8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 3, 2021

DSP GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

1-35256 (Commission File Number)	94-2683643 (I.R.S. Employer Identification No.)
2055 Gateway Place, Suite 480 San Jose, CA (Address of Principal Executive Offices)	95110 (Zip Code)

408/986-4300
(Registrant’s Telephone Number, Including Area Code)

With a copy to:
Jaclyn Liu, Esq.
Morrison & Foerster llp
425 Market Street
San Francisco, CA 94105

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 per share	DSPG	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Security Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 3, 2021, DSP Group, Inc. (the “Company”) announced its financial results for the quarter ended March 31, 2021. A copy of the press release, dated May 3, 2021, is attached and filed herewith as Exhibit 99.1. This information, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

In addition to the disclosure of financial results for the quarter ended March 31, 2021 in accordance with generally accepted accounting principles in the United States (“GAAP”), the press release also included non-GAAP net income and diluted earnings per share, for the quarters ended March 31, 2021 and 2020 that excluded (A) for the quarter ended March 31, 2021, the impact of amortization of acquired intangible assets in the amount of $0.4 million associated with previous acquisitions, equity-based compensation expenses of $2.5 million, amortization of employee’s retention expenses related to the acquisition of SoundChip S.A. of $0.25 million, non-cash exchange rate differences resulting from lease accounting standard (ASC 842) in the amount of $0.4 million and changes in deferred taxes in the amount of $0.1 million related to intangible assets acquired in previous acquisitions and equity-based compensation expenses, and (B) for the quarter ended March 31, 2020, the impact of amortization of acquired intangible assets in the amount of $0.1 million associated with previous acquisitions, equity-based compensation expenses of $1.8 million, non-cash income from exchange rate differences resulting from ASC 842 in the amount of $0.4 million, and changes in deferred taxes in the amount of $0.1 million related to intangible assets acquired in previous acquisitions and equity-based compensation expenses.

The Company believes that the non-GAAP presentation in the press release is useful to investors in analyzing the results for the quarters ended March 31, 2021 and 2020 because the exclusion of such expense may provide a more meaningful analysis of the Company’s core operating results. Further, the Company believes it is useful for investors to understand how the expenses associated with the application of FASB ASC No. 718 are reflected on its statements of income. The non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP, and are intended to provide additional insight into the Company’s operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, offer a more complete understanding of factors and trends affecting the Company’s business. The non-GAAP presentation should not be viewed as a substitute for the Company’s reported GAAP results.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

d. Exhibits

Exhibit No.	Description
99.1	Press Release of DSP Group, Inc., dated May 3, 2021.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DSP GROUP, INC.
Date:         May 3, 2021	By:	/s/ Dror Levy
		Dror Levy
		Chief Financial Officer
		and Secretary

3

EX-99.1

Exhibit 99.1

DSP Group, Inc. Reports First Quarter 2021 Results

First quarter revenues of $32.6 million, 16% YoY growth

Record IoAT revenues of 20.8 million, 14% YoY growth

Record non-GAAP gross margins of 52.7%

San Jose, Calif., May 3, 2021 - DSP Group®, Inc. (NASDAQ: DSPG), a leading global provider of voice and wireless chipset solutions for converged communications, announced today its results for the first quarter ended March 31, 2021.

First Quarter Financial Highlights (and Comparisons to First Quarter of 2020):

Revenue breakdown (USD in millions)

	Q1 2021	Q1 2020	vs. Q1 2020
IoAT Revenues:
SmartVoice	$6.00	$4.00	up 50%
SmartHome	$4.80	$4.00	up 22%
Unified Communications	$10.00	$10.20	down 3%
Total IoAT Revenues	$20.80	$18.20	up 14%
Cordless Revenues	$11.80	$10.00	up 18%
Total Revenues	$32.60	$28.20	up 16%

● GAAP and non-GAAP gross margin of 52.0% and 52.7%, respectively, a 110 and 130 basis point increase, respectively.

● GAAP loss per share of $0.06 and non-GAAP diluted earnings per share of $0.05, compared to GAAP and non-GAAP diluted loss per share of $0.11 and $0.04 for the first quarter of 2020.

● GAAP operating loss of $1.8 million and non-GAAP operating income of $1.4 million, compared to GAAP operating loss of $3.4 million and non-GAAP operating loss of $1.5 million for the first quarter of 2020.

