What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-05 · 137 added, 100 removed, 420 unchanged (36% of the section changed)

28 unchanged sentences

Preferred stock, $ 0.01 par value:

1,000 shares authorized, 200 shares of Series A Convertible Preferred Stock issued and outstanding at both March 31, 2022 and December 31, 2021 ($ 5.0 million liquidation preference)

1,000 shares authorized, 200 shares of Series A Convertible Preferred Stock issued and outstanding at both June 30, 2022 and December 31, 2021 ($ 5.0 million liquidation preference)

Common stock, $ 0.001 par value:

30,000 shares authorized, 6,602 shares issued and outstanding at both March 31, 2022 and December 31, 2021

30,000 shares authorized, 6,602 shares issued and outstanding at both June 30, 2022 and December 31, 2021

Additional paid-in-capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands, except per share data)

7 unchanged sentences

Other income (expense), net

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) applicable to common stockholders

Earnings (loss) per common share – basic and diluted

Income before income taxes

Income tax expense

Net income applicable to common stockholders

Earnings per common share – basic and diluted

Weighted average common shares outstanding – basic and diluted

See accompanying notes to these unaudited condensed consolidated financial statements.

INTERLINK ELECTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Net income (loss)

Other comprehensive income (loss), net of tax:

3 unchanged sentences

INTERLINK ELECTRONICS, INC.

CONDENSED CONSOLIDATED SATEMENTS OF STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Preferred Stock

1 unchanged sentence

Stockholders’

Three months ended March 31, 2022

Three months ended June 30, 2022

Income (Loss)

(in thousands)

Balance at March 31, 2022

Preferred stock dividends

Foreign currency translation adjustment

Balance at June 30, 2022

Preferred Stock

Comprehensive

Stockholders’

Six months ended June 30, 2022

Income (Loss)

(in thousands)

Balance at December 31, 2021

1 unchanged sentence

Foreign currency translation adjustment

Balance at June 30, 2022

Preferred Stock

Comprehensive

Stockholders’

Three months ended June 30, 2021

Income (Loss)

(in thousands)

Balance at March 31, 2021

Foreign currency translation adjustment

Stock-based compensation expense

Balance at June 30, 2021

Preferred Stock

1 unchanged sentence

Stockholders’

Three months ended March 31, 2021

Six months ended June 30, 2021

Income (Loss)

3 unchanged sentences

Stock-based compensation expense

Balance at March 31, 2021

Balance at June 30, 2021

See accompanying notes to these unaudited condensed consolidated financial statements.

INTERLINK ELECTRONICS, INC.

CONDENSED CONSOLIDATED SATEMENTS OF CASH FLOWS

Three months ended March 31,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended June 30,

(in thousands)

Cash flows from operating activities:

Net income (loss)

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

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Unrealized (gains) on marketable securities

Unrealized (gains) losses on marketable securities

Stock-based compensation

Gain on forgiveness of PPP loan

Operating leases, other

Adjustment to reconcile operating lease expense to cash paid

Loss on disposal of property and equipment

Deferred taxes

5 unchanged sentences

Accrued income taxes

Net cash used in operating activities

Net cash provided by operating activities

Cash flows from investing activities:

6 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash, cash equivalents and restricted cash, beginning of period

5 unchanged sentences

Supplemental disclosure of cash flow information:

Income taxes paid

Income taxes paid (refunded), net

Interest paid

Supplemental disclosure of non-cash investing and financing activities:

Lease liabilities arising from obtaining right-of-use assets

See accompanying notes to these unaudited condensed consolidated financial statements.

9 unchanged sentences

Interlink serves our world-wide customer base from our corporate headquarters in Irvine, California, our Global Product Development and Materials Science Center and distribution and logistics center in Camarillo, California, our printed-electronics manufacturing facility in Shenzhen, China, our engineering, research and development center in Singapore, and our distribution and logistics center in Hong Kong.

We also maintain a technical and sales office in Japan, and we expect to launch an engineering, research and development center in the United Kingdom in 2022.

We also maintain a technical and sales office in Japan, and we expect to launch an engineering, research and development center in the United Kingdom.

