agreements is deferred and recognized ratably over the term of the warranty or support period. The Company presents revenue net of sales taxes and any similar assessments.
Adept’s products have features that are enabled or enhanced through the use of software enabling tools and other software elements, which are embedded within its products. Adept’s software enabling tools or other software elements do not operate independently, and they are not sold separately and cannot be used without Adept’s hardware products. The Company also sells optional software used to enhance capability of its products. Adept believes that the software component of its products is incidental to its products and services taken as a whole.
Service and Support revenue consists of sales of spare parts, training, consulting and customer support. Revenues from training and consulting are recognized at the time the service is performed and the customer has accepted the work. These services are not essential to the product functionality and, therefore, do not bear on the revenue recognition policy for Adept’s component products.
Deferred revenues represent payments received from customers in advance of the delivery of products or services, or before the satisfaction of all revenue recognition requirements.
Allowance for doubtful accounts. The allowance for doubtful accounts reflects the Company’s estimate of probable losses inherent in its accounts receivable balances. Adept regularly reviews the adequacy of its allowance for doubtful accounts by considering factors such as payment history and creditworthiness of the customer.
Inventories. Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market. We adjust inventory for estimated obsolescence or unmarketable inventory based on a periodic review of inventory balances, product demand and product lifecycle.
Warranties. We provide for the estimated cost of product warranties at the time revenue is recognized.
Capitalization of software development costs. We capitalize certain software development costs. We begin capitalizing software development costs upon the establishment of technological feasibility, which is established upon the completion of a working model or a detailed program design. Costs incurred prior to technological feasibility are charged to expense as incurred. Capitalization ceases when the product is considered available for general release to customers. Capitalized software development costs are amortized to costs of revenues over the estimated economic lives of the software products based on product life expectancy. Generally, estimated economic lives of the software products do not exceed three years.
Accounting for income taxes. Income taxes are accounted for under the liability method whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is
30
Table of Contents
recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not such assets will not be realized. The Company’s valuation allowance is primarily attributable to net deferred tax assets in the United States. Management believes that it is more likely than not that the Company will not realize certain of these deferred tax assets, and, accordingly, a valuation allowance has been provided for such amounts.
The Company only recognizes the tax benefit of uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
Foreign currency accounting. The functional currencies of our foreign subsidiaries are generally their respective local currencies. Accordingly, gains and losses from the translation of the financial statements of the foreign subsidiaries are reported as a separate component of accumulated other comprehensive income (loss). Realized and unrealized gains and losses from transactions, including intercompany balances not considered to be a permanent investment, denominated in currencies other than an entity’s functional currency are included in foreign currency exchange loss in the accompanying consolidated statements of operations and comprehensive loss. We do not currently apply a hedging strategy against our currency positions.
Stock-based compensation. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period of the individual equity instrument. Determining the fair value of stock-based awards at the grant date requires judgment, including estimating the expected term of stock options, the expected volatility of our stock, risk-free interest rate and expected dividends. The computation of the expected volatility assumption used in the Black-Scholes calculation for option grants is based on historical volatility as options on our stock are not traded. When establishing the expected life assumption, we review annual historical employee exercise behavior of option grants with similar vesting periods. In addition, judgment is also required in estimating the amount of stock-based awards that are expected to be forfeited. If actual forfeitures differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially affected.
Commitments and contingencies. We evaluate potential commitments and contingencies based on their anticipated outcome. If we determine, after consideration of all known facts and consultation with legal counsel, that a loss related to the potential matter is neither probable or cannot be reasonably estimated as of the date of issuance of our fiscal period-end reports, we do not accrue for the potential liability. If a loss is reasonably possible related to the matter, we will disclose the relevant facts of the matter along with an estimated loss amount or range if such amount or range can be reasonably estimated.
New Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The following discussion about our market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We face exposure to market risk from adverse movements in interest rates and foreign currency exchange rates, which could impact our operations and financial condition. We do not use derivative financial instruments for hedging, speculative or trading purposes.
Interest rate sensitivity: As of June 30, 2015, we held approximately $8.5 million of cash and cash equivalents. If short-term interest rates were to decrease 10%, the decreased interest income associated with this cash and cash equivalents would not have a significant impact on our net loss and cash flows.
31
Table of Contents
Foreign currency exchange rate sensitivity: We transact our revenue primarily in U.S. dollars, Euros, and to a lesser extent, RMBs and Singapore dollar. The U.S. dollar is our reporting currency. The U.S. dollar is our functional currency except for our international subsidiaries in China, France and Germany, and Singapore where the Chinese Yuan, Euro, and Singapore dollar are the functional currencies, respectively.
As of June 30, 2015, we had not entered into foreign exchange forward contracts to hedge balance sheet exposures and inter-company balances against future movements in foreign exchange rates.
We maintain certain cash balances denominated in the Chinese Yuan, Euro, and Singapore dollar. If foreign exchange rates were to weaken against the U.S. dollar immediately and uniformly by 10% from the exchange rates at June 30, 2015, the fair value of these foreign currency amounts would decline and we would record a charge of approximately $0.1 million, a portion of which should be offset by our foreign currency denominated payables.
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Consolidated Financial Statements and a Financial Statement Schedule as of June 30, 2015 and 2014 and for each of the years in the three year period ended June 30, 2015 are included in Items 15(a)(1) and (2) of this Annual Report on Form 10-K and incorporated by reference herein.
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We are committed to maintaining disclosure controls and procedures designed to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures and implementing controls and procedures.
As of June 30, 2015, the end of the period covered by this Annual Report on Form 10-K, we have, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and effectiveness of our disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities and Exchange Act of 1934 as amended (the “Exchange Act”). Based on this evaluation, we have concluded that our disclosure controls and procedures were effective as of June 30, 2015.
Management’s Report on Internal Control over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect
32
Table of Contents
misstatements. Projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of June 30, 2015. In making this assessment, we used the criteria set forth in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, we concluded that our internal control over financial reporting was effective as of June 30, 2015 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.
Armanino LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, independently audited the effectiveness of our internal control over financial reporting as of June 30, 2015. Their attestation report is included herein under Part II, Item 8 (referencing Item 15a-1 of this Annual Report on Form 10-k).
Changes in Internal Control over Financial Reporting
During the fourth quarter ended June 30, 2015, there were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| ITEM 9B. | Other Information |
None
33
Table of Contents
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Information required by this item is incorporated by reference from our proxy statement related to the 2015 Annual Meeting of Stockholders, referred to as the Proxy Statement.
| ITEM 11. | EXECUTIVE COMPENSATION |
The information required by this item is incorporated by reference from our Proxy Statement.
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The information required by this item is incorporated by reference from our Proxy Statement.
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
The information required by this item is incorporated by reference from our Proxy Statement.
| ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
The information required by this item is incorporated by reference from our Proxy Statement.
34
Table of Contents
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
(a)(1) Financial Statements
The financial statements (including the Notes thereto set forth in Item 8 of Part II of this Form 10-K) are filed as part of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules
The following financial statement schedule is included herein:
Schedule II—Valuation and Qualifying Accounts. Additional schedules are not required under the related schedule instructions or are inapplicable, and therefore have been omitted.
(a)(3) Exhibits
| 2.1 |
Agreement and Plan of Merger dated November 4, 2005 between Adept Technology, Inc., a Delaware corporation (the “Registrant”, “Adept” or “Adept-Delaware”) and Adept Technology, Inc., a California corporation (“Adept-California”) (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 8, 2005). | |
| 2.4+ |
Agreement and Plan of Merger among Adept Technology, Inc., Tiger Merger Sub Inc., MobileRobots Inc., and Jeanne A. Dietsch, as Stockholder Agent, dated as of June 13, 2010 (incorporated by reference to Exhibit 2.4 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 17, 2010). | |
| 2.5+ |
Agreement and Plan of Merger among Adept Technology, Inc. and InMoTx, Inc., Fast Food Acquisition Inc., and Robert Spears, as Stockholder Agent, dated as of January 4, 2011 (incorporated by reference to Exhibit 2.5 to the Registrant’s Quarterly Report on Form 10-Q for the 2011 second fiscal quarter ended December 25, 2010 filed with the Securities and Exchange Commission on February 7, 2011). | |
| 3.1 |
Certificate of Incorporation of Adept-Delaware (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K12G3 filed with the Securities and Exchange Commission on November 10, 2005). | |
| 3.2 |
Certificate of Amendment of Certificate of Incorporation of Adept-Delaware (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K12G3 filed with the Securities and Exchange Commission on November 10, 2005). | |
| 3.3 |
Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 24, 2012). | |
| 4.1 |
Specimen of Common Stock Certificate of Adept-Delaware (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K12G3 filed with the Securities and Exchange Commission on November 10, 2005). | |
| 4.2 |
Specimen of Preferred Stock Certificate of Adept Delaware (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report filed with the Securities and Exchange Commission on September 24, 2012). | |
35
Table of Contents
| 4.3 |
Form of Registration Rights Agreement, dated as of November 18, 2003 by and among the Registrant and the investors party thereto (incorporated by reference to Exhibit 4.5 to the Registrant’s Registration Statement on Form S-2 (No. 333-112360) filed on January 30, 2004). | |
| 4.4 |
Letter Agreement by and between Adept Technology, Inc. and Hale Capital Partners, LP, dated March 27, 2013 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 29, 2013). | |
| 4.5 |
Registration Rights Agreement, dated as of September 5, 2012, by and among Adept Technology, Inc. and Hale Capital Partners, LP (incorporated by reference to Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 24, 2012). | |
| 4.6 |
Side Letter Agreement, dated as of September 5, 2012 by and among Adept Technology, Inc. and Hale Capital Partners, LP (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 24, 2012). | |
| 10.1 |
Form of Subscription Agreement dated June 2, 2015, among the Company and its investors (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2015). | |
| 10.2-3 |
Reserved. | |
| 10.4 |
Form of Indemnification Agreement between Adept-California and its officers and directors (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (No. 33-98816.)) | |
| 10.5 |
Form of Indemnification Agreement between Adept-Delaware and its officers and directors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K12G3 filed with the Securities and Exchange Commission on November 10, 2005). | |
| 10.6* |
2003 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal 2006 third quarter ended April 1, 2006, filed with the Securities and Exchange Commission on May 16, 2006). | |
| 10.7* |
Form of Option Agreements under the 2003 Stock Option Plan (incorporated by reference to Exhibits 10.2 and 10.3 to the Registrant’s Registration Statement on Form S-8 (Registration No. 333-112148) filed with the Securities and Exchange Commission on January 19, 2005). | |
| 10.8 |
Form of 2013 Indemnification Agreement between Adept-Delaware and its officers and directors. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 9, 2012). | |
| 10.9-11 |
Reserved. | |
| 10.12 |
Lease Agreement dated July 2, 2015 between MNCVAD-CP NORRIS CANYON, LLC, a Delaware limited liability company and Adept Technology, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 8, 2015). | |
| 10.13* |
Form of Director Option Agreement for Initial Grant under the 2004 Director Option Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 2, 2006). | |
| 10.14* |
Form of Director Option Agreement for Annual Grant under the 2004 Director Option Plan (incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2006, filed with the Securities and Exchange Commission on May 16, 2006). | |
36
Table of Contents
| 10.15* |
2005 Equity Incentive Plan, as amended (incorporated by reference to Appendix A the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on October 1, 2015). | |
| 10.16* |
Form of Restricted Stock and Option Agreements to 2005 Equity Incentive Plan (incorporated by reference to Exhibits 10.4, 10.5 and 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the 2006 fiscal third quarter ended March 31, 2006, filed with the Securities and Exchange Commission on May 16, 2006). | |
| 10.17 |
Letter of Understanding dated as of December 9, 2005 between Adept Technology, Inc. and Parker Hannifin Corporation (incorporated by reference to Exhibit 10.22 of the Registrant’s Quarterly Report on Form 10-Q for the 2011 fiscal quarter ended September 25, 2010, filed with the Securities and Exchange Commission on November 9, 2010). | |
| 10.19* |
Summary of Non-employee Director Compensation, dated as of February 6, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2014). | |
| 10.20*X |
Summary of Executive Officer Compensation (effective as of July 1, 2015). | |
| 10.21-22 |
Reserved. | |
| 10.23 |
License Agreement between Registrant and Fundacion Fatronik dated December 21, 2006. (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 29, 2012 filed with the Securities and Exchange Commission on February 12, 2013). | |
| 10.24 |
Addendum dated March 30, 2010 to License Agreement dated December 21, 2006 between Adept Technology and Fundacion Fatronik (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 29, 2012 filed with the Securities and Exchange Commission on September 24, 2012). | |
| 10.25 |
Addendum dated April 25, 2012 to License Agreement dated December 21, 2006 between Adept Technology and Fundacion Fatronik (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 24, 2012). | |
| 10.26-27 |
Reserved. | |
| 10.28* |
Amended and Restated 2008 Employee Stock Purchase Plan. (incorporated by reference to Exhibit 10.40 to Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009 filed with the Securities and Exchange Commission on September 18, 2009.) | |
| 10.29-30 |
Reserved. | |
| 10.31 |
Lease Agreement effective October 10, 2008 between Registrant and Park Lake Apartments, L.P. for premises located on Inglewood Drive in Pleasanton, California. (incorporated by reference to Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q for the 2009 fiscal first quarter ended September 27, 2008, filed with the Securities and Exchange Commission on November 12, 2008). | |
| 10.32 |
Amendment dated November 14, 2008 to Lease Agreement effective October 10, 2008 between Registrant and Park Lake Apartments, L.P. for premises located on Inglewood Drive in Pleasanton, California (incorporated by reference to Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q for the 2009 fiscal second quarter ended December 27, 2008, filed with the Securities and Exchange Commission on February 10, 2009). | |
37
Table of Contents
| 10.33 |
Amendment dated November 14, 2008 to Lease Agreement effective October 10, 2008 between Registrant and W Group Holding III LLC and RASAP Franklin, LLC for premises located on Gibraltar Drive in Pleasanton, California (incorporated by reference to Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q for the 2009 fiscal second quarter ended December 27, 2008, filed with the Securities and Exchange Commission on February 10, 2009). | |
| 10.34 |
Fiscal 2013 Performance Plan—established under Adept Technology 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.54 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 24, 2012). | |
| 10.35-41 |
Reserved. | |
| 10.42* |
Amended and Restated 2004 Director Option Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the 2011 second fiscal quarter ended December 25, 2010 filed with the Securities and Exchange Commission on February 7, 2011). | |
| 10.43* |
Form of Director Option Agreement for Initial Grant under the 2004 Director Option Plan, as amended (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the 2011 second fiscal quarter ended December 25, 2010 filed with the Securities and Exchange Commission on February 7, 2011). | |
| 10.44* |
Form of Director Option Agreement for Annual Grant under the 2004 Director Option Plan, as amended (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the 2011 second fiscal quarter ended December 25, 2010 filed with the Securities and Exchange Commission on February 7, 2011). | |
| 10.45-54 |
Reserved. | |
| 10.55* |
Form of Director Option Agreement for Initial and Annual Grant under the 2005 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2011). | |
| 10.56-57 |
Reserved. | |
| 10.58 |
Securities Purchase Agreement (the “Purchase Agreement”) with affiliates of Hale Capital Partners, LP dated as September 5, 2012 (incorporated by reference to Exhibit 10.79 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 24, 2012). | |
| 10.59X |
Second Amendment to Loan and Security Agreement (dated as of April 3, 2015 by and between Comerica Bank and Adept Technology, Inc.) | |
| 10.60X |
Third Amendment to Loan and Security Agreement (dated as of May 1, 2015 by and between Comerica Bank and Adept Technology, Inc.) | |
| 10.61X |
Fourth Amendment to Loan and Security Agreement (dated as of July 6, 2015 by and between Comerica Bank and Adept Technology, Inc.) | |
| 10.62X |
Fifth Amendment to Loan and Security Agreement (dated as of July 22, 2015 by and between Comerica Bank and Adept Technology, Inc.) | |
| 10.63 |
Reserved. | |
| 10.64* |
Offer Letter Agreement, dated February 22, 2013, between Adept Technology, Inc. and Rob Cain (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 25, 2013). | |
| 10.65* |
CEO Bonus Arrangement (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 29, 2013). | |
38
Table of Contents
| 10.66-67 |
Reserved. | |
| 10.68* |
Fiscal 2013 Management Incentive Plan (incorporated by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2013). | |
| 10.69* |
Form of Performance Stock Award Agreement for Management Incentive Plan (incorporated by reference to Exhibit 99.3 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2013). | |
| 10.70-10.72 |
Reserved | |
| 10.73*X |
Option Agreement, effective as of February 19, 2013, between Adept Technology, Inc. and Rob Cain | |
| 10.74* |
Offer Letter Agreement, dated August 27, 2013, by and between Adept Technology, Inc. and Rob Cain (incorporated by reference to Exhibit 10.74 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.75* |
Offer Letter Agreement, dated August 27, 2013, by and between Adept Technology, Inc. and Terry Hannon. (incorporated by reference to Exhibit 10.75 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.76* |
Fiscal 2014 Management Incentive Plan. (incorporated by reference to Exhibit 10.76 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.77* |
Separation Agreement and General Release of Claims, dated July 15, 2013, by and between Adept Technology, Inc. and Michael Schradle. (incorporated by reference to Exhibit 10.77 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.78* |
Separation Agreement, dated July 31, 2013, by and between Adept Technology, Inc. and Joachim Melis. (incorporated by reference to Exhibit 10.78 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.79* |
Settlement Agreement and General Release of Claims, dated August 27, 2013, by and between Adept Technology, Inc. and John Dulchinos. (incorporated by reference to Exhibit 10.79 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.80* |
Form of Performance Option Agreement for option incentive program dated as of August 27, 2013. (incorporated by reference to Exhibit 10.80 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and Exchange Commission on September 20, 2013). | |
| 10.81* |
Management Incentive Plan (incorporated by reference to Exhibit 10.81 to the Registrant’s Form 10-K for the fiscal year ended June 30, 2014, filed with the Securities and Exchange Commission on August 25, 2014). | |
| 10.82 |
Amendment No. 1 to the Amended and Restated Loan and Security Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 4, 2014). | |
| 10.83 |
Reserved | |
39
Table of Contents
| 10.84 |
Loan and Security Agreement, dated as of June 9, 2014, between Comerica Bank and Adept Technology, Inc., attaching the Prime Referenced Rate Addendum to Loan and Security Agreement dated as of June 9, 2014 (the “Loan and Security Agreement”). (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 11, 2014). | |
| 10.85 |
Form of Security Agreement relating to Loan and Security Agreement for each Adept Technology, Inc. subsidiary guarantor (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 11, 2014). | |
| 10.86 |
Guaranty dated as of June 9, 2014, in favor of Comerica Bank by Adept InMoTx, Inc., Adept Technology Holdings, Inc., Adept Mobilerobots LLC and Adept Technology International, Ltd. relating to Loan and Security Agreement. (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 11, 2014). | |
| 10.87 |
First Amendment to Loan and Security Agreement and Waiver (dated as of January 31, 2015 by and between Comerica Bank and Adept Technology, Inc.. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 4, 2015). | |
| 10.88 |
Prime Referenced Rate Addendum to Loan and Security Agreement (dated as of January 31, 2015 by and between Comerica Bank and Adept Technology, Inc.. (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 4, 2015). | |
| 10.89* |
Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 10-Q for the Quarter ended December 28, 2013, filed with the Securities and Exchange Commission on February 6, 2014). | |
| 10.90* |
Change in Control Plan for Equity Awards (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-Q for the Quarter ended December 28, 2013, filed with the Securities and Exchange Commission on February 6, 2014). | |
| 10.91* |
Adept Technology, Inc. Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-Q for the Quarter ended December 28, 2013, filed with the Securities and Exchange Commission on February 6, 2014). | |
| 10.92* |
Offer Letter Agreement, dated as of September 10, 2013 between Seth Halio and Adept Technology, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the Quarter ended September 28, 2013, filed with the Securities and Exchange Commission on November 7, 2013). | |
| 14.1 |
Code of Business Conduct, as amended (incorporated by reference to Exhibit 14.1 to the Registrant’s Form 10-K for the 2010 fiscal year ended June 30, 2010, filed with the Securities and Exchange Commission on September 17, 2010). | |
| 21.1X |
Subsidiaries of the Registrant. | |
| 23.1 |
Consent of Independent Registered Public Accounting Firm, Armanino LLP. | |
| 24.1 |
Power of Attorney (See Signature Page to this Form 10-K). | |
| 31.1 |
Certification by the Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 |
Certification by the Interim Principal Accounting Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
40
Table of Contents
| 32.1 |
Certification by the Chief Executive Officer and the Interim Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.1- |
The following financial information from the Company’s annual report on Form 10-K for the period ended June 30, 2015, is formatted in XBRL interactive data files: (i) Consolidated Balance Sheets as of June 30, 2015, and 2014; (ii) Consolidated Statements of Operations and Comprehensive Loss for the Twelve Months Ended June 30, 2015, 2014, and 2013; (iii) Consolidated Statements of Stockholders Equity for the Twelve Months Ended June 30, 2015, 2014 and 2013; (iv) Consolidated Statements of Cash Flows for the Twelve Months Ended June 30 2015, 2014 and 2013; and (v) Notes to Consolidated Financial Statements. | |
| * | Management contract or compensatory plan or arrangement. |
| ** | Confidential treatment has been requested as to certain portions of this exhibit. An unredacted version of this exhibit has been filed separately with the Securities and Exchange Commission. |
| + | Schedules to this exhibit have not been filed herewith or with the filing incorporated by reference herein, but will be furnished supplementally to the Securities and Exchange Commission upon request. |
| - | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections |
| X | Filed herewith |
(b) Exhibits.
See Item 15(a)(3) above.
(c) Financial Statement Schedules.
See Item 15(a)(2) above.
41
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) 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.
| ADEPT TECHNOLOGY, INC. | ||||||
| Date: August 31, 2015 | By: | /s/ ROB CAIN | ||||
| Rob Cain, President and Chief Executive Officer | ||||||
| (Principal executive officer) | ||||||
| Date: August 31, 2015 | By: | /s/ Seth Halio | ||||
| Seth Halio, Chief Financial Officer | ||||||
| (Principal financial and accounting officer) | ||||||
42
Table of Contents
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Rob Cain and Seth Halio, and each of them, jointly and severally, his true and lawful attorneys-in-fact, each with full power of substitution and resubstitution, for him in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do if personally present, hereby ratifying and confirming all that each said attorney-in-fact and agent, or his or her substitute or substitutes or any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
| Signature |
Title |
Date | ||
| /s/ ROB CAIN Rob Cain |
President and Chief Executive Officer (Principal Executive Officer); Director | August 31, 2015 | ||
| /s/ Seth Halio Seth Halio |
Chief Financial Officer and Assistant Secretary (Principal Financial and Accounting Officer) | August 31, 2015 | ||
| /S/ MICHAEL P. KELLY Michael P. Kelly |
Chairman of the Board | August 31, 2015 | ||
| /S/ HERBERT J. MARTIN Herbert J. Martin |
Director | August 31, 2015 | ||
| /S/ BENJAMIN A. BURDITT Benjamin A. Burditt |
Director | August 31, 2015 | ||
| /s/ MARTIN HALE, JR. Martin Hale, Jr. |
Director | August 31, 2015 | ||
43
Table of Contents
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ADEPT TECHNOLOGY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| 45 | ||||
| Consolidated Balance Sheets at June 30, 2015 and June 30, 2014 |
46 | |||
| 47 | ||||
| 48 | ||||
| 49 | ||||
| 50 | ||||
| 66 | ||||
44
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Adept Technology, Inc.
