What changed in this filing

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Item 1. Financial Statements

2021-11-01 compared with 2021-08-04 · 174 added, 123 removed, 299 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

Current assets:

4 unchanged sentences

Operating lease right-of-use asset

Financing lease right-of-use asset

Long-term prepaid rent

Long-term prepaid maintenance and supplies

Security deposit

5 unchanged sentences

Current operating lease liability

Current financing lease liability

Total current liabilities

Long-term operating lease liability

Long-term financing lease liability

Total liabilities

2 unchanged sentences

Preferred stock $ 0.001 par value, authorized 2,500 shares;

none issued and outstanding at June 30, 2021 and December 31, 2020

none issued and outstanding at September 30, 2021 and December 31, 2020

Common stock:

$ 0.001 par value, authorized 47,500 shares;

23,104 and 22,375 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively;

23,145 and 22,375 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively;

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

5 unchanged sentences

Loss from operations

Other income (expense)

Interest income

Total other income

Interest expense

Total other income (expense), net

Net loss before income taxes

6 unchanged sentences

Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30,

For the Three and Nine Months Ended September

30, 2021 and 2020

14 unchanged sentences

$ ( 157,486 )

Stock option exercise

Stock-based compensation

Forfeited restricted stock awards

Balance at September 30, 2021

$ ( 161,689 )

Total Stockholders’

5 unchanged sentences

Balance March 31, 2020

$ ( 138,907 )

Underwritten public offering of common stock, net of commissions and expenses

3 unchanged sentences

$ ( 142,686 )

At-the-market sale of stock, net of commissions and expenses

Stock option exercise

Stock-based compensation

Warrant exercise

Balance September 30, 2020

$ ( 146,264 )

The accompanying notes are an integral part of

3 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Depreciation and amortization

Right of use asset amortization

Operating lease right of use asset amortization

Financing lease right of use asset amortization

Stock-based compensation

Warrant modification expense

Non cash interest expense

Changes in operating assets and liabilities:

4 unchanged sentences

Accrued payroll expenses

Lease liability

Operating lease liability

Deferred revenue

15 unchanged sentences

Cash paid for taxes

Non-cash investing and financing activities

Exercise of warrants-cashless

The accompanying notes are an integral part of

2 unchanged sentences

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30,

For the Three and Nine Months Ended September

30, 2021 and 2020

11 unchanged sentences

LIQUIDITY AND MANAGEMENT PLANS

At June 30, 2021, the

Company had cash and cash equivalents of approximately $ 34.3

million and working capital of approximately $ 33.9

The Company has generated only limited revenues since inception and has incurred recurring operating losses.

At September 30, 2021, the

Company had cash and cash equivalents of approximately $ 31.8 million and working capital of approximately $ 29.3 million.

The Company has

generated only limited revenues since inception and has incurred recurring operating losses.

The Company’s operating

24 unchanged sentences

The unaudited condensed financial

statements of the Company for the three and six months ended June 30, 2021 and 2020 have been prepared in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements

for reporting on Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all the information and footnotes required

by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of normal recurring adjustments)

which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and its results

of operations.

Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year.

The balance sheet information as of December 31, 2020, was derived from the audited financial statements included in the Company's financial

statements as of and for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed with the SEC

on February 19, 2021.

statements of the Company for the three and nine months ended September 30, 2021 and 2020 have been prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the

requirements for reporting on Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all the information and footnotes

required by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of normal recurring

adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and

its results of operations.

Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal

The balance sheet information as of December 31, 2020, was derived from the audited financial statements included in the Company's

financial statements as of and for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed

with the SEC on February 19, 2021.

These unaudited condensed financial statements should be read in conjunction with that report.

11 unchanged sentences

Recent accounting standards

In August 2020, the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, Debt

with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic

The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as

derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments

and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

This guidance is effective as of

January 1, 2022 (Early adoption is permitted effective January 1, 2021).

The Company is currently evaluating the effect the

updated standard will have on its financial position, results of operations or financial statement disclosure.

In August 2020, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, Debt with Conversion

and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40).

guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting

for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares

impact the diluted earnings per share computation.

This guidance is effective as of January 1, 2022 (Early adoption is permitted effective

January 1, 2021).

