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Item 8. Financial Statements and Supplementary Data

2024-03-28 compared with 2023-03-30 · 237 added, 108 removed, 519 unchanged (40% of the section changed)

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Energous Corporation

INDEX TO FINANCIAL STATEMENTS

INDEX TO FINANC IAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688 )

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Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Energous Corporation

REPORT OF INDEPENDENT REGI STERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Energous Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Energous Corporation (the “Company”) as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

We have audited the accompanying balance sheets of Energous Corporation (the “Company”) as of December 31, 2023 and 2022, the related statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical audit matters are matters arising from the current period audit of the financial statements that are communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Going Concern – Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company has incurred operating losses and negative cash flows from operations.

As the Company is dependent on its ability to raise funds in the future, to continue as a going concern, it places higher reliance on projected financial information in ascertaining that no substantial doubt exists for it to continue as a going concern.

In evaluating management’s assessment of whether substantial doubt exists, and the projected financial information used in such an evaluation, we identified assessing the reasonableness of management’s such evaluation of the Company’s ability to continue as a going concern and related disclosures as a critical audit matter.

required a high degree of auditor judgment and increased effort when performing audit procedures to evaluate (1) the reasonableness of management’s forecasted revenues, operating expenses, and projected ending cash balance as of March 31, 2025, and (2) the adequacy of the consolidated financial statements disclosure related to the going concern assessment.

How the Critical Audit Matter was Addressed in the Audit

The primary audit procedures we performed to address this critical audit matter included the following:

• We evaluated the design of the internal control related to the Company’s going concern assessment.

• We evaluated the reasonableness of the Company’s forecasted revenues, operating expenses, and the projected cash balance as of March 31, 2025 (collectively, “forecasts”), by (1) inquiring of the senior management to gain an understanding of the Company’s operations and strategy, and (2) testing the forecasts by challenging the significant assumptions used by management in calculating such forecasts.

• We also assessed management’s ability to forecast revenue and cash flows by comparing prior year forecasts to actual financial results.

• We assessed the adequacy of the consolidated financial statements’ disclosure related to the going concern assessment by comparing it to the audit evidence obtained.

/s/ Marcum llp

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Accrued severance

Warrant liability

Operating lease liabilities, current portion

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For the Year Ended December 31,

Operating expenses:

Cost of revenue

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Severance expense

Total operating expenses

Total expenses

Loss from operations

Other income:

Other (expense) income:

Offering costs related to warrant liability

Change in fair value of warrant liability

Interest income

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Issuance of shares for RSUs

Issance of shares for PSUs

Issuance of shares for PSUs

Shares purchased from contributions to the ESPP

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Issuance of shares for RSUs

Issance of shares for PSUs

Issuance of shares for PSUs

Shares purchased from contributions to the ESPP

Cash in lieu of shares from reverse stock split

Issuance of shares in an ATM placement, net

of $ 197,647 in issuance costs

Issuance of shares in a sale of common stock, net

of $ 3,166,139 in issuance costs and fair value of liability warrant

Issuance of shares in a sale of common stock to Chief Executive Officer

Balance, December 31, 2023

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Change in operating lease right-of-use assets

Bad debt expense

Inventory net realizable value adjustment

Bad debt (recovered) expensed

Change in fair value of warrant liability

Offering costs allocated to warrant liability

Changes in operating assets and liabilities:

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Purchases of property and equipment

Net cash used in investing activities

Net cash from investing activities

Cash flows from financing activities:

Net proceeds from an at-the-market ("ATM") offerings

Proceeds from contributions to employee stock purchase

Net proceeds from an ATM offering

Net proceeds from a registered offering of common stock and warrants

Proceeds from a sale of common stock to the Chief Executive Officer

Proceeds from contributions to employee stock purchase plan

Net cash provided by financing activities

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ENERGOUS CORPORATION

Notes to Financial Statements

Notes to Financi al Statements

Note 1 – Business Organization, Nature of Operations

Energous Corporation (the “Company”) was incorporated in Delaware on October 30, 2012.

The Company has developed its WattUp® wireless power technology, consisting of proprietary semiconductor chipsets, software controls, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices.

The WattUp technology has a broad spectrum of capabilities, including near-field wireless charging and at-a-distance wireless charging at various distances.

The Company believes its proprietary WattUp technologies are well suited for many applications, including building and home automation, electronic shelf labels, industrial IoT sensors, surface and implanted medical devices, tracking devices, hearables, wearables, consumer electronics and public safety applications.

Potential future applications include smartphones, commercial and industrial robotics, as well as automotive solutions and other devices with charging requirements that would otherwise require battery replacement or a wired power connection.

Description of Business

Energous Corporation ("the Company") has developed a wireless power networks technology (“WPNT”), consisting of semiconductor chipsets, software controls, hardware designs and antennas, that enable radio frequency (“RF”) based charging for Internet of Things (“IoT”) devices.

The WPNT has a broad spectrum of capabilities to enable the next generation of wireless power networks, delivering power and data in a seamless device portfolio.

This includes near field and at-a-distance wireless charging with multiple power levels at various distances.

The Company believes its technology is innovative in its approach, in that the Company is developing solutions that charge IoT devices using RF technology.

To date, the Company has developed and released to production multiple transmitters and receivers, including prototypes and partner production designs.

The transmitters vary based on form factor and power specifications and frequencies, while the receivers are designed to support a myriad of wireless charging applications including:

Cold Chain, Asset Tracking, Medical IoT

Cold Chain, Logistics, Asset Tracking

Electronic Shelf Labels

Retail and Industrial IoT

The first end product featuring the Company's technology entered the market in 2019.

