What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 77 added, 149 removed, 270 unchanged (46% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

September 30, 2022

March 31, 2023

December 31, 2022

1 unchanged sentence

Cash and cash equivalents

Marketable securities

Receivables, net of allowance for doubtful accounts of $ 326

Legal settlement receivable

Receivables, net of allowance of $ 326

Inventories, net

2 unchanged sentences

Total current assets

Long-term marketable securities

Long-term inventories, net

9 unchanged sentences

Total current liabilities

Long-term debt, net

Operating lease liability, net of current

2 unchanged sentences

Shareholders' equity:

Common stock, par value $ 0.001 , 50,000,000 shares authorized, 23,952,555 and 22,410,126 shares issued and outstanding, respectively

Common stock, par value $ 0.001 , 50,000,000 shares authorized, 23,955,767 shares issued and outstanding

Additional paid-in capital

8 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Cost of goods sold

6 unchanged sentences

Interest expense

Other income (loss), net

Other income, net

Loss before income taxes

12 unchanged sentences

(Dollars in thousands, except per share amounts)

Nine months ended September 30,

Three months ended March 31,

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

1 unchanged sentence

Share-based compensation expense

Provision for doubtful accounts, net

Change of inventory to net realizable value

Gain recognized on Paycheck Protection Plan Loan forgiveness

Gain from disposal of assets

Changes in operating assets and liabilities:

Legal settlement receivable

Prepaid expenses and other assets

4 unchanged sentences

Operating lease liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

3 unchanged sentences

Proceeds from maturities and sales of marketable securities

Purchases of marketable securities

Net cash provided by (used in) investing activities

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

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

Principal payments of long-term debt

Net cash provided by financing activities

Principal payments of debt

Net cash 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:

Nine months ended September 30,

Three months ended March 31,

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 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.

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, 2023 and December 31, 2022, the results of operations for the three months ended March 31, 2023 and 2022, and the cash flows for the three months ended March 31, 2023 and 2022.

The results of operations for the three months ended March 31, 2023 and 2022 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, 2022 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, 2022.

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

There have been no changes to these policies during the quarter ended March 31, 2023 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 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.

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 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.

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326).

The new standard amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities.

In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies.

ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022.

CECL estimates of expected credit losses on trade receivables over their life will be required to be recorded at inception, based on historical information, current conditions, and reasonable and supportable forecasts.

The Company adopted the standard in its first quarter of 2023.

There was no material impact on the results of operations.

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

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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 November 14, 2023.

(Dollars in thousands, except per share amounts)

As of March 31, 2023, our cash and cash equivalents were approximately $ 59,006 compared to $ 984 as of December 31, 2022.

Our working capital was $ 68,676 as of March 31, 2023.

Net cash provided by operating activities was $ 60,321 for the three months ended March 31, 2023, an increase of $ 61,364 compared to $ 1,043 of cash used in operating activities for the three months ended March 31, 2022.

The company announced a special one -time cash dividend of $ 1.00 per share or eligible warrant (please see Note 10 - Subsequent events) which will be paid on May 31, 2023 and is expected to generate cash outflows of approximately $ 28,978 .

The Company also paid approximately $ 6,600 towards income taxes in April 2023.

The Company 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 the current cash position and all of these measures and effective management of working capital, will provide the liquidity needed to meet our operating needs through at least May 15, 2024.

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.

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

Revenue Information

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Audio conferencing

1 unchanged sentence

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

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 September 30,

Nine months ended September 30,

Three months ended March 31,

Basic weighted average shares outstanding

6 unchanged sentences

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Marketable Securities

The Company has classified its marketable securities as available-for-sale securities.

These securities are carried at estimated fair value with unrealized holding gains and losses included in accumulated other comprehensive loss in stockholders’ equity until realized.

Gains and losses on marketable security transactions are reported on the specific-identification method.

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 at December 31, 2021 were as follows.

Amortized cost

Gross unrealized holding gains

Gross unrealized holding losses

Estimated fair value

December 31, 2021

Available-for-sale securities:

Corporate bonds and notes

Municipal bonds

Total available-for-sale securities

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

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Dollars in thousands, except per share amounts)

Intangible Assets

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

Intangible assets as of March 31, 2023 and December 31, 2022 consisted of the following:

Estimated useful lives (years)

September 30, 2022

March 31, 2023

December 31, 2022

4 unchanged sentences

Total intangible assets, net

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,

The amortization of intangible assets for the three months ended March 31, 2023 and 2022 was as follows:

Three months ended March 31,

Amortization of intangible assets

3 unchanged sentences

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

September 30, 2022

(Dollars in thousands, except per share amounts)

Inventories, net of reserves, as of March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023

December 31, 2022

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 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 for three months ended March 31, 2023 and 2022 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

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

Three months ended September 30,

Nine months ended September 30,

Rent expense for three months ended March 31, 2023 and 2022 was as follows:

Three months ended March 31,

The Company occup ies a 1,350 square-foot facility in Gainesville, Florida under the terms of an operating lease expiring in F ebruary 2028 .

The Gainesville facility is used primarily to support the Company's research and development activities.

The Company occupies a 21,443 square-foot facility in Salt Lake City, Utah under the terms of an operating lease expiring in March 2024 , with an option to extend for additional five years .

The Company occupies a 9,402 square-foot facility in Salt Lake City, Utah under the terms of an operating lease expiring in February 2028.

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

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

(Dollars in thousands, except per share amounts)

The Company occupies a 6,175 square-foot facility in Chennai, India under the terms of an operating lease expiring in August 2023.

2 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Nine months ended September 30,

Three months ended March 31,

Cash paid for amounts included in the measurement of lease liabilities

3 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

September 30, 2022

March 31, 2023

December 31, 2022

5 unchanged sentences

Weighted average discount rate for operating leases

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

The following represents maturities of operating lease liabilities as of March 31, 2023:

Years ending December 31,

5 unchanged sentences

Shareholders' Equity

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Common stock and additional paid-in capital

14 unchanged sentences

Issue of Common Stock and Warrants

On September 13, 2020, the Company entered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company issued and sold in a registered direct offering 2,116,050 shares of the Company's common stock, par value $ 0.001 per share at an offering price of $ 2.4925 per share.

The Company received gross proceeds of approximately $ 5,275 and net proceeds $ 4,764 after deducting placement agent fees and related offering expenses.

In a concurring private placement, the Company also issued to the same purchasers warrants exercisable for an aggregate of 1,058,025 shares of common stock at an exercise price of $ 2.43 per share.

Each warrant became immediately exercisable and will expire five years from the issuance date.

On September 12, 2021, the Company entered into a securities purchase agreement with certain purchasers named therein, pursuant to which the Company issued 3,623,189 shares of the Company's common stock, par value $ 0.001 per share at an offering price of $ 2.76 per share.

8 unchanged sentences

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Dollars in thousands, except per share amounts)

Senior Convertible Notes and Warrants

15 unchanged sentences

The net proceeds after original issue discount and issuance costs of $ 346 were approximately $ 2,654 .

The Company expects to use the proceeds from the sale of the Notes and Warrants for general corporate purposes and working capital.

The Company expected to use the proceeds from the sale of the Notes and Warrants for general corporate purposes and working capital.

In accounting for the issuance of the Notes, the Company separated Notes and Warrants into liability and equity components.

10 unchanged sentences

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2022

(Dollars in thousands, except per share amounts)

March 31, 2023

December 31, 2022

6 unchanged sentences

Current portion of liability component included under short-term debt

Long-term portion of liability component included under long-term debt

Liability component total

1 unchanged sentence

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 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:

During the three months ended March 31, 2023 and March 31, 2022 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, 2023:

Year ending December 31,

2 unchanged sentences

Total principal amount

Short-term Bridge Loan

Short-term Bridge Loans

On July 2, 2021, the Company obtained a bridge loan in the principal amount of $ 2,000 from Edward D.

Bagley (the “2021 Bridge Loan”), an affiliate of the C ompany.

The Bridge Loan is evidenced by a promissory note dated July 2, 2021 (the “Note”) issued by the Company to Mr.

The Note bears interests at a rate of 8.0 % per annum, matures on the earlier to occur of (i) October 1 , 2021 or (ii) within two business days of the Company’s receipt of its expected U.S.

federal income tax refund, and contains other customary covenants and even ts of default .

The Bridge Loan was evidenced by a promissory note dated July 2, 2021 (the “Note”) issued by the Company to Mr.

The Note bore interest at a rate of 8.0 % per annum.

On September 11, 2021, the Company amended and restated the terms of the Bridge Loan to extend the latest maturity date from October 1, 2021 to January 3, 2022 .

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

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.

4 unchanged sentences

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

Paycheck Protection Program Loan

On April 18, 2020, the Company, entered into a loan agreement with U.S.

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 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 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 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.

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 Company.

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

The 2022 Note bore interest at a rate of 12.0 % per annum and had a maturity date of October 28, 2023 .

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

This Bridge Loan of $ 2,000 is included under short-term debt as of December 31, 2022.

In January 2023, the 2022 Bridge loan of $ 2,000 along with applicable interest was repaid in full.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2022

December 31, 2021

Current portion of the PPP Loan included under short-term debt

Long-term portion of the PPP Loan included under long-term debt

Liability component total

Fair Value Measurements

The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price).

The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:

Level 1 - Quoted prices in active markets for identical assets and liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

This category generally includes U.S.

Government and agency securities;

municipal securities;

mutual funds and securities sold and not yet settled.

Level 3 - Unobservable inputs.

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 September 30, 2022 and December 31, 2021:

December 31, 2021

Corporate bonds and notes

Municipal bonds

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 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.

Provision for income taxes for the three months ended March 31, 2023 mostly represents income tax expense recorded for jurisdictions outside the United States.

The Company had approximately $ 962 of uncertain tax positions as of March 31, 2023.

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.

Certain manufacturing agreements establish annual volume commitments.

We are also obligated to repurchase the Company-forecasted but unused materials.

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 $ 2,226 as of September 30, 2022.

On May 8, 2023 , the Company announced that the Company’s Board of Directors had declared a special one-time cash dividend of $ 1.00 per share of the Company’s common stock or eligible warrants, payable on May 31, 2023 to shareholders of record on May 22, 2023 .

This is expected to result in cash outflow of approximately, $ 28,978 .

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