● GAAP net loss of $1.3 million and non-GAAP net income of $1.3 million, compared to GAAP net loss of $2.5 million and non-GAAP net loss of $1.0 million for the first quarter of 2020.

● Generated $0.8 million of cash from operations, compared to $0.9 million of cash generated from operations in the first quarter of 2020.

● Cash, deposits and marketable securities of approximately $129.1 million as of March 31, 2021.

Management Comments:

Commenting on the results, Ofer Elyakim, CEO of DSP Group, stated: “We are excited about the solid demand for our products, as evidenced by first quarter revenues of $32.6 million, up 16% year-over-year and exceeding the mid-point of our guidance. We are particularly pleased by our IoAT businesses, which delivered a record quarter with revenues of $20.8 million. These results were driven by robust demand for voice-centric products, offset by certain supply chain constraints, a record quarter for our SmartHome business, solid momentum in our SmartVoice products, and a faster recovery of the Unified Communication segment. Our enhanced product mix contributed to another record high non-GAAP growth margin of 52.7%.”

Mr. Elyakim continued, “Looking ahead, we expect the solid momentum to continue in the second quarter and project strong revenue growth both sequentially and year-over-year. The digital transformation was markedly accelerated by the global response to the pandemic and has stimulated innovation to enable the creation of new models for work, education, and interaction, underscoring the strategic importance of our technology to our customers. These trends support the long-term growth potential of DSP Group’s audio, voice, and connectivity technologies. Our recent achievements include the increasing adoption of voice user interfaces (VUIs) in a broad array of applications, the successful penetration of DECT/ULE into the security market and the launch of new unified communications end points and hybrid collaboration devices by leading brands. While industry-wide supply-chain constraints are curbing product deliveries, the solid demand, coupled with our pipeline of opportunities, position us well for revenue growth in 2021.”

2

First Quarter Business Highlights:

● We continued to grow and strengthen our SmartVoice franchise with design wins and product launches for VUIs with leading consumer electronics OEMs, thereby driving dynamic growth in a burgeoning market. The achievements this quarter include:

o Inauguration of a state-of-the-art audio AI innovation and testing lab in Straubing, Germany that is led by a world class team of audio and automotive sound experts.

o One of the world’s leading monitor and TV manufacturers chose our SmartVoice for its Smart Display offering.

o Lenovo and TCL launched new tablet models based on our SmartVoice solutions for voice control.

● We grew and diversified our SmartHome ecosystem with leading global vendors that recognize ULE’s unmatched characteristics for wireless indoor IoT, including superior range, interference-free spectrum, and native support for two-way voice. Wins include:

o British Telecom launched an Alexa-enabled home phone for UK broadband users based on our DECT/ULE technology.

o A European security service provider launched a home security offering based on our DECT/ULE technology.

o VTech launched a door bell solution leveraging our DECT/ULE technology for two-way voice support.

● We solidified our leadership position and expanded our market share in the Unified Communications market, as demonstrated by the following wins:  

o A Tier-1 UC brand upgraded its DECT headset with our proprietary bit protection for the most reliable narrowband and wideband audio communication in dense wireless deployments, such as offices and call centers.

o A tier 1 UC brand chose our DVF platform for its next generation IP phones.  

o Lenovo and Foneric chose our SmartVoice voice communication engine for a hybrid collaboration endpoint.

3

First Quarter Non-GAAP Results:

Non-GAAP net income and diluted income per share for the first quarter of 2021 were $1.3 million and $0.05, respectively, as compared to non-GAAP net loss and loss per share of $1.0 million and $0.04, respectively, for the first quarter of 2020. Non-GAAP net income and diluted earnings per share for the first quarter of 2021 excluded the impact of amortization of acquired intangible assets in the amount of $0.4 million associated with previous acquisitions, equity-based compensation expenses of $2.5 million, amortization of employee’s retention expenses related to the acquisition of SoundChip S.A. of $0.25 million, non-cash income from exchange rate differences resulting from the lease accounting standard (ASC  842) in the amount of $0.4 million, and changes in deferred taxes in the amount of $0.1 million related to intangible assets acquired in previous acquisitions and equity-based compensation expenses. Non-GAAP net income and diluted earnings per share for the first quarter of 2020 excluded the impact of amortization of acquired intangible assets in the amount of $0.1 million associated with previous acquisitions, equity-based compensation expenses of $1.8 million, non-cash income from exchange rate differences resulting from ASC  842 in the amount of $0.4 million, and changes in deferred taxes in the amount of $0.1 million related to intangible assets acquired in previous acquisitions and equity-based compensation expenses

Earnings Conference Call Details

DSP Group will discuss its first quarter financial results, along with its outlook and guidance for the second quarter of 2021, on its conference call at 8:30 a.m. ET today, and invites you to listen via our conference call or a live broadcast over the Internet.