The Company started shipping its first at-a-distance wireless PowerBridges for commercial IoT applications in the fourth quarter of 2021 and expects additional wireless power enabled products to be released as the Company's business moves forward.

Reverse Stock Split

On June 14, 2023, at the Company's 2023 annual meeting of stockholders, the Company's stockholders approved a proposal to effect a reverse stock split of the Company's common stock by a ratio not to exceed 1-for- 20 .

On August 15, 2023, the Company announced that its Board of Directors had determined to set the reverse stock split ratio at 1-for- 20 and that the Company's common stock would begin trading at the split-adjusted price beginning August 16, 2023.

Upon effectiveness of the reverse stock split, every twenty shares of issued and outstanding common stock held were converted into one share of common stock.

No fractional shares were distributed as a result of the reverse stock split and stockholders were entitled to a cash payment in lieu of fractional shares.

Additionally, the par value of the Company's common stock did not change.

All information presented herein, unless otherwise indicated herein, reflects the 1-for- 20 reverse stock split of the Company’s outstanding shares of common stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth herein have been adjusted to give effect to such reverse stock split.

Note 2 – Liquidity and Management Plans

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Net cash used in operating activities was $ 19,248,510 and $ 23,636,747 for the years ended December 31, 2023 and 2022, respectively.

The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 27,043,751 during 2021 and $ 744,787 during 2022, proceeds from contributions to the employee stock purchase plan (“ESPP”), along with payments received from customers.

However, the Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 27,043,751 during 2021, $ 744,787 during 2022 and $ 6,916,775 during 2023, along with proceeds from the sale of the Company's common stock to Cesar Johnston, the Company's President and Chief Executive Officer, contributions to the employee stock purchase plan (“ESPP”) and payments received from customers.

As of December 31, 2023, the Company had cash on hand of $ 13,936,050 .

The Company expects that cash on hand as of December 31, 2022, together with proceeds from the underwritten offering conducted during the first quarter of 2023 (See Note 12 – Subsequent Events) and anticipated revenues, will be sufficient to fund the Company’s operations into March 2024.

The Company expects that cash and cash equivalents as of December 31, 2023, together with anticipated additional proceeds from the ATM financing during 2024, proceeds from the Company's securities offering that closed on February 20, 2024, continued cost and expense reductions and collections generated by anticipated revenues, will be sufficient to fund the Company's operations through March 2025.

Research and development of new technologies is by its nature unpredictable.

Although the Company intends to continue its research and development activities, there can be no assurance that its available resources and revenue generated from its business operations will be sufficient to sustain its operations.

Accordingly, the Company expects to pursue additional financing, which could include offerings of equity or debt securities, bank financings, commercial agreements with customers or strategic partners, and other alternatives, depending upon market conditions.

There is no assurance that such financing would be available on terms that the Company would find acceptable, or at all.

Accordingly, the Company expects to pursue additional cost and expense reductions in addition to financing, which could include offerings of equity or debt securities, bank financings, commercial agreements with customers or strategic partners, and other alternatives, depending upon market conditions.

There is no assurance that such cost and expense reductions and financing will be available on terms that the Company would find acceptable, or at all.

If the Company is unsuccessful in implementing this plan, the Company will be required to make further cost and expense reductions or modifications to its on-going and strategic plans.

The market for products using the Company’s technology is broad and evolving, but remains nascent and unproven, so the Company’s success is dependent upon many factors, including customer acceptance of its existing products, technical feasibility of future products, regulatory approvals, the development of complementary technologies, competition and global market fluctuations.

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Securities and Exchange Commission (the “SEC”).

Note 3 – Summary of Significant Accounting Policies, continued

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements as well as the reported expenses during the reporting periods.

The Company’s significant estimates and assumptions include the valuation of stock-based compensation awards, recognition of revenue, the lower of cost or net realizable value of inventory and valuation of deferred tax assets.

Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

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The Company maintains its cash deposits with major financial institutions.

Note 3 – Summary of Significant Accounting Policies, continued

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common stock, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The fair value of the warrants is estimated using an appropriate valuation model.

Such warrant classification is also subject to re-evaluation at each reporting period.

Offering costs associated with warrants classified as liabilities are expensed as incurred and are presented as offering cost related to warrant liability in the statement of operations.

Offering costs associated with the sale of warrants classified as equity are charged against proceeds.

The Company follows ASC 820, Fair Value Measurements (“ASC 820”), which establishes a common definition of fair value to be applied when US GAAP requires the use of fair value, establishes a framework for measuring fair value, and requires certain disclosure about such fair value measurements.

ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.

Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about what market participants would use in pricing the asset or liability based on the best information available in the circumstances.

The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Observable inputs such as quoted prices in active markets for identical assets or liabilities to which the Company has access at a measurement date.

Observable inputs other than Level 1 quoted prices that are observable for the asset or liability, either directly or indirectly;

these include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Unobservable inputs for which little or no market data exists and for which the Company must develop its own assumptions regarding the assumptions that market participants would use in pricing the asset or liability, including assumptions regarding risk.

Because of the uncertainties inherent in the valuation of assets or liabilities for which there are no observable inputs, those estimated fair values may differ significantly from the values that may have been used had a ready market for the assets or liabilities existed.

Note 3 – Summary of Significant Accounting Policies, continued

The carrying amounts of the Company’s financial assets and liabilities, such as cash, cash equivalents, prepaid expenses, other current assets, and accounts payable & accrued expenses, are an approximate of their fair values because of the short maturity of these instruments.

The Company’s derivative liabilities recognized at fair value on a recurring basis are a level 3 measurement (see Note 11 – Fair Value Measurement).

Revenue Recognition

The Company follows Accounting Standards Codification (“ASC”) Topic 606, "Revenue from Contracts with Customers” (“Topic 606”).

