What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-15 · 144 added, 43 removed, 304 unchanged (38% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

March 31, 2023

June 30, 2023

December 31, 2022

1 unchanged sentence

Cash and cash equivalents

Current marketable securities

Legal settlement receivable

4 unchanged sentences

Total current assets

Long-term marketable securities

Long-term inventories, net

13 unchanged sentences

Shareholders' equity:

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

Common stock, par value $ 0.001 , 50,000,000 shares authorized, 23,958,979 and 23,955,767 shares issued and outstanding , respectively

Additional paid-in capital

8 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:

4 unchanged sentences

Change of inventory to net realizable value

Gain from disposal of assets

Gain recognized on Paycheck Protection Plan Loan forgiveness

Changes in operating assets and liabilities:

12 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:

Dividend payment

Net proceeds from equity-based compensation programs

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

Principal payments of debt

Net cash used in 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, 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.

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, 2023 and December 31, 2022, the results of operations for the three and six months ended June 30, 2023 and 2022, and the cash flows for the six months ended June 30, 2023 and 2022.

The results of operations for the three and six months ended June 30, 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 quarter ended March 31, 2023 that are of significance or potential significance to the Company.

There have been no changes to these policies during the quarter ended June 30, 2023 that are of significance or potential significance to the Company.

Recent accounting pronouncements:

11 unchanged sentences

(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.

As of June 30, 2023, our cash and cash equivalents were approximately $ 15,086 compared to $ 984 as of December 31, 2022.

Our working capital was $ 37,473 as of June 30, 2023.

Net cash provided by operating activities was $ 52,920 for the six months ended June 30, 2023, an increase of $ 55,612 compared to $ 2,692 of cash used in operating activities for the six months ended June 30, 2022.

The Company believes, although there can be no assurance, that the current cash position and effective management of working capital, will provide the liquidity needed to meet our operating needs through at least August 10, 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.

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

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.

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

7 unchanged sentences

(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 as of June 30, 2023 were as follows:

Amortized cost

Gross unrealized holding gains

Gross unrealized holding losses

Estimated fair value

June 30, 2023

Available-for-sale securities:

US Treasury securities

Certificates of deposit

Corporate bonds and notes

Total available-for-sale securities

There were no available-for sale securities as of December 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

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Debt securities in an unrealized loss position as of June 30, 2023 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 June 30, 2023

Corporate bonds and notes

Intangible Assets

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

Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:

Estimated useful lives (years)

March 31, 2023

June 30, 2023

December 31, 2022

4 unchanged sentences

Total intangible assets, net

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

Three months ended March 31,

The amortization of intangible assets for the three and six months ended June 30, 2023 and 2022 was as follows:

Three months ended June 30,

Six months ended June 30,

Amortization of intangible assets

4 unchanged sentences

(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

Inventories, net of reserves, as of June 30, 2023 and December 31, 2022 consisted of the following:

June 30, 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 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 for three and six months ended June 30, 2023 and 2022 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 three months ended March 31, 2023 and 2022 was as follows:

Three months ended March 31,

Rent expense for three and six months ended June 30, 2023 and 2022 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 2028 .

6 unchanged sentences

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

The Company is planning to renew the lease.

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 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, 2023

June 30, 2023

December 31, 2022

5 unchanged sentences

Weighted average discount rate for operating leases

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

The following represents maturities of operating lease liabilities as of June 30, 2023:

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

Balance, beginning of period

Dividends paid

Issuance of common stock and warrants, net

11 unchanged sentences

Total shareholders' equity

Issue of Common Stock and Warrants

Issue of Common Stock a nd Warrants

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.

7 unchanged sentences

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

Cash Dividend Distribution

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 and paid $ 28,978 of cash dividends on May 31, 2023 to shareholders of record on May 22, 2023 .

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31 unchanged sentences

(Dollars in thousands, except per share amounts)

March 31, 2023

June 30, 2023

December 31, 2022

9 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, 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:

During the three and six months ended June 30, 2023 amortization of debt discount and issuance costs was $ 49 and $ 98 , respectively and for the three and six months ended June 30, 2022 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, 2023:

Year ending December 31,

24 unchanged sentences

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

Share-based Compensation

As of June 30, 2023 , the Company had 245,685 options with contractual lives of ten years and 400,000 options with contractual lives of six years offered under the Company’s 2007 Equity Incentive Plan (the “2007 Plan”), which was restated and approved by the shareholders on December 12, 2015.

As of June 30, 2023 , the 2007 Plan had 813,585 authorized unissued options.

The Company uses judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables.

These variables include, but are not limited to, the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, and the expected dividends of the awards.

The Company uses the Black-Scholes option pricing model to determine the fair value of share-based payments granted under the guidelines of ASC Topic 718 .

In applying the Black-Scholes methodology to 160,000 options granted in June 2023 , the Company used the following assumptions:

Risk free interest rate, average

Expected option life, average

Expected price volatility, average

Expected dividend yield

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2023 , is as follows:

Number of shares

Weighted average exercise price

Options outstanding at beginning of year

Forfeited prior to vesting

Canceled or expired

Options outstanding at June 30, 2023

Options exercisable at end of June 30, 2023

As of June 30, 2023 , the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $ 221 , which will be recognized over a weighted average period of 3.67 year s .

Share-based compensation expense has been recorded as follows:

Three months ended June 30,

Six months ended June 30,

Cost of goods sold

Sales and marketing

Research and product development

General and administrative

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

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, 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.

Provision for income taxes for the six months ended June 30, 2023 mostly represents income tax expense recorded for jurisdictions outside the United States.

The Company had approximately $ 962 of uncertain tax positions as of June 30, 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.

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 June 30, 2023:

June 30, 2023

US Treasury securities

Certificates of deposit

Corporate bonds and notes

There were no financial instruments that were re-measured by the Company as of December 31, 2022.

Subsequent events

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 .

On August 1, 2023, the Company received a letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) informing management that because the closing bid price for the Company’s common stock listed on Nasdaq was below $ 1.00 for 30 consecutive trading days, the Company is not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company was granted a period of 180 calendar days from August 1, 2023, or until January 29, 2024, to regain compliance with the Minimum Bid Price Requirement.

The Company’s common stock has continued to trade below $ 1.00 per share, and the closing price of the Company’s common stock on August 4, 2023 was $ 0.8083 .

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