Achronix Announces First Quarter 2021 Financial Results and

Achronix Announces First Quarter 2021 Financial Results and Business Highlights

Important Information for Investors and Stockholders

In connection with the proposed merger transaction, ACE has filed a registration statement on Form S-4 (the “Registration Statement”) with the SEC, which includes a preliminary proxy statement to be distributed to holders of Ace’s common stock in connection with ACE’s solicitation of proxies for the vote by ACE’s stockholders with respect to the proposed transaction and other matters as described in the Registration Statement, as well as the prospectus relating to the offer of securities to be issued to Achronix’s stockholders in connection with the proposed transaction. After the Registration Statement has been filed and declared effective, ACE will mail a definitive proxy statement, when available, to its stockholders. Investors and security holders and other interested parties are urged to read the proxy statement/prospectus, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about ACE, Achronix and the proposed transaction. Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus (when available) and other documents filed with the SEC by ACE through the website maintained by the SEC at http://www.sec.gov, or by directing a request to: ACE Corporation, 1013 Centre Road, Suite 403S, Wilmington, DE. The information contained on, or that may be accessed through, the websites referenced in this press release is not incorporated by reference into, and is not a part of, this press release.

Participants in the Solicitation

ACE and its directors and officers may be deemed participants in the solicitation of proxies of ACE’s shareholders in connection with the proposed business combination. Security holders may obtain more detailed information regarding the names, affiliations and interests of certain of ACE’s executive officers and directors in the solicitation by reading ACE’s final prospectus filed with the SEC on July 28, 2020, the registration statement on Form S-4, proxy statement/prospectus and other relevant materials filed with the SEC in connection with the business combination when they become available. Information concerning the interests of ACE’s participants in the solicitation, which may, in some cases, be different than those of their stockholders generally, will be set forth in the registration statement, proxy statement relating to the business combination when it becomes available.

Non-Solicitation

This press release is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of ACE, the combined company or Achronix, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.

Trademarks

Achronix and Speedster are registered trademarks, and Speedcore and Speedchip are trademarks of Achronix Semiconductor Corporation. All other brands, product names and marks are the property of their respective owners.

ACHRONIX SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar in thousands, except shares and per share amounts)
(Unaudited)

			Three Months Ended
			March 31,
			2021			2020

Revenue:
	Product		$	25,604		$	5,216
	Licensing			4,249			246
		Total revenue		29,853			5,462

Cost of revenue				6,627			1,423

Gross profit				23,226			4,039

Operating expenses
	Research and development			7,582			6,565
	Sales and marketing			2,589			1,945
	General and administrative			3,382			973
		Total operating expenses		13,553			9,483

	Income (loss) from operations			9,673			(5,444	)
	Total other income (expense), net			(811	)		120

	Income (loss) before income tax expenses			8,862			(5,324	)
	Provision for income tax			99			23

Net income (loss)*			$	8,763		$	(5,347	)

Net income (loss) per share
	Basic		$	0.53		$	(0.86	)
	Diluted		$	0.18		$	(0.86	)

Weighted - average shares used in computing net income per share:
	Basic			16,506			6,203
	Diluted**			48,020			6,203

* Net income does not exclude undistributed earnings attributable to participating securities.

**Diluted shares include options and warrants on an as-if-converted basis and exclude redeemable preferred stocks.

ACHRONIX SEMICONDUCTOR CORPORATION
RECONCILIATION OF GAAP NET INCOME (LOSS)
TO NON-GAAP MEASURES
(Dollar in thousands, except shares and per share amounts)
(Unaudited)

			Three Months Ended
			March 31,
			2021			2020
Non-GAAP gross margin
GAAP gross profit			$	23,226		$	4,039
GAAP gross margin				78	%		74	%

Stock-based compensation expense - cost of revenue				33			20

Non-GAAP gross profit			$	23,260		$	4,060
Non-GAAP gross margin				78	%		74	%

Non-GAAP Operating income (loss)
GAAP operating income (loss)			$	9,673		$	(5,444	)
Stock-based compensation expense
	Cost of revenues			33			20
	Research and development			251			107
	Sales and marketing			140			100
	General and administrative			284			112
		Total stock-based compensation expense		708			339
Non-GAAP operating income (loss)			$	10,381		$	(5,105	)

Non-GAAP net income
GAAP net income (loss)			$	8,763		$	(5,347	)