The Company follows Accounting Standards Codification (“ASC”) 606, "Revenue from Contracts with Customers" (“Topic 606”).

In accordance with Topic 606, the Company recognizes revenue using the following five-step approach:

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Allocate the transaction price to the performance obligations of the contract.

Recognize revenue when the performance obligations are met or delivered.

Recognize revenue when or as the performance obligations are satisfied.

The Company’s revenue consists of its single segment of wireless charging system solutions.

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The Company records the expenses related to these product development projects in research and development expense, in the periods such expenses were incurred.

Revenue Recognition

The Company records revenue associated with the sale of production-level systems at the point in time at which control over the product is transferred to the customer.

The Company records the expense related to the sales of these systems as cost of revenue during the period that the product is transferred to the customer.

Note 3 – Summary of Significant Accounting Policies, continued

The Company follows ASC Topic 330, Inventory (“Topic 330”) to account for its inventory, which includes finished goods ready for sale, work in process and raw materials, at the lower of cost or net realizable value.

Net realizable value is calculated at the end of each reporting period and adjustment, if needed, is made.

Cost is determined by the first-in, first-out ("FIFO") method.

Research and Development

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The Company incurred research and development costs of $ 10,810,570 and $ 12,497,781 for the years ended December 31, 2023 and 2022, respectively.

Note 3 – Summary of Significant Accounting Policies, continued

Stock-Based Compensation

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The Company recognizes compensation costs on a straight-line basis over the requisite service period of the award, which is typically the vesting term of the equity instrument issued.

Forfeitures are recognized as they occur.

Under the Company’s Employee Stock Purchase Plan (“ESPP”), employees may purchase a limited number of shares of the Company’s stock at a 15 % discount from the lower of the closing market prices measured on the first and last days of each half-year period.

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The Company files income tax returns with the United States and California governments.

Property and Equipment

The Company currently uses the following expected life terms for depreciating property and equipment:

computer software – 1 - 2 years , computer hardware – 3 years , furniture and fixtures – 7 years , leasehold improvements – remaining life of the lease .

Accounting for Reverse Stock Split

During the year ended December 31, 2023, the Company effected a reverse stock split of its common stock at a ratio of 1-for- 20 (See Note 1 - Business Organization, Nature of Operations, Reverse Stock Split).

On August 15, 2023, the Company had 92,069,632 shares of common stock issued and outstanding prior to the reverse stock split taking effect.

On August 16, 2023, the Company had 4,601,654 shares of outstanding common stock after the reverse stock split became effective.

No fractional shares were issued in connection with the reverse stock split, and stockholders of record who would have otherwise been entitled to receive a fractional share received a cash payment in lieu thereof.

The Company paid approximately $ 6,250 for cash in lieu of fractional shares.

The par value of the Company's common stock did not change and no adjustments to historical par value were made.

All information presented in the accompanying financial statements, unless otherwise indicated herein, reflects the 1-for- 20 reverse stock split of the Company’s outstanding shares of common stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth herein have been adjusted to give effect to such reverse stock split.

Net Loss Per Common Share

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Note 3 – Summary of Significant Accounting Policies, continued

Net Loss Per Common Share, continued

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive.

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Total potentially dilutive securities

The table above includes 1,666,666 warrants expiring March 1, 2024, with an exercise price of $ 10.00 .

During the year ended December 31, 2022, 1,618,123 warrants with an exercise price of $ 23.00 expired.

The table above includes 83,333 warrants expiring March 1, 2024, with an exercise price of $ 200.00 and 412,500 warrants expiring on March 28,2029, which have an exercise price of $ 1.66 .

The Company determines if an arrangement is a lease at the inception of the arrangement.

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See Note 6 – Commitments and Contingencies, Operating Leases for further discussion of the Company’s operating leases.

Management’s Evaluation of Subsequent Events

The Company evaluates events that have occurred after the balance sheet date of December 31, 2022, through the date which the financial statements are issued.

Note 4 – Property and Equipment

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Total property and equipment, net

The Company currently uses the following expected life terms for depreciating property and equipment:

computer software – 1 - 2 years , computer hardware – 3 years, furniture and fixtures – 7 years, leasehold improvements – remaining life of the lease.

Note 4 – Property and Equipment , continued

The Company disposed of $ 125,112 and $ 166,192 in property and equipment during the years ended December 31, 2023 and 2022, respectively.

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On May 20, 2022, the Company signed a lease amendment to the existing lease of its office space at its corporate headquarters in San Jose, California, extending the term of the lease for an additional three years .

Upon signing the lease amendment, the Company recorded a new ROU lease asset of $ 2,071,336 and operating lease liability of $ 2,071,336 , using a present value discount rate of 3.0 %.

Upon signing the lease amendment, the Company recorded a new ROU lease asset of $ 2,071,336 and operating lease liability of $ 2,071,336 , using a present value discount rate of 3.0 % which was used as an incremental borrowing rate for a hypothetical fully collateralized real estate transaction.

Upon expiration of the original lease on September 30, 2022, the new monthly lease payment starting October 1, 2022 was $ 58,903 , subject to annual escalations up to a maximum monthly lease payment of $ 62,490 .

Costa Mesa Lease

On July 15, 2019, the Company signed a new lease agreement for the lease of office space in Costa Mesa, California for an additional two years .

Upon expiration of the original lease on September 30, 2019, the new monthly lease payment starting October 1, 2019 was $ 9,773 , subject to an annual escalation up to a maximum monthly lease payment of $ 10,200 .

On September 22, 2021, the Company signed a new Costa Mesa lease to lease a new, distinct office space in a different building with the same landlord.

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The new Costa Mesa lease had an initial monthly lease payment of $ 4,369 which started on October 1, 2021, subject to an annual escalation up to a maximum monthly lease payment of $ 4,522 .

The lease expired on September 30, 2023 and was not renewed.

Operating Lease Commitments

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Beginning in year 2022, he is eligible to receive a discretionary annual bonus of up to 100 % of his base salary, at the recommendation of the Company’s Compensation Committee, with the approval of the Company’s Board of Directors.

In add iti on , a s a n i nducemen t to accep t h is appo i n t men t a s Ch i e f Execu ti v e O ffi ce r, M r.

J ohn st o n received , s ub j ec t to con ti nue d emp l oymen t, ( a ) a s pec i a l one -ti m e si gn - o n bonu s in t h e amoun t o f $ 120 , 000 , payab le in two equa l i n st a ll men ts o f $ 60 , 00 0 eac h o n t h e first pay r o ll da te in 202 2 an d t h e first pay r o ll da te a ft e r Decembe r 6 , 2022 , ( b ) a g r an t o f 150 , 00 0 r e stri c t e d st oc k un its to acqu ire s ha r e s o f t h e Company ’s commo n st ock , on e t h ird o f wh i c h vested o n Decembe r 6 , 202 2 an d t h e r ema i n i n g t w o t h ir d s o f wh i c h w ill ve st in e i gh t equa l i n st a ll men ts o f 12 , 50 0 eac h o n eac h qua rt e rly ann i ve rs a ry t he r ea ft e r an d ( c ) a g r an t o f a n op ti o n to pu r cha se 300,000 s ha r e s o f t h e Company ’s commo n st oc k a t a n exe r c ise p ri c e equa l to t h e f a ir ma r ke t va l u e o f t h e Company ’s commo n st oc k o n t h e g r an t da t e , ha lf o f wh i c h s ha ll ve st o n Decembe r 31 , 2023 , a qua rt e r o f wh i c h s ha ll ve st o n Decembe r 31 , 202 4 an d t h e r ema i nde r o f wh i c h s ha ll ve st o n Decembe r 31 , 2025 .

In addition, as an inducement to accept his appointment as Chief Executive Officer, Mr.

Johnston received, subject to continued employment, (a) a special one-time sign-on bonus in the amount of $ 120,000 , payable in two equal installments of $ 60,000 each on the first payroll date in 2022 and the first payroll date after December 6, 2022, (b) a grant of 7,500 restricted stock units to acquire shares of the Company’s common stock, one third of which vested on December 6, 2022 and the remaining two thirds of which will vest in eight equal installments of 625 each on each quarterly anniversary thereafter and (c) a grant of an option to purchase 15,000 shares of the Company’s common stock at an exercise price equal to the fair market value of the Company’s common stock on the grant date, half of which shall vest on December 31, 2023, a quarter of which shall vest on December 31, 2024 and the remainder of which shall vest on December 31, 2025.

Also pursuant to the terms of his offer letter, Mr.

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Johnston of certain performance metrics to be recommended by the Compensation Committee and approved by the Board at a subsequent date.

As of December 31, 2022, the Company accrued $ 360,000 in bonus expense for Mr.

Johnston’s annual discretionary bonus and recorded $ 120,000 in bonus expense for Mr.

Johnston’s one-time sign-on bonus.

As of December 31, 2022, only 187,000 PSUs have approved performance criteria.

As of December 31, 2022, 135,575 PSU shares were earned and deemed delivered on that date.

As of December 31, 2022, the Board has not approved any additional equity awards based on outperformance of agreed upon goals.

As of December 31, 2022, the Board has not approved the goals for the additional 50,000 PSU shares for vesting on each of December 31, 2023 and 2024;

As of December 31, 2023, the Board had not yet approved the performance criteria applicable to the up to 2,500 PSU shares that will vest on December 31, 2024;

therefore, these 2,500 PSUs have not been considered granted.

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Executive Employee Agreement – Cesar Johnston, continued

In connec ti o n w ith M r.

J ohn st on ’s appo i n t men t a s Ch i e f Execu ti v e O ffi ce r, t h e Compan y an d M r.

J ohn st o n add iti ona lly en t e r e d i n to a n amende d and r e st a t e d s eve r anc e an d chang e in con tr o l ag r eemen t, da t e d a s o f Decembe r 6 , 2021 .

I n t h e even t o f a termination t ha t is no t a change-in-control qualifying termination, Mr.

Johnston is entitled to ( a ) a one -ti m e l um p s u m paymen t b y t h e Compan y in a n amoun t equa l to 1 8 mon t h s o f h is mon t h ly ba se s a l a ry p l u s a n amoun t equa l to 100 % o f h is t a r ge t bonu s p l u s, if ag r ee d b y t h e Compen s a ti o n Comm itt ee , a d is c r e ti ona ry bonu s f o r t h e yea r in wh i c h t h e termination occu rs, ( b ) an y ou tst and i n g unve st e d equ ity awa r d s he ld b y M r.

J ohn st o n t ha t wou ld ve st in t h e nex t 1 8 mon t h s o f con ti nu i n g emp l oymen t ( o t he r t ha n an y equ ity awa r d s t ha t ve st upo n s a tisf ac ti o n o f pe rf o r manc e c rit e ri a ) w ill acce l e r a te an d becom e ve st e d an d ( c ) if M r.

J ohn st o n ti me ly e l ec ts con ti nue d cove r ag e unde r t h e Con s o li da t e d Omn i bu s Budge t Reconc ili a ti o n Ac t o f 1985 , a s amende d ( “COBRA” ), t h e Compan y o r its s ucce ss o r w ill pa y t h e f u ll amoun t o f M r.

J ohn st on ’s COBR A p r em i um s o n h is beha lf f o r 1 8 mon t h s.

In connection with Mr.

Johnston’s appointment as Chief Executive Officer, the Company and Mr.

Johnston additionally entered into an amended and restated severance and change in control agreement, dated as of December 6, 2021.

In the event of a termination that is not a change-in-control qualifying termination, Mr.

Johnston is entitled to (a) a one-time lump sum payment by the Company in an amount equal to 18 months of his monthly base salary plus an amount equal to 100 % of his target bonus plus, if agreed by the Compensation Committee, a discretionary bonus for the year in which the termination occurs, (b) any outstanding unvested equity awards held by Mr.

Johnston that would vest in the next 18 months of continuing employment (other than any equity awards that vest upon satisfaction of performance criteria) will accelerate and become vested and (c) if Mr.

Johnston timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company or its successor will pay the full amount of Mr.

Johnston’s COBRA premiums on his behalf for 18 months.

Johnston’s agreement additionally provides that, in the event of a change-in-control qualifying termination, Mr.

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Rizzone, the Company’s President and Chief Executive Officer (“Employment Agreement”).

The Employment Agreement effective as of January 1, 2015 , has an initial term of four years and automatically renews each year after the initial term.

The Employment Agreement provides for an annual base salary of $ 365,000 , and Mr.

Rizzone is eligible to receive quarterly cash bonuses from the MBO Bonus Plan with a total target amount equal to 100 % of his base salary based upon achievement of performance-based objectives established by the Board.

The Employment Agreement effective as of January 1, 2015 , had an initial term of four years and automatically renewed each year after the initial term.

The Employment Agreement provided for an annual base salary of $ 365,000 , and Mr.

Rizzone was eligible to receive quarterly cash bonuses from the MBO Bonus Plan with a total target amount equal to 100 % of his base salary based upon achievement of performance-based objectives established by the Board.

On July 9, 2021, the Company announced that Stephen R.

Rizzone has retired from his position as the Company’s President and Chief Executive Officer and as a member of the Board.

Rizzone had retired from his position as the Company’s President and Chief Executive Officer and as a member of the Board.

In connection with Mr.

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All compensation under the Separation Agreement will be subject to applicable withholding.

During the year ended December 31, 2021, the Company recorded $ 4,017,172 in severance expense associated with the separation agreement, including $ 284,994 in additional stock-based compensation as a result of the extension of the exercise periods on the stock options.

As of December 31, 2022, the Company had unpaid accrued severance expense of $ 411,607 which is expected to be paid by August 2023.

As of December 31, 2023 and 2022, the Company had $ 0 and $ 411,607 , respectively, in unpaid severance expense pertaining to Mr.

Rizzone's Separation Agreement.

Note 6 – Commitments and Contingencies, continued

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Sahejpal’s departure for the year ended December 31, 2022, including $ 252,609 in stock-based compensation as a result of accelerated vesting of RSUs.

As of December 31, 2022, the Company had unpaid accrued severance expense of $ 4,909 pertaining to Mr.

Sahejpal’s agreement which is expected to be paid through April 30, 2023.

As of December 31, 2023, the Company had no unpaid accrued severance expense pertaining to Mr.

Sahejpal's agreement.

Executive Transition Agreement – William Mannina

On July 20, 2023, the Company announced the departure of William Mannina, former Acting Chief Financial Officer, effective August 16, 2023.

Pursuant to the terms of a letter agreement between Mr.

Mannina and the Company, Mr.

Mannina will receive payments and benefits including cash severance payments equivalent to nine months of his then-current salary of $ 265,825 and premium payments for continued healthcare coverage for nine months following his resignation effective date.

Mannina’s restricted stock units continued to vest through August 16, 2023.

As of December 31, 2023, the Company had accrued unpaid severance expense of $ 127,593 pertaining to Mr.

Mannina's agreement.

Strategic Alliance Agreement

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Upon the liquidation, dissolution or winding up of the Company, holders of common stock are entitled to share ratably in all assets of the Company that are legally available for distribution.

On September 15, 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, which became effective on September 24, 2020, and contains two prospectuses:

On September 15, 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, which became effective on September 24, 2020 (the "Prior Shelf"), and contains two prospectuses:

a base prospectus, which covers the offering, issuance and sale by the Company of up to $ 75,000,000 of its common stock, preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase its common stock, preferred stock or debt securities and/or units consisting of some or all of these securities;

and an at-the-market sales agreement prospectus supplement covering the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 40,000,000 of its common stock that may be issued and sold under the At Market Issuance Sales Agreement, as amended, between the Company, B.

Riley Securities, Inc., Roth Capital Partners LLC and Ladenburg Thalmann & Co.

Riley Securities, Inc.

(the “ATM Program”).

The $ 40,000,000 of common stock to be offered, issued and sold under the ATM Program is included in the $ 75,000,000 of securities that may be offered, issued and sold by the Company under the base prospectus.

Pursuant to this shelf registration statement, the Company sold shares which raised net proceeds of $ 38,832,711 (net of $ 1,167,289 in issuance costs) during the third and fourth quarters of 2020 under the ATM Program.

Pursuant to the Prior Shelf, the Company sold shares which raised net proceeds of $ 38,832,711 (net of $ 1,167,289 in issuance costs) during the third and fourth quarters of 2020 under the ATM Program.

On October 4, 2021, the Company filed a prospectus supplement covering the offering, issuance and sale of up to an additional $ 35,000,000 of shares of the Company’s common stock pursuant to the ATM Program.

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During 2022, the Company raised an additional $ 744,787 (net of $ 73,403 in issuance costs).

