What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-10 · 81 added, 66 removed, 174 unchanged (46% of the section changed)

37 unchanged sentences

The UNITE 10 can capture five-megapixel images with a field of view up to 87 degrees, while major competitors at this price point only achieve 78-degree field of view.

The UNITE 10 attaches any PC or laptop with a simple mounting bracket, and a 1.5m USB-A cable ensures simple connection to most modern computers.

The UNITE 10 attaches to any PC or laptop with a simple mounting bracket, and a 1.5m USB-A cable ensures simple connection to most modern computers.

The UNITE 10 is also available to dealers and distributors in 20 packs for commercial sale.

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During February 2021, we expanded the applications for our BMA 360, Beamforming Microphone Array Ceiling Tile with the addition of a new Voice Lift feature that allows its impeccable audio to be locally amplified and heard throughout classrooms, lecture halls, and large meeting rooms.

announced a new Touch-Panel Controller, a highly intuitive 10-inch touch-screen device, designed for ClearOne’s CONVERGE® Pro 2 audio DSP mixers as well as COLLABORATE Live video conferencing room systems.

Paired with CONVERGE Pro 2 DSP mixers, users can make and receive PSTN and/or VoIP conference calls, and multiparty calls with the easy-to-use on-screen dial pad.

When paired with COLLABORATE Live, users can make and receive video calls as well as manage content sharing options.

ClearOne’s powerful breakthrough technologies, FiBeam™ and DsBeam™, already found on the BMA 360, enable exceptional new levels of Voice Lift performance.

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Client tenant usage can be conveniently tracked for invoicing and optional auto-payment reminders.

During the first six months of 2021, we continued our efforts, primarily through litigation, to stop the infringement of our strategic patents.

During July 2021 we introduced UNITE 180 ePTZ professional camera that provides a full 180-degree panoramic field-of-view with “real-time stitching” to achieve a variety of useful viewing modes for any application and environment.

Designed for professional-quality visual collaboration, conferencing, UC applications, distance learning, and more, the new UNITE 180 camera provides six viewing mode options as well as panoramic view for the ultimate in camera flexibility.

Real-time stitching creates a seamless 180-degree panoramic view of wide spaces by bringing the views of multiple lenses together as one complete image.

Large classroom settings, training centers, or any wide conferencing area are all captured and presented with perfect clarity in any of the viewing mode options.

A 4x zoom further enhances the UNITE 180 feature set.

The UNITE 180 is compatible with all popular cloud-based video collaboration applications including Microsoft Teams, Zoom, WebEx, Google Meet, ClearOne’s COLLABORATE Space and others.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

During July 2021 we also announced the market introduction of Versa Mediabar, the company’s first professional quality all-in-one audio and video capture device that combines the elegance and simplicity of a soundbar with the power of ClearOne’s intelligent audio capture and 4K camera technologies.

Versa Mediabar provides high-quality visual collaboration, audio conferencing, and UC applications from a single integrated device, offering the simplest solution available for offices, conference rooms and home offices with virtually no setup required.

With a compact design that can be mounted on a wall or attached to a video display, the Versa Mediabar connects via a single USB cable to elevate the soundbar concept into a powerful tool for virtual collaboration that includes AI-enabled auto-framing and people tracking.

The Versa All-In-One Mediabar features a built-in 4K Ultra HD camera with a 110-degree ultra wide-angle field of view and a four-element microphone array with 360-degree voice pickup and intelligent DSP that provides acoustic echo cancellation (AEC) and automatic noise reduction to ensure crystal clear audio capture.

The camera combines electronic pan, tilt and zoom functions (ePTZ) with artificial intelligence to enable auto-framing and people tracking that keeps the speaker in view even if they move around the room.

From huddle spaces and small meeting rooms to executive offices and home offices, the compact Versa Mediabar delivers all the power and clarity needed for daily virtual communications.

In addition to its professional-quality audio and video capture, the Versa Mediabar also features a powerful built-in speaker with Bluetooth connectivity that allows it to serve double duty as a fully-featured conferencing solution or a Bluetooth speaker for impromptu calls using any Bluetooth device.

These attributes make the Versa Mediabar perfect for popular cloud-based collaboration applications such as Microsoft Teams, Zoom, WebEx, Google Meet, and ClearOne’s COLLABORATE® Space.

The Versa Mediabar supports standard UVC commands for control, making it a great addition to existing systems, while dual wall and display mounting options deliver freedom of placement and movement.

During the first nine months of 2021, we continued our efforts, primarily through litigation, to stop the infringement of our strategic patents.

We believe the decision by the U.S.

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We also continued our programs to cut costs and to speed up product development that we believe will enable us to get back to a growth path.

Overall revenue increased by 22% in the second quarter of 2021 when compared to the second quarter of 2020, primarily due to an increase in revenue from microphones and audio conferencing products with BMA based solutions generating the highest revenue growth.

Overall revenue increased by 22% during the six months ended June 30, 2021 compared to the same period in 2020, primarily due to increase in revenue from microphones, especially the BMA based solutions and video products.

Overall revenue decreased by 17% in the third quarter of 2021 when compared to the third quarter of 2020, primarily due to a sharp decline in revenues from video products partially offset by increase in revenues from microphones and audio conferencing products.

Overall revenue increased by 6% during the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to increase in revenue from microphones, especially the BMA based solutions and audio conferencing products partially offset by a decline in revenues from video products.

Revenue from video products was impacted negatively during 2021-Q3 when compared to 2020-Q3 due to lack of demand for video products and personal audio conferencing products at the same level as it was in latter half of 2020 when the demand from work from home and learn from home markets was boosted by stimulus funding through CARES Act.

Our revenue performance in 2021-Q3 was also impacted negatively due to the raw material supply shortages that have affected the global manufacturing of high tech products as well as due to logistics bottlenecks.

Despite the negative impact of COVID-19 and the infringement of our patents by Shure on all professional installed products, our new solutions incorporating Beamforming Microphone Array Ceiling Tile ("BMA-CT") continued to result in overall Beamforming Microphone Array ("BMA") revenue to be significantly higher than last year.

However, revenue from BMA products as well as from our pro audio products are still far below the levels prior to infringement of our patents.

Our revenue is negatively impacted due to on-going harm of infringement of ClearOne’s patents despite the preliminary injunction granted against Shure as we believe Shure continues to infringe our patents and violates the preliminary injunction.

The patent infringement also has negatively impacted directly the revenue from ClearOne’s other products not related to the infringed patents not withstanding a significant growth in revenue from video products in the first quarter of 2021 compared to first quarter of 2020.

Our gross profit margin increased to 44.3% during the second quarter of 2021 from 41.2% during the second quarter of 2020.

Net loss decreased from $1.9 million in the second quarter of 2020 to $1.6 million in the second quarter of 2021 .

The decrease was mainly due to increase in absolute gross profit dollars through higher revenue partially offset by an increase in operating costs.

During the six months ended June 30, 2021, our absolute gross profit dollars increased to $6.4 million from $5.5 million in the same period in 2020 despite gross profit margin declining to 43.5% from 45.1% due to increase in revenues.

During the six months ended June 30, 2021, net loss decreased to $3.2 million compared to $3.8 million during the same period in 2020 mainly due to higher gross profit dollars from higher revenue partially offset by an increase in operating expenses in the six months ended June 30, 2021 compared to six months ended June 30, 2020.

Our revenue is negatively impacted due to on-going harm of infringement of ClearOne’s patents despite the preliminary injunction granted against Shure as we believe Shure continues to infringe certain of our patents and violates the preliminary injunction.

The patent infringement also has negatively impacted directly the revenue from ClearOne’s other products not related to the infringed patents.

Our gross profit margin decreased to 40.8% during the third quarter of 2021 from 41.8% during the third quarter of 2020.

Net loss increased from $1.3 million in the third quarter of 2020 to $2.2 million in the third quarter of 2021 .

The increase in net loss was mainly due to (a) decrease in absolute gross profit dollars as a result of lower revenue (b) increased amortization costs relating to our capitalized patent defense costs, and (c) increase in trade show related marketing expenses.

During the nine months ended September 30, 2021, our absolute gross profit dollars increased to $9.3 million from $9.0 million in the same period in 2020 despite gross profit margin declining to 42.6% from 43.8% due to increase in revenues.

During the nine months ended September 30, 2021, net loss increased to $5.4 million compared to $5.0 million during the same period in 2020 mainly due to increased amortization costs relating to our capitalized patent defense costs, partially offset by higher gross profit dollars from higher revenue.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On September 1, 2020, the U.S.

District Court of Northern Illinois held that " Shure has violated the preliminary injunction order and is found in contempt because it designed the MXA910-A in such a way that allows it to be easily installed flush in most ceiling grids”.

The Court also opined that, “[t]he record is clear and convincing that Shure - through its design choices - violated the injunction order by allowing integrators to install the MXA910-A in the enjoined flush configuration.” Ultimately, the Court ordered that “ Shure shall no longer manufacture, market, or sell the MXA910...”.

ClearOne’s motion to accuse Shure’s MXA910-US of infringing the ’806 Patent is still pending with the Court.

Industry conditions

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If the pandemic continues to be a severe worldwide health crisis, the disease could have a material adverse effect on our business, results of operations, financial condition and cash flows and adversely impact the trading price of our common stock.

Deferred Revenue

Deferred revenue decreased to $56 thousand at June 30, 2021 compared to $123 thousand at December 31, 2020.

Deferred Product Revenue

Deferred product revenue decreased to $57 thousand on September 30, 2021 compared to $123 thousand on December 31, 2020.

A detailed discussion of our results of operations follows below.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the three and six months ended June 30, 2021

The following table sets forth certain items from our unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 (“ 2021 - Q2 ”) (" 2021 -H1") and 2020 (" 2020 - Q2 ") (" 2020 -H1") , respectively, together with the percentage of total revenue which each such item represents:

Three months ended June 30,

Six months ended June 30,

Results of Operations for the three and nine months ended September 30, 2021

The following table sets forth certain items from our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021 (“ 2021 - Q3 ”) (" 2021 -YTD") and 2020 (" 2020 - Q3 ") (" 2020 -YTD") , respectively, together with the percentage of total revenue which each such item represents:

Three months ended September 30,

Nine months ended September 30,

(dollars in thousands)

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Provision for income taxes

Our revenue increased to $7.7 million in 2021-Q2 compared to $6.4 million in 2020-Q2 primarily due to a 70% increase in microphones revenue, followed by a 17 % increase in audio conferencing revenue, partially offset by a 22% decline in video products.

Microphones growth continued to be led by our new solutions incorporating BMA-CT and BMA 360 with our traditional ceiling mics also enjoying revenue growth.

Audio Conferencing category as a whole increased mainly due to a strong revenue performance of our professional mixers despite decreases in other product groups within audio conferencing category.

During the second quarter of 2021, revenues from Americas declined by 9% primarily due to decline in revenues from USA, while revenues from Asia Pacific, including the Middle East and India grew by 14% primarily due to increase in revenues from China, Australia and Korea, and revenues from Europe and Africa increased by 197% primarily due to significant revenue increases from Southern Europe followed by overall revenue growth in all other regions of Europe and Africa.

During the six months ended June 30, 2021 our revenues increased from $12.1 million to $14.8 million compared to same period in 2020 due to increase in all product categories with revenues from microphones increasing by 38%, video products increasing by 25% and audio conferencing increasing by 9%.

Our revenue decreased to $7.0 million in 2021-Q3 compared to $8.4 million in 2020-Q3 primarily due to a 55% decrease in video products partially offset by increases in microphones revenue by 9% and audio conferencing revenue by 4%.

Video products suffered declines in 2021-Q3 compared to 2020-Q3 due to lack of demand for video products and personal audio conferencing products at the same level as it was in 2020-YTD when the demand from work from home and learn from home markets was boosted by stimulus funding through CARES Act.

Microphones growth continued to be led by our new solutions incorporating BMA-CT and BMA 360 while our traditional ceiling mics suffered a decline in revenues.

Audio Conferencing category as a whole increased mainly due to a strong revenue performance of our professional mixers despite significant decline in revenues from personal audio conferencing products.

During the third quarter of 2021, revenues from Americas declined by 45% primarily due to decline in revenues from USA and Canada despite significant revenue growth from Latin America, while revenues from Asia Pacific, including the Middle East, India and Australia grew by 88% primarily due to overall increase in revenues from all regions except Korea, and revenues from Europe and Africa increased by 34% primarily due to significant revenue increases from Northern Europe followed by overall revenue growth in all other regions of Europe and Africa.

During the nine months ended September 30, 2021 our revenues increased from $20.5 million to $21.8 million compared to same period in 2020 due to increases in microphones revenue increasing by 27%, and audio conferencing revenue by 7%, partially offset by a decrease in video products revenue by 19%.

The increase in revenue from m icrophones continued to be led by our new solutions incorporating BMA-CT and BMA 360 with wireless microphones also enjoying revenue growth.

Audio Conferencing category as a whole increased mainly due to a strong revenue performance by our professional mixers.

However other product categories within audio conferencing category suffered revenue declines during 2021-H1 when compared to 2020-H1.

Video products enjoyed revenue growth primarily due to growth in demand from work from home and learn from home markets.

During 2021-H1 Americas declined by 3%, Asia Pacific, including the Middle East and India increased by 34% and Europe and Africa increased by 106%.

Revenues increased from all major regions except USA and Canada during 2021-H1 compared to 2020-H1 with revenue growth from Korea and Southern Europe far exceeding revenue growth from other regions.

However other product categories within audio conferencing category suffered revenue declines during 2021-YTD when compared to 2020-YTD.

Video products suffered declines in 2021-YTD compared to 2020-YTD due to lack of demand for video products and personal audio conferencing products at the same level as it was in latter half of 2020 when the demand from work from home and learn from home markets was boosted by stimulus funding through CARES Act.

During 2021-YTD revenues from Americas declined by 22%, Asia Pacific, including the Middle East, India and Australia increased by 49% and Europe and Africa increased by 78%.

Revenues increased from all major regions except USA and Canada during 2021-YTD compared to 2020-YTD with rate of revenue growth from Southern Europe and Latin America far exceeding rate of revenue from other regions.

We believe, although there can be no assurance, that we can sustain our revenue growth and return to generating operating profits through our strategic initiatives namely product innovation, cost reduction and defense of our intellectual property.

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Cost of goods sold includes expenses associated with finished goods purchased from outsourced manufacturers, the repackaging of our products, our manufacturing and operations organization, property and equipment depreciation, warranty expense, freight expense, royalty payments, and the allocation of overhead expens es.

Our gross profit margin increased from 41.2% during 2020-Q2 to 44.3 % during 2021 -Q2 .

The gross profit margin was positively impacted due to decreased freight and tariff costs and inventory obsolescence costs as a percentage of revenue, partially offset by increase in material costs and overhead costs as a percentage of revenue.

Our gross profit margin decreased from 45.1% during 2020-H1 to 43.5% during 2021-H1.

The gross profit margin decreased primarily due to increase in material costs and freight and tariff costs a percentage of revenue, partially offset by decrease in inventory obsolescence costs as a percentage of revenue.

Our gross profit margin decreased from 41.8% during 2020-Q3 to 40.8 % during 2021 -Q3 .

The gross profit margin was negatively impacted due to increased freight and tariff costs, and inventory obsolescence and scrap costs as a percentage of revenue, partially offset by decrease in material costs and inventory adjustment costs as a percentage of revenue.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our gross profit margin decreased from 43.8% during 2020-YTD to 42.6% during 2021-YTD.

The gross profit margin decreased primarily due to increased material costs, freight and tariff costs, and inventory obsolescence and scrap costs as a percentage of revenue, partially offset by decrease inventory adjustment costs as a percentage of revenue .

Our profitability in the near-term continues to depend significantly on our revenues from professional installed audio-conferencing products.

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Total operating expenses were $4.9 million for 2021-Q3 compared to $4.7 million for 2020-Q3.

Total operating expenses were $9.4 million for 2021-H1 compared to $9.0 million for 2020-H1.

Total operating expenses were $14.3 million for 2021-YTD compared to $13.7 million for 2020-YTD.

The following contains a more detailed discussion of expenses related to sales and marketing, research and product development, general and administrative, and other items.

Sales and Marketing - S&M expenses include selling, customer service, and marketing expenses such as employee-related costs, allocations of overhead expenses, trade shows, and other advertising and selling expenses.

S&M expenses for 2021-Q2 increased to $1.8 million from $1.5 million for 2020-Q2.

The increase was mainly due to increase in sales commissions and due to one-time employment termination costs.

S&M expenses for 2021-H1 increased to $3.3 million from $3.2 million for 2020-H1.

The increase was mainly due to increase in sales commissions and due one time employment termination costs partially offset by decreases in trade-show related expenses and travel expenses.

S&M expenses for 2021-Q3 remained almost unchanged at $1.7 when compared to 2020-Q3.

The i ncreases in marketing expenses including trade-show expenses were more than offset by a decline in sales commissions.