The Company is currently evaluating the effect the updated standard will have on its financial position, results of

operations or financial statement disclosure.

The Company recognizes revenue

in accordance with ASC 606.

The amount of revenue that the Company recognizes reflects the consideration it expects to receive in

exchange for goods or services and such revenue is recognized at the time when goods or services are transferred and/or delivered to its

The amount of revenue that the Company recognizes reflects the consideration it expects to receive in exchange

for goods or services and such revenue is recognized at the time when goods or services are transferred and/or delivered to its customers.

Revenue is recognized when the Company satisfies a performance obligation by transferring the product or service to the customer.

The Company generates revenues from engineering service contracts, integration license agreements and joint development agreements.

the Company’s performance obligation is the promise to grant a license, revenue is recognized either at a point in time or over

Company generates revenues from engineering service contracts, integration license agreements and joint development agreements.

Company’s performance obligation is the promise to grant a license, revenue is recognized either at a point in time or over time.

The following table provides information about

1 unchanged sentence

Information about disaggregated revenue and timing of revenue

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Primary geographic markets

14 unchanged sentences

revenue when revenue will be recognized after invoicing.

During the six months ended June 30, 2020, the Company recognized approximately

During the nine months ended September 30, 2020, the Company recognized approximately

$ 37,000 of revenue that was included in deferred revenue as of December 31, 2019.

16 unchanged sentences

Schedule of anti dilutive shares

Three and Six Months Ended

Three and Nine Months Ended

September 30,

Stock Options

6 unchanged sentences

4,101 square feet.

Under ASC 842, the lease amendment was treated as a separate lease for the new space and a modification of the

lease for the original space.

An additional right-of-use (“ROU”) asset and lease liability of approximately $ 681,000 were

recorded during at the time of the amendment.

In January 2021 the additional space became available for use, and the Company recorded

an additional ROU asset and corresponding liability of approximately $ 144,000 .

The lease liability is based on the present value of the

minimum lease payments, discounted using the Company’s estimated incremental borrowing rate of 5.5 %.

The lease contains escalating

Under ASC 842, the lease amendment was treated as a separate lease for the new space and a modification of the lease

for the original space.

An additional right-of-use (“ROU”) asset and lease liability of approximately $ 681,000 were recorded

at the time of the amendment.

In January 2021 the additional space became available for use, and the Company recorded an additional

ROU asset and corresponding liability of approximately $ 144,000 .

The lease liability is based on the present value of the minimum lease

payments, discounted using the Company’s estimated incremental borrowing rate of 5.5 %.

The lease contains escalating payments on

the anniversary of the original commencement which are included in the measurement of the initial lease liability.

Additional payments

based on a change in the Company’s share of the operating expenses, including property taxes and insurance, are recorded as a period

expense when incurred.

In March 2021, the

Company began leasing 474 square feet of office space in Tempe, Arizona.

The new lease is classified as an operating lease with an

initial term of two years and an option to extend for an additional three years through February 2026.

The lease also contains a

performance standard for research collaboration with Arizona State University.

The agreement requires a minimum value of

collaborative research in each year of the lease.

The lease is accounted for under ASC 842 and accordingly, the research payments

are included in the ROU and lease liability at the commencement.

In March 2021, the Company recorded an ROU and associated lease

liability of approximately $ 238,000 .

The lease liability is based on the present value of the minimum lease payments, discounted using the Company’s estimated

incremental borrowing rate of 5.25 %

over five years, as the Company expects to lease the space through the three-year extension.

The lease also contains escalating

payments on the anniversary of the original commencement which are included in the measurement of the initial lease liability.

payments based on a change in the Company’s share of the operating expenses, including property taxes and insurance, are recorded

as a period expense when incurred.

In March 2021, the Company

began leasing 474 square feet of office space in Tempe, Arizona.

The new lease is classified as an operating lease with an initial term

of two years and an option to extend for an additional three years through February 2026.

The lease also contains a performance standard

for research collaboration with Arizona State University.

The agreement requires a minimum value of collaborative research in each year

of the lease.

The lease is accounted for under ASC 842 and accordingly, the research payments are included in the ROU and lease liability

at the commencement.

In March 2021, the Company recorded an ROU and associated lease liability of approximately $ 238,000 .

The lease liability

is based on the present value of the minimum lease payments, discounted using the Company’s estimated incremental borrowing rate

of 5.5 % over five years, as the Company expects to lease the through the three-year extension.

The lease also contains escalating payments

on the anniversary of the original commencement which are included in the measurement of the initial lease liability.

In October 2019, the Company

entered into an agreement to lease a tool for use in the development of the Company’s technology.

The lease is for five 5 years

at $ 150,000 per month and commenced on August 1, 2021.

A prepayment of $ 450,000 was made in the nine months ended September 30, 2020 which

represents the final three monthly payments under the lease and was recorded as a long-term prepaid until the lease commencement.

At commencement,

the Company recorded an ROU asset of approximately $ 6.4 million and a corresponding lease liability of approximately $ 6 .0 million.

lease was classified as a financing lease and accordingly, amortization is recorded as a research and development expense in the Company’s

condensed statement of operations.

Interest expense is also recorded and included in other income or expense in the Company’s condensed

statement of operations.

The lease liability is based on the present value of the minimum lease payments, discounted using the Company’s

estimated incremental borrowing rate of 5.25 % at the time of commencement.

The lease payment of $150,000 per month includes approximately

$30,000 in supplies and maintenance that is recorded as an operating expense and is not included in the valuation of the lease liability.

The Company elected to exclude these costs from the asset and related lease liability valuation for this class of assets.

will be expensed as operating expenses in the period incurred.

Lease expense for operating

leases consists of the lease payments recognized on a straight-line basis over the lease term.

The components of operating lease costs

Expenses for financing leases consists

of the amortization expenses recognized on a straight-line basis over the lease term and interest expense.

The components of lease costs

were as follows (in thousands):

Components of lease costs

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Financing lease costs:

Amortization of ROU Assets

Interest on lease liabilities

Operating lease costs

Fixed lease costs

3 unchanged sentences

Future minimum payments under

non-cancellable leases as of June 30, 2021 were as follows (in thousands):

non-cancellable leases as of September 30, 2021 were as follows (in thousands):

Schedule of future minimum lease payments

For the Year Ended December 31,

Financing leases

Operating leases

Remaining 2021

3 unchanged sentences

Total lease liability

The following table provides

supplemental information and non-cash activity related to the Company’s operating leases (in thousands):

The following table provides supplemental information and non-cash

activity related to the Company’s operating and financing leases (in thousands):

Supplemental non-cash activity related to operating leases

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating cash flow information:

Cash paid for amounts included in the measurement of lease liabilities

Cash paid for amounts included in the measurement of operating lease liabilities

Cash paid for amounts included in the measurement of financing lease

Non-cash activity:

Right-of-use assets obtained in exchange for the lease obligations

In October 2019, the Company

entered into an agreement to lease a tool for use in the development of the Company’s technology.

The lease is for five 5

years at $150,000 per month.

The lease commencement date is anticipated to be in August 2021, at which time the Company will account

for the lease under ASC 842.

A prepayment of $ 450,000

was made in the six months ended June 30, 2020, this payment represents the final three payments under the lease and is recorded as a

long-term prepaid until the lease commencement, at which time it will be record in accordance with ASC 842.

Right-of-use assets obtained in exchange for operating lease obligations

Right-of-use assets obtained in exchange for financing lease obligations

The weighted average

remaining discount rate is 5.25 % for the Company’s operating and financing leases.

The weighted average remaining lease term is

4.4 years for operating leases and 4.8 years for financing leases.

A summary of warrant activity

for the six months ended June 30, 2021 is as follows (in thousands except per share amounts and contractual term):

for the nine months ended September 30, 2021 is as follows (in thousands except per share amounts and contractual term):

Schedule of warrant activity

1 unchanged sentence

Outstanding at January 1, 2021

Outstanding at June 30, 2021

Outstanding at September 30, 2021

The warrants outstanding at

June 30, 2021 had an intrinsic value of approximately $ 9,000 based on a per-share stock price of $ 21.44 as of June 30, 2021.

September 30, 2021 had an intrinsic value of $ 0 based on a per-share stock price of $ 23.09 as of September 30, 2021.