We were incorporated in California in 1985.

13 unchanged sentences

These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes included in our Annual Report on Form 10-K, which was filed the Securities and Exchange Commission on March 29, 2022.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Use of Estimates

1 unchanged sentence

Management regularly evaluates estimates and assumptions related to revenue recognition, allowances for doubtful accounts, warranty reserves, inventory valuation reserves, stock-based compensation, purchased intangible asset valuations and useful lives, asset retirement obligations, and deferred income tax asset valuation allowances.

These estimates and

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

assumptions are based on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.

These estimates and assumptions are based on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.

The actual results we experience may differ materially and adversely from our original estimates.

20 unchanged sentences

We generally warrant our products against defects for one year from date of shipment, with certain exceptions in which the warranty period can extend to more than one year based on contractual agreements.

A warranty reserve is recorded against revenues when products are shipped.

At each reporting period, we adjust our reserve for warranty claims based on our actual warranty claims experience as a percentage of net revenue for the preceding 24 months and also consider the effect of known operations issues that may have an impact that differs from historical trends.

Our warranty reserves are established at the time of sale and are updated throughout the warranty period based upon numerous factors including historical warranty return rates and claim costs over various warranty periods.

Historically, our warranty returns have not been material.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Shipping and Handling Fees and Costs

1 unchanged sentence

Costs incurred for shipping and handling are included in cost of revenues.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Engineering, Research and Development Costs

16 unchanged sentences

The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow.

As of March 31, 2022, there were no stock-based compensation awards outstanding.

As of June 30, 2022, there were no stock-based compensation awards outstanding.

Other Income (Expense), Net

Other income (expense), net, consists of interest income, foreign currency exchange gains and losses, gains and losses on marketable securities, and other non-operating gains and losses.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

We account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards.

3 unchanged sentences

We recognize potential accrued interest and penalties related to unrecognized tax benefits within the consolidated statements of operations as income tax expense.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

We operate within multiple tax jurisdictions and are subject to audit in these jurisdictions.

18 unchanged sentences

Under the two-class method of determining earnings for each class of stock, we consider the dividend rights and participating rights in undistributed earnings for each class of stock.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

We account for our leases under ASC 842.

4 unchanged sentences

In calculating the right of use and lease liability, we have elected to combine lease and non-lease components.

We exclude short-term leases having initial term of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

We exclude short-term leases having an initial term of 12 months or less from the new guidance as an accounting policy election, and recognize rent expense on a straight-line basis over the lease term.

Risk and Uncertainties

12 unchanged sentences

Public health threats could adversely affect our ongoing or planned business operations.

In particular, the outbreak in December 2019 of a novel coronavirus (COVID-19) in China resulted in quarantines, restrictions on travel and other business and economic disruptions.

In particular, the outbreak of a novel coronavirus (COVID-19) in China resulted in quarantines, restrictions on travel and other business and economic disruptions.

We cannot predict the scope and severity of potential business shutdowns or disruptions posed by public health threats, but if we or any of the third parties with whom we engage, including the suppliers, distributers, resellers and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and adversely impacted.

6 unchanged sentences

Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Recently Issued Accounting Pronouncements

1 unchanged sentence

Subsequent Events

We have evaluated subsequent events through May 5, 2022, being the date these condensed consolidated financial statements were issued.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

We have evaluated subsequent events through August 11, 2022, being the date these condensed consolidated financial statements were issued.

Note 2 – Details of Certain Financial Statement Components

12 unchanged sentences

Total property, plant and equipment, net

Depreciation expense totaled $ 52 thousand and $ 54 thousand for the three months ended March 31, 2022 and 2021, respectively.

Depreciation expense totaled $ 50 thousand and $ 57 thousand for the three months ended June 30, 2022 and 2021, respectively.

Depreciation expense totaled $ 102 thousand and $ 111 thousand for the six months ended June 30, 2022 and 2021, respectively.

Intangible assets, net consisted of the following:

4 unchanged sentences

Total intangible assets, net

Amortization expense totaled $ 15 thousand and $ 17 thousand for the three months ended March 31, 2022 and 2021, respectively.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Amortization expense totaled $ 13 thousand and $ 17 thousand for the three months ended June 30, 2022 and 2021, respectively.