S&M expenses for 2021-YTD increased to $5.0 million from $4.9 million for 2020-YTD.

The increases in employee sales commissions and marketing expenses were partially offset by decreases in commissions paid to independent reps, travel expenses and shipping costs.

Research and Product Development - R&D expenses include research and development, product line management, engineering services, and test and application expenses, including employee-related costs, outside services, expensed materials, depreciation, and an allocation of overhead expenses.

R&D expenses remained almost the same at $1.5 million for both quarters compared.

R&D expenses remained fairly consistent with approximately $2.8 million for 2021-H1, as compared to $2.8 million for 2020-H1.

The increase in R&D project expenses were offset by decreases in legal expenses and employee related expenses.

R&D expenses remained almost the same at $4.3 million for 2021-YTD, as compared to 2020-YTD.

The decreases in employee related expenses and legal expenses were offset by increases in R&D project expenses and one-time employment termination expenses.

General and Administrative - G&A expenses include employee-related costs, professional service fees, allocations of overhead expenses, litigation costs, and corporate administrative costs, including costs related to finance and human resources teams.

G&A expenses increased slightly from $1.5 million in 2020-Q2 to $1.7 million in 2021- Q2 .

The increase was primarily due to increases in depreciation and amortization expenses and insurance expenses.

G&A expenses increased from $3.0 million in 2020-H1 to $3.3 million in 2021-H1.

The increase was primarily due to increases in depreciation and amortization expenses and insurance expenses.

G&A expenses increased from $1.4 million in 2020-Q3 to $1.7 million in 2021- Q3 .

The increase was primarily due to increased amortization costs relating to our capitalized patent defense costs and an increase in insurance expenses partially offset by a decrease in legal expenses.

G&A expenses increased from $4.5 million in 2020-YTD to $5.0 million in 2021-YTD.

The increase was primarily due to increased amortization costs relating to our capitalized patent defense costs and increase in insurance expenses partially offset by a decrease in legal expenses.

Other income (expense), net

Other income (expense), net includes interest income and foreign currency changes.

Other income remained immaterial during the second quarter of 2021 and 2020 and between 2021-H1 and 2020-H1.

I nterest expense remained almost the same at $0.1 million for both quarters compared.

Interest expense remained consistent at $0.2 million in 2021 - H1 compared to $ 0.2 million in 2020 - H1 .

Other income remained immaterial during the third quarter of 2021 and 2020 and between 2021-YTD and 2020-YTD.

I nterest expense increased from $0.1 million in 2020-Q3 to $0.15 million in 2021-Q3 due to increased debt during 2021-Q3 compared to 2020-Q3.

Interest expense increased to $0.4 million in 2021 -YTD compared to $ 0.3 million in 2020 -YTD due to increased debt during 2021-YTD compared to 2020-YTD.

Provision for income taxes

During 2021 -H1, we did not recognize any benefit from the losses incurred due to setting up of full valuation allowance.

Provision for income taxes recognized for 2021 - Q2 and 2021 - H1 relates to foreign jurisdictions .

During 2021 -YTD, we did not recognize any benefit from the losses incurred due to setting up of a full valuation allowance.

Provision for income taxes recognized for 2021 - Q3 and 2021 -YTD relates to foreign jurisdictions .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2021, our cash and cash equivalents were approximately $2.1 million compared to $3.8 million as of December 31, 2020.

Our working capital was $ 17.6 million and $22.2 million as of June 30, 2021 and December 31, 2020, respectively.

Net cash provided by opera ting activities was approximately $1.0 million in 2021 - H1 , an inc rease of cash provided of approximately $0.9 million from $0.1 million of cash provided by operating activities in 2020-H1.

The increase in cash inflow was due to a positive change in operating assets and liabilities of $0.1 million, increase in non-cash charges by $0.3 million and a decrease in net loss by $0.5 million.

Net cash used in investing activities was $2.5 million in 2021-H1 compared to $3.5 million in 2020-H1, a decrease in cash used of $ 1.0 million.

The decrease in cash used in investing activities was primarily due to an increase in net cash realized from marketable securities of approximately $ 0.3 million and a decrease in capitalized patent defense costs by $0.6 million.

Net cash used in financing activities in 2021-H1 was $0.2 million consisting of repayment of principal amounts due on senior convertible notes compared to cash provided by financing activities of $1.5 million in 2020-H1, which consisted of net proceeds from Paycheck Protection Program.

