What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-12 compared with 2022-05-19 · 69 added, 92 removed, 339 unchanged (32% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

March 31, 2022

June 30, 2022

December 31, 2021

35 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Cost of goods sold

21 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense

2 unchanged sentences

Change of inventory to net realizable value

Gain recognized on Paycheck Protection Plan Loan forgiveness

Changes in operating assets and liabilities:

5 unchanged sentences

Operating lease liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

7 unchanged sentences

Net proceeds from equity-based compensation programs

Paycheck Protection Program loan refund upon full forgiveness net of loan payments

Principal payments of long-term debt

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

7 unchanged sentences

The following is a summary of supplemental cash flow activities:

Three months ended March 31,

Six months ended June 30,

Cash paid for income taxes

14 unchanged sentences

Certain information and footnote disclosures that are usually included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been either condensed or omitted in accordance with SEC rules and regulations.

The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of March 31, 2022 and December 31, 2021, the results of operations for the three months ended March 31, 2022 and 2021, and the cash flows for the three months ended March 31, 2022 and 2021.

The results of operations for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the results for a full-year period.

The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of June 30, 2022 and December 31, 2021, the results of operations for the three and six months ended June 30, 2022 and 2021, and the cash flows for the six months ended June 30, 2022 and 2021.

The results of operations for the three and six months ended June 30, 2022 and 2021 are not necessarily indicative of the results for a full-year period.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

1 unchanged sentence

The significant accounting policies were described in Note 1 to the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

There have been no changes to these policies during the March 31, 2022 that are of significance or potential significance to the Company.

There have been no changes to these policies during the June 30, 2022 that are of significance or potential significance to the Company.

Recent accounting pronouncements:

The Company has determined that recently issued accounting standards will not have a material impact on its consolidated financial position, results of operations or cash flows.

As of March 31, 2022 , our cash and cash equivalents were approximately $ 1,422 compared to $ 1,071 as of December 31, 2021.

Our working capital was $ 19,339 as of March 31, 2022 .

Net cash used in operating activities was $ 1,043 for the three months ended March 31, 2022, an increase 1,030 from $ 13 of cash used in activities in the three months ended March 31, 2022.

As of June 30, 2022, our cash and cash equivalents were approximately $ 1,203 compared to $ 1,071 as of December 31, 2021.

Our working capital was $ 20,162 as of June 30, 2022.

Net cash used in operating activities was $ 2,692 for the six months ended June 30, 2022, an increase of $ 3,677 from $ 985 of cash provided by operating activities in the six months ended June 30, 2021.

The Company is currently pursuing all available legal remedies to defend its strategic patents from infringement.

The Company has already spent approximately $ 28,345 from 2016 through March 31, 2022 towards this litigation and may be required to spend more to continue its legal defense.

The Company has already spent approximately $ 28,653 from 2016 through June 30, 2022 towards this litigation and may be required to spend more to continue its legal defense.

In order to maintain liquidity, the Company has been actively engaged in preserving cash by implementing company-wide cost reduction measures and raising additional capital.

The company raised additional capital in 2019 by issuing senior convertible notes, in 2020 by borrowing through the CARES Act Paycheck Protection Program and issuing common stock and warrants and in 2021 by issuing short-term notes and issuing common stock and warrants.

In January 2022, the Company issued $ 2,000 in common stock as consideration for the cancellation and termination of the short-term notes.

In addition, the Company has been generating additional cash as our inventory levels are brought down to historical levels.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited - Dollars in thousands, except per share amounts)

The Company has 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.

The company has also raised additional capital in 2019 by issuing senior convertible notes, in 2020 by borrowing through the CARES Act Paycheck Protection Program and issuing common stock and warrants and in 2021 by issuing short-term notes and issuing common stock and warrants.

In January 2022, the Company issued $ 2,000 in common stock as consideration for the cancellation and termination of the short-term notes.

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

The Company also believes that the Company's core strategies of product innovation and prudent cost management will bring the company back to profitability in the future.

The Company believes, 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 May 19, 2023.

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

however, there can be no assurance that, if needed, we will be successful in obtaining the necessary funds through equity or debt financing.

The Company believes, although there can be no assurance, that all of these measures and effective management of working capital, including collecting on the income taxes receivable balance, will provide the liquidity needed to meet our operating needs through at least August 12, 2023.

The Company also believes that its strong portfolio of intellectual property and its solid brand equity in the market will enable it to raise additional capital if and when needed to meet its short and long-term financing needs;

however, there can be no assurance that, if needed, the Company will be successful in obtaining the necessary funds through equity or debt financing.

If the Company needs additional capital and is unable to secure financing, it may be required to further reduce expenses, delay product development and enhancement, or revise its strategy regarding ongoing litigation.

1 unchanged sentence

The following table disaggregates the Company’s revenue into primary product groups:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Audio conferencing

1 unchanged sentence

The following table disaggregates the Company’s revenue into major regions:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

North and South America

10 unchanged sentences

The following table sets forth the computation of basic and diluted earnings (loss) per common share:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Basic weighted average shares outstanding

12 unchanged sentences

Dividend and interest income are recognized when earned.

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities by major security type and class of securities as of March 31, 2022 and December 31, 2021 were as follows:

Amortized cost

2 unchanged sentences

Estimated fair value

March 31, 2022

Available-for-sale securities:

Corporate bonds and notes

Municipal bonds

Total available-for-sale securities

December 31, 2021

3 unchanged sentences

Total available-for-sale securities

Maturities of marketable securities classified as available-for-sale securities were as follows as of March 31, 2022:

Amortized cost

Estimated fair value

Due within one year

Due after one year through five years

Due after five years

Total available-for-sale securities

There were no available-for-sale securities as of June 30, 2022.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited - Dollars in thousands, except per share amounts)

Debt securities in an unrealized loss position as of March 31, 2022 were not deemed impaired at acquisition and subsequent declines in fair value are not deemed attributed to declines in credit quality.

Management believes that it is more likely than not that the securities will receive a full recovery of par value, although there can be no assurance that such recovery will occur.

The available-for-sale marketable securities with continuous gross unrealized loss position for less than 12 months and 12 months or greater and their related fair values were as follows:

Less than 12 months

More than 12 months

Estimated fair value

Gross unrealized holding losses

Estimated fair value

Gross unrealized holding losses

Estimated fair value

Gross unrealized holding losses

As of March 31, 2022

Corporate bonds and notes

Municipal bonds

Management believes that it is more likely than not that the securities will receive a full recovery of par value, although there can be no assurance that such recovery will occur.

Intangible Assets

Intangible assets as of March 31, 2022 and December 31, 2021 consisted of the following:

Intangible assets as of June 30, 2022 and December 31, 2021 consisted of the following:

Estimated useful lives (years)

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

Total intangible assets, net

The amortization of intangible assets for the three months ended March 31, 2022 and 2021 was as follows:

Three months ended March 31,

The amortization of intangible assets for the three and six months ended June 30, 2022 and 2021 was as follows:

Three months ended June 30,

Six months ended June 30,

Amortization of intangible assets

4 unchanged sentences

(Unaudited - Dollars in thousands, except per share amounts)

Inventories, net of reserves, as of March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022

Inventories, net of reserves, as of June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022

December 31, 2021

5 unchanged sentences

We expect to sell the above inventory, net of reserves, at or above the stated cost and believe that no loss will be incurred on its sale, although there can be no assurance of the timing or amount of any sales.

Net loss incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory for the three months ended March 31, 2022 and 2021 was as follows:

Three months ended March 31,

Net loss incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory for the three and six months ended June 30, 2022 and 2021 was as follows:

Three months ended June 30,

Six months ended June 30,

Net loss incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory

Rent expense is recognized on a straight-line basis over the period of the lease taking into account future rent escalation and holiday periods.

Rent expense for the three months ended March 31, 2022 and 2021 was as follows:

Three months ended March 31,

Rent expense for the three and six months ended June 30, 2022 and 2021 was as follows:

Three months ended June 30,

Six months ended June 30,

The Company occup ies a 1,350 square-foot facility in Gainesville, Florida under the terms of an operating lease expiring in F ebruary 2023 .

8 unchanged sentences

This facility support s the Company's administrative, marketing, customer support, and research and product development activities.

The Company occupies a 40,000 square-foot warehouse in Salt Lake City, Utah under the terms of an operating lease expiring in April 2025, which serves as the Company's primary inventory fulfillment and repair center.

Supplemental cash flow information related to leases was as follows:

Three months ended March 31,

Six Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities

3 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

March 31, 2022

June 30, 2022

December 31, 2021

5 unchanged sentences

Weighted average discount rate for operating leases

The following represents maturities of operating lease liabilities as of March 31, 2022:

The following represents maturities of operating lease liabilities as of June 30, 2022:

Years ending December 31,

5 unchanged sentences

Shareholders' Equity

Three months ended March 31,

Three months ended June 30,

Six Months Ended June 30,

Common stock and additional paid-in capital

60 unchanged sentences

(Dollars in thousands, except share and per share amounts)

March 31, 2022

June 30, 2022

December 31, 2021

10 unchanged sentences

Debt discount and issuance costs are amortized over the life of the note to interest expense using the effective interest method.

During the three months ended March 31, 2022 and March 31, 2021 amortization of debt discount and issuance costs was $ 49 and $ 49 , respectively.

The following table represents schedule of maturities of principal amount contained in the Notes as of March 31, 2022:

During the three and six months ended June 30, 2022, amortization of debt discount and issuance costs was $ 49 and $ 98 , respectively and for the three and six months ended June 30, 2021, amortization of debt discount and issuance costs was $ 49 and $ 98 , respectively.

The following table represents schedule of maturities of principal amount contained in the Notes as of June 30, 2022:

Year ending December 31,

10 unchanged sentences

All other terms and conditions of the Bridge Loan remained the same.

This Bridge Loan of $ 2,000 is included under short-term debt.

This Bridge Loan of $ 2,000 is included under short-term debt as of December 31, 2021.

On January 4, 2022, the Company entered into a Securities Purchase Agreement with Edward D.

Bagley, pursuant to which the Company agreed to issue and sell, in a private placement 1,538,461 shares (the “Shares”) of the Company’s common stock, par value $ 0.001 per share, at a purchase price of $ 1.30 per share of Common Stock.

The consideration for the Shares is the cancellation and termination of Mr.

Bagley, pursuant to which the Company issued and sold to Mr.

Bagley, in a private placement 1,538,461 shares (the “Shares”) of the Company’s common stock, par value $ 0.001 per share, at a purchase price of $ 1.30 per share of Common Stock.

The consideration for the Shares was the cancellation and termination of Mr.

Bagley’s outstanding bridge loan to the Company in the principal amount of $ 2,000 originally issued on July 2, 2021 and amended and restated on September 11, 2021 .

3 unchanged sentences

Bank National Association Bank, which provided for a loan in the principal amount of $ 1,499 (“PPP Loan”) pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

The PPP Loan has a two-year term and bears interest at a rate of 1.0 % per annum.

The PPP Loan had a two-year term and bears interest at a rate of 1.0 % per annum.

Monthly principal and interest payments are deferred for approximately sixteen months after the date of disbursement.

The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties.

The PPP Loan contains events of default and other provisions customary for a loan of this type.

The Paycheck Protection Program provides that the Loans may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act.

The Company intends to use the entire PPP Loan amount for qualifying expenses and to apply for forgiveness of the PPP Loan in accordance with the terms of the CARES Act.

The Company's Paycheck Protection Program Loan ("PPP Loan") under the CARES Act was forgiven by Small Business Administration effective April 29, 2022.

With this forgiveness, the Company is not required to repay the principal amount of $ 1,499 and the interest of $ 31 .

The Company received $ 953 back that it had already paid towards principal and interest payments toward the PPP Loan.

The Company treated the forgiveness as extinguishment of debt in this quarter ended June 30, 2022 and reported the entire principal amount forgiven of $ 1,499 along with interest already accounted for of $ 29 as a gain on extinguishment of debt.

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

As further discussed in Note 11 - Subsequent Events, the PPP Loan and the interest associated with the loan have been forgiven by United States Small Business Administration ("SBA") effective April 29, 2022.

March 31, 2022

June 30, 2022

December 31, 2021

15 unchanged sentences

The Company’s financial instruments are valued using observable inputs.

The following table sets forth the fair value of the financial instruments re-measured by the Company as of March 31, 2022 and December 31, 2021:

March 31, 2022

Corporate bonds and notes

Municipal bonds

The following table sets forth the fair value of the financial instruments re-measured by the Company as of December 31, 2021:

December 31, 2021

1 unchanged sentence

Municipal bonds

There were no financial instruments that were re-measured by the Company as of June 30, 2022.

The current year loss did not result in income tax benefit due to recording a full valuation allowance against expected benefits.

The valuation allowance was recorded as we concluded that it was more likely than not that our deferred tax assets were not realizable primarily due to the Company's recent pre-tax losses.

Provision for income taxes for the three months ended March 31, 2022 represents income tax expense recorded for jurisdictions outside the United States.

The Company had approximately $ 895 of uncertain tax positions as of March 31, 2022.

Provision for income taxes for the six months ended June 30, 2022 mostly represents income tax expense recorded for jurisdictions outside the United States.

The Company had approximately $ 895 of uncertain tax positions as of June 30, 2022.

Due to the inherent uncertainty of the underlying tax positions, it is not possible to forecast the payment of this liability for any particular year.

Subsequent events

The Company's Paycheck Protection Program Loan ("PPP Loan") under the CARES Act was forgiven by Small Business Administration effective April 29, 2022.

With this forgiveness, the Company is not required to repay the principal amount of $ 1,499 and the interest of $ 31 .

The Company expects to receive $ 953 back that it had already paid towards principal and interest payments toward the PPP Loan.

The Company will treat the forgiveness as extinguishment of debt in the quarter ended June 30, 2022 and will report the entire principal amount forgiven of $ 1,499 along with interest already accounted for of $ 27 as a gain on extinguishment of debt.

We have manufacturing agreements with electronics manufacturing service (“EMS”) providers related to the outsourced manufacturing of our products.

2 unchanged sentences

The Company has non-cancellable, non-returnable, and long-lead time commitments with its EMS providers and certain suppliers for inventory components that will be used in production.

The Company’s purchase commitments under such agreements are approximately $ 4,850 as of March 31, 2022.

The Company’s purchase commitments under such agreements are approximately $ 6,383 as of June 30, 2022.

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