Amortization expense totaled $ 28 thousand and $ 34 thousand for the six months ended June 30, 2022 and 2021, respectively.

Future amortization expense on existing intangible assets is as follows:

2 unchanged sentences

2022 (remainder of year)

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Accrued liabilities consisted of the following:

1 unchanged sentence

(in thousands)

Accrued wages and benefits

Accrued compensation and benefits

Accrued vacation

6 unchanged sentences

The specific identification method is used to determine realized gains and losses on AFS securities.

During the three months ended March 31, 2022, we purchased $ 2.179 million of marketable equity securities.

As of March 31, 2022, gross unrealized gains were $ 156 thousand, and gross unrealized losses were $ 0 .

As of March 31, 2022, our position in marketable equity securities had a historical cost of $ 2.179 million and a fair value of $ 2.335 million, as determined using Level 1 inputs on the fair value hierarchy.

During the three months and six months ended June 30, 2022, we purchased $ 3.8 million and $ 6.0 million of marketable equity securities, respectively.

As of June 30, 2022, gross unrealized gains were $ 381 thousand, and gross unrealized losses were $ 0 .

As of June 30, 2022, our position in marketable equity securities had a historical cost of $ 6.0 million and a fair value of $ 6.4 million, as determined using Level 1 inputs on the fair value hierarchy.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Note 4 – Earnings Per Share

3 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per share data)

Net income (loss)

Preferred stock dividends

Net income (loss) applicable to common stockholders

Net income applicable to common stockholders

Weighted average common shares outstanding – basic

1 unchanged sentence

Weighted average common shares outstanding – diluted

Earnings (loss) per common share, basic

Earnings (loss) per common share, diluted

Earnings per common share, basic

Earnings per common share, diluted

Shares subject to anti-dilutive stock options and restricted stock units excluded from calculation

Shares subject to anti-dilutive Series A Convertible Preferred Stock excluded from calculation

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Note 5 – Significant Customers, Concentrations of Credit Risk, and Geographic Information

1 unchanged sentence

Net revenues from customers equal to or greater than 10% of total net revenues are as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

* Less than 10% of total net revenues

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Net revenues by geographic area are as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

United States

5 unchanged sentences

Accounts receivable balances are monitored on an ongoing basis, and accounts deemed to have credit risk are fully reserved.

At March 31, 2022, one customer accounted for 55 % of total accounts receivable.

At June 30, 2022, three customers accounted for 28 %, 21 %, and 11 % of total accounts receivable.

At December 31, 2021, three customers accounted for 39 %, 18 %, and 12 % of total accounts receivable.

Our allowance for doubtful accounts was $ 0 at both March 31, 2022 and December 31, 2021.

Our allowance for doubtful accounts was $ 0 at both June 30, 2022 and December 31, 2021.

Our long-lived assets were geographically located as follows:

2 unchanged sentences

Total long-lived assets

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Note 6 – Related Party Transactions

5 unchanged sentences

(OTCMKTS:BKFG) which he controls, has a controlling interest in both Interlink and Qualstar.

We have a facilities agreement with

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Qualstar to allow Qualstar to use of a portion of our Irvine, California and Los Angeles, California office facilities, for which we have agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

We have a facilities agreement with Qualstar to allow Qualstar to use of a portion of our Irvine, California and Los Angeles, California office facilities, for which we have agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

Qualstar also has a facilities agreement with us to allow us to use of a portion of its Camarillo, California office and warehouse facility, for which we have agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

2 unchanged sentences

Transactions with Qualstar and its subsidiaries are as follows:

Three months ended March 31,

Due from Qualstar

Due to Qualstar

Due from Qualstar

Due to Qualstar

Three months ended June 30,

(in thousands)

Balance at April 1,

Billed (or accrued) to Qualstar by Interlink

Paid by Qualstar to Interlink

Billed (or accrued) to Interlink by Qualstar

Paid by Interlink to Qualstar

Balance at June 30,

Six months ended June 30,

(in thousands)

Balance at January 1,

3 unchanged sentences

Paid by Interlink to Qualstar

Balance at March 31,

Balance at June 30,

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

BKF Capital Group (OTCMKTS:BKFG)

8 unchanged sentences

Transactions with BKF Capital and its subsidiaries are as follows:

Three months ended March 31,

Due from BKF Capital

Due to BKF Capital

Due from BKF Capital

Due to BKF Capital

Three months ended June 30,

(in thousands)

Balance at April 1,

Billed (or accrued) to BKF Capital by Interlink

Paid by BKF Capital to Interlink

Billed (or accrued) to Interlink by BKF Capital

Paid by Interlink to BKF Capital

Balance at June 30,

Six months ended June 30,

(in thousands)

Balance at January 1,

3 unchanged sentences

Paid by Interlink to BKF Capital

Balance at March 31,

Balance at June 30,

Note 7 – Income Taxes

Income tax expense as a percentage of income before income taxes was 41.4 % for the three months ended June 30, 2022 versus 39.4 % for the comparable period in the prior year.

Income tax expense as a percentage of income before income taxes was 30.2 % for the six months ended June 30, 2022 versus 63.0 % for the comparable period in the prior year.

Our income tax expense is impacted by the mix of domestic and foreign pre-tax earnings and losses, as well as the valuation allowance on certain of our net operating loss carryovers (“NOLs”).

The effective income tax rates are higher than the blended statutory tax rates due to having incurred income tax expense on taxable income in certain jurisdictions, while not being able to benefit from losses in other jurisdictions for which our NOLs are subject to valuation allowance.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

Note 7 – Income Taxes

Income tax expense as a percentage of income before income taxes was 17.9 % for the three months ended March 31, 2022 versus an income tax benefit of 14.0 % for the comparable period in the prior year.

Our income tax expense is primarily impacted by the mix of domestic and foreign pre-tax earnings, as well as our ability to utilize prior net operating loss carryovers (“NOLs”).

We experienced an ownership change under IRC Section 382 in February 2010.

We experienced an ownership change under IRC Section 382 in 2010.

In general, a Section 382 ownership change occurs if there is a cumulative change in our ownership by “5% shareholders” (as defined in the Internal Revenue Code of 1986, as amended) that exceeds 50 percentage points over a rolling three-year period.

1 unchanged sentence

Certain state jurisdictions within which we operate contain similar provisions and limitations.

As of March 31, 2022, all of the remaining federal and state NOLs are subject to annual limitations due to the February 2010 ownership change.

As of June 30, 2022, all of the remaining federal and state NOLs are subject to annual limitations due to the 2010 ownership change.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

4 unchanged sentences

We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.

Of the $ 8.1 million of cash balances on hand at March 31, 2022, $ 2.4 million was held by our foreign subsidiaries.

Of the $ 4.4 million of cash balances on hand at June 30, 2022, $ 0.9 million was held by our foreign subsidiaries.

If these funds are needed for our operations in the U.S., we have several methods to repatriate the funds without significant tax effects, including repayment of intercompany loans or distributions of previously taxed income.

1 unchanged sentence

or foreign taxes to repatriate these funds.

However, our intent is to permanently reinvest these funds outside the U.S.

and our current plans do not demonstrate a need to repatriate cash to fund our U.S.

Note 8 – Commitments and Contingencies

4 unchanged sentences

The rate implicit in each lease is not readily determinable, and we therefore use our incremental borrowing rate to determine the present value of the lease payments.

No new right-of-use (“ROU”) assets were capitalized during the three months ended March 31, 2022 or 2021.

The weighted average incremental borrowing rate used to determine the initial value of right-of-use (“ROU”) assets and lease liabilities capitalized during the six months ended June 30, 2022 was 7.0 %, and during the six months ended June 30, 2021 was 5.5 %.

ROU assets for operating leases are periodically reduced by impairment losses.

We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant and Equipment – Overall , to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

As of March 31, 2022, we have not recognized any impairment losses for our ROU assets.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

As of June 30, 2022, we have not recognized any impairment losses for our ROU assets.

