What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-12 · 74 added, 63 removed, 345 unchanged (28% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

June 30, 2022

September 30, 2022

December 31, 2021

2 unchanged sentences

Marketable securities

Receivables, net of allowance for doubtful accounts of $ 326 and $ 326 , respectively

Receivables, net of allowance for doubtful accounts of $ 326

Inventories, net

30 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cost of goods sold

6 unchanged sentences

Interest expense

Other income, net

Other income (loss), net

Loss before income taxes

5 unchanged sentences

Comprehensive loss:

Unrealized gain (loss) on available-for-sale securities, net of tax

Unrealized loss on available-for-sale securities, net of tax

Change in foreign currency translation adjustment

4 unchanged sentences

(Dollars in thousands, except per share amounts)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

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

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

Depreciation and amortization expense

1 unchanged sentence

Share-based compensation expense

Provision for doubtful accounts, net

Change of inventory to net realizable value

7 unchanged sentences

Operating lease liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

6 unchanged sentences

Cash flows from financing activities:

Net proceeds from issuance of common stock and warrants

Proceeds from issuance of short-term notes

Net proceeds from equity-based compensation programs

1 unchanged sentence

Principal payments of long-term debt

Net cash provided by (used in) financing activities

Net cash provided by 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:

Six months ended June 30,

Nine months ended September 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 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.

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 September 30, 2022 and December 31, 2021, the results of operations for the three and nine months ended September 30, 2022 and 2021, and the cash flows for the nine months ended September 30, 2022 and 2021.

The results of operations for the three and nine months ended September 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 June 30, 2022 that are of significance or potential significance to the Company.

There have been no changes to these policies during the September 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 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 $ 28,653 from 2016 through June 30, 2022 towards this litigation and may be required to spend more to continue its legal defense.

As of September 30, 2022, our cash and cash equivalents were approximately $ 1,450 compared to $ 1,071 as of December 31, 2021.

Our working capital was $ 19,329 as of September 30, 2022.

Net cash used in operating activities was $ 2,060 for the nine months ended September 30, 2022, an increase of $ 583 from $ 1,477 of cash used in operating activities in the nine months ended September 30, 2021.

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

The Company has already spent approximately $ 28,798 from 2016 through September 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.

1 unchanged sentence

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

In October 2022, the Company issued short term notes to raise $ 2,000 .

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

2 unchanged sentences

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, 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;

3 unchanged sentences

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Audio conferencing

1 unchanged sentence

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

North and South America

5 unchanged sentences

Loss per common share is computed based on the weighted-average number of common shares outstanding and, when appropriate, dilutive potential common stock outstanding during the period.

Stock options, warrants and convertible portion of senior convertible notes are considered to be potential common stock.

Stock options, warrants and the convertible portion of senior convertible notes are considered to be potential common stock.

The computation of diluted earnings (loss) per share does not assume exercise or conversion of securities that would have an anti-dilutive effect.

2 unchanged sentences

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 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 December 31, 2021 were as follows.

Amortized cost

7 unchanged sentences

Total available-for-sale securities

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

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

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Intangible Assets

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

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

Estimated useful lives (years)

June 30, 2022

September 30, 2022

December 31, 2021

4 unchanged sentences

Total intangible assets, net

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,

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

Three months ended September 30,

Nine months ended September 30,

Amortization of intangible assets

4 unchanged sentences

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

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

June 30, 2022

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

September 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 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 for the three and nine months ended September 30, 2022 and 2021 was as follows:

Three months ended September 30,

Nine months ended September 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 and six months ended June 30, 2022 and 2021 was as follows:

Three months ended June 30,

Six months ended June 30,

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

Three months ended September 30,

Nine months ended September 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 .

2 unchanged sentences

The facility supports the Company's principal administrative, sales, marketing, customer support, and research and product development activities.

The Company occupies a 950 square-foot facility in Austin, Texas under the terms of an operating lease expiring in October 20 22 .

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

The Company occupied a 950 square-foot facility in Austin, Texas under the terms of an operating lease that expired in October 20 22 .

This facility supported the Company's sales, marketing, customer support, and research and development activities.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Six Months Ended June 30,

Nine months ended September 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:

June 30, 2022

September 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 June 30, 2022:

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

Years ending December 31,

5 unchanged sentences

Shareholders' Equity

Three months ended June 30,

Six Months Ended June 30,

Three months ended September 30,

Nine months ended September 30,

Common stock and additional paid-in capital

58 unchanged sentences

The following table represents the carrying value of Notes and Warrants:

UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2022

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 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 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:

During the three and nine months ended September 30, 2022, amortization of debt discount and issuance costs was $ 49 and $ 147 , respectively and for the three and nine months ended September 30, 2021, amortization of debt discount and issuance costs was $ 49 and $ 147 , respectively.

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

Year ending December 31,

25 unchanged sentences

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)

June 30, 2022

The Company treated the forgiveness as extinguishment of debt in this quarter ended September 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 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 December 31, 2021:

The following table sets forth the fair value of the financial instruments re-measured by the Company as of September 30, 2022 and 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.

There were no financial instruments that were re-measured by the Company as of September 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 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.

Provision for income taxes for the nine months ended September 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 September 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.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Subsequent events

On October 28, 2022 the Company obtained a bridge loan in the principal amount of $ 2,000 from Edward D.

Bagley (the “2022 Bridge Loan”), an affiliate of the C ompany.

The 2022 Bridge Loan is evidenced by a promissory note dated October 28, 2022 (the “2022 Note”) issued by the Company to Mr.

The 2022 Note bears interest at a rate of 12.0 % per annum and matures on October 28, 2023 .

Bagley is an affiliate of the Company and the Company’s single largest stockholder.

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 $ 6,383 as of June 30, 2022.

The Company’s purchase commitments under such agreements are approximately $ 2,226 as of September 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