What changed in this filing

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Item 1. Financial Statements

2021-08-12 compared with 2021-05-13 · 67 added, 50 removed, 305 unchanged (28% of the section changed)

8 unchanged sentences

Total current assets

Long-term investments

Property and equipment, net

3 unchanged sentences

Accounts payable

Accrued expenses and other

Deferred revenue

1 unchanged sentence

PPP note payable, current

Accrued expenses and other

Total current liabilities

10 unchanged sentences

120,000 shares authorized;

and 3,554 shares issued and outstanding at March 31, 2021 and

and 3,554 shares issued and outstanding at June 30, 2021 and

December 31, 2020, respectively

8 unchanged sentences

Three Months Ended

Six Months Ended

Royalty and other

8 unchanged sentences

Other income, net

Other comprehensive loss, net of tax:

Net unrealized loss on available-for-sale securities

Comprehensive loss

Net loss per share

Deemed dividend for warrant exercise price adjustment

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders

Basic and diluted

1 unchanged sentence

Basic and diluted

Other comprehensive loss, net of tax:

Net unrealized loss on available-for-sale securities

Comprehensive loss

The accompanying notes are an integral part of these condensed consolidated financial statements.

10 unchanged sentences

Balance as of March 31, 2021

Issuance of common stock under stock plan, net

Exercise of warrants

Sale of common stock, net of placement costs

Stock-based compensation

Unrealized loss on available-for-sale investments

Balance as of June 30, 2021

Comprehensive

4 unchanged sentences

Balance as of March 31, 2020

Issuance of common stock for release of awards

Sale of common stock, net of placement costs

Deemed dividend for warrant exercise price adjustment

Stock-based compensation

Balance as of June 30, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

6 unchanged sentences

Gain on settlement of convertible notes payable and accrued interest, net

Gain on extinguishment of PPP Note

Changes in assets and liabilities:

7 unchanged sentences

Proceeds from maturities of short-term investments

Purchases of short-term investments

Purchases of investments

Net cash provided by (used in) investing activities

3 unchanged sentences

Repayment of convertible notes payable

Proceeds from PPP note

Taxes paid to net share settle equity awards

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Settlement of accrued interest through issuance of common shares

Fair value of warrant exercise price adjustment considered as deemed dividend

The accompanying notes are an integral part of these condensed consolidated financial statements.

11 unchanged sentences

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented.

The operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other future period.

The operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other future period.

Basis of Presentation

40 unchanged sentences

The Company grants credit only to customers deemed creditworthy in the judgment of management.

The allowance for doubtful accounts was $41,000 at March 31, 2021 and December 31, 2020.

The allowance for doubtful accounts was $ 41,000 at June 30, 2021 and December 31, 2020.

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

4 unchanged sentences

quantification of slow moving inventory items.

The Company recorded no material write-downs of inventory during the three months ended March 3 1 , 202 1 and recorded write-downs of $ 0.1 m illion for the year ended December 31, 2020 .

The Company recorded no material write-downs of inventory during the six months ended June 3 0 , 202 1 and recorded write-downs of $ 0.1 m illion for the year ended December 31, 2020 .

Revenue Recognition

19 unchanged sentences

The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue.

During the three months ended March 31, 2021, the Company recognized no revenue that had been included in deferred revenue as of December 31, 2020.

During the six months ended June 30, 2021, the Company recognized no revenue that had been included in deferred revenue as of December 31, 2020.

See Note 5 for disaggregation of revenue by geography.

2 unchanged sentences

Maintenance and support typically include engineering support to assist in the commencement of production of a licensee’s products.

As of March 31, 2021, the Company had the following warrants outstanding (share amounts in thousands):

As of June 30, 2021, the Company had the following warrants outstanding (share amounts in thousands):

Number of Shares

10 unchanged sentences

The estimated fair values of financial instruments outstanding were (in thousands):

March 31, 2021

June 30, 2021

Cash and cash equivalents

Short-term investments

Long-term investments

December 31, 2020

1 unchanged sentence

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) (in thousands):

March 31, 2021

June 30, 2021

Money market funds

2 unchanged sentences

Money market funds

There were no transfers in or out of Level 1 and Level 2 securities during the three months ended March 31, 2021 or 2020.

(1) Includes $ 2.0 million in cash and cash equivalents on the accompanying condensed consolidated balance sheet due to original maturities of less than three months.

There were no transfers in or out of Level 1 and Level 2 securities during the six months ended June 30, 2021 or 2020.

Balance Sheet Detail

7 unchanged sentences

The Company has also entered into indemnification agreements with its officers and directors.

No material amounts were reflected in the Company’s condensed consolidated financial statements for the three months ended March 31, 2021 or 2020 related to these indemnifications.

No material amounts were reflected in the Company’s condensed consolidated financial statements for the six months ended June 30, 2021 or 2020 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement.

9 unchanged sentences

Three Months Ended

Six Months Ended

North America

3 unchanged sentences

Three Months Ended

Six Months Ended

Represents less than 10%

Three customers accounted for 74% of accounts receivable as of March 31, 2021.

Four customers accounted for 95 % of accounts receivable as of June 30, 2021.

Three customers accounted for 86 % of accounts receivable as of December 31, 2020.

6 unchanged sentences

Returns filed in foreign jurisdictions may be subject to examination for the years 2011 to 2020.

As of March 31, 2021, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions.

As of June 30, 2021, the Company has no t recorded any liability for unrecognized tax benefits related to uncertain tax positions.

Stock-Based Compensation

2 unchanged sentences

The Amended 2010 Plan was terminated in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration.

As of March 31, 2021, no new awards may be made under the Amended 2010 Plan, and equity awards for approximately 57,858 shares were outstanding.

As of June 30, 2021, no new awards may be made under the Amended 2010 Plan, and equity awards for approximately 115,358 shares were outstanding.

In August 2019, the Company’s stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan), and it replaced the Amended 2010 Plan.

8 unchanged sentences

The expense relating to stock options is recognized on a straight-line basis over the requisite service period, usually the vesting period, based on the grant-date fair value.

The unamortized compensation cost, as of March 31, 2021, was $0.1 million related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 1.25 years.

The expense related to restricted stock units (RSUs) is generally recognized over a three-year

vesting period and is based on the fair value of the underlying stock on the dates of grant.

The unamortized compensation cost, as of March 3 1 , 202 1 , was $ 0.

2 million related to RSUs and is expected to be recognized as expense over a weighted-average period of approximately 0 .

For the three months ended March 31, 2021 and 2020, there were no excess tax benefits associated with the exercise of stock options due to the Company’s historical loss positions.

The unamortized compensation cost, as of June 30, 2021, was $ 0.1 million related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 1.04 years.

The expense related to restricted stock units (RSUs) is generally recognized over a three-year vesting period and is based on the fair value of the underlying stock on the dates of grant.

The unamortized

compensation cost, as of June 30 , 202 1 , was $ 0.5 million related to RSUs and is expected to be recognized as expense over a weighted-average period of approximately 0.9 years .

For the three and six months ended June 30, 2021 and 2020, there were no excess tax benefits associated with the exercise of stock options due to the Company’s historical loss positions.

Valuation Assumptions

There were no stock options granted during the three months ended March 31, 2021 and 2020.

There were no stock options granted during the six months ended June 30, 2021 and 2020.

Common Stock Options and Restricted Stock

3 unchanged sentences

In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

The following table summarizes the activity in the shares available for grant under the Plans during the three months ended March 31, 2021 (in thousands, except exercise price):

The following table summarizes the activity in the shares available for grant under the Plans during the six months ended June 30, 2021 (in thousands, except exercise price):

Options outstanding

1 unchanged sentence

Balance as of March 31, 2021

A summary of RSU activity under the Plans is presented below (in thousands, except for fair value):

Balance as of June 30, 2021

A summary of RSUs activity under the Plans is presented below (in thousands, except for fair value):

Non-vested shares as of January 1, 2021

Non-vested shares as of March 31, 2021

The fair value of the RSU granted during the three months ended March 31, 2021 was $32,500.

The total intrinsic value of the RSUs outstanding as of March 31, 2021 was $0.2 million.

The following table summarizes significant ranges of outstanding and exercisable options as of March 31, 2021 (in thousands, except contractual life and exercise price):

Non-vested shares as of June 30, 2021

The fair value of the RSU granted during the six months ended June 30, 2021 was $ 0.4 million.

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2021 (in thousands, except contractual life and exercise price):

Options Outstanding

7 unchanged sentences

$1.57 - $924.00

There were no stock options exercised during the three months ended March 31, 2021 or 2020.

There was no stock options exercised during the six months ended June 30, 2021 and 2020.

Stockholders’ Equity

2 unchanged sentences

Net proceeds of the offering, after placement agent and other fees and expenses paid by the Company, were approximately $ 6.8 million.

During the three months ended March 31, 2021, the Company received a total of $2,478,461 of proceeds from the exercise of 1,032,692 warrants to purchase shares of common stock at a price of $2.40 per share.

In June 2021, the Company completed a registered direct offering of securities under an effective registration statement filed with the SEC pursuant to the Securities Act of 1933, as amended.

In the offering, the Company sold 1,818,181 shares of common stock at a price of $ 7.15 per share to institutional investors.

Net proceeds of the offering, after placement agent and other fees and expenses paid by the Company, were approximately $ 12.0 million.

During the six months ended June 30, 2021, the Company received a total of $ 4,174,018 of proceeds from the exercise of 1,739,174 warrants to purchase shares of common stock at a price of $ 2.40 per share.

Notes Payable

5 unchanged sentences

The Interest Notes have terms identical to the Notes.

The Company issued 42,672 shares of its common stock valued at $139,964 to the Note holder in settlement of the accrued interest for the six month period ended February 15, 2021.

The Company issued 42,672 shares of its common stock valued at $ 139,964 to the Note holder in settlement of the accrued interest of $ 123,066 for the six month period ended February 15, 2021.

The Company recorded a loss of $ 16,898 on this payment, which was recorded in other income in the condensed consolidated statements of operation.

In January and February 2021, a holder of warrants, who was also the holder of the Notes, exercised warrants to purchase 613,791 shares of the Company’s common stock at an exercise price of $ 2.40 per share for total proceeds of

$ 1,473,098 .

The proceeds from the exercise of these warrants were used to repay a portion of the principal amount of the Notes.

3 unchanged sentences

(the Lender) in an aggregate principal amount of $ 579,330 (the PPP Note), pursuant to the Paycheck Protection Program (the PPP) under the CARES Act.

The term of the PPP Note is two years.

Interest will accrue on the outstanding principal balance of the PPP Note at a fixed rate of 1.0%, which shall be deferred for the first ten months of the term of the PPP Note.

Monthly payments will be due and payable beginning in March 2021 and continue each month thereafter until maturity of the PPP Note.

The Company may prepay principal of the PPP Note at any time in any amount without penalty.

The Agreement contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties or provisions of the PPP Note.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company.

The Company applied to the Lender for forgiveness of the PPP Note, under the terms of the PPP.

No assurance is provided that the Company will obtain forgiveness of the PPP Note in whole or in part, but the Company believes it has used the proceeds in accordance with the PPP.

If the PPP Note is not forgiven, principal payments will be due:

$217,250 in 2021 and $362,080 in 2022.

The Company has one lease, which is the lease for its corporate facility that expires in July 2022, that it accounts for under Accounting Standards Update 2016-02.

The Company applied to the Lender for forgiveness of the PPP Note, under the terms of the PPP, and, in May 2021, obtained forgiveness for the full amount of the PPP Note and recognized the forgiven amount in other income in the condensed consolidated statements of operations.

The Company has one lease, which is the lease for its corporate facility that expires in July 2022, that it accounts for under Accounting Standards Update No.

The right-of-use asset and corresponding liability for the facility lease have been measured at the present value of the future minimum lease payments.

The discount rate used to measure the lease asset and liability represents the interest rate on the Notes ( 8 %).

Lease expense is recognized on a straight-line basis over the lease term, and operating lease expense was approximately $53,000 for the three months ended March 31, 2021.

Lease expense is recognized on a straight-line basis over the lease term, and operating lease expense was approximately $ 0.1 million and $ 0.1 million for the six months ended June 30, 2021 and 2020, respectively.

The Company does not have an option to extend the lease term beyond the current extension.

Future minimum payments under the facility operating lease at March 31, 2021 are as follows (in thousands):

Future minimum payments under the facility operating lease at June 30, 2021 were as follows (in thousands):

Year ending December 31,

3 unchanged sentences

Supplemental cash flow information related to the operating lease was as follows (in thousands):

Three Months Ended

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

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