We monitor for events or changes in circumstances that require a reassessment of our leases.

1 unchanged sentence

In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

In June 2020, we entered into a sublease agreement to lease 4,351 square feet of office space located in Irvine, California for approximately $ 6 thousand per month with 3 percent annual increases, plus common area maintenance costs.

2 unchanged sentences

We lease a 14,476 square-foot manufacturing facility and administrative office in Shenzhen, China.

In May 2020, we renewed this lease for the period June 1, 2020 through May 31, 2022 for approximately $ 7 thousand per month through May 31, 2021 and increasing to approximately $ 8 thousand per month through May 31, 2022.

In May 2022, we renewed this lease for the period June 1, 2022 through May 31, 2024 for approximately $ 8 thousand per month.

We lease a 275 square-foot engineering and administrative office in Singapore for approximately $ 1 thousand per month.

6 unchanged sentences

This lease term ends March 2023.

As of March 31, 2022, we had current and long-term lease liabilities of $ 114 thousand and $ 14 thousand, respectively, and right-of-use assets of $ 119 thousand.

As of December 31, 2021, we had current and long-term lease liabilities of $ 138 thousand and $ 37 thousand, respectively, and right of use assets of $ 163 thousand.

Future imputed interest as of March 31, 2022 totaled $ 5 thousand.

The weighted average remaining lease term of our leases as of March 31, 2022 is 0.4 years.

As of June 30, 2022, we had current and long-term lease liabilities of $ 172 thousand and $ 87 thousand, respectively, and ROU assets of $ 252 thousand.

As of December 31, 2021, we had current and long-term lease liabilities of $ 138 thousand and $ 37 thousand, respectively, and ROU assets of $ 163 thousand.

Future imputed interest as of June 30, 2022 totaled $ 15 thousand.

The weighted average remaining lease term of our leases as of June 30, 2022 is 1.3 years.

Future minimum lease payments under non-cancellable operating leases that have remaining non-cancellable lease terms in excess of one year are as follows:

5 unchanged sentences

Present value of lease liabilities

During the three months ended March 31, 2022, we incurred approximately $ 61 thousand in operating lease costs .

Operating lease costs of $ 32 thousand are included in cost of revenue, and $ 29 thousand are included in operating expenses in our condensed consolidated statements of operations for the three months ended March 31, 2022.

During the three months ended March 31, 2021, we incurred approximately $ 82 thousand in operating lease costs.

Operating lease costs of $ 30 thousand are included in cost of revenue, and $ 52 thousand are included in operating expenses in our condensed consolidated statements of operations for the three months ended March 31, 2021.

During the three months ended June 30, 2022, we incurred approximately $ 61 thousand in operating lease costs, of which $ 30 thousand is included in cost of revenue and $ 31 thousand is included in operating expenses in our condensed consolidated statements of operations.

During the three months ended June 30, 2021, we incurred approximately $ 84 thousand in operating lease costs, of which $ 30 thousand is included in cost of revenue and $ 54 thousand is included in operating expenses in our condensed consolidated statements of operations.

During the six months ended June 30, 2022, we incurred approximately $ 122 thousand in operating lease costs, of which $ 62 thousand is included in cost of revenue and $ 60 thousand is included in operating expenses in our condensed consolidated statements of operations.

During the six months ended June 30, 2021, we incurred approximately $ 166 thousand in operating lease costs, of which $ 59 thousand is included in cost of revenue and $ 107 thousand is included in operating expenses in our condensed consolidated statements of operations.

INTERLINK ELECTRONICS, INC.

Notes to Condensed Consolidated Financial Statements - continued

We are not party to any legal proceedings as of March 31, 2022.

We are not party to any legal proceedings as of June 30, 2022.

We are occasionally involved in legal proceedings in the ordinary course of business, including actions against us which assert or may assert claims or seek to impose fines and penalties in substantial amounts.

2 unchanged sentences

Our warranty reserves are established at the time of sale and updated throughout the warranty period based upon numerous factors including historical warranty return rates and expenses over various warranty periods.

Historically, our warranty returns have not been material.

38 unchanged sentences

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