On March 17, 2020, 196,602

5 unchanged sentences

Due to this modification, the Company incurred a modification expense

of approximately $ 139,000 that is included in general and administrative expenses on the Condensed Statement of Operations for the six

months ended June 30, 2020.

of approximately $ 139,000 that is included in general and administrative expenses on the Condensed Statement of Operations for the nine

months ended September 30, 2020.

All of the modified warrants were exercised on August 6, 2020.

15 unchanged sentences

The following table summarizes

the stock-based compensation expense recorded in the Company’s results of operations during the three and six months ended June

the stock-based compensation expense recorded in the Company’s results of operations during the three and nine months ended September

30, 2021 and 2020 for stock options and restricted stock granted under the 2017 Plan and the 2007 Plan (in thousands):

Schedule of stock-based compensation expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Selling and Marketing

As June 30, 2021, there was

approximately $ 7.0 million of total unrecognized compensation expense related to unvested share-based compensation arrangements.

As September 30, 2021, there

was approximately $ 6.1 million of total unrecognized compensation expense related to unvested share-based compensation arrangements.

cost is expected to be recognized over a weighted-average period of 2.3 years.

The weighted average grant

date fair value per share of the options granted under the Company’s 2017 Plan was $ 14.78 and $ 15.36 for the three and six months

ended June 30, 2021, respectively.

date fair value per share of the options granted under the Company’s 2017 Plan was $ 13.77 and $ 15.29 for the three and nine months

ended September 30, 2021, respectively.

The weighted average grant date fair value per share of the options granted under Company’s

plan was $ 5.86 and $ 2.75 for the three and six months ended June 30, 2020, respectively.

2017 plan was $ 7.64 and $ 2.80 for the three and nine months ended September 30, 2020, respectively.

The following table summarizes

stock option activity during the three months ended June 30, 2021 (in thousands except exercise prices and contractual terms):

stock option activity during the nine months ended September 30, 2021 (in thousands except exercise prices and contractual terms):

Schedule of stock option activity

2 unchanged sentences

Outstanding at January 1, 2021

Outstanding at June 30, 2021

Exercisable at June 30, 2021

During the six months ended

June 30, 2021, the Company granted options under the 2017 Plan to purchase approximately 148,000 shares of its common stock to its employees.

Outstanding at September 30, 2021

Exercisable at September 30, 2021

During the nine months ended

September 30, 2021, the Company granted options under the 2017 Plan to purchase approximately 153,000 shares of its common stock to its

The fair value of these options was approximately $ 2.3 million at the time of grant.

2 unchanged sentences

The following

table summarizes all restricted stock activity during the six months ended June 30, 2021 (in thousands except per share data):

table summarizes all restricted stock activity during the nine months ended September 30, 2021 (in thousands except per share data):

Schedule of restricted stock option activity

1 unchanged sentence

Outstanding at January 1, 2021

Outstanding non-vested shares at June 30, 2021

During the six months ended

June 30, 2021 the Company granted approximately 89,000 restricted stock awards under the 2017 Plan to its employees and directors.

fair value of these awards was approximately $ 1.9 million at the time of grant.

During the six months ended

June 30, 2021, approximately 54,000

restricted stock awards were forfeited and reissued under the Company’s equity compensation plan.

Outstanding non-vested shares at September 30, 2021

During the nine months ended

September 30, 2021 the Company granted approximately 89,000 restricted stock awards under the 2017 Plan to its employees and directors.

The fair value of these awards was approximately $ 1.9 million at the time of grant.

During the nine months ended

September 30, 2021, approximately 63,000 restricted stock awards were forfeited and reissued under the Company’s equity compensation

PROVISION FOR INCOME TAXES

The Company recorded a provision

for income taxes of approximately $ 17,000 and $ 31,000 during the three and six months ended June 30, 2021, respectively.

for income taxes of approximately $ 17,000 and $ 48,000 during the three and nine months ended September 30, 2021, respectively.

The provision

1 unchanged sentence

The Company recorded the provision in accordance

with ASC 740 using its estimated annual tax rate and applied it to the net loss for the three and six months ended June 30, 2021.

with ASC 740 using its estimated annual tax rate and applied it to the net loss for the three and nine months ended September 30, 2021.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The Company is not party to any material

litigation as of June 30, 2021, or through the date these financial statements have been issued.

litigation as of September 30, 2021, or through the date these financial statements have been issued.

SUBSEQUENT EVENTS

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements