What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-07 compared with 2023-08-08 · 95 added, 63 removed, 506 unchanged (24% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

2023 December 31,

37 unchanged sentences

(In thousands, except per share data)

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

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

2023 2022 2023 2022

12 unchanged sentences

Net loss ( 7,333 ) ( 4,496 ) ( 23,211 ) ( 13,626 )

Net (income) loss attributable to redeemable non-controlling interest 107 — 445 ( 470 )

Net (income) loss attributable to redeemable non-controlling interest and non-controlling interest 334 — 779 ( 470 )

Net loss attributable to Pixelworks Inc.

14 unchanged sentences

(In thousands)

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

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

2023 2022 2023 2022

Net loss $ ( 7,333 ) $ ( 4,496 ) $ ( 23,211 ) $ ( 13,626 )

Other comprehensive loss:

Other comprehensive loss, net of tax:

Foreign currency translation adjustment 161 1,657 1,372 3,173

Comprehensive loss ( 7,172 ) ( 2,839 ) ( 21,839 ) ( 10,453 )

comprehensive (income) loss attributable to redeemable non-controlling interest 107 — 445 ( 470 )

comprehensive (income) loss attributable to redeemable non-controlling interest and non-controlling interest 334 — 779 ( 470 )

Total comprehensive loss attributable to Pixelworks, Inc.

4 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization 3,211 3,490

Reversal of uncertain tax positions ( 2 ) ( 121 )

Deferred income tax expense 314 396

Reversal of uncertain tax positions ( 2 ) ( 121 )

Amortization of acquired intangible assets — 90

15 unchanged sentences

Proceeds from issuance of common stock under employee equity incentive plans 299 387

Net cash provided by (used in) financing activities 14,206 ( 408 )

Net cash provided by financing activities 13,963 10,233

Net decrease in cash and cash equivalents ( 6,503 ) ( 3,972 )

33 unchanged sentences

Balance as of June 30, 2023 56,116,428 $ 483,810 $ 4,198 $ ( 466,418 ) $ 24,251 $ 45,841

Stock issued under employee equity incentive plans 577,089 $ 143 $ — $ — $ — $ 143

Stock-based compensation expense — 1,252 — — — $ 1,252

Foreign currency translation adjustment — — 241 — ( 80 ) $ 161

Net loss attributable to non-controlling interest — — — — ( 185 ) $ ( 185 )

Net loss attributable to Pixelworks, Inc.

— $ — $ — ( 6,999 ) $ — $ ( 6,999 )

Balance as of September 30, 2023 56,693,517 $ 485,205 $ 4,439 $ ( 473,417 ) $ 23,986 $ 40,213

Balance as of December 31, 2021 53,367,136 $ 475,644 $ ( 468 ) $ ( 434,955 ) $ — $ 40,221

11 unchanged sentences

Balance as of June 30, 2022 54,231,872 $ 478,605 $ 1,048 $ ( 444,555 ) $ — $ 35,098

Stock issued under employee equity incentive plans 604,167 170 — — 170

Stock-based compensation expense — 1,294 — — $ — 1,294

Foreign currency translation adjustment — — 1,657 — $ — 1,657

Net proceeds from issuance of equity interest to non-controlling interest — — — — $ 10,738 10,738

Net loss attributable to Pixelworks, Inc.

( 4,496 ) $ — ( 4,496 )

Balance as of September 30, 2022 54,836,039 $ 480,069 $ 2,705 $ ( 449,051 ) $ 10,738 $ 44,461

See accompanying notes to condensed consolidated financial statements.

11 unchanged sentences

We were the first company to integrate motion estimation / motion compensation technology ("MEMC") as a mobile-optimized solution for smartphones.

In 2019, we introduced our Hollywood award-winning TrueCut® video platform, the industry’s first motion grading technology that allows fine tuning of motion appearance in cinematic content.

As of June 30, 2023, we had an intellectual property portfolio of 280 patents related to the visual display of digital image data.

In 2019, we introduced our Hollywood award-winning TrueCut Motion TM® video platform, the industry’s first motion grading technology that allows fine tuning of motion appearance in cinematic content.

As of September 30, 2023, we had an intellectual property portfolio of 278 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.

14 unchanged sentences

We believe that the Listing will have many benefits, including improved access to new capital markets and the funding of PWSH’s growth worldwide.

We presently intend to qualify PWSH to apply for the Listing in the second half of 2023.

The process of going public on the STAR Market is lengthy and includes several periods of review by various government agencies of the People’s Republic of China (“PRC”), such as the Shanghai Stock Exchange and the China Securities Regulatory Commission (“CSRC”).

The process of going public on the STAR Market is lengthy and includes several periods of review by various government agencies of the People’s Republic of China (“PRC”), such as the Shanghai Stock Exchange (“SSE”) and the China Securities Regulatory Commission (“CSRC”).

There is no guarantee that PWSH will be approved for a Listing at any point in the future.

The listing of PWSH on the STAR Market will not change the status of PXLW as a U.S.

The CSRC and the SSE have recently tightened the standards for the STAR Market and are currently advising companies that are not yet profitable under China GAAP standards against filing an IPO application in the present environment.

The Company believes this is in large part due to the current economic conditions in China and the recent performance of companies already listed on the STAR Market that were not profitable at the time of their IPO.

PWSH is not currently profitable under China GAAP standards.

The CSRC and the SSE may relax the standards, but there is no guarantee that this will happen in any particular time frame.

The Company will continue to prepare our application so it is ready to file once the situation changes or PWSH achieves profitability under China GAAP standards.

Any listing of PWSH on the STAR Market will not change the status of PXLW as a U.S.

public company.

3 unchanged sentences

Condensed Consolidated Financial Statements

The financial information included herein for the three and six months ended June 30, 2023 and 2022 is prepared in accordance with U.S.

The financial information included herein for the three and nine months ended September 30, 2023 and 2022 is prepared in accordance with U.S.

generally accepted accounting principles ("U.S.

2 unchanged sentences

The financial information as of December 31, 2022 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, included in Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 8, 2023, and should be read in conjunction with such consolidated financial statements.

The results of operations for the three and six months ended June 30, 2023 and 2022 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2023.

The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2023.

Recent Accounting Pronouncements

1 unchanged sentence

Summary of Significant Accounting Policies" in Part II, Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 8, 2023.

We did not adopt any new accounting pronouncements during the three months ended June 30, 2023.

We did not adopt any new accounting pronouncements during the three or nine months ended September 30, 2023.

Use of Estimates

1 unchanged sentence

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

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.

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

The actual results experienced could differ materially from our estimates.

5 unchanged sentences

Accounts receivable net, consist of the following:

September 30,

2023 December 31,

3 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

Balance at beginning of period $ 77 $ 36

Additions charged (reductions credited) ( 46 ) 17

Reductions credited ( 51 ) ( 10 )

Balance at end of period $ 26 $ 26

1 unchanged sentence

Inventories consist of the following:

September 30,

2023 December 31,

4 unchanged sentences

Property and equipment, net consists of the following:

September 30,

2023 December 31,

Gross carrying amount $ 24,942 $ 20,792

Gross property and equipment $ 25,084 $ 20,792

accumulated depreciation and amortization ( 18,522 ) ( 16,160 )

3 unchanged sentences

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

September 30,

2023 December 31,

7 unchanged sentences

Goodwill is not amortized;

however, we review goodwill for impairment annually and whenever events or changes in circumstances indicate that the fair value of the reporting unit may be less than it's carrying value.

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 six months ended June 30, 2023.

however, we review goodwill for impairment annually and whenever events or changes in circumstances indicate that the fair value of the reporting unit may be less than its carrying value.

Our stock price has declined recently, however, combined with our assessment of other events and circumstances, we do not believe this to be a current triggering event requiring a goodwill impairment assessment as of September 30, 2023.

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,

2023 December 31,

5 unchanged sentences

Accrued commissions and royalties 30 210

Liability for warranty returns 12 15

Other 2,029 2,264

4 unchanged sentences

The change in deferred revenue is as follows:

Six Months Ended

Nine Months Ended

September 30,

Deferred revenue:

9 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 June 30, 2023 and December 31, 2022:

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, 2023 and December 31, 2022:

Level 1 Level 2 Level 3 Total

As of June 30, 2023:

As of September 30, 2023:

Cash equivalents:

15 unchanged sentences

For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

We have operating leases for office buildings and one vehicle.

We have operating leases for office buildings and two vehicles.

Our leases have remaining lease terms of one year to four years .

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

1 unchanged sentence

$ 765 $ 659 $ 2,129 $ 2,004

Six Months Ended

Nine Months Ended

September 30,

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

Operating cash flows from operating leases $ 2,025 $ 2,076

Leased assets obtained in exchange for new operating lease liabilities 3,422 —

Supplemental non-cash information related to lease liabilities arising from obtaining right-of-use assets 3,881 734

Weighted average remaining lease term (in years) 2.39 2.90

Weighted average discount rate 6.93 % 4.18 %

Future minimum lease payments under non-cancellable leases as of June 30, 2023 were as follows:

Future minimum lease payments under non-cancellable leases as of September 30, 2023 were as follows:

Operating Lease Payments

Six months ending December 31, 2023 $ 1,199

Three months ending December 31, 2023 $ 594

Years ending December 31:

3 unchanged sentences

Total operating lease liabilities $ 5,466

As of June 30, 2023, we had no operating lease liabilities that had not commenced.

As of September 30, 2023, we 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.