As of December 31, 2022, the Company has $ 6,269,937 of common stock registered for sale under the ATM Program.

On November 15, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC, which became effective on December 16, 2021.

During 2023, the Company raised an additional $ 3,555,563 (net of $ 162,799 in issuance costs).

As of December 31, 2023, there is no amount remaining in the Prior Shelf due to its expiration on September 24.

On November 15, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC, which became effective on December 16, 2021 (the "Current Shelf").

This shelf registration statement allows the Company to sell, from time to time, any combination of debt or equity securities described in the registration statement up to aggregate proceeds of $ 100,000,000 .

Pursuant to this registration statement, on March 28, 2023, the Company completed an underwritten offering pursuant to which it issued and sold an aggregate of (i) 412,500 shares of its common stock (the “Shares”) and (ii) warrants to purchase up to 412,500 shares of its common stock (the “2023 Warrants”), for net proceeds of $ 2,677,191 , after deducting underwriting discounts, commission and expenses payable by the Company.

The 2023 Warrants were immediately exercisable upon issuance and have a term of six years and an exercise price of $ 8.00 .

The Company allocated the proceeds received first to the 2023 Warrants based on the fair value of the 2023 Warrants as determined at initial measurement, with the remaining proceeds allocated to the Shares (see Note 7 – Warrant Liability and Note 8 – Fair Value Measurements).

Pursuant to the terms of the 2023 Warrants, the exercise price was adjusted to $ 1.66 as of December 31, 2023.

On August 30, 2023, the Company filed a prospectus supplement to the Current Shelf covering the offering, issuance and sale of up to an additional $ 25,000,000 of shares of the Company’s common stock pursuant to the ATM Program.

During 2023, the Company raised $ 684,021 (net of $ 34,848 in issuance costs) under the ATM Program.

As of December 31, 2023, the Company has $ 24,281,132 remaining available under the ATM Program.

Common Stock Outstanding

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or (c) will become an employee of the Company or any subsidiary in connection with a merger or acquisition.

On July 20, 2022, the Board increased the number of shares of common stock reserved and available for issuance under the 2017 Plan by 2,000,000 shares to a total of 2,600,000 shares approved.

On July 20, 2022, the Board increased the number of shares of common stock reserved and available for issuance under the 2017 Plan by 100,000 shares.

As of December 31, 2023, 51,084 shares of common stock remain available to be issued through equity-based instruments under the 2017 Plan.

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Stock Option Award Activity

During the year ended December 31, 2022, the Board granted our Chief Executive Officer 300,000 stock options under the 2013 Equity Incentive Plan at an exercise price of $ 1.27 per share with half of the options vesting on the second anniversary of the vesting start date and a quarter of the options vesting on each of the next two anniversaries of the vesting start date.

No options were granted during the years ended December 31, 2022 and 2021.

In February 2022, the Board granted our Chief Executive Officer 15,000 stock options under the 2013 Equity Incentive Plan at an exercise price of $ 25.40 per share with half of the options vesting on the second anniversary of the vesting start date and a quarter of the options vesting on each of the next two anniversaries of the vesting start date .

No options were granted during the year ended December 31, 2023.

The Company estimated the fair value of stock options granted during 2022 using the Black-Scholes option pricing model.

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Outstanding at December 31, 2023

Exercisable at January 1, 2023

Exercisable at December 31, 2023

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The aggregate intrinsic value of options exercised was $ 0 for the years ended December 31, 2023 and 2022.

Restricted Stock Units (“RSUs”)

During the year ended December 31, 2022, the Compensation Committee granted various employees RSUs under which the holders have the right to receive an aggregate of 1,038,700 shares of common stock.

The majority of these awards, granted under the 2013 Equity Incentive Plan, vest over terms ranging from two to four years .

Note 8 – Stock Based Compensation, continued

Restricted Stock Units (“RSUs”), continued

During the year ended December 31, 2022, the Compensation Committee granted various directors and consultants RSUs under which the holders have the right to receive an aggregate 290,055 shares of common stock.

These awards were granted under the 2014 Non-Employee Equity Compensation Plan.

The awards granted vest over terms from one year to two years .

During the year ended December 31, 2022, the Compensation Committee granted employees RSUs under which the holders have the right to receive 608,500 shares of common stock.

The awards, granted under the 2017 Equity Inducement Plan, vest over four years beginning on the anniversary of the grant date.

Restricted Stock Units (“RSUs”)

During the year ended December 31, 2023, the Compensation Committee granted various employees RSUs covering 3,439 shares of common stock under the 2013 Equity Incentive Plan .

The awards vest over five years .

During the year ended December 31, 2023, the Compensation Committee granted various non-employees RSUs covering 6,223 shares of common stock under the 2014 Non-Employee Equity Compensation Plan.

The awards granted vest over terms ranging from one to four years .

During the year ended December 31, 2023, the Compensation Committee granted employees RSUs covering 30,750 shares of common stock under the 2017 Equity Inducement Plan.

The awards vest over four years .

At December 31, 2023, the unamortized value of the RSUs was $ 1,130,709 .

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Johnston’s continued service as Chief Executive Officer and the achievement, to be determined in the Compensation Committee’s sole discretion, by Mr.

Johnston of certain performance metrics previously determined by the Compensation Committee and approved by the Board, and (b) up to an additional 50,000 PSU shares shall vest on each of December 31, 2023 and December 31, 2024, subject to Mr.

Johnston of certain performance metrics previously determined by the Compensation Committee and approved by the Board, (b) up to an additional 2,500 PSU shares shall vest on December 31, 2023, subject to Mr.

Johnston’s continued service as Chief Executive Officer and the achievement, to be determined in the Compensation Committee’s sole discretion, by Mr.