Stock-based compensation expense				708			339
Change in fair value of warrant liability				767			(340	)

Non-GAAP net income (loss)			$	10,238		$	(5,348	)

GAAP basic earnings per share			$	0.53		$	(0.86	)
Effect of non-GAAP adjustments on basic earnings per share				0.09			(0.00	)
Non-GAAP basic earnings per share			$	0.62		$	(0.86	)

GAAP diluted earnings per share			$	0.18		$	(0.86	)
Effect of non-GAAP adjustments on diluted earnings per share				0.03			(0.00	)
Non-GAAP diluted earnings per share			$	0.21		$	(0.86	)

Weighted - average shares used in computing net income (loss) per share:
	Basic			16,506			6,203
	Diluted*			48,020			6,203

*Diluted shares include options and warrants on an as-if-converted basis and exclude redeemable preferred stocks.

			Three Months Ended
			March 31,
			2021			2020
Adjusted EBIT
GAAP net income (loss)			$	8,763		$	(5,347	)

Stock-based compensation expense				708			339
Total other income (expense), net				811			(120	)
Provision for income tax				99			23
Adjusted EBIT			$	10,381		$	(5,105	)

In addition to disclosing financial results calculated in accordance with U. S. generally accepted accounting principles (GAAP), the operating results presented contain non-GAAP financial measures that exclude the income statement effects of stock-based compensation expense and expenses related to the change in fair value of our redeemable preferred stock warrants.

Management believes it is useful to provide these non-GAAP financial measures and a reconciliation to comparable GAAP financial measures as we believe non-GAAP measures provide useful supplemental information for investors to evaluate our operating results in the same manner as used by industry research analysts, all of whom present non-GAAP projections in their published reports. As such, non-GAAP measures provided by Achronix facilitate a more direct comparison of its performance with the financial reports published by the industry analysts. The items reconciling GAAP financial measures to non-GAAP financial measures and additional comments and the usefulness of each item are set forth below:

(1)	Stock-based compensation is excluded by management when evaluating operating activities and for strategic decision making, forecasting future results and evaluating current performance. Management believes that utilizing non-GAAP financial measures that exclude this non-cash item is useful in providing an alternate measure that excludes the variability caused by different methodologies and subjective assumptions used in the valuation of equity awards across different companies.

(2)	Redeemable preferred stock warrant is excluded from the internal analysis of Achronix's operations and management does not view this non-cash expense as reflective of the business' current performance. Management believes that utilizing non-GAAP financial measures that exclude this non-cash item is useful in providing an alternate measure that excludes the variability caused by such item.

Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies' financial information and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

ACHRONIX SEMICONDUCTOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar in thousands)

			March 31,			December 31,
			2021			2020
			(unaudited)			(audited)
Assets
Current assets:
	Cash and cash equivalents		$	40,193		$	38,546
	Restricted Cash			5,011			5,011
	Accounts receivable, net			10,218			16,900
	Inventories			10,021			2,116
	Prepaid expenses and other current assets			2,016			2,251
		Total current assets		67,459			64,824

Property and equipment, net				9,335			3,723
Operating lease assets, net				6,049			-
Intangible assets, net				19,251			16,432
Other current assets				3,232			1,247
		Total assets	$	105,326		$	86,226


Liabilities, redeemable convertible preferred shares and stockholders' equity (deficit)
Current liabilities:
	Accounts payable		$	9,542		$	5,938
	Accrued liabilities			11,178			13,414
	Operating lease liabilities			941			-
	Deferred revenue			1,476			4,176
		Total current liabilities		23,137			23,528

	Preferred stock warrant liability			5,078			4,311
	Deferred revenue - noncurrent			2,558			2,800
	Operating lease liabilities - noncurrent			5,400			-
	Other noncurrent liabilities			8,413			6,125

		Total liabilities	$	44,586		$	36,764

Redeemable convertible preferred stock			$	320,916		$	320,916

Stockholders' equity (deficit):
	Common stock			18			9
	Additional paid-in capital			8,488			5,983
	Currency translation adjustment			(86	)		(87	)
	Accumulated deficit			(268,596	)		(277,359	)
	Total stockholders’ equity (deficit)			(260,176	)		(271,454	)
		Total liabilities, redeemable convertible preferred shares and stockholders' equity (deficit)	$	105,326		$	86,226

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