27 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, with IC sales disaggregated further into net revenue from external customers for each group of similar products, for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

3 unchanged sentences

IC sales by end market:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

11 unchanged sentences

There is no amount of transaction price allocated to unsatisfied performance obligations with an original expected duration of greater than one year.

Revenue related to the Cinema market was not material during the three and six months ended June 30, 2023 and 2022, and was therefore included in the engineering, services, license revenue and other category within the Mobile market.

Revenue related to the Cinema market was not material during the three and nine months ended September 30, 2023 and 2022, and was therefore included in the engineering services, license revenue and other category within the Mobile market.

INTEREST INCOME AND OTHER, NET

Interest income and other, net, consists of the following:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Interest income $ 500 $ 165 $ 1,487 $ 388

Other income 17 16 125 61

Interest expense ( 29 ) ( 10 ) 3 ( 32 )

Other income — 10 125 72

Total interest income and other, net $ 471 $ 165 $ 1,615 $ 428

5 unchanged sentences

As amounts become due and payable, they are offset against research and development expense on a pro rata basis.

We recognized offsets to research and development expense of $ 1,900 and $ 855 , during the three months ended June 30, 2023 and 2022, respectively and $ 1,900 and $ 1,838 during the six months ended June 30, 2023 and 2022, respectively.

We recognized offsets to research and development expense of $ 43 and $ 0 , during the three months ended September 30, 2023 and 2022, respectively and $ 1,943 and $ 1,838 during the nine months ended September 30, 2023 and 2022, respectively.

The provision for income taxes during the 2023 and 2022 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 $ 2 and $ 121 during the first six months of 2023 and 2022, respectively.

We recorded a benefit for the reversal of previously recorded foreign tax contingencies of $ 2 and $ 121 during the first nine months of 2023 and 2022, 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 and China, as we believe that it is more likely than not that we will realize a benefit from those assets.

As of June 30, 2023 and December 31, 2022, the amount of our uncertain tax positions was a liability of $ 382 and $ 1,643 , respectively, as well as a contra deferred tax asset of $ 1,470 and $ 1,353 , respectively.

As of September 30, 2023 and December 31, 2022, the amount of our uncertain tax positions was a liability of $ 381 and $ 378 , respectively, as well as a contra deferred tax asset of $ 1,443 and $ 1,353 , respectively.

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

5 unchanged sentences

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,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

$ ( 7,333 ) $ ( 4,496 ) $ ( 23,211 ) $ ( 13,626 )

Net (income) loss attributable to redeemable non-controlling interest 107 — 445 ( 470 )

Net (income) loss attributable to redeemable non-controlling interest and non-controlling interest 334 — 779 ( 470 )

Net loss attributable to Pixelworks, Inc.

8 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

10 unchanged sentences

Revenue by geographic region, is as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Japan $ 5,122 $ 9,298 $ 10,681 $ 16,696

China $ 8,777 $ 5,482 $ 20,906 $ 21,371

Japan 7,070 10,908 17,752 27,604

Taiwan 185 464 836 2,421

United States — 648 109 1,736

Korea — 50 — 50

Europe — — — 76

2 unchanged sentences

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

12 unchanged sentences

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

September 30,

2023 December 31,

Account V 42 % 27 %

Account W 62 % 31 %

20 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 June 30, 2023, 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 September 30, 2023, 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 June 30, 2023, $ 193 is included in accrued liabilities and current portion of long-term liabilities in our condensed consolidated balance sheets.

As of September 30, 2023, $ 128 is included in accrued liabilities and current portion of long-term liabilities in our condensed consolidated balance sheets.

Contract Manufacturers

In the normal course of business, we commit to purchase products from our contract manufacturers to be delivered within the next approximately 90 days.

In certain situations, should we cancel an order, we could be required to pay cancellation fees.

Such obligations could impact our immediate results of operations but would not materially affect our business.

REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY INTEREST OF PWSH SOLD TO EMPLOYEES

35 unchanged sentences

public company.

The components of the change in redeemable non-controlling interests for the six months ended June 30, 2023 are presented in the following table (in thousands):

The components of the change in redeemable non-controlling interests for the nine months ended September 30, 2023 are presented in the following table (in thousands):

Carrying Value of Redeemable Non-Controlling Interest as of January 1, 2023

Net loss attributable to redeemable non-controlling interest ( 149 )

Effect of foreign currency translation attributable to redeemable non-controlling interest ( 1,372 )

Carrying Value of Redeemable Non-Controlling Interest as of June 30, 2023

Carrying Value of Redeemable Non-Controlling Interest as of September 30, 2023

NON-CONTROLLING INTEREST

19 unchanged sentences

Effect of foreign currency translation attributable to non-controlling interest ( 889 )

Carrying Value of Permanent Equity Non-Controlling Interest as of June 30, 2023

Carrying Value of Permanent Equity Non-Controlling Interest as of September 30, 2023

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