Pleasanton, California
We have audited the accompanying consolidated balance sheets of Adept Technology, Inc. (“the Company”) as of June 30, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended June 30, 2015. We also have audited the Company’s internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our audits also included the consolidated financial statement schedule listed in the Index at Part IV, Item 15 (a)(2). The Company’s management is responsible for these consolidated financial statements and schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting, appearing under Item 9A. Our responsibility is to express an opinion on these consolidated financial statements and schedule and an opinion on the Company’s internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2015 and 2014, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended June 30, 2015 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related consolidated financial statement schedule for each of the fiscal years in the three-year period ended June 30, 2015, when considered in relation to the consolidated financial statements as a whole, presents fairly in all material respects the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
/s/ Armanino LLP
ARMANINO LLP
San Jose, California
August 31, 2015
45
Table of Contents
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| June 30, 2015 |
June 30, 2014 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 8,508 | $ | 7,600 | ||||
| Restricted cash |
78 | 194 | ||||||
| Accounts receivable, less allowance for doubtful accounts of $405 and $610 at June 30, 2015 and 2014, respectively |
10,585 | 10,974 | ||||||
| Inventories |
10,419 | 10,296 | ||||||
| Other current assets |
432 | 545 | ||||||
|
|
|
|
|
|||||
| Total current assets |
30,022 | 29,609 | ||||||
| Property and equipment, net |
1,396 | 1,082 | ||||||
| Goodwill |
1,493 | 1,493 | ||||||
| Other intangible assets, net |
552 | 796 | ||||||
| Other assets |
294 | 90 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 33,757 | $ | 33,070 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 5,447 | $ | 7,709 | ||||
| Accrued payroll and related expenses |
2,397 | 2,235 | ||||||
| Accrued warranty expenses |
854 | 897 | ||||||
| Deferred revenue |
142 | 644 | ||||||
| Accrued income tax |
— | 10 | ||||||
| Other accrued liabilities |
509 | 848 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
9,349 | 12,343 | ||||||
| Long-term liabilities: |
||||||||
| Income taxes payable |
291 | 430 | ||||||
| Long-term obligations |
6 | 130 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
9,646 | 12,903 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies (Note 8) |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.001 par value: 19,000 shares authorized, 14,569 shares issued and 14,564 shares outstanding at June 30, 2015 and 13,051 shares issued and 13,046 shares outstanding at June 30, 2014 |
198,751 | 189,427 | ||||||
| Treasury stock, at cost, 5 shares at June 30, 2015 and 2014 |
(42 | ) | (42 | ) | ||||
| Accumulated deficit |
(174,377 | ) | (169,368 | ) | ||||
| Accumulated other comprehensive income (loss) |
(221 | ) | 150 | |||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
24,111 | 20,167 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 33,757 | $ | 33,070 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
46
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(in thousands, except per share data)
| Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Revenues |
$ | 54,195 | $ | 57,540 | $ | 46,816 | ||||||
| Cost of revenues |
31,441 | 30,920 | 27,696 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross margin |
22,754 | 26,620 | 19,120 | |||||||||
| Operating expenses: |
||||||||||||
| Research, development and engineering |
7,365 | 6,758 | 7,634 | |||||||||
| Selling, general and administrative |
19,705 | 19,806 | 18,958 | |||||||||
| Restructuring charges |
— | — | 785 | |||||||||
| Legal settlement |
260 | 159 | — | |||||||||
| Amortization of other intangible assets |
244 | 244 | 411 | |||||||||
| Impairment of intangible assets and goodwill |
— | — | 1,708 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
27,574 | 26,967 | 29,496 | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating loss |
(4,820 | ) | (347 | ) | (10,376 | ) | ||||||
| Foreign currency exchange gain (loss) |
(463 | ) | 350 | (3 | ) | |||||||
| Interest income |
1 | 59 | 34 | |||||||||
| Interest expense |
(47 | ) | (54 | ) | (71 | ) | ||||||
| Other income |
— | 2 | 71 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) before income taxes |
(5,329 | ) | 10 | (10,345 | ) | |||||||
| Provision for (benefit from) income taxes |
(320 | ) | 349 | (320 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net loss |
(5,009 | ) | (339 | ) | (10,025 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Effects of redeemable convertible preferred stock: |
||||||||||||
| Accretion of preferred stock to redemption value |
— | (239 | ) | (73 | ) | |||||||
| Dividends allocated to preferred stockholders |
— | (203 | ) | (250 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net loss attributable to common stockholders |
$ | (5,009 | ) | $ | (781 | ) | $ | (10,348 | ) | |||
|
|
|
|
|
|
|
|||||||
| Net loss per share attributable to common stockholders: |
||||||||||||
| Basic |
$ | (0.38 | ) | $ | (0.07 | ) | $ | (0.99 | ) | |||
|
|
|
|
|
|
|
|||||||
| Diluted |
$ | (0.38 | ) | $ | (0.07 | ) | $ | (0.99 | ) | |||
|
|
|
|
|
|
|
|||||||
| Number of shares used in computing net loss per share attributable to common stockholders: |
||||||||||||
| Basic |
13,205 | 11,718 | 10,437 | |||||||||
| Diluted |
13,205 | 11,718 | 10,437 | |||||||||
| Comprehensive loss, net of taxes |
||||||||||||
| Net loss |
$ | (5,009 | ) | $ | (339 | ) | $ | (10,025 | ) | |||
| Foreign currency translation adjustment |
(371 | ) | (115 | ) | 321 | |||||||
|
|
|
|
|
|
|
|||||||
| Total comprehensive loss |
$ | (5,380 | ) | $ | (454 | ) | $ | (9,704 | ) | |||
|
|
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
47
Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
| Common Stock | Treasury Stock | Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total Stockholders’ Equity |
||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance at June 30, 2012 |
10,530 | $ | 177,446 | (5 | ) | $ | (42 | ) | $ | (159,004 | ) | $ | (56 | ) | $ | 18,344 | ||||||||||||
| Common stock issued under equity plans |
195 | 512 | — | — | — | — | 512 | |||||||||||||||||||||
| Restricted stock awards issued |
344 | — | — | — | — | — | — | |||||||||||||||||||||
| Restricted stock forfeited |
(125 | ) | — | — | — | — | — | — | ||||||||||||||||||||
| Restricted stock awards surrendered to satisfy tax obligations |
(23 | ) | (85 | ) | — | — | — | — | (85 | ) | ||||||||||||||||||
| Preferred stock accretion |
— | (73 | ) | — | — | — | — | (73 | ) | |||||||||||||||||||
| Preferred stock dividend |
— | (171 | ) | — | — | — | — | (171 | ) | |||||||||||||||||||
| Preferred stock dividend—undistributed |
— | (79 | ) | — | — | — | — | (79 | ) | |||||||||||||||||||
| Stock-based compensation |
— | 836 | — | — | — | — | 836 | |||||||||||||||||||||
| Net loss |
— | — | — | — | (10,025 | ) | — | (10,025 | ) | |||||||||||||||||||
| Foreign currency translation adjustment |
— | — | — | — | — | 321 | 321 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at June 30, 2013 |
10,921 | 178,386 | (5 | ) | (42 | ) | (169,029 | ) | 265 | 9,580 | ||||||||||||||||||
| Common stock issued under equity plans |
406 | 1,792 | — | — | — | — | 1,792 | |||||||||||||||||||||
| Restricted stock awards issued |
8 | — | — | — | — | — | — | |||||||||||||||||||||
| Restricted stock forfeited |
(21 | ) | — | — | — | — | — | — | ||||||||||||||||||||
| Restricted stock awards surrendered to satisfy tax obligations |
(45 | ) | (501 | ) | — | — | — | — | (501 | ) | ||||||||||||||||||
| Conversion of preferred stock, net of conversion costs of $34 |
1,739 | 7,967 | — | — | 7,967 | |||||||||||||||||||||||
| Preferred stock accretion |
(239 | ) | — | — | — | — | (239 | ) | ||||||||||||||||||||
| Preferred stock dividend |
43 | — | — | — | — | — | — | |||||||||||||||||||||
| Stock-based compensation |
— | 2,022 | — | — | — | — | 2,022 | |||||||||||||||||||||
| Net loss |
— | — | — | — | (339 | ) | — | (339 | ) | |||||||||||||||||||
| Foreign currency translation adjustment |
— | — | — | — | — | (115 | ) | (115 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at June 30, 2014 |
13,051 | 189,427 | (5 | ) | (42 | ) | (169,368 | ) | 150 | 20,167 | ||||||||||||||||||
| Common stock issued under equity plans |
129 | 512 | — | — | — | — | 512 | |||||||||||||||||||||
| Issuance of common stock, net of issuance costs of $107 |
1,391 | 7,888 | — | — | — | — | 7,888 | |||||||||||||||||||||
| Stock-based compensation |
— | 924 | — | — | — | — | 924 | |||||||||||||||||||||
| Restricted stock forfeited |
(2 | ) | — | — | — | — | — | — | ||||||||||||||||||||
| Net loss |
— | — | — | — | (5,009 | ) | — | (5,009 | ) | |||||||||||||||||||
| Foreign currency translation adjustment |
— | — | — | — | — | (371 | ) | (371 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at June 30, 2015 |
14,569 | $ | 198,751 | (5 | ) | $ | (42 | ) | $ | (174,377 | ) | $ | (221 | ) | $ | 24,111 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
48
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Operating activities |
||||||||||||
| Net loss |
$ | (5,009 | ) | $ | (339 | ) | $ | (10,025 | ) | |||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||||||
| Depreciation and amortization |
1,030 | 1,095 | 1,378 | |||||||||
| Deferred income taxes |
(219 | ) | 55 | (57 | ) | |||||||
| Loss (gain) on disposal of property and equipment |
— | 50 | (65 | ) | ||||||||
| Stock-based compensation |
924 | 2,022 | 836 | |||||||||
| Impairment of goodwill and other intangible assets |
— | — | 1,708 | |||||||||
| Net changes in operating assets and liabilities: |
||||||||||||
| Accounts receivable |
(666 | ) | 115 | 1,336 | ||||||||
| Inventories |
(1,442 | ) | (2,215 | ) | (175 | ) | ||||||
| Other assets |
108 | 33 | (29 | ) | ||||||||
| Accounts payable |
(2,089 | ) | 622 | 868 | ||||||||
| Other accrued liabilities and deferred revenue |
(528 | ) | (580 | ) | (747 | ) | ||||||
| Other liabilities |
(252 | ) | 96 | 260 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net cash provided by (used in) operating activities |
(8,143 | ) | 954 | (4,712 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Investing activities |
||||||||||||
| Purchase of property and equipment |
(531 | ) | (240 | ) | (86 | ) | ||||||
| Proceeds from sale of property and equipment |
— | 17 | 127 | |||||||||
| Restricted cash |
116 | (194 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net cash provided by (used in) investing activities |
(415 | ) | (417 | ) | 41 | |||||||
|
|
|
|
|
|
|
|||||||
| Financing activities |
||||||||||||
| Borrowings from (repayments of) line of credit, net |
— | — | (5,500 | ) | ||||||||
| Principal payments on capital leases and long-term obligations |
— | (8 | ) | (59 | ) | |||||||
| Proceeds from employee stock plans |
512 | 1,792 | 512 | |||||||||
| Net proceeds from common stock issued under public offering |
7,888 | — | — | |||||||||
| Net proceeds from issuance of preferred stock |
— | — | 7,608 | |||||||||
| Cash dividends paid on redeemable convertible preferred stock |
— | — | (171 | ) | ||||||||
| Costs of conversion of redeemable convertible preferred stock |
— | (34 | ) | — | ||||||||
| Payment for taxes for restricted stock awards surrendered to satisfy tax obligations |
— | (499 | ) | (85 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net cash provided by financing activities |
8,400 | 1,251 | 2,305 | |||||||||
|
|
|
|
|
|
|
|||||||
| Effect of exchange rates on cash and cash equivalents |
1,066 | (462 | ) | (82 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Increase (decrease) in cash and cash equivalents |
908 | 1,326 | (2,448 | ) | ||||||||
| Cash and cash equivalents, beginning of period |
7,600 | 6,274 | 8,722 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents, end of period |
$ | 8,508 | $ | 7,600 | $ | 6,274 | ||||||
|
|
|
|
|
|
|
|||||||
| Cash paid during the period for: |
||||||||||||
| Interest |
$ | 46 | $ | 3 | $ | 71 | ||||||
| Income taxes |
29 | 49 | 22 | |||||||||
| Supplemental disclosure of non-cash investing and financing activities: |
||||||||||||
| Transfers from inventory to property and equipment |
419 | 204 | 161 | |||||||||
| Accretion of preferred stock to redemption value |
— | 239 | 73 | |||||||||
| Conversion of preferred stock |
— | 8,000 | — | |||||||||
| Undistributed dividends allocated to preferred stock |
— | — | 79 | |||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
49
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Description of Business |
Founded in 1983, Adept Technology, Inc. (“Adept,” “we” or the “Company”) is a global automation supplier of industrial (fixed) and mobile robots to enable customers to improve speed, quality and efficiency of their production environments. Headquartered in Pleasanton, California, the Company has operations worldwide, including research and development, manufacturing, sales, service and support.
| 2. | Significant Accounting Policies |
Basis of Presentation
The consolidated financial statements include the accounts of Adept and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.
Fair Value of Financial Instruments
The carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities.
Cash Equivalents
All highly liquid investments purchased with maturities of three months or less at time of purchase are classified as cash equivalents. Restricted cash consists of deposit accounts held to secure a leased facility.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. The Company places its cash and cash equivalents with high credit-quality financial institutions and invests its excess cash primarily in money market funds, subject to established guidelines relative to credit ratings, diversification and maturities to maintain safety and liquidity. The Company is exposed to credit risk in the event of default by the financial institutions holding the cash and cash equivalents to the extent of the amount recorded on the consolidated balance sheets exceeds insured limits.
Adept’s accounts receivable are derived from sales to customers for commercial and research applications. Adept performs ongoing credit evaluations of customers’ financial condition and limits the amount of credit extended when deemed necessary but generally requires no collateral. Adept maintains credit insurance for a substantial portion of its accounts receivable balance. The Company maintains reserves for potential credit losses, in excess of insured amounts. Adept’s products are broadly distributed and no customer accounted for 10% or more of sales. At June 30, 2015 and 2014, no one customer accounted for 10% or greater of accounts receivable.
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects the Company’s estimate of probable losses inherent in its accounts receivable balances. Adept regularly reviews the adequacy of its allowance for doubtful accounts by considering factors such as payment history and creditworthiness of the customer. Amounts (credited) charged to bad debt expense were $(5,000), $(54,000), and $173,000 in fiscal 2015, 2014 and fiscal 2013, respectively.
50
Table of Contents
Inventories
Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from three to five years.
Capitalization of Software Development Costs
The Company begins capitalizing software development costs upon the establishment of technological feasibility, which is established upon the completion of a working model or a detailed program design. Costs incurred prior to technological feasibility are charged to expense as incurred. Capitalization ceases when the product is considered available for general release to customers. Capitalized software development costs are amortized to costs of revenues over the estimated economic lives of the software products based on product life expectancy, generally not to exceed three years. The Company did not capitalize any software development costs during fiscal 2015, 2014 and 2013, respectively.
Goodwill and Purchased Intangible Assets
Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets are recorded at fair value. Identifiable intangible assets are comprised of patents, customer base, technology and trade names. Identifiable intangible assets are being amortized over the period of estimated benefit using the straight-line method, reflecting the pattern of economic benefits associated with these assets. Goodwill is not subject to amortization, but is subject to at least an annual assessment for impairment.
