What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 77 added, 202 removed, 387 unchanged (42% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

2021 December 31,

16 unchanged sentences

Accrued liabilities and current portion of long-term liabilities 8,523 9,452

Short-term line of credit 3,954 —

Current portion of income taxes payable 155 147

16 unchanged sentences

(In thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Revenue, net $ 9,270 $ 13,774

7 unchanged sentences

Loss from operations ( 7,914 ) ( 5,277 )

Interest income (expense) and other, net ( 28 ) 70 2 270

Gain on sale of patents — — — 3,905

Total other income (expense), net ( 28 ) 70 2 4,175

Interest income and other, net 56 54

Total other income, net 56 54

Loss before income taxes ( 7,858 ) ( 5,223 )

Provision (benefit) for income taxes ( 26 ) ( 68 ) 257 571

Provision for income taxes 217 176

Net loss $ ( 8,075 ) $ ( 5,399 )

3 unchanged sentences

Amortization of acquired intangible assets 245 298

Restructuring 166 — 166 —

Stock-based compensation 79 101

Inventory step-up and backlog amortization — — — 12

(2) Includes stock-based compensation 581 648

6 unchanged sentences

(In thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Net loss $ ( 8,075 ) $ ( 5,399 )

Other comprehensive loss:

Unrealized gain (loss) on available-for-sale securities ( 2 ) ( 1 ) ( 1 ) 6

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

Total comprehensive loss $ ( 8,075 ) $ ( 5,405 )

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 8,075 ) $ ( 5,399 )

Adjustments to reconcile net loss to net cash used in operating activities:

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

Stock-based compensation 1,432 1,822

1 unchanged sentence

Amortization of acquired intangible assets 305 374

Deferred income tax expense (benefit) ( 10 ) 4

Reversal of uncertain tax positions ( 2 ) ( 10 )

Accretion on short-term marketable securities — ( 10 )

Deferred income tax benefit 4 —

Gain on sale of marketable securities — ( 4 )

Gain on sale of patents — ( 3,905 )

Inventory step-up and backlog amortization — 12

Changes in operating assets and liabilities, net of acquisition:

Changes in operating assets and liabilities:

Accounts receivable, net ( 850 ) 2,065

4 unchanged sentences

Income taxes payable 131 46

Net cash used in operating activities ( 3,231 ) ( 2,952 )

Net cash provided by (used in) operating activities ( 6,651 ) 900

Cash flows from investing activities:

2 unchanged sentences

Purchases of short-term marketable securities — ( 1,500 )

Purchases of licensed technology ( 152 ) ( 521 )

Proceeds from sale of patents — 4,250

Payment associated with sale of patents — ( 345 )

Net cash provided by investing activities 7 4,294

Cash flows from financing activities:

Proceeds from line of credit 3,954 —

Net proceeds from "at the market" equity offering 3,641 —

Proceeds from Paycheck Protection Program loan 796 —

Payments on asset financings ( 239 ) —

Proceeds from issuance of common stock under employee equity incentive plans 1,063 325

Net cash provided by (used in) financing activities 8,316 ( 19 )

Proceeds from line of credit — 5,157

Net cash provided by financing activities 824 5,482

Net increase (decrease) in cash and cash equivalents ( 5,820 ) 10,676

20 unchanged sentences

Stock-based compensation expense — 1,432 — — 1,432

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

Net loss — — — ( 8,075 ) ( 8,075 )

Balance as of March 31, 2021 52,212,421 $ 470,452 $ 47 $ ( 423,209 ) $ 47,290

"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

"At the market" equity offering 570,989 1,167 1,167

Stock issued under employee equity incentive plans 745,878 263 — — 263

Stock-based compensation expense — 1,850 — — 1,850

Unrealized loss on available for sale securities — — ( 2 ) — ( 2 )

Net loss — — — ( 8,139 ) ( 8,139 )

Balance as of September 30, 2020 41,537,358 $ 446,278 $ 11 $ ( 408,695 ) $ 37,594

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 — — 4 — 4

Net income — — — 133 133

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

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

Stock issued under employee equity incentive plans 487,820 255 — — 255

Stock-based compensation expense — 1,498 — — 1,498

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

Net loss — — — ( 5,399 ) ( 5,399 )

Balance as of September 30, 2019 38,321,611 $ 434,325 $ 21 $ ( 384,149 ) $ 50,197

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

See accompanying notes to condensed consolidated financial statements.

7 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 September 30, 2020, we had an intellectual property portfolio of 344 patents related to the visual display of digital image data.

As of March 31, 2021, we had an intellectual property portfolio of 336 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 and nine month periods ended September 30, 2020 and 2019 is prepared in accordance with U.S.

The financial information included herein for the three month periods ended March 31, 2021 and 2020 is prepared in accordance with U.S.

generally accepted accounting principles ("U.S.

2 unchanged sentences

The financial information as of December 31, 2020 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2020, included in Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 10, 2021, and should be read in conjunction with such consolidated financial statements.

The results of operations for the three month and nine month periods ended September 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.

The results of operations for the three month periods ended March 31, 2021 and 2020 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2021.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Starndards Board ("FASB") issued Accounting Standards Update No.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No.

2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12").

ASU 2019-12 removes certain exceptions to the general principles in Accounting Standards Codification ("ASC") 740 and also clarifies and amends existing guidance to provide for more consistent application.

ASU 2019-12 will become effective for us in the first quarter of fiscal 2021, and early adoption is permitted.

We are evaluating the impact that the adoption of ASU 2019-12 will have on our financial position, results of operations and cash flows.

ASU 2019-12 became effective for us on January 1, 2021.

The adoption of ASU 2019-12 did not have a material impact on our financial position, results of operations and cash flows.

In November 2018, the FASB issued Accounting Standards Update No.

8 unchanged sentences

GAAP requires us to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes.

These estimates reflect considerations related to the impact of COVID-19.

Our significant estimates and judgments include those related to revenue recognition, valuation of excess and obsolete inventory, lives and recoverability of equipment and other long-lived assets, valuation of goodwill, valuation of share-based payments, income taxes, litigation and other contingencies.

6 unchanged sentences

Accounts receivable consists of the following:

September 30,

2021 December 31,

3 unchanged sentences

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

Nine Months Ended

September 30,

Three Months Ended

Balance at beginning of period $ 41 $ 23

3 unchanged sentences

Inventories consist of the following:

September 30,

2021 December 31,

4 unchanged sentences

Property and equipment, net consists of the following:

September 30,

2021 December 31,

5 unchanged sentences

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

September 30,

2021 December 31,

6 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 and $ 1,122 for the three and nine months ended September 30, 2020, respectively, $ 298 and $ 894 were included in cost of revenue for the three and nine months ended September 30, 2020, respectively, and $ 76 and $ 228 were included in selling, general and administrative for the three and nine months ended September 30, 2020, respectively, in the condensed consolidated statements of operations.

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

Three months ending December 31:

Years ending December 31:

Amortization expense for intangible assets was $ 305 for the three months ended March 31, 2021, $ 245 was included in cost of revenue and $ 60 was included in selling, general and administrative for the three months ended March 31, 2021, in the condensed consolidated statements of operations.

As of March 31, 2021, future estimated amortization expense is as follows:

Nine months ending December 31, 2021 $ 812

Year ending December 31, 2022 90

Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

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 nine months ended September 30, 2020.

There were no such triggering events requiring an impairment assessment of other intangible assets during the three months ended March 31, 2021.

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 nine months ended September 30, 2020.

There were no such triggering events requiring a goodwill impairment assessment during the three months ended March 31, 2021.

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:

September 30,

2021 December 31,

1 unchanged sentence

Operating lease liabilities, current 2,331 2,039

Accrued costs related to restructuring 1,132 66

Current portion of accrued liabilities for asset financings 715 786

Accrued commissions and royalties 525 663

Accrued interest payable 427 429

Accrued commissions and royalties 396 474

Deferred revenue 120 179

Accrued costs related to restructuring — 630

Other 1,972 2,048

4 unchanged sentences

The change in deferred revenue is as follows:

Nine Months Ended

September 30,

Three Months Ended

Deferred revenue:

4 unchanged sentences

Short-Term Line of Credit

On December 21, 2010, we entered into a Loan and Security Agreement with Silicon Valley Bank (the "Bank"), which was amended on December 14, 2012, December 4, 2013, December 18, 2015, December 15, 2016, July 21, 2017, December 21, 2017, December 18, 2018, December 18, 2019 and April 17, 2020 (as amended, the "Revolving Loan Agreement").

The Revolving Loan Agreement provides a secured working capital-based revolving line of credit (the "Revolving Line") in an aggregate amount of up to the lesser of (i) $ 10,000 , or (ii) $ 2,500 plus 80 % of eligible domestic accounts receivable and certain foreign accounts receivable of both Pixelworks and ViXS Systems, Inc., subject to certain limitations on the amount of accounts receivables attributable to ViXS.

The Revolving Line has a maturity date of December 27, 2020.

In addition, the Revolving Loan Agreement provides for non-formula advances of up to $ 10,000 which may be made solely during the last five business days of any fiscal month or quarter and which must be repaid by us on or before the fifth business day after the applicable fiscal month or quarter end.

Due to their repayment terms, non-formula advances do not provide us with usable liquidity.

The Revolving Loan Agreement, as amended, contains customary affirmative and negative covenants as well as customary events of default.

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

As of September 30, 2020, short-term borrowings outstanding under the Revolving Line consisted of $ 3,954 .

The weighted-average interest rate on short-term borrowings outstanding as of September 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 has used the Loan amount for Qualifying Expenses and we have applied 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.

During the nine months ended September 30, 2020, we sold an aggregate of 1,374,517 shares of our common stock under this at the market offering, resulting in aggregate net proceeds to us of approximately $ 3,641 , and gross proceeds of approximately $ 4,071 , and paid Cowen commissions and fees of approximately $ 172 , and other expenses of $ 258 .

As of September 30, 2020, the remaining availability under the at the market offering is $ 20,929 .

On December 21, 2010, we entered into a Loan and Security Agreement with Silicon Valley Bank (the "Bank"), which was amended on December 14, 2012, December 4, 2013, December 18, 2015, December 15, 2016, July 21, 2017, December 21, 2017, December 18, 2018, December 18, 2019, April 17, 2020 and December 14, 2020 (as amended, the "Revolving Loan Agreement").

The Revolving Loan Agreement provided a secured working capital-based revolving line of credit (the "Revolving Line") in an aggregate amount of up to the lesser of (i) $ 10,000 , or (ii) $ 2,500 plus 80 % of eligible domestic accounts receivable and certain foreign accounts receivable of both Pixelworks and ViXS Systems, Inc., subject to certain limitations on the amount of accounts receivables attributable to ViXS.

In addition, the Revolving Loan Agreement provided for non-formula advances of up to $ 10,000 which may have been made solely during the last five business days of any fiscal month or quarter and which were required to be repaid by us on or before the fifth business day after the applicable fiscal month or quarter end.

Due to their repayment terms, non-formula advances did not provide us with usable liquidity.

The Revolving Loan Agreement, as amended, contained customary affirmative and negative covenants as well as customary events of default.

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

The Revolving Line had a maturity date of March 26, 2021.

We did not renew the Revolving Loan Agreement upon its maturity.

As of March 31, 2021 and December 31, 2020, we had no outstanding borrowings under the Revolving Line.

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

Marketable Securities

As of September 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:

We had no marketable securities a s of March 31, 2021.

As of December 31, 2020, 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 September 30, 2020:

Corporate debt securities $ 737 $ ( 2 ) $ 735

$ 737 $ ( 2 ) $ 735

As of December 31, 2020:

Commercial paper $ 2,487 $ — $ 2,487

government treasury bills 2,249 1 2,250

Corporate debt securities 253 ( 3 ) 250

7 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 September 30, 2020 and December 31, 2019:

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, 2021 and December 31, 2020:

Level 1 Level 2 Level 3 Total

As of September 30, 2020:

As of March 31, 2021:

Cash equivalents:

Money market funds $ 18,149 $ — $ — $ 18,149

Short-term marketable securities:

Corporate debt securities — 735 — 735

As of December 31, 2020:

2 unchanged sentences

Short-term marketable securities:

government treasury bills 2,250 — — 2,250

Commercial paper — 2,487 — 2,487

Corporate debt securities — 250 — 250

7 unchanged sentences

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

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 nine month periods ended September 30, 2020 and 2019 is comprised of the following:

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Cost of revenue — restructuring:

Employee severance and benefits

$ 166 $ — $ 166 $ —

Total restructuring expense included in our condensed consolidated statements of operations for the three month periods ended March 31, 2021 and 2020 is comprised of the following:

Three Months Ended

Operating expenses — restructuring:

Employee severance and benefits

$ 1,430 $ — $ 2,022 $ 398

1,430 — 2,022 398

Total restructuring expense $ — $ 592

During the three months ended September 30, 2020, we recorded $ 1,596 in restructuring expense related to the August 2020 Plan.

During the nine months ended September 30, 2020 we recorded $ 1,596 in restructuring expense related to the August 2020 Plan and $ 592 in restructuring expense related to the January 2020 Plan.

During the three months ended September 30, 2019, we did not record any restructuring expense.

During the nine months ended September 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 nine month period ended September 30, 2020:

During the three months ended March 31, 2021, we did not record any restructuring expense.

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

The following is a rollforward of the accrued liabilities related to restructuring for the three month period ended March 31, 2021:

Balance as of December 31, 2020 Expensed Payments

Balance as of

September 30, 2020

March 31, 2021

Employee severance and benefits

2 unchanged sentences

$ 630 $ — $ ( 630 ) $ —

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

2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements.

Topic 842 was subsequently amended by ASU No.

2018-01, Land Easement Practical Expedient for Transition to Topic 842 ;

2018-10, Codification Improvements to Topic 842 ;

2018-11, Targeted Improvements .

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 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.

We elected the "practical expedient package," which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.

We did not elect the use-of-hindsight or the practical expedient pertaining to land easements;

the latter not being applicable to us.

We elected the short-term lease recognition exemption for all leases that qualify.

This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition.

We also elected the practical expedient to not separate lease and non-lease components for all of our leases.

Upon adoption, we recognized operating lease liabilities of $ 6,847 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

We also recognized ROU assets of $ 6,224 which represents the operating lease liability adjusted for accrued rent and cease-use liabilities.

The adoption did not have a material impact on our condensed consolidated statements of operations or cash flows.

The most significant impact relates to (1) the recognition of new ROU assets and lease liabilities on our balance sheet for our office operating leases;

and (2) providing significant new disclosures about our leasing activities.

We determine if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities, and operating lease liabilities in our condensed consolidated balance sheets.

Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

6 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Operating lease cost:

$ 702 $ 646 $ 2,024 $ 1,931

Nine Months Ended

September 30,

Three Months Ended

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

3 unchanged sentences

Weighted average discount rate 4.90 % 5.17 %

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

Future minimum lease payments under non-cancellable leases as of March 31, 2021 were as follows:

Operating Lease Payments

Three months ending December 31, 2020 $ 520

Nine months ending December 31, 2021 $ 1,934

Years ending December 31:

3 unchanged sentences

Total operating lease liabilities $ 7,122

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

As of March 31, 2021, 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.

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License Revenue - On occasion, we derive revenue from the license of our internally developed intellectual property ("IP").

Additionally, for certain IP license agreements, royalties are collected as customers sell their own products that incorporate the Company’s IP.

IP licensing agreements that we enter into generally provide licensees the right to incorporate our IP components in their products with terms and conditions that vary by licensee.

Fees under these agreements generally include license fees relating to our IP and support service fees, resulting in two performance obligations.

Fees under these agreements generally include license fees or royalty fees relating to our IP and support service fees, resulting in two performance obligations.

We evaluate each performance obligation, which generally results in the transfer of control at a point in time for the license fee and over time for support services.

Royalties are recognized as revenue is earned, generally when the customer sells its products that incorporate the Company’s IP.

Other - From time-to-time, we enter into arrangements for other revenue generating activities, such as providing technical support services to customers through technical support agreements.

1 unchanged sentence

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 and nine months ended September 30, 2020 and 2019:

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

The following table provides information about disaggregated revenue based on the preceding categories for the three months ended March 31, 2021 and 2020:

Three Months Ended

IC sales $ 8,637 $ 13,118

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The aggregate amount of the transaction price allocated to unsatisfied performance obligations with an original expected duration of greater than one year is $ 120 , which we expect to recognize ratably over the next 12 months .

INTEREST INCOME (EXPENSE) AND OTHER, NET

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Interest income $ 9 $ 75 $ 81 $ 261

INTEREST INCOME AND OTHER, NET

Interest income and other, consists of the following:

Three Months Ended

Other income $ 65 $ 43

Interest expense ( 14 ) ( 40 )

Total interest income (expense) and other, net $ ( 28 ) $ 70 $ 2 $ 270

Interest income 5 51

Total interest income and other, net $ 56 $ 54

The provision for income taxes during the 2021 and 2020 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 nine months of 2020 and 2019, respectively.

We recorded a benefit for the reversal of previously recorded foreign tax contingencies of $ 2 and $ 10 during the first three months of 2021 and 2020, respectively.

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

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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 September 30, 2020 and December 31, 2019, the amount of our uncertain tax positions was a liability of $ 1,601 and $ 1,554 , respectively, as well as a contra deferred tax asset of $ 1,254 and $ 1,100 , respectively.

As of March 31, 2021 and December 31, 2020, the amount of our uncertain tax positions was a liability of $ 1,616 and $ 1,610 , respectively, as well as a contra deferred tax asset of $ 1,279 and $ 1,189 , respectively.

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

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

$ ( 8,075 ) $ ( 5,399 )

2 unchanged sentences

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 Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Employee equity incentive plans 3,886 4,094

6 unchanged sentences

Revenue by geographic region, is as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Japan $ 5,296 $ 14,119 $ 21,297 $ 42,814

Three Months Ended

China $ 4,277 $ 2,846

Japan 3,544 8,486

United States 766 1,666

Korea 275 15 308 108

Taiwan 666 738

Europe 70 — 260 104

$ 9,270 $ 13,774

1 unchanged sentence

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 Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Three Months Ended

Distributors:

1 unchanged sentence

Distributor A 34 % 7 %

Distributor B 8 % 13 %

Distributor C 7 % 10 %

End customers:

2 unchanged sentences

End customer B 20 % 7 %

End customer C 17 % — %

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:

September 30,

2021 December 31,

1 unchanged sentence

Account Y 35 % 39 %

Account Z 7 % 26 %

RISKS AND UNCERTAINTIES

16 unchanged sentences

It is not possible for us to predict the maximum potential amount of future payments or indemnification costs under these or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement.

We have not made any payments under these agreements in the past, and as of September 30, 2020, we have not incurred any material liabilities arising from these indemnification obligations.

We have not made any payments under these agreements in the past, and as of March 31, 2021, we have not incurred any material liabilities arising from these indemnification obligations.

In the future, however, such obligations could materially impact our results of operations.

7 unchanged sentences

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

As of September 30, 2020, $ 474 is included in accrued liabilities and current portion of long-term liabilities in our condensed consolidated balance sheets and $ 302 is included in long-term liabilities, net of current portion in our condensed consolidated balance sheets.

SUBSEQUENT EVENT

On October 19, 2020, we entered into a Securities Purchase Agreement with MTM-Xinhe Investment Limited, a British Virgin Islands company (the “Investor”), pursuant to which we agreed to issue and sell in a private placement 3,200,000 shares of the our common stock, par value $ 0.001 per share, to the Investor at a purchase price of $ 2.071 per share, for gross proceeds to us of approximately $ 6,600 (the “Private Placement”).

Subject to the fulfillment of certain conditions, the Private Placement is expected to close in November 2020.

As of March 31, 2021, $ 506 is included in accrued liabilities and current portion of long-term liabilities in our condensed consolidated balance sheets and $ 221 is included in long-term liabilities, net of current portion in our condensed consolidated balance sheets.

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