What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-30 compared with 2024-04-30 · 85 added, 58 removed, 149 unchanged (49% of the section changed)

69 unchanged sentences

accepting the film, resulting in our recognizing license revenue associated with that milestone.

We expect that ST will now proceed to

completing process qualification with MST which would result in additional license fees for the distribution license upon completion of

qualification, at which time ST would commence paying royalties on MST-enabled products they sell.

There can be no assurance, however,

that ST will complete its process qualification and pursue the licensed rights through development to the manufacture and commercial sale

of MST-enabled products.

ST is currently performing testing to

optimize their integration of MST as part of their qualification process.

Upon qualification, we will earn additional license fees for

the distribution license, after which ST will be entitled to MST-enabled products and royalties will be payable to us for every product

There can be no assurance, however, that ST will complete its process qualification and pursue the licensed rights through development

to the manufacture and commercial sale of MST-enabled products.

We were organized as a Delaware

8 unchanged sentences

million in an “at-the-market” offering or “ATM”, to or through the agents.

During the three months ended March

31, 2024, we sold approximately 510,000 shares pursuant to our ATM at an average price per share of approximately $8.06, resulting in

approximately $4.0 million of net proceeds to us after deducting commissions and other offering expenses.

During the three-month period ended

June 30, 2024, we sold approximately 669,000 shares pursuant to the ATM at an average price per share of approximately $3.82, resulting

in approximately $2.4 million of net proceeds to the Company after deducting commissions and other offering expenses.

During the six-month

period ended June 30, 2024, we sold approximately 1.2 million shares pursuant to the ATM at an average price per share of approximately

$5.66, resulting in approximately $6.4 million of net proceeds to the Company after deducting commissions and other offering expenses.

Results of Operations

7 unchanged sentences

licenses are granted on a monthly or yearly basis and revenue is recognized over time.

Revenue for the three months

ended March 31, 2024 and 2023 was approximately $18,000 and $0, respectively.

Revenue for the three and

six months ended June 30, 2024 was approximately $72,000 and $90,000 respectively.

Our revenue in 2024 consisted of MSTcad license revenue,

and consulting services related to MSTcad.

consulting services related to MSTcad and the delivery of MST wafers.

Revenue was not recorded during the three and six months ended June

Cost of revenue .

1 unchanged sentence

payment of success fees, delivery of wafers delivered as part of integration license agreements and consulting services provided for our

MSTcad License.

MSTcad licenses.

Cost of revenue is expensed when incurred and may not correspond with revenue earned.

Cost of revenue for the three months

ended March 31, 2024 and 2023 was approximately $33,000 and $0, respectively.

We anticipate that our cost of revenue will vary substantially

depending on the mix of license and engineering services revenues we receive and the nature of products and/or services delivered in each

customer engagement.

Cost of revenue for the three and

six months ended June 30, 2024 was approximately $74,000 and $107,000, respectively.

We anticipate that our cost of revenue will vary

substantially depending on the mix of license and engineering services revenues we receive and the nature of products and/or services

delivered in each customer engagement.

Cost of revenue was not recorded during the three and six months ended June 30, 2023.

Operating expenses.

1 unchanged sentence

For the three

months ended March 31, 2024 and 2023, our operating expenses totaled approximately $5.0 million and $5.2 million, respectively.

months ended June 30, 2024 and 2023, our operating expenses totaled approximately $4.6 million and $5.4 million, respectively.

six months ended June 30, 2024 and 2023, our operating expenses totaled approximately $9.6 million and $10.5 million, respectively.

Research and development

4 unchanged sentences

For the three months ended

March 31, 2024 and 2023, we incurred approximately $2.9 million and $3.0 million, respectively, of research and development expenses,

a decrease of approximately $178,000, or 6%.

June 30, 2024 and 2023, we incurred approximately $2.6 million and $3.2 million, respectively, of research and development expenses, a

decrease of approximately $600,000, or 19%.

This decrease was primarily due to decrease of approximately $535,000 in outsourced research

as we discontinued working with our foundry services provider, TSI Semiconductor, as of January 31.

We are currently seeking a replacement

provider of foundry services.

This decrease was offset by increases in both employee related expenses and stock-based compensation totaling

approximately $92,000.

and development as we discontinued working with our foundry services provider, TSI Semiconductor, as of January 31.

We are currently

seeking a replacement provider of foundry services.

Additionally, there were decreases of approximately $101,000 in payroll and benefits

costs for reduced headcount and bonus accrual.

For the six months ended June

30, 2024 and 2023, we incurred approximately $5.4 million and $6.2 million, respectively, of research and development expenses, a decrease

of approximately $781,000, or 13%.

This decrease was primarily due to a decline of approximately $776,000 in outsourced research and development

as we discontinued working with TSI Semiconductor as of January 31.

General and administrative

1 unchanged sentence

costs and professional fees.

General and administrative costs were approximately $1.8 million and $1.7 million for the three months March

31, 2024 and 2023, respectively, representing an increase of approximately $69,000, or 4%.

The increase is primarily related to increases

of approximately $107,000 in payroll and benefits costs and approximately $57,000 in stock-based compensation.

These increases were partly

offset by a decrease of approximately $74,000 in corporate legal expenses.

General and administrative costs were approximately $1.8 million for each of the three-month periods ended

June 30, 2024 and 2023, representing an increase of approximately $57,000, or 3%.

The increase is primarily related to increases of approximately

$101,000 in professional fees, related primarily to legal costs and fees related to our patent portfolio.

These costs are partially offset

by a decrease of approximately $44,000 in stock-based compensation costs.

General and administrative

costs were approximately $3.6 million and $3.5 million for the six months ended June 30, 2024 and 2023, respectively, representing an

increase of approximately $126,000, or 4%.