Johnston of certain performance metrics determined and granted by the Board on May 17, 2023, and (c) up to an additional 2,500 PSU shares shall vest on December 31, 2024, subject to Mr.

Johnston’s continued service as Chief Executive Officer and the achievement, to be determined in the Compensation Committee’s sole discretion, by Mr.

Johnston of certain performance metrics to be recommended by the Compensation Committee and approved by the Board at a subsequent date.

As of December 31, 2022, only 187,000 PSUs have approved performance criteria.

As of December 31, 2022, 135,575 PSUs have been achieved and vested and were deemed delivered on that date.

As of December 31,2022, the performance criteria for the additional 100,000 PSUs have not been approved by the Board.

As of December 31, 2022, 6,779 PSUs were achieved, vested and deemed delivered on that date.

As of December 31, 2023, an additional 1,125 PSUs were achieved, vested and deemed delivered on that date.

As of December 31, 2023, the performance criteria for the additional 2,500 PSUs that shall vest on December 31, 2024 have not been approved by the Board.

Note 8 – Stock Based Compensation, continued

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(i) the value of the discount on the enrollment date, (ii) the proportionate value of the call option for 85 % of the stock and (iii) the proportionate value of the put option for 15 % of the stock.

The Company recognized stock-based compensation expense for the plan of $ 124,053 and $ 252,568 for the years ended December 31, 2022 and 2021, respectively.

The Company recorded stock-based compensation expense for the plan of $ 43,831 and $ 124,053 for the years ended December 31, 2023 and 2022, respectively.

The Company estimated the fair value of the purchase options granted during the years ended December 31, 2023 and 2022 using the Black-Scholes option pricing model.

10 unchanged sentences

Stock price range

19.20 - 25.00

Dividend yield

13 unchanged sentences

Note 9 – Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law.

The CARES Act includes provisions relating to refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax refunds, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property.

The CARES Act has an immaterial impact on the Company’s income taxes.

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”).

14 unchanged sentences

valuation allowance

( 104,318,267

Total deferred tax assets

12 unchanged sentences

Accordingly, management has determined that a full valuation allowance of the deferred tax asset is appropriate at December 31, 2023 and 2022.

The Inflation Reduction Act (IRA) of 2022 was signed into law by President Joe Biden on August 16, 2022.

The IRA provides several tax incentives, including the expanded Internal Revenue Code (IRC) Section 179D deduction, increased ability to leverage the R&D credit to offset payroll taxes for eligible start-up businesses, and 15% alternative minimum tax (AMT) for corporations with average income more than $1 billion for the past three tax period.

The provisions do not have material impact to the Company for the 2023 tax year and the Company will continue to monitor the effect of this legislation.

Note 9 – Income Taxes, continued

Internal Revenue Code Section 382 imposes limitations on the use of net operating loss carryforwards when the stock ownership of one or more 5% stockholders (stockholders owning 5% or more of the Company’s outstanding capital stock) has increased on a cumulative basis by more than 50 percentage points .

IRC Section 382 imposes limitations on the use of net operating loss carryforwards when the stock ownership of one or more 5% stockholders (stockholders owning 5% or more of the Company’s outstanding capital stock) has increased on a cumulative basis by more than 50 percentage points .

Management cannot control the ownership changes occurring as a result of public trading of the Company’s Common Stock.

9 unchanged sentences

Increase in valuation allowance

Mark-to-market warrant liability

Effective income tax rate

Note 10 - Warrant Liability

2023 Warrants

In March 2023, the Company issued 412,500 warrants to purchase up to 412,500 shares of its common stock.

The 2023 Warrants have a six-year term and were exercisable upon issuance on March 28, 2023 .

At issuance, each 2023 Warrant was exercisable for one share of the Company’s common stock at a price of $ 8.00 per share.

As of December 31, 2023, the exercise price of the 2023 Warrants was adjusted to $ 1.66 per share (subject to further adjustment in certain circumstances, including in the event of stock dividends and splits;

recapitalizations;

change of control transactions;

and issuances or sales of, or agreements to issue or sell, shares of common stock or common stock equivalents at a price per share less than the then-applicable exercise price for the 2023 Warrants, including sales under the ATM, the “Exercise Price”).

In the event of certain transactions such as a merger, consolidation, tender offer, reorganization, or other change in control, if holders of common stock are given any choice as to the consideration to be received, the holder of each 2023 Warrant shall be given the same choice of alternate consideration.

In the event of certain transactions that are not within the Company’s control, such as a merger, consolidation, tender offer, reorganization, or other change in control of the Company, each holder of a 2023 Warrant shall be entitled to receive the same form of consideration at the Black Scholes value of the unexercised portion of the 2023 Warrant that is being offered and paid to holders of common stock, including the option to exercise the 2023 Warrants on a “cashless basis”.

If the Company issues additional shares of common stock or equity-linked securities for a consideration per share less than the Exercise Price, then such Exercise Price will be reduced to a new lower price pursuant to the terms of the 2023 Warrants.

Additionally, if the Exercise Price of any outstanding derivative securities is modified by the Company such that such security’s modified exercise price is below the Exercise Price, the Exercise Price will adjust downward pursuant to the terms of the 2023 Warrant.

This provision would not apply for stock or stock equivalents which fall under shares that qualify for exempt issuance, such as if the Company adjusted the option exercise price for an option granted to an employee, officer, or director.

Note 10 - Warrant Liability, continued

The Company accounted for the 2023 Warrants in accordance with the derivative guidance contained in ASC 815-40, as the warrants did not meet the criteria for equity treatment.

The Company believes that the adjustments to the Exercise Price is based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40, and thus the 2023 Warrants are not eligible for an exception from derivative accounting.

As such, the 2023 Warrants were initially measured at fair value and recorded as a liability in the amount of $ 3,135,000 .

As of December 31, 2023, all 2023 Warrants were outstanding.

As of December 31, 2023, the fair value of the warrant liability was $ 619,575 .

The Company recorded a change in fair value of the warrant liability of $ 2,515,425 for the year ended December 31, 2023.

Note 11 - Fair Value Measurements

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

Balance as of December 31, 2023

Cash and cash equivalents

Warrant liability

Balance as of December 31, 2022

Cash and cash equivalents

Warrant liability

There were no transfers among Level 1, Level 2, or Level 3 categories during the periods presented.

2023 Warrants

The Company utilizes a Monte Carlo simulation model for the 2023 Warrants at each reporting period, with changes in fair value recognized in the statements of operations.

The estimated fair value of the 2023 Warrant liability is determined using Level 3 inputs.

Inherent in a Monte Carlo simulation model are assumptions related to expected share-price volatility, expected life, risk-free interest rate, and dividend yield.

The key inputs into the Monte Carlo simulation model for the 2023 Warrants are as follows:

At March 31, 2023

At June 30, 2023

At September 30, 2023

At December 31, 2023

Exercise price

Term (in years)

Risk-free rate

Dividend yield

The decrease in the fair value of the 2023 Warrant liability was determined to be $ 2,515,425 during the year ended December 31, 2023, respectively (see Note 10 – Warrant Liability).

Note 12 – Related Party Transactions

3 unchanged sentences

Dialog presently owns approximately 1.6 % of the Company’s outstanding common shares.

The Company incurred $ 0 and $ 408,000 in chip development expense from Dialog during the years ended December 31, 2022 and 2021, respectively.

The Company did no t record any revenue under the Alliance Agreement during the years ended December 31, 2023 and 2022.

The Company incurred $ 87,701 and $ 0 in chip development expense from Renesas Electronics Corporation, which acquired Dialog in August 2021 ("Renesas"), during the years ended December 31, 2023 and 2022, respectively.

On September 20, 2021, the Company was notified by Dialog, then acquired by Renesas Electronics Corporation, that it was terminating the Alliance Agreement between the Company and Dialog.

Note 13 – Customer Concentration

One customer accounted for approximately 50 % of the Company’s revenue for the year ended December 31, 2022 and three customers accounted for approximately 42 % of the Company’s revenue for the year ended December 31, 2021.

Three customers accounted for approximately 70 % of the Company’s revenue for the year ended December 31, 2023 and one customer accounted for approximately 50 % of the Company’s revenue for the year ended December 31, 2022.

Two customers accounted for approximately 88 % of the Company’s accounts receivable balance as of December 31, 2023.

One customer accounted for approximately 87 % of the Company’s accounts receivable balance as of December 31, 2022.

Four customers accounted for approximately 68 % of the Company’s accounts receivable balance as of December 31, 2021.

Note 14 – Subsequent Events

During the period from January 1, 2023 through March 1, 2023, the Company raised net proceeds of $ 2,674,683 (net of $ 68,651 in issuance costs) under its ATM Program.

As of March 1, 2023, the Company had $ 3,526,605 remaining on the ATM Program.

On February 28, 2023, the Company committed to purchase products that will be produced by a contract manufacturer during the second and third quarters of 2023.

The total amount of the committed orders is $ 510,000 , and the products produced by the contract manufacturer will be held for future sales.

On March 24, 2023, the Company completed an underwritten offering of its securities (the “Offering”) pursuant to which it sold an aggregate of (i) 8,250,000 shares of its common stock and (ii) warrants to purchase up to 8,250,000 shares of common stock, for aggregate proceeds of approximately $ 2,689,000 , net of commissions and professional fees of approximately $ 611,000 .

The warrants issued in the Offering were immediately exercisable and have a term of six years and a per share exercise price of $ 0.40 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

The Company evaluates events that have occurred after the balance sheet date of December 31, 2023, through the date which the financial statements are issued.

On February 15, 2024, the Company entered into a securities purchase agreement with an institutional investor, providing for the issuance and sale by the Company, in a registered direct offering (the “Offering”), of (i) 570,000 shares of the Company’s common stock, par value $ 0.00001 (“Common Stock”), (ii) pre-funded warrants to purchase up to 450,409 shares of Common Stock (referred to individually as a “Pre-Funded Warrant” and collectively as the “Pre-Funded Warrants”), and (iii) warrants to purchase up to an aggregate of 1,020,409 shares of Common Stock (referred to individually as a “Warrant” and collectively as the “Warrants”).

Each share of Common Stock and Pre-Funded Warrant was offered and sold together with an accompanying Warrant at a combined price of $ 1.96 per share of Common Stock or Pre-Funded Warrant, as applicable.

Each Pre-Funded Warrant and Warrant is exercisable at any time on or after the date of issuance to purchase one share of Common Stock at a price of either $ 0.001 per share, in the case of the Pre-Funded Warrants, or $ 1.84 per share, in the case of the Warrants.

The Pre-Funded Warrants expire when they are exercised in full, and the Warrants expire five years from the date of issuance.

The Offering closed on February 20, 2024.

The Company received net proceeds of approximately $ 1.8 million from the Offering, after deducting placement agent fees and estimated offering expenses payable by the Company.

On March 26, 2024, the Company announced that effective March 24, 2024 Cesar Johnston is no longer serving as President and Chief Executive Officer.

Johnston will remain a member of the Board.

No agreement pertaining to Mr.

Johnston's departure has yet been signed.

Except for the events stated above, no events have occurred that would require adjustment to the amounts, or disclosures, in the financial statements.

Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data