As of September 30, 2021, our cash and cash equivalents were approximately $9.2 million compared to $3.8 million as of December 31, 2020.

Our working capital was $ 23.7 million and $22.2 million as of September 30, 2021 and December 31, 2020, respectively.

Net cash used in opera ting activities was approximately $1.5 million in 2021 -YTD , an inc rease of cash used of approximately $1.2 million from $0.3 million of cash used in operating activities in 2020-YTD.

The increase in cash outflow was due to a negative change in operating assets and liabilities of $1.0 million, increase in non-cash charges by $0.2 million and an increase in net loss by $0.4 million.

Net cash used in investing activities was $4.2 million in 2021-YTD compared to $4.4 million in 2020-YTD, a decrease in cash used of $ 0.3 million.

The decrease in cash used in investing activities was primarily due to a decrease in capitalized patent defense costs by $0.2 million and a decrease in purchase of property and equipment by $0.2 million, offset partially by a decrease in net cash realized from marketable securities of approximately $ 0.1 million.

Net cash provided by financing activities in 2021-YTD was $11.0 million consisting primarily of net proceeds from issue of common stock and warrants for $9.3 million and proceeds from short-term bridge loan of $2.0 million offset by repayment of principal amounts due on senior convertible notes of $0.3 million compared to cash provided by financing activities of $6.3 million in 2020-YTD, which consisted of net proceeds from issue of common stock and warrants for $4.8 million and proceeds of $1.5 million from Paycheck Protection Program.

Capitalization of patent defense costs .

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We are currently pursuing all available legal remedies to defend our strategic patents from infringement.

We have already spent approximately $23.6 million from 2016 through June 30, 2021 towards this litigation and may be required to spend more to continue our legal defense.

We have already spent approximately $25.7 million from 2016 through September 30, 2021 towards this litigation and may be required to spend more to continue our legal defense.

We believe the decision by the U.S.

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We have been actively engaged in preserving cash by suspending our dividend program and allowing our share repurchase program to expire in 2018 and implementing company-wide cost reduction measures.

We have also raised additional capital of $9.9 million (net of issuance costs) in 2018 by issuing common stock, $2.7 million (net of issuances costs) in 2019 by issuing senior convertible notes, $1.5 million in April 2020 by borrowing through Paycheck Protection Program, $4.8 million in September 2020 by issuing common stock and warrants, and $2.0 million in July 2021 by issuing short-term debt.

In addition, we expect to generate additional cash as our inventory levels are brought down to historical levels.

We have also raised additional capital of $9.9 million (net of issuance costs) in 2018 by issuing common stock, $2.7 million (net of issuances costs) in 2019 by issuing senior convertible notes, $1.5 million in April 2020 by borrowing through Paycheck Protection Program, $4.8 million (net of issuances costs) in September 2020 by issuing common stock and warrants, $2.0 million in July 2021 by issuing short-term debt and $9.3 million (net of issuances costs) in September 2021 by issuing common stock and warrants.

In addition, we are generating additional cash as our inventory levels are brought down to historical levels.

We also believe that the measures taken by us will yield higher revenues in the future.

We believe, although there can be no assurance, that all of these measures and effective management of working capital will provide the liquidity needed to meet our operating needs through at least through August 10, 2022.

We also believe that our strong portfolio of intellectual property and our solid brand equity in the market will enable us to raise additional capital if and when needed to meet our short and long-term financing needs;

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If we need additional capital and are unable to secure financing, we may be required to further reduce expenses, delay product development and enhancement, or revise our strategy regarding ongoing litigation.

At June 30, 2021, we had open purchase orders of approximately $1.8 million mostly for purchase of inventory.

At June 30, 2021, we had inventory totaling $13.2 million, of which non-current inventory accounted for $4.0 million.

At September 30, 2021, we had open purchase orders of approximately $6.0 million mostly for purchase of inventory.

At September 30, 2021, we had inventory totaling $12.5 million, of which non-current inventory accounted for $3.3 million.

This compares to total inventories of $15.1 million and non-current inventory of $4.6 million as of December 31, 2020.

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Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of June 30, 2021 (in millions):

The following table summarizes our contractual obligations as of September 30, 2021 (in millions):

Payment Due by Period

Senior convertible notes

Short-term bridge loan

Payroll Protection Plan loan

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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