Investors may access the conference call by dialing + 1(877)8709135 (domestic US) or +44 (0) 2071 928338 (international) approximately 10 minutes prior to the starting time. The password is 4266177.

The broadcast via the Internet can be accessed by interested parties through the Investor Relations section of DSP Group’s website at www.dspg.com or link to: https://edge.media-server.com/mmc/p/979kfwz6

A replay of the conference call will be available for a week following the call. To listen to the session, please dial +1(917) 677 7532, domestically or +44 (0) 3333009785, internationally and enter the company access code: 4266177

Presentation of Non-GAAP Net Income and EPS

The Company believes that the non-GAAP presentation of net income (loss) and diluted earnings per share presented in this press release is useful to investors in comparing results for the first quarter and ended March 31, 2021 and 2020 because the exclusion of the above noted expenses may provide a more meaningful analysis of the Company’s core operating results. Further, the Company believes it is useful to investors to understand how the expenses associated with equity-based compensation and retention expenses are reflected in its statements of income

4

Forward Looking Statements

This press release contains statements that qualify as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995, including Mr. Elyakim’s statements about: (i) the expectation of DSP Group’s solid momentum to continue and expectation for strong revenue growth both sequentially and year-over-year, (ii) the digital transformation trends supporting the long-term growth potential of DSP Group’s audio, voice, and connectivity technologies, (iii) industry-wide supply-chain constraints curbing product deliveries, and (iv) DSP Group’s strong demand, coupled with pipeline of opportunities, position the company well for revenue growth in 2021. The results from these statements may not actually arise as a result of various factors, including the continued duration of the COVID-19 pandemic and the impact on the demand for consumer electronics and the global economy; market penetration of DSP Group’s unified communications, DECT/ULE, VUI, SmartVoice and SmartHome products; duration and impact of the industry-wide supply-chain constraints, unexpected delays in the commercial launch of new products; unexpected inventory adjustments, the speed of decline in the cordless market; DSP Group’s ability to manage costs; DSP Group’s ability to develop and produce new products at competitive costs and in a timely manner and the ability of such products to achieve broad market acceptance; and general market demand for products that incorporate DSP Group’s technology in the market. These factors and other factors which may affect future operating results or DSP Group’s stock price are discussed under “RISK FACTORS” in the Form 10-K for fiscal 2020, as well as other reports DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group’s website (www.dspg.com) under Investor Relations. DSP Group assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

About DSP Group

DSP Group®, Inc. (NASDAQ: DSPG) is a global leader in wireless chipsets for a wide range of smart-enabled devices. The company was founded in 1987 on the principles of experience, insight and continuous advancement which enable the company to consistently deliver next-generation solutions in the areas of voice, audio, video and data connectivity.  DSP Group, an expert in voice processing, invests heavily in innovation for the smart future and designs leading-edge semiconductor technology that is enabling our customers to develop a new wave of products that bring enhanced user experiences through innovation.  For more information, visit www.dspg.com.

Contact:

Shiri Weiss, IR & Communications, Shiri.Weiss@dspg.com

5

DSP GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Three Months Ended March 31
	2021			2020
	(Unaudited)			(Unaudited)
Revenues	$	32,647		$	28,239
Cost of revenues		15,666			13,858
Gross profit		16,981			14,381
Operating expenses:
Research and development, net		10,480			10,354
Sales and marketing		5,202			5,011
General and administrative		2,653			2,348
Amortization of intangible assets		419			104
Total operating expenses		18,754			17,817
Operating loss		(1,773	)		(3,436	)
Financial income, net		641			903
Loss before income tax expenses (benefit)		(1,132	)		(2,533	)
Income tax expenses (benefit)		211			(68	)
Net loss	$	(1,343	)	$	(2,465	)
Net loss per share:
Basic and diluted	$	(0.06	)	$	(0.11	)
Weighted average number of shares used in per share computations of loss per share:
Basic and diluted		24,058			23,342

