What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2024-05-20 · 53 added, 27 removed, 89 unchanged (47% of the section changed)

14 unchanged sentences

● our ability to develop new products and technologies;

● our ability to comply with the continued listing requirements of Nasdaq

● our estimates of our expenses, ongoing losses, future revenue and capital requirements, including

28 unchanged sentences

Our electronic polymer platform can be used in a number of display technologies including microLED, miniLED and AMOLED displays for next generation televisions, laptops, augmented reality (“AR”) and virtual reality (“VR”) headsets, smartwatches, and smartphones.

We develop our materials at our research and provide prototyping services at the Centre for Process Innovation (“CPI”) at Sedgefield, UK.

We have a field application office in Taiwan.

We develop our materials at our research and development facility in Manchester, UK, and provide prototyping services at the Centre for Process Innovation (“CPI”) at Sedgefield, UK.

We have signed a technology transfer agreement (TTA) with the Industrial Technology Research Institute (“ITRI”) in Taiwan for product prototyping on its Gen2.5 fabrication line.

We also have a field application office in Taiwan.

We have an extensive IP portfolio including 125 granted patents across 19 patent families and 40 codified trade secrets.

Since our inception in 2009, we have devoted substantial resources to the research and development of materials and production processes for the manufacture of organic thin film transistors and the enhancement of our intellectual property.

Our loss before income taxes was $1.7 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, our accumulated deficit was $103.9 million.

Our loss before income taxes was $4.8 million and $4.1 million for the six months ended June 30, 2024 and 2023.

As of June 30, 2024, our accumulated deficit was $107.0 million.

Substantially all our operating losses have resulted from expenses incurred in connection with research and development activities and from general and administrative costs associated with our operations.

Results of Operations for the three months ended March 31, 2024

Three months ended March 31, 2024 compared with three months ended March 31, 2023

Results of Operations for the three and six months ended June 30, 2024

Three months ended June 30, 2024 compared with three months ended June 30, 2023

Revenue and Cost of revenue

We did not have any revenue or cost of revenue in the three months ended March 31, 2024.

We had revenue of $40.0 thousand and cost of revenue of $32.0 thousand in the three months ended June 30, 2024.

We had revenue of $8.0 thousand and cost of revenue of $6.0 thousand in the same period of 2023.

Both revenues and related cost

of revenue for three months ended March 31, 2023 are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.

Both revenues and related cost of revenue for the three months ended June 30, 2024 and 2023 are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.

Other operating income

Other operating income was $0.2 million in the three months ended March 31, 2024, compared to $0.3 million in the same period of 2023.

Other operating income was $0.2 million in the three months ended June 30, 2024, compared to $0.2 million in the same period of 2023.

The primary source of the income is related to a research grant and research and development tax credits.

The decrease is mainly due to a reduction in the allowable research and development expenses and a lowering of the tax credit rate to be applied to the allowable expenses of which both went into effect on April 1, 2023.

Operating expenses

Operating expenses were $2.7 million for the three months ended March 31, 2024, compared to $2.8 million in the same period of 2023, a decrease of $0.1 million.

Operating expenses were $3.0 million for the three months ended June 30, 2024, compared to $2.5 million in the same period of 2023, an increase of $0.5 million.

Research and development expenses are incurred for the development of TRUFLEX® inks to make OTFT circuits and consist primarily of payroll and technical development costs.

The research and development expenses represent 48.1% and 45.3% of the total operating expenses for the three months ended March 31, 2024 and 2023, respectively.

Research and development expenses decreased $3 thousand for the three months ended March 31, 2024 compared to the same period for the prior year.

This decrease is primarily related to lower personnel expenses due to a reduction in force in 2023 offset in part by higher technical service costs.

The research and development expenses represent 38.4% and 49.5% of the total operating expenses for the three months ended June 30, 2024 and 2023, respectively.

Research and development expenses decreased $98 thousand for the three months ended June 30, 2024 compared to the same period for the prior year.

This decrease is primarily related to lower personnel expenses due to a reduction in force in 2023 and additional personnel resignations in 2024, offset in part by higher technical service costs.

Selling, general and administrative expenses consist primarily of payroll and professional services such as accounting, legal services and investor relations .

These expenses represent 51.4% and 50.8% of our total operating expenses for the three months ended March 31, 2024 and 2023, respectively.

Selling, general and administrative expenses decreased by $71 thousand for the three months ended March 31, 2024 compared to the same period for the prior year.

This decrease was primarily a result of a decrease in professional service fees related to investor relation consulting costs.

These expenses represent 61.0% and 52.2% of our total operating expenses for the three months ended June 30, 2024 and 2023, respectively.

Selling, general and administrative expenses increased by $0.5 million for the three months ended June 30, 2024 compared to the same period for the prior year.

This increase was primarily a result of an increase in personnel expenses related to salary increases and bonus payouts and professional service fees related to the NASDAQ uplisting.

Non-Operating income/(expense)

We recorded a gain of $0.8 million related to the valuation of the warrant liability for the three months ended March 31, 2024.

There were no similar gains or losses during the same period of the prior year.

We recorded a loss of $81 thousand related to the valuation of the warrant liability for the three months ended June 30, 2024 compared to a gain of $3 thousand for the same period in 2023.

We had transaction costs of $0.2 million related to a private placement financing for the three months ended June 30, 2023 with no similar costs in the same period of 2024.

We recorded a loss on foreign currency transactions of $0.2 million for the three months ended June 30, 2024 compared to gain of $0.5 million in the same period on 2023.

Six months ended June 30, 2024 compared with six months ended June 30, 2023

Revenue and Cost of revenue

We had revenue of $40.0 thousand and cost of revenue of $32.0 thousand in the six months ended June 30, 2024.

We had revenue of $24.0 thousand and cost of revenue of $22.0 thousand in the same period of 2023.

Both revenues and related cost of revenue for the six months ended June 30, 2024 and 2023 are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.

Other operating income

Other operating income was $0.4 million in the six months ended June 30, 2024 ended, compared to $0.4 million in the same period of 2023.

The primary source of the income is related to a research grant and research and development tax credits.

Operating expenses

Operating expenses were $5.7 million for the six months ended June 30, 2024, compared to $5.4 million in the same period of 2023, an increase of $0.3 million.

Research and development expenses are incurred for the development of TRUFLEX® inks to make OTFT circuits and consist primarily of payroll and technical development costs.

The research and development expenses represent 42.9% and 47.3% of the total operating expenses for the six months ended June 30, 2024 and 2023, respectively.

Research and development expenses decreased $0.1 million for the six months ended June 30, 2024 compared to the same period for the prior year.

This decrease is primarily related to lower personnel expenses due to a reduction in force in 2023 and additional personnel resignations in 2024, offset in part by higher technical service costs.

Selling, general and administrative expenses consist primarily of payroll and professional services such as accounting, legal services and investor relations .

These expenses represent 56.5% and 51.4% of our total operating expenses for the six months ended June 30, 2024 and 2023, respectively.

Selling, general and administrative expenses increased by $0.4 million for the six months ended June 30, 2024 compared to the same period for the prior year.

This increase was primarily a result of an increase in personnel expenses related to salary increases and bonus payouts and professional service fees related to the NASDAQ uplisting.

Non-Operating income/(expense)

We recorded a gain of $0.7 million related to the valuation of the warrant liability for the six months ended June 30, 2024 compared to a gain of $3 thousand for the same period in 2023.

We had transaction costs of $0.2 million related to a private placement financing for the six months ended June 30, 2023 with no similar costs in the same period of 2024.

We recorded a loss on foreign currency transactions of $0.2 million for the three months ended June 30, 2024 compared to gain of $1.0 million in the same period on 2023.

Liquidity and Capital Resources

As of March 31, 2024, our cash and cash equivalents were $7.3 million compared with $8.8 million as of December 31, 2023.

We believe this will be sufficient to fund our operating expenses and capital expenditure requirements into June 2025.

As of June 30, 2024, our cash and cash equivalents were $4.4 million compared with $8.8 million as of December 31, 2023.

We believe this will not be sufficient to fund our operating expenses and capital expenditure requirements for the 12 months from the issuance of these financial statements and that we will require additional capital funding to continue our operations and research development activity.

It is possible this period could be shortened if there are any significant increases in spending or more rapid progress of development programs than anticipated.

Our expected cash payments over the next twelve months include (a) $1.9 million to satisfy accounts payable and accrued expenses and (b) $0.2 million to satisfy the lease liabilities.

Additional expected cash payments beyond the next twelve months include $16 thousand of lease liabilities.

Our future viability is dependent on our ability to raise additional capital to fund our operations.

5 unchanged sentences

There can be no assurance however that such financing will be available in sufficient amounts, when and if needed, on acceptable terms or at all.

The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including the market demand for the Company’s products and services, the quality of product development efforts, management of working capital, and continuation of normal payment terms and conditions for purchase of services.

The precise amount and timing of the funding needs

cannot be determined accurately at this time, and will depend on a number of factors, including the market demand for the Company’s products and services, the quality of product development efforts, management of working capital, and continuation of normal payment terms and conditions for purchase of services.

If we are unable to substantially increase revenues, reduce expenditures, or otherwise generate cash flows for operations, then we will need to raise additional funding.

Cash Flow from Operating Activities

Net cash used in operating activities was $1.6 million for the three months ended March 31, 2024, compared to $2.4 million for the three months ended March 31, 2023, a decrease of $0.8 million.

The decrease is primarily related to the timing of payments made to vendors.

Net cash used in operating activities was $4.4 million for the six months ended June 30, 2024, compared to $3.1 million for the six months ended June 30, 2023, an increase of $1.5 million.

The increase is primarily related to the timing of payments made to vendors and the payout of bonuses.

Contractual Payment Obligations

Our principal commitments primarily consist of obligations under leases for office space and purchase commitments in the normal course of business for research & development facilities and services, communications infrastructure, and administrative services.

Our principal commitments primarily consist of obligations under leases for office space and purchase commitments in the normal course of business for research and development facilities and services, communications infrastructure, and administrative services.

We expect to fund these commitments from our cash balances and working capital.

1 unchanged sentence

We prepare our consolidated financial statements in accordance with U.S.

generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

generally accepted accounting principles (“GAAP”), which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected.

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis