What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-08 · 40 added, 70 removed, 71 unchanged (61% of the section changed)

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Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should,” and the negative of these terms or other comparable terminology often identify forward-looking statements.

Statements in this Quarterly Report on Form 10-Q (this “Report”) that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.

Statements in this Quarterly Report on Form 10-Q (this “Report”) that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”).

These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including the risks discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “10-K”) in Item 1A under “Risk Factors” and the risks detailed from time to time in our future reports filed with the Securities and Exchange Commission (the “SEC”).

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● the rate and degree of market acceptance of any of our products or organic semiconductor technology in

general, including changes due to the impact of (i) new semiconductor technologies, (ii) the performance of organic semiconductor technology, whether perceived or actual, relative to competing semiconductor materials, and (iii) the performance of our products, whether perceived or actual, compared to competing silicon-based and other products;

general, including changes due to the impact of (i) new semiconductor technologies, including MicroLED technology, (ii) the performance of organic semiconductor technology, whether perceived or actual, relative to competing semiconductor materials, and (iii) the performance of our products, whether perceived or actual, compared to competing silicon-based and other products;

● the timing and success of our, and our customers’, product releases;

● our ability to develop new products and technologies;

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

● our ability to meet management goals;

● our ability to maintain compliance with the continued listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”);

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

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● our dependence on third-party fabrication facilities;

● the impact of the COVID-19 pandemic and any future communicable disease outbreak on our business and operations;

● our relationships with our executive officers, directors, and significant stockholders;

● our expectations regarding our classification as a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”) in future periods;

● our expectations regarding our classification as a “smaller reporting company,” as defined under the Exchange Act, and an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”) in future periods;

● our future financial performance;

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Company Overview

We are seeking to reshape the world of electronics with our disruptive organic thin-film transistors (“OTFTs”) that have the potential to revolutionize the display industry.

Our patented TRUFLEX® liquid semiconductor polymers are used to make a new type of transistor that can be used in a number of display technologies, including next generation microLED displays.

Our inks enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost displays that outperform existing technology.

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 entered into 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.

We are seeking to change the world of electronics with a new class of transistor developed using our proprietary advanced semiconductor materials that we believe has the potential to revolutionize the display industry.

Our TRUFLEX® semiconductor polymers enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost, high-performance displays.

Our semiconductor platform can be used in a range of display technologies including MicroLED, miniLED and AMOLED, as well as in applications in advanced chip packaging, sensors, and logic .

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

We also operate a field application office in Hsinchu, Taiwan, close to our collaboration partner, The Industrial Technology Research Institute of Taiwan (“ITRI”).

With our collaboration partners, we are developing a commercial-scale production process and EDA tools for our materials to demonstrate the commercial viability of manufacturing a new generation of displays using our materials.

We have an extensive IP portfolio including 138 granted patents across 17 patent families, 16 pending patents 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 $7.6 million and $7.1 million for the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, our accumulated deficit was $109.8 million.

Our loss before income taxes was $2.1 million and $1.7 million for the three months ended March 31, 2025 and 2024.

As of March 31, 2025, our accumulated deficit was $116.8 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 and nine months ended September 30, 2024

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

Revenue and Cost of revenue

We had no revenue or cost of revenue in the three months ended September 30, 2024.

We had revenue of $3.0 thousand and cost of revenue of $1.0 thousand in the same period of 2023.

Both revenues and related cost of

revenue are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.

Other operating income

Other operating income was $0.3 million in the three months ended September 30, 2024, compared to $0.3 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 $3.1 million for each of the three months ended September 30, 2024 and 2023.

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 53.1% of the total operating expenses for the three months ended September 30, 2024 and 2023, respectively.

Research and development expenses decreased $64 thousand for the three months ended September 30, 2024 compared to the same period for the prior year.

This decrease is primarily related to lower personnel expenses, 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 50.5% and 42.9% of our total operating expenses for the three months ended September 30, 2024 and 2023, respectively.

Selling, general and administrative expenses increased by $0.3 million for the three months ended September 30, 2024 compared to the same period for the prior year.

This increase was primarily a result of an increase in personnel expenses as well as professional service fees primarily related to business development initiatives.

Non-Operating income/(expense)

We had a gain of $0.5 million for the three months ended September 30, 2023 related to the valuation of the warrant liability, with no similar gain in the same period of 2024.

We recorded a loss on foreign currency of $0.8 million for the three months ended September 30, 2023, with no similar loss in the same period of 2024.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Results of Operations for the three months ended March 31, 2025

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Revenue and Cost of revenue

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

We had revenue of $27.0 thousand and cost of revenue of $23.0 thousand in the same period of 2023.

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

We had revenue of $23.0 thousand and cost of revenue of $1.0 thousand in the three months ended March 31, 2025.

We had no revenue or cost of revenue in the same period of 2024.

Both revenue and related cost of revenue for the three months ended March 31, 2025 are a result of sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes.

Other operating income

Other operating income was $0.7 million in the nine months ended September 30, 2024 , compared to $0.7 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.

Other operating income was $0.3 million in the three months ended March 31, 2025, compared to $0.2 million in the same period of 2024.

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

Operating expenses

Operating expenses were $8.8 million for the nine months ended September 30, 2024, compared to $8.3 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 44.8% and 49.4% of the total operating expenses for the nine months ended September 30, 2024 and 2023, respectively.

Research and development expenses decreased $0.1 million for the

nine months ended September 30, 2024 compared to the same period for the prior year.

This decrease is primarily related to lower personnel expenses, 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 54.4% and 48.4% of our total operating expenses for the nine months ended September 30, 2024 and 2023, respectively.

Selling, general and administrative expenses increased by $0.8 million for the nine months ended September 30, 2024 compared to the same period for the prior year.

This increase was primarily a result of an increase in personnel expenses as well as professional service fees primarily related to the NASDAQ uplisting and business development initiatives.

Operating expenses were $3.4 million for the three months ended March 31, 2025 compared to $2.7 million for the three months ended March 31, 2024.

Research and development expenses are incurred for the development and process validation for TRUFLEX inks to make OTFT circuits, OTFT based display concepts integrating novel display technology, and provide dielectric solutions for packaging applications.

The expenses consist primarily of payroll, technical facilities overheads, and development consumables costs.

The research and development expenses represent 43.9% and 48.1% of the total operating expenses for the three months ended March 31, 2025 and 2024, respectively.

Research and development expenses increased $0.2 million for the three months ended March 31, 2025 compared to the same period for the prior year.

This increase primarily resulted from higher personnel expenses.

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

These expenses represent 58.9% and 51.4% of our total operating expenses for the three months ended March 31, 2025 and 2024, respectively.

Selling, general and administrative expenses increased by $0.6 million for the three months ended March 31, 2025 compared to the same period for the prior year.

This increase primarily resulted from an increase in personnel expenses as well as professional service fees primarily related to legal fees and investor relation activities.

Non-Operating income/(expense)

We recorded a gain of $0.7 million related to the valuation of the warrant liability for the nine months ended September 30, 2024 compared to a gain of $0.5 million for the same period in 2023.

We had transaction costs of $0.2 million related to a private placement financing for the nine months ended September 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 nine months ended September 30, 2024 compared to gain of $0.2 million in the same period in 2023.

Non-operating income of $0.8 million for the three months ended March 31, 2024 resulted primarily from the revaluation of our warrant liability.

Because of changes in certain of our warrants that occurred as a result of the listing of our common stock on the Nasdaq Capital Market on May 31, 2024, those warrants were accounted for as an equity instrument beginning on that date and as a result there was no similar gain or loss in the same period of 2025.

We recorded a gain on foreign currency of $1.0 million for the three months ended March 31, 2025, with no similar gain or loss in the same period of 2024.

Liquidity and Capital Resources

As of September 30, 2024, our cash and cash equivalents were $1.8 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.

As of March 31, 2025, our cash and cash equivalents were $3.9 million compared with $7.1 million as of December 31, 2024.

We believe our cash balance at March 31, 2025 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) $1.6 million to satisfy accounts payable and accrued expenses and (b) $0.2 million to satisfy the lease liabilities.

Our expected cash payments over the next twelve months include (a) $1.4 million to satisfy accounts payable and accrued expenses and (b) $24 thousand to satisfy the lease liabilities.

Additional expected cash payments beyond the next twelve months include $21 thousand of lease liabilities.

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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 $7.0 million for the nine months ended September 30, 2024, compared to $5.6 million for the nine months ended September 30, 2023, an increase of $1.4 million.

The increase is related to the payout of bonuses and payments made related to the NASDAQ uplisting and business development initiatives.

Net cash used in operating activities was $3.3 million for the three months ended March 31, 2025, compared to $1.6 million for the three months ended March 31, 2024, an increase of $1.7 million.

The increase is related to the payout of bonuses and payments made related to business development initiatives.

During the three months ended March 31, 2025, we had no cash flows from investing or financing activities.

Contractual Payment Obligations

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Changes in estimates used in these and other items could have a material impact on our financial statements.

Fair Value Measurements

GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.

As a basis for considering market participant assumptions in fair value measurements, GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Our fair value measurements are generally related to a warrant liability and amendments to preferred stock.

The models used for these fair value calculations use inputs such as the underlying price of the shares issued at the measurement date, expected volatility, risk free interest rate and expected life of the instrument.

Since our common stock is so thinly traded there is insufficient volatility data available.

Accordingly, we have used an expected volatility based on historical common stock volatility of our peers.

Quantitative and Qualitative Disclosures about Market Risk

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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