6

	Three Months Ended
	March 31,
	2021			2020
	Unaudited			Unaudited
GAAP net Loss	$	(1,343	)	$	(2,465	)
Equity-based compensation expense included in cost of revenues		161			120
Equity-based compensation expense included in research and development, net		1,142			751
Equity-based compensation expense included in sales and marketing		626			555
Equity-based compensation expense included in general and administrative		601			406
Amortization of intangible assets		419			104
Amortization of employee’s retention expenses related to the acquisition of SoundChip included in cost of revenues		67			-
Amortization of employee’s retention expenses related to the acquisition of SoundChip included in sales and marketing		149			-
Amortization of employee’s retention expenses related to the acquisition of SoundChip included in research and development, net		34			-
Non-cash Income from Exchange rates differences resulting from the new lease accounting standard (ASC 842)		(448	)		(416	)
Changes of deferred taxes related to intangible assets and equity-based compensation expense		(142	)		(66	)
Non-GAAP net income (loss)	$	1,266		$	(1,011	)
Weighted-average number of common stock used in computation of GAAP diluted net loss per share (in thousands)		24,058			23,342
Weighted-average number of shares related to outstanding options, stock appreciation rights and restricted share units (in thousands)		1,433			-
Weighted-average number of common stock used in computation of non-GAAP diluted net earnings (loss) per share (in thousands)		25,491			23,342
GAAP diluted net loss per share	$	(0.06	)	$	(0.11	)
Equity-based compensation expense		0.10			0.08
Amortization of intangible assets		0.02			0.01
Amortization of employee’s retention expenses related to the acquisition of SoundChip		0.01			-
Non-cash income from Exchange rates differences resulting from the new lease accounting standard (ASC 842)		(0.02	)		(0.02	)
Changes of deferred taxes related to intangible assets and equity-based compensation expense		-			-
Non-GAAP diluted net earnings (loss) per share	$	0.05		$	(0.04	)

7

DSP GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	March 31,			December 31,
	2021			2020
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents Restricted deposits	$	20,018565		$	16,936548
Marketable securities and short-term deposits		53,267			50,615
Trade receivables, net		11,226			11,003
Inventories		7,929			9,061
Other accounts receivable and prepaid expenses		3,674			3,460
Total current assets		96,679			91,623
Property and equipment, net		6,628			6,574
Long term marketable securities and deposits		55,201			60,454
Severance pay fund		15,512			16,285
Operating leases– right of use assets		10,876			11,102
Deferred income taxes		6,572			6,893
Intangible assets, net		20,044			20,654
Long term prepaid expenses		2,687			2,888
Total long-term assets		110,892			118,276
Total assets	$	214,199			216,473
Liabilities and Stockholders’ Equity
Current liabilities:
Trade payables	$	9,575		$	10,708
Operating lease liability		2,883			2,974
Other current liabilities		13,465			15,724
Total current liabilities		25,923			29,406
Accrued severance pay		15,883			16,647
Operating lease liability		9,489			10,075
Accrued pensions		1,042			1,089
Deferred income taxes		1,011			1,073
Other long-term liabilities		1,945			1,945
Total long-term liabilities		29,370			30,829
Stockholders’ equity:
Common stock		24			24
Additional paid-in capital		398,916			396,335
Accumulated other comprehensive loss		(886	)		(637	)
Less – Cost of treasury stock		(103,300	)		(108,509	)
Accumulated deficit		(135,848	)		(130,975	)
Total stockholders’ equity		158,906			156,238
Total liabilities and stockholders’ equity	$	214,199			216,473

8

XML

Document And Entity Information	May 03, 2021
Document Information [Line Items]
Entity, Registrant Name	DSP GROUP, INC.
Document, Type	8-K
Document, Period End Date	May 03, 2021
Entity, Incorporation, State or Country Code	DE
Entity, File Number	1-35256
Entity, Tax Identification Number	94-2683643
Entity, Address, Address Line One	2055 Gateway Place
Entity, Address, Address Line Two	Suite 480
Entity, Address, City or Town	San Jose
Entity, Address, State or Province	CA
Entity, Address, Postal Zip Code	95110
City Area Code	408
Local Phone Number	986-4300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	DSPG
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000915778