Impairment of Goodwill, Intangible Assets and Other Long-Lived Assets
The Company evaluates goodwill, at a minimum, on an annual basis and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company performs its annual goodwill impairment testing in the fourth fiscal quarter of each year. The Company is not required to calculate the fair value of a reporting unit unless the Company determines, based on a qualitative assessment which is the first step of the impairment testing, that it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Adept has defined its reporting units at the business unit level, one level below reportable segments. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and forecasted operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions and determination of appropriate market comparables. Adept bases its fair value estimates on assumptions it believes to be reasonable. Actual future results may differ from those estimates. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process is only performed if a potential impairment exists, and it involves determining the difference between the fair value of the reporting unit’s net assets other than goodwill to the fair value of the reporting unit and if the difference is less than the net book value of goodwill, an impairment exists and is recorded.
Intangible and other long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance and may differ from actual cash flows. The assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value.
51
Table of Contents
Warranties
The Company provides for the estimated cost of product warranties at the time revenue is recognized.
Foreign Currency
The functional currencies of our foreign subsidiaries are generally their respective local currencies. Accordingly, gains and losses from the translation of the financial statements of the foreign subsidiaries are reported as a separate component of accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in earnings.
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when persuasive evidence of an arrangement exists, shipment has occurred, the fee is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.
Contracts and/or customer purchase orders are used to determine the existence of an arrangement. Shipping documents and customer acceptance, when applicable, are used to verify delivery. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company assesses collectibility based primarily on the creditworthiness of the customer as determined by payment history. Revenue for orders is generally not recognized until the product is shipped and title has transferred to the buyer. The Company bears all costs and risks of loss or damage to the goods up to that point. The Company’s shipment terms typically provide that title passes to the buyer upon delivery of the goods to the carrier named by the buyer at the named place or point. If no precise point is indicated by the buyer, delivery is deemed to occur when the carrier takes the goods into its charge from the place determined by the Company. Other shipment terms may provide that title passes to the buyer upon delivery of the goods to the buyer. Shipping and handling costs are included in cost of sales. Revenue from sales to distributors is recognized upon shipment, assuming all other criteria for revenue recognition have been met. Distributors do not have a right of return. Revenue from purchased extended warranty and post contract support agreements is deferred and recognized ratably over the term of the warranty or support period. The Company presents revenue net of sales taxes and similar assessments.
Adept’s products have features that are enabled or enhanced through the use of software enabling tools and other software elements, which are embedded within its products. Adept’s software enabling tools or other software elements do not operate independently, and they are not sold separately and cannot be used without Adept’s hardware products. The Company also sells optional software used to enhance capability of its products. Adept believes that the software component of its products is incidental to its products and services taken as a whole.
Service and Support revenue consists of sales of spare parts, training, consulting and customer support. Revenues from training and consulting are recognized at the time the service is performed and the customer has accepted the work. These services are not essential to the product functionality and, therefore, do not bear on the revenue recognition policy for Adept’s component products.
Deferred revenues represent payments received from customers in advance of the delivery of products or services, or before the satisfaction of all revenue recognition requirements.
Research, Development and Engineering Costs
Research, development and engineering costs are expensed as incurred, with the exception of software development costs incurred subsequent to establishing technological feasibility and up to the general release of the software products that are capitalized. In fiscal 2015 and 2014, the Company offset $0.1 million and $0.2 million of research, development and engineering costs by a tax refund to be received in France.
52
Table of Contents
Advertising Costs
Advertising costs are expensed in the period incurred and have not been material in each of three years ended June 30, 2015.
Income Taxes
Income taxes are accounted for under the liability method whereby deferred tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not such assets will not be realized. The Company’s valuation allowance is primarily attributable to net deferred tax assets in the United States. Management believes that it is more likely than not that the Company will not realize certain of these deferred tax assets, and, accordingly, a valuation allowance has been provided for such amounts.
The Company only recognizes the tax benefit of uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
Stock-Based Compensation
The Company has employee stock benefit plans. Stock compensation expense is recognized based on the fair value of the portion of share-based payment awards that is expected to vest during the period and is net of estimated forfeitures. The Company attributes the value of stock options to expense using the straight-line single option method. The grant date fair value for options is estimated using the Black-Scholes option-pricing model. Employee option grants under equity incentive plans generally vest, and are expensed, monthly in equal installments over a four year period, except for performance awards which vest when achievement of the performance criteria occurs, begin to be expensed when achievement of the performance criteria is probable, and are expensed over the shorter of the service period or when the criteria is met. For performance awards, the Company estimates the service period based on its analysis of when the vesting criteria (typically some or all of the following components: share price, annual revenue amounts, earnings per share, net cash, and/or new customers) will occur. Restricted stock grants made under annual performance programs are generally subject to vesting quarterly over two years following the end of the relevant fiscal year of performance.
Net Loss Per Share
The number of shares used in the calculation of basic net loss per share represents the weighted average common shares outstanding during the period and excludes any potentially dilutive securities. The dilutive effects of outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, non-vested restricted stock units and convertible securities are included in diluted earnings per share.
New Accounting Pronouncements
Recent accounting pronouncements that may have a material impact to the Company’s financial statements that are not yet effective are summarized below. Other recent authoritative guidance issued by the FASB (including technical corrections to the FASB Accounting Standards Codification), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (“SEC”) did not, or are not expected to have a material effect on the Company’s consolidated financial statements.
In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a
53
Table of Contents
consensus of the FASB Emerging Issues Task Force).” This ASU provides explicit guidance regarding the presentation in the statement of financial position of an unrecognized tax benefit when net operating losses or tax credit carryforwards exist. The adoption of this pronouncement did not have a material effect on the Company’s financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP. On July 9, 2015, the FASB deferred the effective date of the new revenue recognition standard by one year. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The standard permits the use of either the retrospective or cumulative effect transition method. The Company will apply the new revenue standard in fiscal year 2019.
| 3. | Balance sheet detail |
The components of inventories are as follows (in thousands):
| June 30, | ||||||||
| 2015 | 2014 | |||||||
| Raw materials |
$ | 8,133 | $ | 6,408 | ||||
| Work-in-process |
434 | 1,614 | ||||||
| Finished goods |
1,852 | 2,274 | ||||||
|
|
|
|
|
|||||
| Total inventory |
$ | 10,419 | $ | 10,296 | ||||
|
|
|
|
|
|||||
The components of property and equipment are summarized as follows (in thousands):
| June 30, | ||||||||
| 2015 | 2014 | |||||||
| Cost: |
||||||||
| Machinery and equipment |
$ | 4,073 | $ | 3,991 | ||||
| Computer equipment |
5,900 | 5,456 | ||||||
| Demonstration equipment |
1,848 | 1,605 | ||||||
| Office furniture and equipment |
938 | 1,052 | ||||||
| Software development costs |
2,688 | 2,688 | ||||||
|
|
|
|
|
|||||
| 15,447 | 14,792 | |||||||
| Accumulated depreciation and amortization |
(14,051 | ) | (13,710 | ) | ||||
|
|
|
|
|
|||||
| Property and equipment, net |
$ | 1,396 | $ | 1,082 | ||||
|
|
|
|
|
|||||
Changes in the Company’s warranty liability are as follows (in thousands):
| June 30, | ||||||||
| 2015 | 2014 | |||||||
| Balance at beginning of period |
$ | 897 | $ | 1,070 | ||||
| Warranty expense |
748 | 531 | ||||||
| Warranty claims |
(791 | ) | (704 | ) | ||||
|
|
|
|
|
|||||
| Balance at end of period |
$ | 854 | $ | 897 | ||||
|
|
|
|
|
|||||
54
Table of Contents
| 4. | Stock-Based Compensation |
The Company has adopted equity incentive plans that provide for the grant to employees, consultants and directors of stock-based awards, including stock options, restricted shares, and restricted stock units of Adept common stock. Option awards granted have an exercise price equal to or greater than the market price of the Company’s stock on the date of grant and generally have ten-year contractual terms. The Company also has an employee stock purchase plan (“ESPP”) that allows employees to purchase a limited number of shares of its common stock at a discount of 15% of the market value at certain plan-defined dates that are established at six-month intervals.
Annual option grants of 6,000 shares to non-employee directors vest in full on the date of the annual meeting of stockholders following the meeting at which the director is elected and the annual grant is made, and the initial option grant of 10,000 shares to non-employee directors vests in the amount of 50% of the grant on the first annual meeting of stockholders following the initial appointment or election of the director and the remaining 50% vests at the second annual meeting of stockholders of the Company following the initial appointment or election of the director. All stock compensation has been accounted for as an equity instrument, and the Company recognizes the fair value of stock-based compensation as an expense ratably over the service period of the individual equity instruments. Employee option grants are subject to a change of control plan adopted by the Company in 2014 for equity awards that provides for acceleration and vesting in full of options in connection with a change of control transaction under certain circumstances when options are not assumed or replaced by an acquirer.
The Company recorded $0.9 million, $2.0 million, and $0.8 million of stock-based compensation expense for the three years ended June 30, 2015, respectively. The Company did not record an income-tax benefit for the stock compensation expense because of the extent of its net operating loss carry-forwards. The Company utilized the Black-Scholes option pricing model for estimating the fair value of the stock-based compensation. The weighted average grant-date fair values were as follows:
| Year Ended June 30, 2015 |
Year Ended June 30, 2014 |
Year Ended June 30, 2013 |
||||||||||||||||||
| Equity |
ESPP | Equity Incentive and Stock Option Plans |
ESPP | Equity Incentive and Stock Option Plans |
ESPP | |||||||||||||||
| $5.29 | $ | 2.10 | $ | 3.03 | $ | 3.56 | $ | 2.31 | $ | 1.21 | ||||||||||
The weighted average grant-date fair values were calculated using the following assumptions:
| Year Ended June 30, 2015 |
Year Ended June 30, 2014 |
Year Ended June 30, 2013 |
||||||||||||||||||||||
| Equity Incentive and Stock Option Plans |
ESPP | Equity Incentive and Stock Option Plans |
ESPP | Equity Incentive and Stock Option Plans |
ESPP | |||||||||||||||||||
| Average risk free interest rate |
1.65 | % | 0.6 | % | 0.76 | % | 0.11 | % | 0.55 | % | 0.13 | % | ||||||||||||
| Expected life (in years) |
4.88 | 0.50 | 3.95 | 0.49 | 6.23 | 0.49 | ||||||||||||||||||
| Expected volatility |
77 | % | 61 | % | 77 | % | 75 | % | 80 | % | 67 | % | ||||||||||||
| Dividend yield |
— | % | — | % | — | % | — | % | — | % | — | % | ||||||||||||
The dividend yield of zero is based on the fact that the Company has never paid cash dividends, is restricted from paying cash dividends on its common stock by its credit facility, and has no present intention to pay cash dividends on its common stock. Expected volatility is based on the historical volatility of Adept’s common stock over the period commensurate with the expected life of the options or ESPP shares. The risk-free interest rate is based on observed and expected time to post-vesting exercise and forfeitures of options or ESPP shares by Adept’s employees. The expected life in years is based on the historic time to post-vesting exercise and forfeitures of the options or ESPP shares.
55
Table of Contents
Stock-based compensation expense was based on the Company’s historical experience of option cancellations prior to vesting. The Company has generally assumed an annualized forfeiture rate of 5% for each period for its options. The Company adjusts stock-based compensation expense if the actual forfeiture rate is different than estimated.
The intrinsic value of options exercised during the years ended June 30, 2015, 2014 and 2013 were $0.2 million. $3.3 million, and $0.1 million, respectively. As of June 30, 2015, there was $2.6 million of total unrecognized compensation cost that is expected to be recognized through fiscal year 2019, with a weighted average remaining period of 2.9 years. In 2014, the Company granted restricted stock units (“RSUs”) for up to 112,500 shares of common stock to its Chief Executive Officer (“CEO”). The RSUs vest upon the earlier of the CEO’s separation from service or a change in control. The number of shares issuable upon vesting and settlement of the RSUs, if any, will be determined based on the Company’s stock price on the vesting date and, in the case of a separation from service, the extent to which certain performance criteria has been met.
The following table summarizes activities under the Company’s equity incentive plans (in thousands, except per share data):
| Options | ||||||||||||||||||||
| Available for Grant |
Options Outstanding |
Restricted Stock and RSUs Outstanding |
Aggregate Price |
Weighted Average Exercise Price Per Share |
||||||||||||||||
| Balance at June 30, 2012 |
888 | 1,473 | — | $ | 7,530 | $ | 5.11 | |||||||||||||
| Granted |
(758 | ) | 414 | 344 | 1,500 | 3.62 | ||||||||||||||
| Canceled |
905 | (905 | ) | — | (4,913 | ) | 5.43 | |||||||||||||
| Exercised |
— | (138 | ) | — | (408 | ) | 2.95 | |||||||||||||
| Vested |
— | — | (65 | ) | — | — | ||||||||||||||
| Expired |
(72 | ) | — | — | — | — | ||||||||||||||
| Forfeited due to cancellation or for taxes |
148 | — | (148 | ) | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at June 30, 2013 |
1,111 | 844 | 131 | 3,709 | 4.39 | |||||||||||||||
| Granted |
(991 | ) | 871 | 120 | 5,694 | 6.54 | ||||||||||||||
| Canceled |
202 | (202 | ) | — | (1,033 | ) | 5.11 | |||||||||||||
| Exercised |
— | (355 | ) | — | (1,563 | ) | 4.41 | |||||||||||||
| Vested |
— | — | (66 | ) | — | — | ||||||||||||||
| Expired |
(28 | ) | — | — | — | — | ||||||||||||||
| Forfeited due to cancellation or for taxes |
73 | — | (73 | ) | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at June 30, 2014 |
367 | 1,158 | 112 | 6,807 | 5.87 | |||||||||||||||
| Shares added |
400 | — | — | — | — | |||||||||||||||
| Granted |
(626 | ) | 619 | 7 | 5,263 | 8.50 | ||||||||||||||
| Canceled |
146 | (146 | ) | — | (1,284 | ) | 8.82 | |||||||||||||
| Exercised |
— | (61 | ) | — | (253 | ) | 4.12 | |||||||||||||
| Forfeited due to cancellation or for taxes |
2 | — | (2 | ) | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance at June 30, 2015 |
289 | 1,570 | 117 | $ | 10,533 | $ | 6.70 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
56
Table of Contents
| Shares (In thousands) |
Weighted- Average Exercise Price Per Share |
Weighted- Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value (in thousands) |
|||||||||||||
| Options Vested/Expected to Vest at June 30, 2015 |
1,518 | $ | 6.66 | 7.86 | $ | 2,389 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Options Exercisable at June 30, 2015 |
896 | $ | 5.56 | 6.97 | $ | 2,063 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The following table summarizes information concerning outstanding and exercisable stock options at June 30, 2015:
| Options Outstanding | Options Exercisable | |||||||||||||||||||
| Range of Exercise Prices Per Share |
Options Outstanding |
Weighted Average Remaining Contractual Life |
Weighted Average Exercise Price |
Options Exercisable |
Weighted Average Exercise Price |
|||||||||||||||
| (in thousands) | (years) | (per share) | (in thousands) | (per share) | ||||||||||||||||
| $2.80 - $ 3.27 |
192 | 6.23 | $ | 3.12 | 172 | $ | 3.11 | |||||||||||||
| $3.51 - $ 3.51 |
35 | 7.11 | 3.51 | 22 | 3.51 | |||||||||||||||
| $3.58 - $ 3.58 |
175 | 8.13 | 3.58 | 175 | 3.58 | |||||||||||||||
| $3.73 - $ 4.31 |
52 | 6.17 | 3.88 | 47 | 3.88 | |||||||||||||||
| $4.60 - $ 4.60 |
164 | 7.92 | 4.60 | 119 | 4.60 | |||||||||||||||
| $4.86 - $ 6.66 |
195 | 8.10 | 6.21 | 66 | 5.32 | |||||||||||||||
| $6.76 - $ 6.90 |
200 | 8.21 | 6.85 | 157 | 6.85 | |||||||||||||||
| $7.05 - $ 8.00 |
47 | 7.52 | 7.29 | 12 | 8.00 | |||||||||||||||
| $8.66 - $ 8.66 |
251 | 9.37 | 8.66 | — | — | |||||||||||||||
| $8.75 - $ 17.36 |
259 | 7.71 | 12.07 | 126 | 11.80 | |||||||||||||||
|
|
|
|
|
|||||||||||||||||
| $2.80 - $ 17.36 |
1,570 | 7.91 | $ | 6.70 | 896 | $ | 5.56 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 5. | Net loss per share |
Options to purchase 1,570,000, 1,158,000, and 844,000 shares of common stock were outstanding at June 30, 2015, 2014 and 2013, respectively. Because the Company was in a loss position for each of these years, stock options outstanding, restricted stock grants, and common stock issuable upon the conversion of the redeemable convertible preferred stock were excluded in the computation of diluted loss per share because their effect would be antidilutive. Options to purchase 0.3 million, 0.6 million, and 0.1 million shares of common stock were not included in the computation of diluted earnings per share for fiscal 2015, 2014, and 2013, respectively, because their exercise prices were greater than the average market price of the Company’s common stock and therefore their effect would be antidilutive.
57
Table of Contents
| 6. | Other Intangible Assets |
The following is a summary of the gross carrying amount, the accumulated amortization and the aggregate amortization expense related to intangible assets subject to amortization (in thousands):
| June 30, 2015 | June 30, 2014 | |||||||||||||||||||||||||||||||
| Gross Assets |
Accumulated Amortization |
Impairment of Intangible Assets |
Net Carrying Amount |
Gross Assets |
Accumulated Amortization |
Impairment of Intangible Assets |
Net Carrying Amount |
|||||||||||||||||||||||||
| Developed Technology/Patents |
$ | 1,930 | $ | (1,220 | ) | $ | (158 | ) | $ | 552 | $ | 1,930 | $ | (976 | ) | $ | (158 | ) | $ | 796 | ||||||||||||
| Customer Base |
340 | (340 | ) | — | — | 340 | (340 | ) | — | — | ||||||||||||||||||||||
| Trademarks/ Trade names |
231 | (154 | ) | (77 | ) | — | 231 | (154 | ) | (77 | ) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total |
$ | 2,501 | $ | (1,714 | ) | $ | (235 | ) | $ | 552 | $ | 2,501 | $ | (1,470 | ) | $ | (235 | ) | $ | 796 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
A summary of future amortization as of June 30, 2015 follows (in thousands):
| 2016 | 2017 | 2018 | Total | |||||||||||||
| Developed Technology and Patents |
$ | 245 | $ | 245 | $ | 62 | $ | 552 | ||||||||
| 7. | Bank Line of Credit |
In 2014, the Company entered into a Loan and Security Agreement (the “Agreement”) with a bank. Under the Agreement, as amended, the Company may borrow an amount not to exceed the lesser of (i) $10.0 million and (ii) $1.0 million plus 80% of eligible domestic and foreign subsidiary accounts receivable. The Agreement specifies the criteria for determining eligible accounts receivable and sets forth ongoing conditions precedent to the Company’s ability to borrow under the Agreement. Amounts borrowed under the Agreement may be repaid and reborrowed until its maturity on June 9, 2016, at which time all advances shall be immediately due and payable in full. Amounts borrowed under the Agreement shall bear interest at the prime rate plus 0.75%. Adept and certain of its subsidiaries have granted the bank a security interest in substantially all of their respective assets (excluding intellectual property) to secure the outstanding obligations under the Agreement.
The Agreement contains customary representations and warranties by the Company and customary affirmative and negative covenants, including, among other requirements, requirements as to permissible use of proceeds, restrictions on Adept’s ability to dispose of assets, make acquisitions, be acquired, undergo a change of control, incur indebtedness, grant liens, transfer funds to subsidiaries, make distributions to its stockholders, make investments, or enter into certain transactions with affiliates, subject to specified exceptions. Further, the Agreement contains a financial covenant that requires the Company to achieve certain minimum EBITDA levels specified in the Agreement.
The Agreement contains customary events of default that entitle the bank to accelerate Adept’s obligations and require repayment of the outstanding indebtedness, increase the applicable interest rate by an additional 4.00% per annum, and enforce the bank’s security interest against the collateral. These events of default include, among others, Adept’s breach of payment obligations or covenants, material misrepresentations, events constituting a material adverse change, and bankruptcy and insolvency defaults.
At June 30, 2015, the Company had no borrowings under the Agreement.
Through June of 2014, the Company had a credit facility with a bank which was originally entered into in 2009, and was amended and restated in 2013 and amended in 2014. The credit facility provided for borrowings of up to $8 million at specified advance rates.
58
Table of Contents
| 8. | Commitments and Contingencies |
Commitments
Adept leases facilities in the United States, Germany, France, Singapore and China. Adept records lease expense on a straight-line basis over the related lease term. Future minimum lease payments under non-cancelable operating leases with original terms in excess of one year as of June 30, 2015 are as follows (in thousands):
| Fiscal Year |
||||
| 2016 |
$ | 1,748 | ||
| 2017 |
1,306 | |||
| 2018 |
1,172 | |||
| 2019 |
834 | |||
| 2020 |
858 | |||
| Thereafter |
5,260 | |||
|
|
|
|||
| Total minimum lease payments |
$ | 11,178 | ||
|
|
|
In July 2015, the Company entered a new lease for its principal corporate offices and manufacturing facility. The future minimum lease payments associated with such lease are included in the table above. Rent expense was $1.8 million, $1.9 million, and $1.9 million in fiscal 2015, 2014 and 2013, respectively.
At June 30, 2015, Adept had $11.7 million of inventory purchase obligations. Purchase obligations are in the form of purchase orders, generally for components and sub-assemblies. These purchase orders typically cannot be canceled by Adept without penalty.
Legal Proceedings
From time to time, the Company is party to various legal proceedings or claims, either asserted or unasserted, which arise in the ordinary course of its business. The Company has reviewed pending legal matters and believes that the resolution of these matters will not have a material adverse effect on its business, financial condition, or results of operations.
Adept has in the past received communications from third parties asserting that it has infringed upon certain patents and other intellectual property rights of others, or seeking indemnification against alleged infringement. While it is not feasible to predict or determine the likelihood or outcome of any actual or potential actions from such assertions against the Company or other matters, the Company believes the ultimate resolution of these matters will not have a material adverse effect on its financial position, results of operations, or cash flows.
In 2014, the Commercial Court of Lorient, France held that Adept did not fulfill certain obligations relating to a contract between Adept and a sub-contractor, requiring Adept to pay the sub-contractor 362,000 euros. Adept reached agreement to settle this matter, and paid $159,000 relating to the settlement. In 2015, the Company settled a legal claim made by a former employee and recorded a $260,000 charge, which includes legal expenses and is net of insurance reimbursement and amounts previously accrued.
| 9. | Stockholders’ Equity |
Redeemable Convertible Preferred Stock
In 2013, the Company issued 8,000 shares of its Series A redeemable convertible preferred stock (the “redeemable convertible preferred stock”), par value $0.001 per share, at a price of $1,000 per share, subject to the terms of its Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock (the “Certificate of Designations”) for net proceeds of $7.6 million. The Certificate of Designations set forth the terms, rights, provisions for conversion to common stock, obligations and preferences of the redeemable
59
Table of Contents
convertible preferred stock and provided that holders of the redeemable convertible preferred stock were entitled to receive dividends payable quarterly in arrears, at the election of Adept either in cash, or, subject to certain equity conditions, in common stock calculated based upon the volume weighted average price of the common stock for a period preceding the dividend date. Dividends on the redeemable convertible preferred stock accrued at the prime rate plus 3% up to a maximum amount of 4%. Each share of redeemable convertible preferred stock was convertible, at the option of the holder and upon certain mandatory conversion events, into common stock, at a conversion rate of $4.60 per common share (as adjusted for stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and similar events). In February 2014, all of the outstanding redeemable convertible preferred stock plus accrued dividends through the date of conversion was converted into 1.7 million shares of common stock of the Company.
Preferred Stock
The Board of Directors has the authority to issue, without further action by the stockholders, up to 1.0 million shares of preferred stock in one or more series and to fix the price, rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting a series or the designation of such series, without any further vote or action by the Company’s stockholders.
Common Stock
The Company has reserved shares of common stock for future issuance at June 30, 2015 as follows (in thousands):
| Stock based awards outstanding |
1,687 | |||
| Stock based awards available for grant |
289 | |||
| Employee stock purchase plan shares available for purchase |
246 | |||
|
|
|
|||
| 2,222 | ||||
|
|
|
| 10. | Employee Savings and Investment Plan |
The Company maintains a 401(k) savings and investment plan in which all U.S. employees are eligible to participate. The Company matches employees’ contributions up to a specified amount each year. In fiscal 2015, 2014 and 2013, the Company expensed $55,000, $46,000 and $46,000 in 401(k) matching benefits.
| 11. | Income Taxes |
The Company’s income (loss) before income taxes were as follows (in thousands):
| Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Domestic |
$ | (5,203 | ) | $ | (4,091 | ) | $ | (6,826 | ) | |||
| Foreign |
(126 | ) | 4,101 | (3,519 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total |
$ | (5,329 | ) | $ | 10 | $ | (10,345 | ) | ||||
|
|
|
|
|
|
|
|||||||
The Company had no accumulated foreign earnings at June 30, 2015.
60
Table of Contents
The provision for (benefit from) income taxes consists of the following (in thousands):
| Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Current: |
||||||||||||
| Federal |
$ | — | $ | — | $ | (59 | ) | |||||
| State |
27 | 23 | 22 | |||||||||
| Foreign |
(80 | ) | 206 | (171 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total current |
(53 | ) | 229 | (208 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Deferred: |
||||||||||||
| Foreign |
(267 | ) | 120 | (112 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Provision for (benefit from) income taxes |
$ | (320 | ) | $ | 349 | $ | (320 | ) | ||||
|
|
|
|
|
|
|
|||||||
The difference between the provision for (benefit from) income taxes and the amount computed by applying the federal statutory income tax rate to income (loss) before provision for (benefit from) income taxes is summarized below (in thousands):
| Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Tax at federal statutory rate |
$ | (1,813 | ) | $ | 3 | $ | (3,517 | ) | ||||
| State taxes, net of federal benefit |
(822 | ) | (36 | ) | 462 | |||||||
| Foreign taxes differential |
5 | 451 | 432 | |||||||||
| Tax credits |
(75 | ) | (59 | ) | (148 | ) | ||||||
| Non-deductible meals and entertainment |
23 | 29 | 21 | |||||||||
| Stock compensation |
160 | (28 | ) | 325 | ||||||||
| Unrecognized tax benefits |
(60 | ) | 11 | (425 | ) | |||||||
| Imputed intercompany interest |
80 | 132 | 243 | |||||||||
| Adjustments related to prior years |
(288 | ) | 21 | (212 | ) | |||||||
| Change in valuation allowance |
2,461 | (237 | ) | 2,462 | ||||||||
| Other |
9 | 62 | 37 | |||||||||
|
|
|
|
|
|
|
|||||||
| Provision for (benefit from) income taxes |
$ | (320 | ) | $ | 349 | $ | (320 | ) | ||||
|
|
|
|
|
|
|
|||||||
61
Table of Contents
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Deferred tax assets: |
||||||||
| Net operating loss carryforwards |
$ | 38,178 | $ | 35,947 | ||||
| Tax credit carryforwards |
2,497 | 2,114 | ||||||
| Inventory valuation |
492 | 644 | ||||||
| Depreciation and amortization |
1,101 | 847 | ||||||
| Other accruals not currently deductible for tax purposes |
1,591 | 1,809 | ||||||
| Other |
— | 85 | ||||||
|
|
|
|
|
|||||
| Total deferred tax assets |
43,859 | 41,446 | ||||||
| Valuation allowance |
(43,311 | ) | (40,850 | ) | ||||
|
|
|
|
|
|||||
| Net deferred tax assets |
548 | 596 | ||||||
|
|
|
|
|
|||||
| Deferred tax liabilities: |
||||||||
| Depreciation and amortization |
— | (308 | ) | |||||
| Purchased intangibles |
(198 | ) | (297 | ) | ||||
| Other |
(92 | ) | — | |||||
|
|
|
|
|
|||||
| Net deferred tax liabilities |
(290 | ) | (605 | ) | ||||
|
|
|
|
|
|||||
| Total net deferred tax assets (liabilities) |
$ | 258 | $ | (9 | ) | |||
|
|
|
|
|
|||||
| Included in: |
||||||||
| Other current assets |
$ | 67 | $ | 12 | ||||
| Other assets |
205 | (10 | ) | |||||
| Long-term income taxes payable |
(14 | ) | (11 | ) | ||||
|
|
|
|
|
|||||
| $ | 258 | $ | (9 | ) | ||||
|
|
|
|
|
|||||
For financial reporting purposes, the Company’s deferred tax assets have been substantially offset by a valuation allowance due to uncertainties about the Company’s ability to generate future taxable income. The change in the valuation allowance was a net increase (decrease) of $2.5 million and $(0.2) million for the years ended June 30, 2015, and June 30, 2014, respectively.
The accumulated tax benefits associated with employee stock options provide a deferred benefit of approximately $2.6 million which has been fully offset by the valuation allowance. The deferred tax benefit associated with the employee stock options will be credited to additional paid-in capital when realized.
The reversal of previously accrued income taxes reflects management’s reassessment of the appropriate level of tax liabilities for the Company based on the Company’s current level of operating activities and recent filing of its federal, state, and certain international tax returns.
62
Table of Contents
At June 30, 2015, the Company had income tax carryfowards summarized as follows:
| Amount (in millions) |
Years of expiration, if unused |
|||||||
| Net operating loss carryforwards: |
||||||||
| Federal |
$ | 110 | 2022-2035 | |||||
| California |
33 | 2016-2034 | ||||||
| Other states |
15 | 2016-2034 | ||||||
| Foreign |
7 | No expiration date | ||||||
| Credit carryforwards: |
||||||||
| Federal |
3 | 2019-2034 | ||||||
| State |
6 | No expiration date | ||||||
Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the change in ownership limitations provided in the Internal Revenue Code. The annual limitation may result in the expiration of the net operating losses and credits before utilization.
The Company evaluates if its income tax positions will more than likely not sustain on technical merits if audited by an income tax authority. The more likely than not threshold is assessed assuming that the taxing authority will examine the income tax position having full knowledge of all relevant information. At June 30, 2015 the Company had $7.9 million of unrecognized tax benefits of which $0.3 million , if recognized, would reduce the Company’s effective tax rate.
Adept files income tax returns in the U.S. federal jurisdiction, California and various state and foreign tax jurisdictions in which the Company has a subsidiary or branch operation. The tax years 1999 to 2013 remain open to examination by the U.S. and state tax authorities, and the tax years 2010 to 2013 remain open to examination by the foreign tax authorities or until the statute of limitations lapses in each jurisdiction.
Adept’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of June 30, 2015, the Company had no material accrued interest or penalties associated with unrecognized tax benefits. The Company does not expect an increase to the estimated amount of the liability associated with its uncertain tax position within the next twelve months.
The following table summarizes the activity related to Adept’s unrecognized tax benefits (in thousands):
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Beginning balance |
$ | 7,413 | $ | 6,982 | ||||
| Increases related to prior year tax positions |
424 | 407 | ||||||
| Decreases related to prior year tax positions |
— | (11 | ) | |||||
| Increases related to current year tax positions |
78 | 35 | ||||||
|
|
|
|
|
|||||
| Ending balance |
$ | 7,915 | $ | 7,413 | ||||
|
|
|
|
|
|||||
In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. The Company does not provide for U.S. income taxes on the earnings of foreign subsidiaries as such earnings are to be reinvested indefinitely. As of June 30, 2015, there is no cumulative amount of earnings upon which U.S. income taxes have not been provided.
63
Table of Contents
| 12. | Segment Information |
The Company discloses certain information regarding operating segments, products and services, geographic areas of operation and major customers. This reporting is based upon the Company’s operating segments for which separate financial information is (i) available and (ii) evaluated regularly by Chief Executive Officer, who is the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has two operating segments: Robotics and Services and Support.
Segment operating income is comprised of income before unallocated research, development and engineering expenses, unallocated selling, general and administrative expenses, interest income, and other expenses. Management does not fully allocate research, development and engineering expenses and selling, general and administrative expenses when making capital spending and expense funding decisions or assessing segment performance. All goodwill is carried in the Robotics segment. Segment information for total assets and capital expenditures is not presented as such information is not used in measuring segment performance or allocating resources between segments. There is no inter-segment revenue recognized. Transfers of materials or labor between segments are recorded at cost.
The following table summarizes the Company’s segment results (in thousands):
| Years Ended | ||||||||||||
| June 30, 2015 |
June 30, 2014 |
June 30, 2013 |
||||||||||
| Revenue: |
||||||||||||
| Robotics |
$ | 42,250 | $ | 45,084 | $ | 36,353 | ||||||
| Services and Support |
11,945 | 12,456 | 10,463 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total revenue |
$ | 54,195 | $ | 57,540 | $ | 46,816 | ||||||
|
|
|
|
|
|
|
|||||||
| Operating income (loss): |
||||||||||||
| Robotics |
$ | 49 | $ | 4,987 | $ | (2,389 | ) | |||||
| Services and support |
3,997 | 4,636 | 3,815 | |||||||||
|
|
|
|
|
|
|
|||||||
| Segment profit |
4,046 | 9,623 | 1,426 | |||||||||
| Unallocated operating expenses |
(8,622 | ) | (9,726 | ) | (8,898 | ) | ||||||
| Restructuring charges, net |
— | — | (785 | ) | ||||||||
| Amortization of other intangible assets |
(244 | ) | (244 | ) | (411 | ) | ||||||
| Impairment of goodwill and other intangible assets |
— | — | (1,708 | ) | ||||||||
| Interest income (expense), net |
(46 | ) | 5 | (37 | ) | |||||||
| Other income |
— | 2 | 71 | |||||||||
| Currency exchange gain (loss) |
(463 | ) | 350 | (3 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) before income taxes |
$ | (5,329 | ) | $ | 10 | $ | (10,345 | ) | ||||
|
|
|
|
|
|
|
|||||||
Management also assesses the Company’s performance, operations and assets by geographic areas. Revenue and long-lived assets related to continuing operations are summarized in the following tables (in thousands):
| 2015 | 2014 | 2013 | ||||||||||
| Revenue: |
||||||||||||
| United States |
$ | 10,766 | $ | 13,289 | $ | 12,708 | ||||||
|
|
|
|
|
|
|
|||||||
| Europe |
25,904 | 25,973 | 22,572 | |||||||||
| Asia |
15,548 | 15,700 | 10,218 | |||||||||
| Other countries |
1,977 | 2,578 | 1,318 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total International |
43,429 | 44,251 | 34,108 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total revenue |
$ | 54,195 | $ | 57,540 | $ | 46,816 | ||||||
|
|
|
|
|
|
|
|||||||
64
Table of Contents
| June 30, 2015 |
June 30, 2014 |
|||||||
| Long-lived assets: |
||||||||
| United States |
$ | 1,220 | $ | 795 | ||||
| All other countries |
470 | 377 | ||||||
|
|
|
|
|
|||||
| Total long-lived assets |
$ | 1,690 | $ | 1,172 | ||||
|
|
|
|
|
|||||
| 13. | Selected Quarterly Consolidated Financial Data (unaudited) |
The following tables set forth unaudited condensed consolidated statements of operations data for each of the eight quarterly periods ended June 30, 2015. This unaudited information was prepared on a basis consistent with audited consolidated financial statements, reflecting all normal recurring adjustments that were considered necessary for a fair presentation of our financial position and operating results for the fiscal quarters presented. Basic and diluted net loss per share is computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted net loss per share.
| Three months ended | Three months ended | |||||||||||||||||||||||||||||||
| Sep 28, 2013 |
Dec 28, 2013 |
Mar 29, 2014 |
Jun 30, 2014 |
Sep 27, 2014 |
Dec 27, 2014 |
Mar 28, 2015 |
Jun 30, 2015 |
|||||||||||||||||||||||||
| Revenues |
$ | 13,571 | $ | 14,588 | $ | 15,121 | $ | 14,260 | $ | 14,402 | $ | 11,797 | $ | 14,114 | $ | 13,882 | ||||||||||||||||
| Gross margin |
6,262 | 6,839 | 6,914 | 6,605 | 6,443 | 5,060 | 5,837 | 5,414 | ||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders |
(502 | ) | 100 | (12 | ) | (367 | ) | 82 | (2,357 | ) | (1,324 | ) | (1,410 | ) | ||||||||||||||||||
| Basic net income (loss) attributable to common stockholders |
(0.05 | ) | 0.01 | — | (0.03 | ) | 0.01 | (0.18 | ) | (0.10 | ) | (0.10 | ) | |||||||||||||||||||
| Diluted net income (loss) attributable to common stockholders |
(0.05 | ) | 0.01 | — | (0.03 | ) | 0.01 | (0.18 | ) | (0.10 | ) | (0.10 | ) | |||||||||||||||||||
65
Table of Contents
ADEPT TECHNOLOGY, INC.
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
| Description |
Balance at Beginning of Period |
Additions Charged (credited) to expenses |
Deductions (1) | Balance at End of Period |
||||||||||||
| Year ended June 30, 2013: |
||||||||||||||||
| Allowance for doubtful accounts |
$ | 629 | $ | 173 | $ | (74 | ) | $ | 728 | |||||||
| Year ended June 30, 2014: |
||||||||||||||||
| Allowance for doubtful accounts |
$ | 728 | (54 | ) | (64 | ) | $ | 610 | ||||||||
| Year ended June 30, 2015: |
||||||||||||||||
| Allowance for doubtful accounts |
$ | 610 | (5 | ) | 200 | $ | 405 | |||||||||
| (1) | Includes write-offs, net of recoveries. |
66
Exhibit 10.20
Schedule of Executive Officer Compensation
The following is a summary of the compensation of the executive officers of Adept Technology, Inc. (the “Company”) effective commencing July 1, 2015 and in effect as of the date of filing of the Company’s Annual Report on Form 10-K.
| Current Executive Officers |
Annual Base Salary |
Fiscal 2015 Incentive Compensation |
Other Annual | |||||
| Rob Cain President and Chief Executive Officer |
$ | 350,000 | (1) | Health care coverage; long- term disability and group term life insurance excess premiums; 401(k) match | ||||
| Seth Halio Chief Financial Officer |
$ | 255,000 | (1) | Health care coverage; long- term disability and group term life insurance excess premiums; 401(k) match | ||||
| Terry Hannon Chief Business Development and Strategy Officer |
$ | 275,000 | (1) | Health care coverage; long- term disability and group term life insurance excess premiums; 401(k) match | ||||
(1) Pursuant to participation in, and subject to terms of, the Fiscal 2016 Management Incentive Plan.
(2) Other benefits to be provided by the Company to the identified executive officer. Equity awards have been granted to the executive officers pursuant to option agreements and restricted stock unit agreements, the forms of which have been approved by the Compensation Committee and filed with the Securities and Exchange Commission.
Exhibit 10.59
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement (the “Amendment”) is entered into as of April 1, 2015, by and between COMERICA BANK (“Bank”) and ADEPT TECHNOLOGY, INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that certain Loan and Security Agreement dated as of June 9, 2014 (as amended from time to time, including, without limitation, by that certain First Amendment to Loan and Security Agreement and Waiver dated as of January 31, 2015, collectively, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
| I. | Incorporation by Reference. The Recitals and the documents referred to therein are incorporated herein by this reference. Except as otherwise noted, the terms not defined herein shall have the meaning set forth in the Agreement. |
| II. | Amendment to the Agreement. Subject to the satisfaction of the conditions precedent as set forth in Article IV hereof, the Agreement is hereby amended as set forth below. |
| A. | The following defined term in Exhibit A of the Agreement is hereby amended and restated in its entirety to read as follows: |
“Letter of Credit Sublimit” means a sublimit for Letters of Credit under the Revolving Line not to exceed (i) Four Hundred Fifty Thousand and No/100ths Dollars ($450,000.00) from the date of this Amendment through and including November 30, 2015, and (ii) One Hundred Thousand and No/100ths Dollars ($100,000) from December 1, 2015, through the Business Day immediately prior the Revolving Maturity Date.”
| B. | Section 2.1(b)(iii) of the Agreement is hereby amended and restated to read as follows: |
“(iii) Letter of Credit Sublimit. Subject to the availability under the Revolving Line, and in reliance on the representations and warranties of Borrower set forth herein, at any time and from time to time from the date hereof through the Business Day immediately prior to the Revolving Maturity Date, Bank shall issue for the account of Borrower such Letters of Credit as Borrower may request by delivering to Bank a duly executed letter of credit application on Bank’s standard form; provided, however, that the outstanding and undrawn amounts under all such Letters of Credit (i) shall not at any time exceed the Letter of Credit Sublimit ((a) Four Hundred Fifty Thousand and No/100ths Dollars ($450,000) from April 1, 2015 to November 30, 2015; and (b) One Hundred Thousand and No/100ths Dollars from December 1, 2015 through the Revolving Maturity Date), and (ii) shall be deemed to constitute Advances for the purpose of calculating availability under the Revolving Line. Notwithstanding the foregoing, the aggregate credit limit of Credit Card Services, the aggregate outstanding amount of Letters of Credit and the FX Amount shall not exceed the Maximum Sublimit Amount at any time. Any drawn but unreimbursed amounts under any Letters of Credit shall be charged as Advances against the Revolving Line. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s form application and letter of credit agreement. Borrower will pay any standard issuance and other fees that Bank notifies Borrower it will charge for issuing and processing Letters of Credit.”
| III. | Legal Effect. The Agreement is hereby amended wherever necessary to reflect the changes described above. Borrower agrees that it has no defenses against the obligations to pay any amounts under the Agreement. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Agreement and the other Loan Documents. Except as expressly modified pursuant to this Amendment, the terms of the Agreement and the other Loan Documents remain unchanged, and in full force and effect. Bank’s agreement to modifications to the existing Agreement pursuant to this Amendment in no way shall obligate Bank to make any future modifications to the Agreement. The terms of this paragraph apply not only to this Amendment, but also to all subsequent loan modification requests. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. This is an integrated Amendment and supersedes all prior negotiations and agreements regarding the subject matter hereof. All modifications hereto must be in writing and signed by the parties. |
| IV. | Conditions Precedent. Except as specifically set forth in this Amendment, all of the terms and conditions of the Agreement and the other Loan Documents remain in full force and effect. The effectiveness of this Amendment is conditioned upon receipt by Bank of: |
| A. | This Amendment, duly executed by Borrower; |
| B. | An Affirmation of Subordination Agreement, executed by Borrower and Adept Technology Holdings, Inc.; |
| C. | An Affirmation of Guaranty executed by Adept InMoTx, Inc., Adept Technology Holdings, Inc., Adept MobileRobots LLC, and Adept Technology International, Ltd.; |
| D. | A corporate resolutions and incumbency certification of Borrower; |
| E. | A corporate resolutions and incumbency certification authority to support another’s borrowings of Adept Technology Holdings, Inc.; |
| F. | A corporate resolutions and incumbency certification authority to support another’s borrowings of Adept Technology International, Ltd.; |
| G. | A corporate resolutions and incumbency certification authority to support another’s borrowings of Adept InMoTx, Inc.; |
| H. | A limited liability company authority to support another’s borrowings of Adept MobileRobots LLC; |
| I. | A legal fee from Borrower in the amount of $350; and |
| J. | Such other documents and completion of such other matters, as Bank may reasonably deem necessary or appropriate. |
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
| ADEPT TECHNOLOGY, INC. | ||
| By: | /s/ Seth Halio | |
| Name: | Seth Halio | |
| Title | Chief Financial Officer | |
| COMERICA BANK | ||
| By: | /s/ Sean Noonan | |
| Name: | Sean Noonan | |
| Title: | Vice President | |
Exhibit 10.60
THIRD AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Third Amendment to Loan and Security Agreement (“Amendment”) is entered into as of May 1, 2015, by and between COMERICA BANK (“Bank”) and ADEPT TECHNOLOGY, INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that Loan and Security Agreement dated as June 9, 2014 (as it may be amended from time to time, including, without limitation, by that certain First Amendment to Loan and Security Agreement and Waiver dated as of January 31, 2015, and that certain Second Amendment to Loan and Security Agreement dated as of April 3, 2015, “Agreement”). The parties desire to amend the Agreement further in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following defined term in Exhibit A to the Agreement is hereby amended and restated in its entirety to read as follows:
“Letter of Credit Sublimit” means a sublimit for Letters of Credit under the Revolving Line not to exceed One Million Dollars and No/100ths Dollars ($1,000,000).”
2. Section 2.1(b)(iii) of the Agreement is hereby amended and restated to read as follows:
“(iii) Letter of Credit Sublimit. Subject to the availability under the Revolving Line, and in reliance on the representations and warranties of Borrower set forth herein, at any time and from time to time from the date hereof through the Business Day immediately prior to the Revolving Maturity Date, Bank shall issue for the account of Borrower such Letters of Credit as Borrower may request by delivering to Bank a duly executed letter of credit application on Bank’s standard form; provided, however, that the outstanding and undrawn amounts under all such Letters of Credit (i) shall not at any time exceed the Letter of Credit Sublimit, and (ii) shall be deemed to constitute Advances for the purpose of calculating availability under the Revolving Line. Notwithstanding the foregoing, the aggregate credit limit of Credit Card Services, the aggregate outstanding amount of Letters of Credit and the FX Amount shall not exceed the Maximum Sublimit Amount at any time. Any drawn but unreimbursed amounts under any Letters of Credit shall be charged as Advances against the Revolving Line. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s form application and letter of credit agreement. Borrower will pay any standard issuance and other fees that Bank notifies Borrower it will charge for issuing and processing Letters of Credit.”
3. Section 6.7(a)(i) of the Agreement is amended and restated to read in its entirety as follows:
“(a) EBITDA Loss. (i) An EBITDA loss of not greater than the following amounts for the following periods:
| Testing Period | Maximum EBITDA Loss | |||
| Quarter ending June 30, 2015 |
($ | 1,500,000 | ) | |
| Twelve month period ending June 30, 2015 |
($ | 4,000,000 | ) | |
4. No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later
exercise of any such right. Bank’s failure at any time to require strict performance by Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank.
5. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and is hereby ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
6. Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment , and that (except for the Existing Defaults) no Event of Default has occurred and is continuing.
7. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
| (a) | this Amendment, duly executed by Borrower; |
| (b) | a non-refundable amendment fee in the amount of $2,000, which may be debited from any of Borrower’s accounts with Bank; |
| (c) | all reasonable Bank Expenses incurred through the date of this Amendment, including a legal fee in the amount of $350, which may be debited from any of Borrower’s accounts with Bank; and |
| (d) | such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. |
8. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Loan and Security Agreement and Waiver as of the first date above written.
| ADEPT TECHNOLOGY, INC. | ||
| By: | /s/ Seth Halio | |
| Name: | Seth Halio | |
| Title: | Chief Financial Officer | |
| COMERICA BANK | ||
| By: | /s/ Robert Shutt | |
| Name: |
Robert Shutt | |
| Title: | Senior Vice President | |
Exhibit 10.61
FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Fourth Amendment to Loan and Security Agreement (“Amendment”) is entered into as of July 6, 2015, by and between COMERICA BANK (“Bank”) and ADEPT TECHNOLOGY, INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that Loan and Security Agreement dated as June 9, 2014 (as it may be amended from time to time, including, without limitation, by that certain First Amendment to Loan and Security Agreement and Waiver dated as of January 31, 2015, that certain Second Amendment to Loan and Security Agreement dated as of April 3, 2015, and that certain Third Amendment to Loan and Security Agreement dated as of May 1, 2015, the “Agreement”). The parties desire to amend the Agreement further in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following defined term in Exhibit A to the Agreement is hereby amended and restated in its entirety to read as follows:
“Letter of Credit Sublimit” means a sublimit for Letters of Credit under the Revolving Line not to exceed Two Million Dollars and No/100ths Dollars ($2,000,000).”
2. No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure at any time to require strict performance by Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank.
3. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and is hereby ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
4. Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment , and that (except for the Existing Defaults) no Event of Default has occurred and is continuing.
5. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
| (a) | this Amendment, duly executed by Borrower; |
| (b) | all reasonable Bank Expenses incurred through the date of this Amendment, including a legal fee in the amount of $350, which may be debited from any of Borrower’s accounts with Bank; and |
| (c) | such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. |
6. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Loan and Security Agreement and Waiver as of the first date above written.
| ADEPT TECHNOLOGY, INC. | ||
| By: | /s/ Seth Halio | |
| Name: | Seth Halio | |
| Title: | Chief Financial Officer | |
| COMERICA BANK | ||
| By: | /s/ Robert Shutt | |
| Name: | Robert Shutt | |
| Title: | Senior Vice President | |
Exhibit 10.62
FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Fifth Amendment to Loan and Security Agreement (“Amendment”) is entered into as of July 22, 2015, by and between COMERICA BANK (“Bank”) and ADEPT TECHNOLOGY, INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that Loan and Security Agreement dated as June 9, 2014 (as it may be amended from time to time, including, without limitation, by that certain First Amendment to Loan and Security Agreement and Waiver dated as of January 31, 2015, that certain Second Amendment to Loan and Security Agreement dated as of April 3, 2015, that certain Third Amendment to Loan and Security Agreement dated as of May 1, 2015, and that certain Fourth Amendment to Loan and Security Agreement dated as of July 6, 2015, the “Agreement”). The parties desire to amend the Agreement further in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Section 6.7(a)(ii) of the Agreement is amended and restated to read in its entirety as follows:
“(a) EBITDA Loss. (ii) An EBITDA loss of not greater than the following amounts for the following periods:
| Testing Period | Maximum EBITDA Loss | |
| Quarter ending September 30, 2015 |
||
| Quarter ending December 31, 2015 |
||
| Quarter ending March 31, 2016 |
||
| Quarter ending June 30, 2016 |
||
| Twelve month period ending June 30, 2016 |
2. No course of dealing on the part of Bank or its officers, nor any failure or delay in the exercise of any right by Bank, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right. Bank’s failure at any time to require strict performance by Borrower of any provision shall not affect any right of Bank thereafter to demand strict compliance and performance. Any suspension or waiver of a right must be in writing signed by an officer of Bank.
3. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and is hereby ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.
4. Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment , and that (except for the Existing Defaults) no Event of Default has occurred and is continuing.
5. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
| (a) | this Amendment, duly executed by Borrower; |
| (b) | an Amendment fee of $2,000, and all reasonable Bank Expenses incurred through the date of this Amendment, including a legal fee in the amount of $350, which may be debited from any of Borrower’s accounts with Bank; and |
| (c) | such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. |
6. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Loan and Security Agreement and Waiver as of the first date above written.
| ADEPT TECHNOLOGY, INC. | ||
| By: | /s/ Seth Halio | |
| Name: | Seth Halio | |
| Title: | Chief Financial Officer | |
| COMERICA BANK | ||
| By: | /s/ Robert Shutt | |
| Name: | Robert Shutt | |
| Title: | Senior Vice President | |
Exhibit 10.73
ADEPT TECHNOLOGY, INC.
OPTION AGREEMENT FOR
EMPLOYEE NONQUALIFIED STOCK OPTIONS
| I. | NOTICE OF GRANT (Attached). |
| II. | AGREEMENT. |
FOR GOOD AND VALUABLE CONSIDERATION, Adept Technology, Inc. (the “Company”), has granted to the Participant named in the Notice of Grant attached as Part I of this Option Agreement (the “Notice of Grant”), as of the date set forth in the Notice of Grant (the “Grant Date”), a nonqualified stock option (the “Option”) to purchase up to the number of shares of the Company’s common stock (the “Common Stock”), set forth in the Notice of Grant, at the purchase price per share and upon the other terms and subject to the conditions set forth in this Option Agreement (as amended from time to time), including the Notice of Grant, and the 2005 Equity Incentive Plan (as may be amended, the “Plan”). For purposes of this Option Agreement, any reference to the Company shall include a reference to any Subsidiary. By accepting the Option, the Participant irrevocably agrees on behalf of the Participant and the Participant’s successors and permitted assigns to all of the terms and conditions of the Option as set forth in or pursuant to this Agreement and the Plan (as such may be amended from time to time).
| 1. | Definitions |
Defined terms in the Plan shall have the same meaning in this Agreement, except where the context otherwise requires.
| 2. | Non-Qualified Stock Option |
The Option is not intended to be an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and will be interpreted accordingly.
| 3. | Exercise of Option |
The Option shall not be exercisable as of the Grant Date. After the Grant Date, to the extent not previously exercised, and subject to termination or acceleration as provided in this Option Agreement and the Plan, the Option shall be exercisable to the extent it becomes vested, as described below, to purchase up to that number of shares of Common Stock as set forth in the Notice of Grant.
(a) Vesting. The Options shall vest according to the following schedule:
(i) 25,000 shares underlying the Option shall vest upon Milestone A;
(ii) 25,000 shares underlying the Option shall vest upon the generation of New Sales of Milestone B; and
(iii) 25,000 shares underlying the Option shall vest upon Milestone C, together with Milestone A and Milestone B, the “Milestones”).
The Options shall vest in the applicable amounts identified above upon the achievement of each specified Milestone to the extent the Milestone is achieved within twelve months after the Termination Date, so long as Participant provides 20 hours of service per month as a part-time employee at no charge (“Continued Service”). It is understood that the continuation of the vesting of the Option after the Termination Date will be the consideration for Continued Service and that no new consideration will be provided at such time. The vesting period and/or exercisability of an Option may be adjusted by the Committee. Notwithstanding anything to the contrary in this Paragraph 3, the Option shall be subject to forfeiture and transfer as may be provided in this Agreement and the Plan.
(b) Exercise. To exercise the Option (or any part thereof), Participant shall deliver to the Company a “Notice of Exercise” on a form specified by the Committee, specifying the number of whole shares of Common Stock Participant wishes to purchase and how Participant’s shares of Common Stock should be registered (in Participant’s name only or in Participant’s and Participant’s spouse’s names as community property or as joint tenants with right of survivorship). The exercise price per share (the “Exercise Price”) of the Option is set forth in the Notice of Grant. The Company shall not be obligated to issue any shares of Common Stock until Participant shall have paid the total Exercise Price for that number of shares of Common Stock subject to the exercise. The exercise price of any Option may be paid in cash or, to the extent allowed by the Committee, an irrevocable commitment by a broker to pay over such amount from a sale of the shares of Common Stock issuable under an Option, the delivery of previously owned shares, withholding of shares deliverable upon exercise or a combination thereof. Fractional shares may not be exercised.
Notwithstanding the above, the Company shall not be obligated to deliver any shares of Common Stock during any period when the Company determines that the exercisability of the Option or the delivery of shares hereunder would violate any federal, state or other applicable laws, and the Option may be rescinded if necessary to ensure compliance with federal, state or other applicable laws.
| 4. | Expiration of Option; Effect of Termination of Employment; Change in Control |
(a) General. Upon the Termination Date, (i) any part of the Option that is unexercisable as of such Termination Date shall remain unexercisable and shall terminate as of such date unless there is Continued Service in which case the part of the Option that is unexercisable may remain outstanding and become exercisable pursuant to Section 3(a) or terminate as of the date that is twelve months after the Grant Date, and (ii) any part of the Option that is exercisable as of such Termination Date or becomes exercisable pursuant to Section 3(a) shall expire upon the earlier of (A) September 30, 2016 and (B) the date on which the Company’s Series A Preferred Stock is no longer outstanding. The Company shall have no obligation to notify Participant of any potential conversion, redemption, exchange or termination of such Series A Preferred Stock. Subject to the foregoing and Section 3(a), in the absence of a termination of service, the Option will expire ten (10) years from the Grant Date.
(b) Plan provisions relating to termination or exercise in cases of death, disability, retirement, or cause shall not apply to the Options.
(c) Change in Control. In the event of any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such shares have been changed, or for which shares have been exchanged, whether by reason of a Change in Control (as defined in the Plan), other merger, consolidation or otherwise, then the Committee will, in its sole discretion, determine the appropriate adjustment, if any, to be effected. In addition, in the event of a change described in this paragraph any part of the Option which remains outstanding but has not become vested and exercisable prior to the date of such change shall terminate, provided, however, that the Committee may determine to accelerate the time or times at which any Option may be exercised and may provide for cancellation of such accelerated Options that are not exercised within a time prescribed by the Committee in its sole discretion.
| 5. | Restrictions on Resales of Option Shares |
The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued as a result of the exercise of the Option, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other optionholders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
| 6. | Income Taxes |
The Participant is liable and responsible for all taxes owed in connection with the Option, the exercise thereof or the disposition of shares issued as a result of an Option exercise, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection therewith. The Company does not make any representation or undertaking regarding the treatment of any tax withholding in connection with the grant, vesting or exercise of the Option, or the disposition of shares issuable as a result of an Option exercise. To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of an Option exercise or disposition of shares issued as a result of an Option exercise. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied.
| 7. | Non-transferability of Option |
Except as may otherwise be provided by the Plan, the Participant may not assign or transfer the Option to anyone other than by will or the laws of descent and distribution and the Option shall be exercisable only by the Participant during his or her lifetime. The Company may cancel the Participant’s Option if the Participant attempts to assign or transfer it in a manner inconsistent with this Paragraph 7.
| 8. | The Plan and Other Agreements |
The terms of this Agreement are governed by the terms of the Plan, as it exists on the Grant Date and as the Plan is amended from time to time. In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise in this Agreement. The term “Section” generally refers to provisions within the Plan or the Code; provided, however, the term “Paragraph” shall refer to a provision of this Agreement.
This Option Agreement, including the Notice of Grant, and the Plan constitute the entire understanding between the Participant and the Company regarding the Option. Any prior agreements, commitments or negotiations concerning the Option are superseded.
| 9. | Limitation of Interest in Shares Subject To Option |
Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to this Option Agreement except as to such shares of Common Stock, if any, as shall have been issued to such person upon exercise of the Option or any part of it. Nothing in the Plan, this Option Agreement, including the Notice of Grant, or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.
| 10. | Limitation on Rights; No Right to Future Grants; Extraordinary Item |
By entering into this Agreement and accepting the Option, Participant acknowledges that: (a) Participant’s participation in the Plan is voluntary; (b) the value of the Option is an extraordinary item which is outside the scope of any employment or service contract with Participant; (c) the Option is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and Participant will not be entitled to compensation or damages as a consequence of Participant’s forfeiture as provided for in the Plan or this Agreement of any part of the Option as a result of Participant’s termination of employment or services with the Company or any Subsidiary for any reason; and (d) in the event that Participant is not a direct employee of Company, the grant of the Option will not be interpreted to form an employment relationship with the Company or any Subsidiary and will not be interpreted to form an employment contract with Participant’s employer, the Company or any Subsidiary. The Company shall be under no obligation to advise Participant of the existence, maturity or termination of any of Participant’s rights hereunder and Participant shall be responsible for familiarizing himself or herself with all matters contained herein and in the Plan which may affect any of Participant’s rights or privileges hereunder.
| 11. | Committee Authority |
Any question concerning the interpretation of this Agreement or the Plan, any adjustments required to be made under the Plan, and any controversy that may arise under the Plan or this Agreement shall be determined by the Committee (including any Subcommittee or other person(s) to whom the Committee has delegated its authority) in its sole and absolute discretion. Such decision by the Committee shall be final and binding.
| 12. | General Provisions |
(a) Notices. Whenever any notice is provided hereunder, such notice must be in writing and delivered in person or by mail or electronically. Any notice delivered in person or by mail shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. Any notice given by the Company directed to Participant at Participant’s address on file with the Company shall be effective to bind Participant and any other person who shall have acquired rights under this Agreement. The Company or Participant may change, by written notice to the other, the address previously specified for receiving notices. Notices delivered to the Company in person or by mail shall be addressed to Adept Technology, Inc. Attn: Chief Financial Officer, at the address set forth in the Notice of Grant.
(b) No Waiver. No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.
(c) Undertaking. Participant hereby agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Option pursuant to the express provisions of this Agreement.
(d) Illegality. In the event that any provision of this Option Agreement is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of this Option Agreement shall not be affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.
(e) Entire Contract. This Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof.
(f) Successors and Assigns. The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and Participant and Participant’s legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have agreed in writing to join herein and be bound by the terms and conditions hereof.
(g) Legal Compliance. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by Participant or other subsequent transfers by Participant of any shares issued under this Option, including without limitation, restrictions: (i) under the Company’s insider trading policy, (ii) that may be necessary in the absence of an effective registration statement under the Securities Act of 1933, as amended, covering the Option and/or shares underlying the Option or pursuant to applicable state securities laws, and (iii) as to the use of a specified brokerage firm or other agent for such resales or other transfers. Any sale of the shares must also comply with other applicable laws and regulations governing the sale of such shares.
(h) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to any awards granted under the Plan by electronic means or to request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, and such consent shall remain in effect throughout Participant’s term of employment or service with the Company and thereafter until withdrawn in writing by Participant.
(i) Governing Law. The provisions of this Agreement shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of law.
| Notice of Grant of Stock Options and Option Agreement |
Adept Technology, Inc. ID: 94-2900635 5960 Inglewood Drive Pleasanton, CA 94588
|
| Rob Cain |
Option Number: | 00002504 | ||
| 1775 W. State Street |
Plan: | 2005 | ||
| Boise, ID United States 83702 |
ID: | 00000001889 |
Effective 2/19/2013, you have been granted a(n) Non-Qualified Stock Option to buy 75,000 shares of Adept Technology, Inc. (the Company) stock at $4.6000 per share.
The total option price of the shares granted is $345,000.00.
Options will become fully vested subject to satisfaction of the relevant vesting performance requirements on the date shown.
| Shares |
Vest Type | Full Vest | Expiration | |||
| 25,000 |
On Vest Date | 9/30/2016 | 2/19/2023 | |||
| 25,000 |
On Vest Date | 9/30/2016 | 2/19/2023 | |||
| 25,000 |
On Vest Date | 9/30/2016 | 2/19/2023 |
By your signature and the Company’s signature below, you and the Company agree that these options are granted under and governed by the terms and conditions of the Company’s Stock Option Plan as amended and the Option Agreement, all of which are attached and made a part of this document.
| Adept Technology, Inc. | Date | |||
| Michael Schradle | Date | |||
Exhibit 21.1
SUBSIDIARIES
Adept Technology, S.A.R.L., a French corporation
Adept Technology International Ltd., a California corporation
Adept Technology GmbH, a German corporation
Adept Technology Holdings, Inc., a Delaware corporation
Adept Technology Canada Holding Co., a Nova Scotia Canada corporation
Adept Technology Canada Co., a Nova Scotia Canada corporation
Adept MobileRobots LLC, a Delaware Limited Liability Company
Adept Technology (Shanghai) Co., Ltd.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements of Adept Technology, Inc. on Form S-2 (No. 333-112360), Form S-3 (No. 333-181322, No. 333-187626, and 333-204105) and Form S-8 (No. 333-39065, 333-92525, 333-112213, 333-130235, 333-50296, 333-71374, 333-122148, 333-122155, 333-138863, 333-03656, 333-147423, 333-155360, 333-162973, 333-177952, and 333-200188) of our reports dated August 31, 2015, with respect to the consolidated balance sheets of Adept Technology, Inc. as of June 30, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended June 30, 2015 and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of June 30, 2015, which reports appear in the June 30, 2015 annual report on Form 10-K of Adept Technology, Inc.
| /s/ Armanino LLP |
| Armanino LLP |
| San Jose, California |
| August 31, 2015 |
EXHIBIT 31.1
CERTIFICATIONS
I, Rob Cain, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Adept Technology, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 31, 2015 | /s/ Rob Cain | |||
| Rob Cain | ||||
| President, Chief Executive Officer and Secretary |
EXHIBIT 31.2
CERTIFICATIONS
I, Seth Halio, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Adept Technology, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 31, 2015 | /s/ Seth Halio | |||
| Seth Halio | ||||
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, in his capacity as an officer of Adept Technology, Inc. (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:
| • | the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 2015 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
| • | the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
Dated: August 31, 2015
| /s/ Rob Cain |
| Rob Cain |
| President, Chief Executive Officer and Secretary |
Dated: August 31, 2015
| /s/ Seth Halio |
| Seth Halio |
| Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Adept Technology, Inc. and will be retained by Adept Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- TNS is the Only Provider in Europe to Offer Full-Service, Vendor-Neutral Market Data Management Solutions for Financial Institutions
- Daniel Karpovič steps down as Head of B2B at Telia Lietuva
- Green Hydrogen Systems and BWSC sign strategic collaboration agreement on green hydrogen projects
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