The increase is primarily related to increases of approximately $99,000 in payroll and benefits

costs and approximately $158,000 in legal costs and fees related to our patent portfolio.

These increases were partly offset by a decrease

of approximately $89,000 in corporate legal expenses and approximately $42,000 in director and officer insurance.

Selling and marketing expense.

1 unchanged sentence

consulting services.

Selling and marketing expenses for the three months ended March 31, 2024 and 2023 were approximately $350,000 and

Selling and marketing expenses for the three months ended June 30, 2024 and 2023 were approximately $207,000 and

$393,000, respectively, representing a decrease of approximately $186,000, or 47%.

The decrease in costs is primarily related to a reduction

in head count.

Selling and marketing expenses for the six months ended

June 30, 2024 and 2023 were approximately $557,000 and $782,000, respectively, representing a decrease of approximately $225,000, or 29%.

The decrease in costs for both the three and six-month periods is primarily due to a reduction in headcount.

Interest income.

income for three months ended March 31, 2024 and 2023 was approximately $205,000 and $199,000, respectively.

Interest income for the periods

presented related to interest earned on our cash, cash equivalents and short-term investments.

income for three months ended June 30, 2024 and 2023 was approximately $185,000 and $152,000, respectively.

Interest income for six months

ended June 30, 2024 and 2023 was approximately $390,000 and $351,000, respectively.

Interest income for the periods presented was due

to interest earned on our cash, cash equivalents and short-term investments.

Accretion income.

income for the three months ended March 31, 2024 and 2023 was approximately $46,000 and $2,000, respectively.

Accretion income relates

to the increase in value of our available-for-sale securities from the purchase date through the maturity date.

income for the three months ended June 30, 2024 and 2023 was approximately $47,000 and $107,000, respectively.

Accretion income for the

six months ended June 30, 2024 and 2023 was approximately $93,000 and $109,000, respectively.

Accretion income relates to the increase

in value of our available-for-sale securities from the purchase date through the maturity date.

Interest expense.

expense for the three months ended March 31, 2024 and 2023 was approximately $39,000 and $53,000, respectively.

Interest expense is related

to the tool financing lease entered into in August 2021.

expense for the three months ended June 30, 2024 and 2023 was approximately $35,000 and $51,000, respectively.

Interest expense for the

six months ended June 30, 2024 and 2023 was approximately $74,000 and $104,000, respectively.

Interest expense is related to the tool

financing lease entered into in August 2021.

Other income, net.

income for the three and six months ended June 30, 2024 of approximately $72,000, consisted primarily of a refundable state research and

development tax credit, net of filing costs and tax consulting services.

Cash Flows from Operating, Investing and Financing

Net cash used in operating

activities of approximately $4.1 million for the three months ended March 31, 2024 resulted primarily from our net loss of approximately

$4.8 million offset by approximately $1.0 million of stock-based compensation and approximately $550,000 of collected contracts receivable

offset by the payment of accrued payroll expenses of approximately $928,000.

activities of approximately $7.3 million for the six months ended June 30, 2024 resulted primarily from our net loss of approximately

$9.2 million offset by approximately $2.0 million of stock-based compensation.

Net cash used in operating

activities of approximately $4.2 million for the three months ended March 31, 2023 resulted primarily from our net loss of approximately

$5.0 million offset by approximately $927,000 stock-based compensation.

activities of approximately $8.2 million for the six months ended June 30, 2023 resulted primarily from our net loss of approximately

$10.2 million offset by approximately $2.0 million of stock-based compensation.

Net cash provided by investing

activities of approximately $2.5 million and for the three months ended March 31, 2024 consisted primarily of the maturity of short-term

activities of approximately $3.2 million and for the six months ended June 30, 2024 consisted primarily of the maturity of short-term

available-for-sale investments, offset by the purchase of short-term available-for-sale investments.

Net cash used in investing

activities of approximately $5.0 million and for the three months March 31, 2023 consisted primarily of the purchase of short-term investments.

activities of approximately $10.9 million and for the six months ended June 30, 2023 consisted primarily of the purchase of short-term

Net cash provided by financing

activities of approximately $3.8 million for the three months ended March 31, 2024 primarily related to the net proceeds from our ATM

offering, offset by the principal payments on our financing lease.

activities of approximately $6.0 million for the six months ended June 30, 2024 primarily related to the net proceeds from our ATM offering,

offset by the principal payments on our financing lease.

Net cash provided by financing

activities of approximately $125,000 for the three months ended March 31, 2023 primarily related to the net proceeds from our ATM offering,

activities of approximately $10.8 million for the six months ended June 30, 2023 primarily related to the net proceeds from our ATM offering,

offset by the principal payments on our financing lease.

Liquidity and Capital Resources

As of March 31, 2024, we had

As of June 30, 2024, we had

cash and cash equivalents of approximately $14.5 million, short-term investments of approximately $3.8 million and working capital of

approximately $15.8 million.

For three months ended March 31, 2024, we had a net loss of approximately $4.8 million and used approximately

For six months ended June 30, 2024, we had a net loss of approximately $9.2 million and used approximately

$7.3 million of cash and cash equivalents in operations.

Since inception, we have incurred recurring operating losses.

During the three months ended

March 31, 2024, we sold approximately 510,000 shares pursuant to our ATM at an average price per share of approximately $8.06, resulting

During the six months ended

June 30, 2024, we sold approximately 1.2 million shares pursuant to our ATM at an average price per share of approximately $5.66, resulting

in approximately $6.4 million of net proceeds to us after deducting commissions and other offering expenses.

20 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 2. Management’s Discussion and Analysis