What changed in this filing

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Item 1. Financial Statements

2020-08-10 compared with 2020-05-08 · 172 added, 103 removed, 396 unchanged (41% of the section changed)

3 unchanged sentences

(In thousands)

2020 December 31,

Current assets:

2 unchanged sentences

Accounts receivable, net 5,925 10,915

Inventories 4,767 5,401

Prepaid expenses and other current assets 1,783 1,689

4 unchanged sentences

Acquired intangible assets, net 1,955 2,704

Goodwill 18,407 18,407

Total assets $ 68,972 $ 64,657

LIABILITIES AND SHAREHOLDERS’ EQUITY

12 unchanged sentences

Preferred stock — —

Common stock 442,998 436,122

Accumulated other comprehensive income 13 12

6 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Revenue, net $ 9,253 $ 18,027 $ 23,027 $ 34,675

Cost of revenue (1) 4,204 8,651 11,203 16,827

Gross profit 5,049 9,376 11,824 17,848

Operating expenses:

4 unchanged sentences

Loss from operations ( 6,421 ) ( 2,321 ) ( 11,698 ) ( 5,781 )

Interest income and other, net

Interest income (expense) and other, net ( 24 ) 104 30 200

Gain on sale of patents — — — 3,905

Total other income, net

Income (loss) before income taxes

Total other income (expense), net ( 24 ) 104 30 4,105

Loss before income taxes ( 6,445 ) ( 2,217 ) ( 11,668 ) ( 1,676 )

Provision for income taxes 107 231 283 639

Net income (loss)

Net income (loss) per share:

Weighted average shares outstanding:

Net loss $ ( 6,552 ) $ ( 2,448 ) $ ( 11,951 ) $ ( 2,315 )

Net loss per share - basic and diluted $ ( 0.17 ) $ ( 0.06 ) $ ( 0.31 ) $ ( 0.06 )

Weighted average shares outstanding - basic and diluted 39,444 37,688 39,156 37,469

(1) Includes:

8 unchanged sentences

PIXELWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Three Months Ended March 31,

Net income (loss)

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale securities

Total comprehensive income (loss)

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net loss $ ( 6,552 ) $ ( 2,448 ) $ ( 11,951 ) $ ( 2,315 )

Other comprehensive loss:

Unrealized gain on available-for-sale securities 7 3 1 7

Total comprehensive loss $ ( 6,545 ) $ ( 2,445 ) $ ( 11,950 ) $ ( 2,308 )

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income (loss)

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

Net loss $ ( 11,951 ) $ ( 2,315 )

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

Stock-based compensation 4,065 3,354

9 unchanged sentences

Accounts receivable, net 4,990 ( 371 )

Inventories 634 100

Prepaid expenses and other current and long-term assets, net 1,343 207

13 unchanged sentences

Proceeds from line of credit 4,329 —

Net proceeds from "at the market" equity offering 2,474 —

Proceeds from Paycheck Protection Program loan 796 —

Proceeds from issuance of common stock under employee equity incentive plans 337 315

Payments on asset financings ( 328 ) ( 337 )

Net cash provided by financing activities

Net cash provided by (used in) financing activities 7,608 ( 22 )

Net increase (decrease) in cash and cash equivalents 13,160 ( 1,198 )

11 unchanged sentences

(In thousands, except share data)

Common Stock Accumulated

Comprehensive

Income Accumulated

Deficit Total

Shareholders'

2020 Shares Amount

Balance as of December 31, 2019 38,434,488 $ 436,122 $ 12 $ ( 388,605 ) $ 47,529

1 unchanged sentence

Stock-based compensation expense — 1,822 — — 1,822

Unrealized gain on available for sale securities

Unrealized loss on available for sale securities — — ( 6 ) — ( 6 )

Net loss — — — ( 5,399 ) ( 5,399 )

Balance as of March 31, 2020 39,249,863 $ 438,269 $ 6 $ ( 394,004 ) $ 44,271

"At the market" equity offering 803,528 2,474 — — 2,474

Stock issued under employee equity incentive plans 167,100 12 — — 12

Stock-based compensation expense — 2,243 — — 2,243

Unrealized gain on available for sale securities — — 7 — 7

Net loss — — — ( 6,552 ) (6,552)

Balance as of June 30, 2020 40,220,491 $ 442,998 $ 13 $ ( 400,556 ) $ 42,455

Balance as of December 31, 2018 36,937,458 $ 428,903 $ 15 $ ( 379,528 ) $ 49,390

2 unchanged sentences

Unrealized gain on available for sale securities — — 4 — 4

Net income — — — 133 133

Balance as of March 31, 2019 37,543,369 $ 430,907 $ 19 $ ( 379,395 ) $ 51,531

See accompanying notes to consolidated financial statements.

Stock issued under employee equity incentive plans 290,422 — — — —

Stock-based compensation expense — 1,665 — — 1,665

Unrealized gain on available for sale securities — — 3 — 3

Net loss — — — ( 2,448 ) ( 2,448 )

Balance as of June 30, 2019 37,833,791 $ 432,572 $ 22 $ ( 381,843 ) $ 50,751

See accompanying notes to condensed consolidated financial statements.

PIXELWORKS, INC.

6 unchanged sentences

Our primary target markets include Mobile (smartphone, gaming and tablet), Home Entertainment (TV, personal video recorder ("PVR"), over-the-air ("OTA") and projector), Content (creation, remastering and delivery), and Business & Education (projector).

As of March 31, 2020, we had an intellectual property portfolio of 347 patents related to the visual display of digital image data.

As of June 30, 2020, we had an intellectual property portfolio of 345 patents related to the visual display of digital image data.

We focus our research and development efforts on developing video algorithms that improve quality, and architectures that reduce system power, cost, bandwidth and increase overall system performance and device functionality.

3 unchanged sentences

Condensed Consolidated Financial Statements

The financial information included herein for the three month periods ended March 31, 2020 and 2019 is prepared in accordance with U.S.

The financial information included herein for the three and six month periods ended June 30, 2020 and 2019 is prepared in accordance with U.S.

generally accepted accounting principles ("U.S.

2 unchanged sentences

The financial information as of December 31, 2019 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2019, included in Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 11, 2020, and should be read in conjunction with such consolidated financial statements.

The results of operations for the three month periods ended March 31, 2020 and 2019 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2020.

Immaterial Error Correction

During the second quarter of 2019, the Company determined that the statute of limitations had previously expired related to a portion of a liability that had been accrued in prior periods.

Management evaluated the materiality of the error, both quantitatively and qualitatively, and concluded that it was not material to the financial statements of any period presented.

The Company has revised beginning retained earnings and corrected the error in the accompanying prior period financial information in these condensed consolidated financial statements.

The following table sets forth the effect this immaterial error correction had on the Company’s unaudited condensed consolidated statements of operations for the three month period ended March 31, 2019:

Three Months Ended

March 31, 2019

Previously Reported

Interest income (expense) and other, net

Total other income, net

Income before income taxes

Net income (loss)

Net income (loss) per share:

The following table sets forth the effect this immaterial error correction had on the Company's unaudited condensed consolidated statement of cash flows for the three month period ended March 31, 2019:

Three Months Ended March 31, 2019

Previously Reported

Operating activities:

Net income (loss)

Change in accrued current and long-term liabilities

Net cash used in operating activities

The results of operations for the three month and six month periods ended June 30, 2020 and 2019 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2020.

Recent Accounting Pronouncements

23 unchanged sentences

Accounts receivable consists of the following:

2020 December 31,

Accounts receivable, gross $ 5,959 $ 10,938

2 unchanged sentences

The following is the change in our allowance for doubtful accounts:

Three Months Ended

Six Months Ended

Balance at beginning of period $ 23 $ 21

3 unchanged sentences

Inventories consist of the following:

2020 December 31,

Finished goods $ 2,913 $ 1,630

Work-in-process 1,854 3,771

Inventories $ 4,767 $ 5,401

Property and Equipment, Net

Property and equipment consists of the following:

2020 December 31,

Gross carrying amount $ 26,117 $ 22,866

4 unchanged sentences

Acquired intangible assets resulting from this transaction were assigned to Pixelworks, Inc., and consist of the following:

2020 December 31,

Developed technology $ 5,050 $ 5,050

5 unchanged sentences

Backlog was fully amortized as of September 30, 2018 and tradename was fully amortized as of March 31, 2019.

Amortization expense for intangible assets was $ 374 for the three months ended March 31, 2020, $ 298 was included in cost of revenue and $ 76 was included in selling, general and administrative in the condensed consolidated statements of operations.

As of March 31, 2020, future estimated amortization expense is as follows:

Nine months ending December 31:

Amortization expense for intangible assets was $ 374 and $ 748 for the three and six months ended June 30, 2020, respectively, $ 298 and $ 596 were included in cost of revenue for the three and six months ended June 30, 2020, respectively, and $ 76 and $ 152 were included in selling, general and administrative for the three and six months ended June 30, 2020, respectively, in the condensed consolidated statements of operations.

As of June 30, 2020, future estimated amortization expense is as follows:

Six months ending December 31:

Years ending December 31:

1 unchanged sentence

Conditions that would trigger an impairment assessment include, but are not limited to, past, current, or expected cash flow or operating losses associated with the asset.

There were no such triggering events requiring an impairment assessment of other intangible assets during the three months ended March 31, 2020.

There were no such triggering events requiring an impairment assessment of other intangible assets during the six months ended June 30, 2020.

Goodwill resulted from the Acquisition, whereby we recorded goodwill of $ 18,407 .

2 unchanged sentences

Conditions that would trigger an impairment assessment include, but are not limited to, a significant adverse change in our business climate or a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continued losses or adverse changes in legal factors, regulation or business environment.

There were no such triggering events requiring a goodwill impairment assessment during the three months ended March 31, 2020.

There were no such triggering events requiring a goodwill impairment assessment during the six months ended June 30, 2020.

We perform our annual impairment assessment for goodwill on November 30 of each year.

1 unchanged sentence

Accrued liabilities and current portion of long-term liabilities consist of the following:

2020 December 31,

Accrued payroll and related liabilities $ 3,002 $ 3,440

5 unchanged sentences

Accrued costs related to restructuring — 66

Other 3,924 1,952

Accrued liabilities and current portion of long-term liabilities $ 10,972 $ 8,692

3 unchanged sentences

The change in deferred revenue is as follows:

Three Months Ended

Six Months Ended

Deferred revenue:

11 unchanged sentences

The occurrence of an event of default could result in the acceleration of our obligations under the Revolving Loan Agreement, as amended, and an increase to the applicable interest rate, and would permit the Bank to exercise remedies with respect to its security interest.

As of March 31, 2020, we were in compliance with all of the terms of the Revolving Loan Agreement, as amended.

As of March 31, 2020, short-term borrowings outstanding under the Revolving Line consisted of $ 5,157 .

The weighted-average interest rate on short-term borrowings outstanding as of March 31, 2020 was 3.5 % .

As of June 30, 2020, we were in compliance with all of the terms of the Revolving Loan Agreement, as amended.

As of June 30, 2020, short-term borrowings outstanding under the Revolving Line consisted of $ 4,329 .

The weighted-average interest rate on short-term borrowings outstanding as of June 30, 2020 was 3.5 %.

As of December 31, 2019, we had no outstanding borrowings under the Revolving Line.

Paycheck Protection Program Loan

On April 25, 2020, we entered into a loan with Silicon Valley Bank as the lender in an aggregate principal amount of $ 796 (the “Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Loan is evidenced by a promissory note (the “Note”) dated April 25, 2020, and matures 2 years from the disbursement date.

The Note bears interest at a rate of 1.000 % per annum, with the first six months of interest deferred.

Principal and interest are payable monthly commencing 6 months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

The Note contains customary events of default relating to, among other things, payment defaults or breaches of the terms of the Note.

Upon the occurrence of an event of default, the Lender may require immediate repayment of all amounts outstanding under the Note.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP.

The Loan is subject to forgiveness to the extent proceeds are used for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest expenses (collectively, “Qualifying Expenses”), pursuant to the terms and limitations of the PPP.

The Company intends to use the Loan amount for Qualifying Expenses and we intend to apply for forgiveness, however, no assurance is provided that the Company will obtain forgiveness of the Loan in whole or in part.

We have elected to account for the Loan as Debt under ASC 470.

The Loan proceeds are included within other long-term liabilities, net of current portion in our condensed consolidated balance sheets and we recognize interest expense at 1% per annum within interest income (expense) and other, net in our condensed consolidated statements of operations.

At the Market Offering

On June 5, 2020, we entered into a sales agreement (the "Sales Agreement") with Cowen and Company, LLC ("Cowen"), pursuant to which we may issue and sell shares of the Company's common stock, par value $ 0.001 per share, having an aggregate offering price of up to $ 25,000 , from time to time, through an "at the market" equity offering program under which Cowen will act as sales agent.

Under the Sales Agreement, Cowen may sell the shares by methods deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions on the Nasdaq Global Market or on any other existing trading market for the common stock or otherwise at market prices prevailing at the time of sale, in block transactions, or as otherwise directed by the Company.

We pay Cowen a commission equal to three percent ( 3.0 %) of the gross sales proceeds of any common stock sold through Cowen under the Sales Agreement.

The Sales Agreement may be terminated by us upon prior notice to Cowen or by Cowen upon prior notice to us, or at any time under certain circumstances, including but not limited to the occurrence of a material adverse change in the Company.

We are not obligated to sell any shares under the Sales Agreement.

As of June 30, 2020 and during the three months ended June 30, 2020, we sold an aggregate of 803,528 shares of our common stock under this at the market offering, resulting in aggregate net proceeds to us of approximately $ 2,474 , and gross proceeds of approximately $ 2,812 , and paid Cowen commissions and fees of approximately $ 144 , and other expenses of $ 194 .

As of June 30, 2020, the remaining availability under the at the market offering is $ 22,188 .

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

Marketable Securities

As of March 31, 2020 and December 31, 2019, all of our marketable securities are classified as available-for-sale, have contractual maturities of one year or less and consist of the following:

Unrealized Gain (Loss)

As of June 30, 2020 and December 31, 2019, all of our marketable securities are classified as available-for-sale, have contractual maturities of one year or less and consist of the following:

Cost Unrealized Gain (Loss) Fair Value

Short-term marketable securities:

As of March 31, 2020:

Commercial paper

As of June 30, 2020:

Corporate debt securities $ 735 $ 7 $ 742

Commercial paper 250 — 250

$ 985 $ 7 $ 992

As of December 31, 2019:

2 unchanged sentences

Corporate debt securities 2,236 2 2,238

$ 6,972 $ 3 $ 6,975

Unrealized holding gains and losses are recorded in accumulated other comprehensive income, a component of shareholders’ equity, in the condensed consolidated balance sheets.

5 unchanged sentences

Valuations based on unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.

The following table presents information about our assets measured at fair value on a recurring basis in the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019:

As of March 31, 2020:

The following table presents information about our assets measured at fair value on a recurring basis in the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019:

Level 1 Level 2 Level 3 Total

As of June 30, 2020:

Cash equivalents:

1 unchanged sentence

Short-term marketable securities:

Commercial paper

Corporate debt securities — 742 — 742

Commercial paper — 250 — 250

As of December 31, 2019:

11 unchanged sentences

The 2020 Plan included an approximately 4 % reduction in workforce, primarily in the areas of research and development and sales.

Total restructuring expense included in our statement of operations for the three month periods ended March 31, 2020 and 2019 is comprised of the following:

Three Months Ended

In June 2019, we executed a restructuring plan to make the operation of the Company more efficient (the "2019 Plan").

The 2019 Plan included an approximately 2 % reduction in workforce, primarily in the areas of sales and operations.

Total restructuring expense included in our statement of operations for the three and six month periods ended June 30, 2020 and 2019 is comprised of the following:

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Operating expenses — restructuring:

Employee severance and benefits

$ — $ 398 $ 592 $ 398

Total restructuring expense $ — $ 398 $ 592 $ 398

During the three months ended March 31, 2020, we recorded $ 592 in restructuring expense related to the 2020 Plan.

During the three months ended March 31, 2019, we did not incur any restructuring expense.

The following is a rollforward of the accrued liabilities related to restructuring for the three month period ended March 31, 2020:

Balance as of December 31, 2019

During the three months ended June 30, 2020, we did no t record any restructuring expense.

During the six months ended June 30, 2020 we recorded $ 592 in restructuring expense related to the 2020 Plan.

During the three and six months ended June 30, 2019, we recorded $ 398 in restructuring expense related to the 2019 Plan.

The following is a rollforward of the accrued liabilities related to restructuring for the six month period ended June 30, 2020:

Balance as of December 31, 2019 Expensed Payments

Balance as of

March 31, 2020

June 30, 2020

Employee severance and benefits

$ 66 $ 592 $ ( 658 ) $ —

Accrued costs related to restructuring

$ 66 $ 592 $ ( 658 ) $ —

In February 2016, the FASB issued Accounting Standards Update No.

4 unchanged sentences

2018-11, Targeted Improvements .

The new standard establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

The standard establishes a right-of-use model ("ROU") that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

We adopted the new standard on January 1, 2019 and used the effective date as our date of initial application under the modified retrospective approach.

We adopted the standard on January 1, 2019 and used the effective date as our date of initial application under the modified retrospective approach.

Under the effective date method, financial information and disclosures prior to January 1, 2019 are not required to be restated.

20 unchanged sentences

Supplemental information related to lease expense and valuation of the ROU assets and lease liabilities was as follows:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Operating lease cost:

Three Months Ended

$ 676 $ 657 $ 1,323 $ 1,286

Six Months Ended

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

3 unchanged sentences

Weighted average discount rate 5.07 % 5.75 %

Future minimum lease payments under non-cancellable leases as of March 31, 2020 were as follows:

Future minimum lease payments under non-cancellable leases as of June 30, 2020 were as follows:

Operating Lease Payments

Nine months ending December 31, 2020

Six months ending December 31, 2020 $ 1,148

Years ending December 31:

Thereafter 370

Total operating lease payments 8,244

1 unchanged sentence

Total operating lease liabilities $ 7,410

As of March 31, 2020, the Company had no operating lease liabilities that had not commenced.

As of June 30, 2020, the Company had no operating lease liabilities that had not commenced.

Revenue is recognized when control of the promised good or service is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

23 unchanged sentences

Historically, such arrangements have not been material to our operating results.

The following table provides information about disaggregated revenue based on the preceding categories for the three months ended March 31, 2020 and 2019:

Three Months Ended

The following table provides information about disaggregated revenue based on the preceding categories for the three and six months ended June 30, 2020 and 2019:

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

IC sales $ 8,840 $ 17,588 $ 21,958 $ 32,662

Engineering services, license and other 413 439 1,069 2,013

11 unchanged sentences

Interest income (expense) and other, consists of the following:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Interest income $ 21 $ 85 $ 71 $ 185

Other income 37 53 81 97

Interest expense ( 82 ) ( 34 ) ( 122 ) ( 82 )

1 unchanged sentence

The provision for income taxes during the 2020 and 2019 periods is primarily comprised of current and deferred tax expense in profitable cost-plus foreign jurisdictions, accruals for tax contingencies in foreign jurisdictions and benefits for the reversal of previously recorded foreign tax contingencies due to the expiration of the applicable statutes of limitation.

We recorded a benefit for the reversal of previously recorded foreign tax contingencies of $ 10 and $ 31 during the first three months of 2020 and 2019, respectively.

We recorded a benefit for the reversal of previously recorded foreign tax contingencies of $ 10 and $ 31 during the first six months of 2020 and 2019, respectively.

As we do not believe that it is more likely than not that we will realize a benefit from our U.S.

3 unchanged sentences

We have not recorded a valuation allowance against our other foreign net deferred tax assets, with the exception of Canada, as we believe that it is more likely than not that we will realize a benefit from those assets.

As of March 31, 2020 and December 31, 2019, the amount of our uncertain tax positions was a liability of $ 1,530 and $ 1,554 , respectively, as well as a contra deferred tax asset of $ 1,244 and $ 1,100 , respectively.

As of June 30, 2020 and December 31, 2019, the amount of our uncertain tax positions was a liability of $ 1,537 and $ 1,554 , respectively, as well as a contra deferred tax asset of $ 1,244 and $ 1,100 , respectively.

A number of years may elapse before an uncertain tax position is resolved by settlement or statute of limitation.

4 unchanged sentences

EARNINGS ( LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data):

Three Months Ended

Net income (loss)

Basic weighted average shares outstanding

Dilutive effect of employee equity incentive plans

Diluted weighted average shares outstanding

Net income (loss) per share:

The following shares were excluded from the calculation of diluted net income (loss) per share as their effect would have been anti-dilutive (in thousands):

Three Months Ended

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

$ ( 6,552 ) $ ( 2,448 ) $ ( 11,951 ) $ ( 2,315 )

Weighted average shares outstanding - basic and diluted 39,444 37,688 39,156 37,469

Net loss per share - basic and diluted $ ( 0.17 ) $ ( 0.06 ) $ ( 0.31 ) $ ( 0.06 )

The following shares were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Employee equity incentive plans 4,023 3,423 3,979 3,353

6 unchanged sentences

Revenue by geographic region, is as follows:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Japan $ 7,515 $ 15,234 $ 16,001 $ 28,694

China 959 1,686 3,805 3,548

United States 433 623 2,099 1,337

Europe 185 71 190 104

Taiwan 161 380 899 899

Korea — 33 33 93

$ 9,253 $ 18,027 $ 23,027 $ 34,675

Significant Customers

The percentage of revenue attributable to our distributors, top five end customers, and individual distributors or end customers that represented 10% or more of revenue in at least one of the periods presented, is as follows:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Distributors:

1 unchanged sentence

Distributor A 54 % 37 % 29 % 30 %

Distributor B

End customers:

2 unchanged sentences

End customer B 14 % 7 % 7 % 5 %

End customer C 13 % 7 % 5 % 5 %

End customer D 11 % 9 % 6 % 6 %

End customer E 10 % 12 % 5 % 14 %

1 End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors.

The following accounts represented 10% or more of total accounts receivable in at least one of the periods presented:

2020 December 31,

Account X 63 % 24 %

Account Y 15 % 42 %

Account Z — % 26 %

RISKS AND UNCERTAINTIES

26 unchanged sentences

The scheduled payments are made on a quarterly basis and end in January 2024.

As of March 31, 2020, $ 445 is included in accrued liabilities and current portion of long-term liabilities in our consolidated balance sheet and $ 367 is included in long-term liabilities, net of current portion in our condensed consolidated balance sheets.

SUBSEQUENT EVENT

On April 25, 2020, Pixelworks, Inc.

(the “Company”), entered into a loan with Silicon Valley Bank as the lender (“Lender”) in an aggregate principal amount of $ 796 (the “Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The Loan is evidenced by a promissory note (the “Note”) dated April 25, 2020, and matures 2 years from the disbursement date.

The Note bears interest at a rate of 1.000 % per annum, with the first six months of interest deferred.

Principal and interest are payable monthly commencing 6 months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

The Note contains customary events of default relating to, among other things, payment defaults or breaches of the terms of the Note.

Upon the occurrence of an event of default, the Lender may require immediate repayment of all amounts outstanding under the Note.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP.

The Company intends to use the Loan amount for Qualifying Expenses.

However, no assurance is provided that the Company will obtain forgiveness of the Loan in whole or in part.

As of June 30, 2020, $ 463 is included in accrued liabilities and current portion of long-term liabilities in our condensed consolidated balance sheets and $ 339 is included in long-term liabilities, net of current portion in our condensed consolidated balance sheets.

SUBSEQUENT EVENTS

On August 7, 2020, the Board of Directors (the “Board”) of the Company approved a restructuring plan to make the operation of the Company more efficient and which would result in an approximat ely 14 % reduction in workforce, primarily in the areas of operations, research and development, sales, and marketing.

The Board believes adoption of this restructuring plan will help streamline the Company’s operations and workforce, and more appropriately align the Company’s operating expenses with current revenue levels.

The Company expects the restructuring to be substantially completed by the end of the third quarter ending September 30, 2020 and expects to incur total estimated restructuring charges of approximately $ 1,500 related to employee severance and benefits.

The Company expects that these charges will largely be recorded in the third quarter of 2020.

As a result of the restructuring, the Company expects to realize annualized savings of approximately $ 3,200 .

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