What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-17 compared with 2020-11-09 · 86 added, 160 removed, 319 unchanged (44% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30, 2020

March 31, 2021

December 31, 2020

1 unchanged sentence

Cash and cash equivalents

At-the-market ("ATM") funds receivable

Accounts receivable

15 unchanged sentences

Preferred Stock, $ 0.00001 par value, 10,000,000 shares authorized

at September 30, 2020 and December 31, 2019;

at March 31, 2021 and December 31, 2020;

no shares issued or

Common Stock, $ 0.00001 par value, 200,000,000 and 50,000,000

shares authorized at September 30, 2020 and December 31, 2019,

respectively;

43,062,944 and 33,203,806 shares issued and

outstanding at September 30, 2020 and December 31, 2019, respectively.

Common Stock, $ 0.00001 par value, 200,000,000 shares authorized

at March 31, 2021 and December 31, 2020, respectively;

and 61,292,412 shares issued and outstanding at March 31, 2021

and December 31, 2020, respectively.

Additional paid-in capital

7 unchanged sentences

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Operating expenses:

18 unchanged sentences

stock units ("RSUs")

Stock-based compensation - performance

share units ("PSUs")

Stock-based compensation - employee

2 unchanged sentences

Proceeds from contributions to the ESPP

Issuance of shares in an at-the-market ("ATM")

offering, net of $ 141,322 in issuance costs

Balance March 31, 2021 (unaudited)

( 303,498,509

Stock-based compensation - restricted

stock units ("RSUs")

Stock-based compensation - employee

stock purchase plan ("ESPP")

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Issuance of shares in an at-the-market ("ATM")

offering, net of $ 236,528 in issuance costs

Balance, June 30, 2020 (unaudited)

( 279,943,062

Stock-based compensation - restricted

stock units ("RSUs")

Stock-based compensation - employee

stock purchase plan ("ESPP")

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Issuance of shares in an at-the-market ("ATM")

offering, net of $ 240,060 in issuance costs

Balance, September 30, 2020 (unaudited)

( 287,499,899

Energous Corporation

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Stockholders'

3 unchanged sentences

stock units ("RSUs")

Stock-based compensation - performance

share units ("PSUs")

Stock-based compensation - employee

1 unchanged sentence

Issuance of shares for RSUs

Shares withheld for payroll tax on RSUs

Shares withheld for payroll tax on performance share units ("PSUs")

Exercise of stock options

Proceeds from contributions to the ESPP

Issuance of shares and warrant in a private

placement, net of $ 1,680,844 in issuance costs

Issuance of shares in an at-the-market ("ATM")

offering, net of $ 141,322 in issuance costs

Balance, March 31, 2020 (unaudited)

( 271,738,396

Stock-based compensation - restricted

stock units ("RSUs")

Stock-based compensation - employee

stock purchase plan ("ESPP")

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance, June 30, 2019 (unaudited)

( 245,565,035

Stock-based compensation - restricted

stock units ("RSUs")

Stock-based compensation - employee

stock purchase plan ("ESPP")

Issuance of shares for RSUs

Shares returned

Proceeds from contributions to the ESPP

Balance, September 30, 2019 (unaudited)

( 253,749,262

The accompanying notes are an integral part of these condensed financial statements.

1 unchanged sentence

CONDENSED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

11 unchanged sentences

Operating lease liabilities

Deferred revenue

Net cash used in operating activities

4 unchanged sentences

Net proceeds from the sales of common stock

Proceeds from the exercise of stock options

Proceeds from contributions to employee stock purchase plan

Shares repurchased for tax withholdings on vesting of RSUs

Shares repurchased for tax withholdings on vesting of PSUs

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents - beginning

1 unchanged sentence

Supplemental disclosure of non-cash financing activities:

At-the-market ("ATM") funds receivable

Common stock issued for RSUs

5 unchanged sentences

Note 2 – Liquidity and Management Plans

During the three and nine months ended September 30, 2020, the Company recorded revenue of $ 61,500 and $ 237,350 , respectively, and during the three and nine months ended September 30, 2019, the Company recorded revenue of $ 40,500 and $ 154,500 , respectively.

During the three and nine months ended September 30, 2020, the Company recorded net losses of $ 7,556,837 and $ 24,359,239 , respectively, and during the three and nine months ended September 30, 2019, the Company recorded net losses of $ 8,184,227 and $ 29,007,691 , respectively.

Net cash used in operating activities was $ 19,435,940 and $ 20,968,817 for the nine months ended September 30, 2020 and 2019, respectively.

The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 23,319,156 in March 2019, $ 4,557,693 during the fourth quarter 2019, $ 5,506,880 during the first quarter 2020 and $ 9,216,611 during the second quarter 2020, along with payments received from customers.

As of September 30, 2020, the Company had cash on hand of $ 17,303,234 .

The Company expects that cash on hand as of September 30, 2020, together with anticipated revenues and funds raised from the at-the-market (“ATM”) finance offering (see Note 9 – Subsequent Events) will be sufficient to fund the Company’s operations into November 2021.

During the three months ended March 31, 2021 and 2020, the Company recorded revenue of $ 145,065 and $ 61,475 , respectively.

During the three months ended March 31, 2021 and 2020, the Company recorded a net loss of $ 8,525,763 and $ 8,597,736 , respectively.

Net cash used in operating activities was $ 5,976,550 and $ 7,340,111 for the three months ended March 31, 2021 and 2020, respectively.

The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 53,556,202 during 2020, along with payments received from customers.

As of March 31, 2021, the Company had cash on hand of $ 44,758,397 .

The Company expects that cash on hand as of March 31, 2021, together with anticipated revenues, will be sufficient to fund the Company’s operations into May 2022.

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

36 unchanged sentences

The Company also provides contract services for Dialog.

During the three months ended March 31, 2021, the Company recognized $ 145,065 in product development projects revenue, $ 0 in royalty revenue and $ 0 in contract services revenue.

During the three months ended March 31, 2020, the Company recognized $ 20,850 in product development projects revenue, $ 0 in royalty revenue and $ 40,625 in contract services revenue.

The Company records revenue associated with product development projects that it enters into with certain customers.

11 unchanged sentences

Patent application costs, which are generally legal costs, are expensed as research and development costs until such time as the future economic benefits of such patents become more certain.

The Company incurred research and development costs of $ 4,003,642 and $ 5,190,056 for the three months ended September 30, 2020 and 2019, respectively, and the Company incurred research and development costs of $ 12,909,378 and $ 17,505,751 for the nine months ended September 30, 2020 and 2019, respectively.

The Company incurred research and development costs of $ 4,591,244 and $ 4,575,303 for the three months ended March 31, 2021 and 2020, respectively.

Note 3 – Summary of Significant Accounting Policies, continued

7 unchanged sentences

A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards.

As of September 30, 2020, no liability for unrecognized tax benefits was required to be reported.

As of March 31, 2021, no liability for unrecognized tax benefits was required to be reported.

The guidance also discusses the classification of related interest and penalties on income taxes.

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense.

No interest or penalties were recorded during the three or nine months ended September 30, 2020 or 2019.

No interest or penalties were recorded during the three months ended March 31, 2021 or 2020.

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

3 unchanged sentences

Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method), the vesting of restricted stock units (“RSUs”) and performance stock units (“PSUs”) and the enrollment of employees in the ESPP.

The computation of diluted loss per share excludes potentially dilutive securities of 5,990,698 and 6,876,595 for the three months ended September 30, 2020 and 2019, respectively, and 5,990,698 and 6,876,595 for the nine months ended September 30, 2020 and 2019, respectively, because their inclusion would be anti-dilutive.

The computation of diluted loss per share excludes potentially dilutive securities of 7,137,741 and 7,206,004 for the three months ended March 31, 2021 and 2020, respectively, because their inclusion would be anti-dilutive.

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.

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

Warrant issued to private investors

12 unchanged sentences

Recent Accounting Pronouncements

In July 2019, the FASB issued ASU No.

2019-07, “Codification Updates to SEC Sections.” ASU 2019-07 updates the SEC portion of the FASB’s codification literature to reflect the changes the SEC made to simplify disclosures.

It is effective immediately.

The Company adopted ASU 2019-07 and its adoption had no material impact on its financial statements.

In December 2019, the FASB issued ASU No.

2 unchanged sentences

This standard is effective for annual reporting periods beginning after December 15, 2020.

The Company does not believe adoption of this standard will have a material impact on its financial statements.

The Company adopted this standard, and the adoption did not have a material impact on its financial statements.

Management’s Evaluation of Subsequent Events

The Company evaluates events that have occurred after the balance sheet date of September 30, 2020, through the date which the financial statements are available to be issued.

The Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the financial statements are available to be issued.

Note 4 – Commitments and Contingencies

1 unchanged sentence

San Jose Lease

On September 10, 2014, the Company entered into a lease agreement with Balzer Family Investments, L.P.

(the “Landlord”) related to space located at Northpointe Business Center, 3590 North First Street, San Jose, California.

The initial term of the lease was 60 months, with initial monthly base rent of $ 36,720 and the lease was subject to certain annual escalations as defined in the agreement.

On March 13, 2019, the Company amended its lease agreement with the Landlord which combined both the first-floor space and the second-floor space for the final three months of the original lease term for the second floor, which expired on September 30, 2019 .

Effective July 1, 2019 through September 30, 2019, the new monthly rent payment was $ 48,372 .

On February 26, 2015, the Company entered into a sub-lease agreement for space in its San Jose location on the first floor and was amended on August 25, 2015 to include additional space.

The sub-lease agreement had a term which expired on June 30, 2019 .

On July 1, 2019, the Company signed a new lease agreement for the lease of its office space at its corporate headquarters in San Jose, California for an additional three years .

4 unchanged sentences

Costa Mesa Lease

On May 31, 2017, the Company renewed a lease agreement for the Company’s space in Costa Mesa, California.

The agreement had a term that expired on September 30, 2019 with initial monthly rent of $ 9,040 and was subject to certain annual escalations as defined in the agreement.

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 .

7 unchanged sentences

The Company’s adoption of the new standard resulted in the recognition of right-of-use assets of $ 414,426 and operating lease liabilities of $ 485,747 , with no material cumulative effect adjustment to equity as of the date of adoption.

The Company anticipates having future total lease payments of $ 1,670,460 during the period from the fourth quarter of 2020 to the third quarter of 2022.

As of September 30, 2020, the company has total operating lease right-of-use assets of $ 1,487,116 , current portion operating lease liabilities of $ 845,108 and long-term portion of operating lease liabilities of $ 765,209 .

The weighted average remaining lease term is 1.9 years as of September 30, 2020.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of September 30, 2020 is as follows:

The Company anticipates having future total lease payments of $ 1,224,876 during the period from the second quarter of 2021 to the third quarter of 2022.

As of March 31, 2021, the company has total operating lease right-of-use assets of $ 1,097,377 , current portion operating lease liabilities of $ 805,557 and long-term portion of operating lease liabilities of $ 386,424 .

The weighted average remaining lease term is 1.4 years as of March 31, 2021.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of March 31, 2021 is as follows:

Total future lease payments

5 unchanged sentences

On December 18, 2015, the agreement was amended to redefine the hardware and software configuration and the quarterly payments increased to approximately $ 198,000 .

In July 2018, the Company renewed agreement for an additional three years , and the Company is required to remit quarterly payments of approximately $ 218,000 , with the last payment due in March 2021.

In July 2018, the Company renewed the agreement for an additional three years , and the Company is required to remit quarterly payments of approximately $ 218,000 .

The current subscription term expires on June 23, 2021.

Litigations, Claims, and Assessments

6 unchanged sentences

Under the Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers, the performance metrics used to determine whether any such bonuses will be paid and determining whether those performance metrics have been achieved.

During the three months ended September 30, 2020, the Company accrued $ 189,728 in expense under the Bonus Plan, which will be paid during the fourth quarter of 2020.

During the three months ended September 30, 2019, the Company accrued $ 167,740 in expense, which was paid during the fourth quarter of 2019.

During the nine months ended September 30, 2020 and 2019, the Company incurred $ 867,248 and $ 691,928 in expense under the Bonus Plan.

During the three months ended March 31, 2021, the Company accrued $ 391,578 in expense under the Bonus Plan, which will be paid during the second quarter of 2021.

During the three months ended March 31, 2020, the Company accrued $ 284,591 in expense, which was paid during the second quarter of 2020.

Severance and Change in Control Agreement

19 unchanged sentences

The Company Exclusivity Requirement will terminate upon the earlier of January 1, 2021 or the occurrence of certain events relating to the Company’s pre-existing exclusivity obligations.

The Company Exclusivity Requirement renews automatically on an annual basis unless the Company and Dialog agree to terminate the requirement.

Note 5 – Stockholders’ Equity

6 unchanged sentences

Pursuant to this registration statement, in March 2019 the Company raised $ 23,319,156 (net of $ 1,680,844 in issuance costs) from an offering of shares of its common stock and warrants to purchase 1,666,666 shares of common stock at an exercise price of $ 10.00 per share.

The Company also raised $ 4,557,693 (net of $ 339,081 in issuance costs) during the fourth quarter of 2019, $ 5,506,880 (net of $ 141,322 in issuance costs) during the first quarter of 2020 and $ 9,216,611 (net of $ 236,528 in issuance costs) during the second quarter of 2020.

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:

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 a sales agreement prospectus 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 a sales agreement.

The $40,000,000 of common stock that may be offered, issued and sold under the sales agreement prospectus 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 $ 3,165,868 (before legal and issuance costs of $ 158,810 ) on September 30, 2020 which were recorded as a receivable on the accompanying balance sheet on September 30, 2020.

and an at-the-market (“ATM”) sales agreement prospectus supplement covering the offering, or the ATM Program, 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 that certain sales agreement.

The $40,000,000 of common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $75,000,000 of the Company’s 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.

The ATM Program was completed as of the end of 2020 and no further securities were sold during the three months ended March 31, 2021.

Common Stock Outstanding

2 unchanged sentences

There are no voting rights for shares that are deemed delivered under US GAAP until the actual delivery of shares takes place.

As of September 30, 2020, a total of 200,000,000 common shares are authorized .

In August 2019, an aggregate of 38,666 shares of common stock were returned to the Company and retired in connection with the rescission of restricted stock unit agreements.

On July 24, 2020, the stockholders of the Company approved an increase of the authorized share capital of the Company from 50,000,000 to 200,000,000 shares of common stock.

Note 6 – Stock-Based Compensation

2 unchanged sentences

Effective on May 26, 2020, the Company’s stockholders approved the amendment and restatement of the 2013 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 1,200,000 shares, bringing to 7,285,967 the total number of shares approved for issuance under that plan.

As of September 30, 2020, 1,893,044 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

As of March 31, 2021, 930,611 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

2014 Non-Employee Equity Compensation Plan

2 unchanged sentences

Equity Incentive Plans, continued

As of September 30, 2020, 1,047,794 shares of common stock remain eligible to be issued through equity-based instruments under the 2014 Non-Employee Equity Compensation Plan.

As of March 31, 2021, 873,971 shares of common stock remain eligible to be issued through equity-based instruments under the 2014 Non-Employee Equity Compensation Plan.

2015 Performance Share Unit Plan

Effective on May 26, 2020, the Company’s stockholders approved the amendment and restatement of the 2015 Performance Share Unit Plan to increase the number of shares reserved for issuance through equity-based instruments thereunder by 700,000 shares, bringing to 3,410,104 the total number of shares approved for issuance under that plan.

As of September 30, 2020, 1,510,274 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

As of March 31, 2021, 681,238 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

2017 Equity Inducement Plan

5 unchanged sentences

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

As of September 30, 2020, 155,776 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

As of March 31, 2021, 143,336 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

Employee Stock Purchase Plan

6 unchanged sentences

The exercise price of the option will be the lesser of 85 % of the fair market of the common stock on the first business day of the offering period and 85 % of the fair market value of the common stock on the applicable exercise date.

As of September 30, 2020, 271,380 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 121,692 through payroll withholdings as of September 30, 2020 to the ESPP for the current offering period that will end on December 31, 2020 and shares were deemed delivered on that date.

As of March 31, 2021, 140,438 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 117,013 through payroll withholdings as of March 31, 2021 to the ESPP for the current offering period that will end on June 30, 2021 and shares will be deemed delivered on that date.

Note 6 – Stock-Based Compensation, continued

Stock Option Activity

The following is a summary of the Company’s stock option activity during the nine months ended September 30, 2020:

The following is a summary of the Company’s stock option activity during the three months ended March 31, 2021:

Outstanding at January 1, 2021

Outstanding at September 30, 2020

Outstanding at March 31, 2021

Exercisable at January 1, 2021

Exercisable at September 30, 2020

As of September 30, 2020, the unamortized value of options was $ 0 .

Exercisable at March 31, 2021

As of March 31, 2021, the unamortized value of options was $ 0 .

Restricted Stock Units (“RSUs”)

During the nine months ended September 30, 2020, the Compensation Committee granted various employees RSUs covering 648,781 shares of common stock under the 2013 Equity Incentive Plan.

The awards vest over terms ranging from two to four years .

During the nine months ended September 30, 2020, the Compensation Committee and the Board of Directors granted various non-employees RSUs covering 25,000 shares of common stock under the 2014 Non-employee Equity Compensation Plan.

The awards vest over terms ranging from one to three years .

During the nine months ended September 30, 2020, the Compensation Committee granted employees RSUs covering 171,000 shares of common stock under the 2017 Equity Inducement Plan.

The awards vest over four years beginning on the anniversary of the grant date.

As of September 30, 2020, t h e un am or ti ze d v a l u e o f t h e R SUs w a s $ 5,921,305 .

During the three months ended March 31, 2021, the Compensation Committee granted various employees RSUs covering 941,635 shares of common stock under the 2013 Equity Incentive Plan.

The awards vest over terms ranging from two to three years.

During the three months ended March 31, 2021, the Compensation Committee and the Board of Directors granted various non-employees RSUs covering 125,000 shares of common stock under the 2014 Non-employee Equity Compensation Plan.

The awards vest over one year .

As of March 31, 2021, t h e un am or ti ze d v a l u e o f t h e R SUs w a s $ 6,355,220 .

T h e un am or ti ze d am oun t w il l b e e xp e n s e d ov e r a weighted average p e r i o d o f 1.6 y ea r s .

A summary of the activity related to RSUs for the nine months ended September 30, 2020 is presented below:

A summary of the activity related to RSUs for the three months ended March 31, 2021 is presented below:

Outstanding at January 1, 2021

RSUs forfeited

Outstanding at September 30, 2020

Outstanding at March 31, 2021

Note 6 – Stock-Based Compensation, continued

2 unchanged sentences

The goals are commonly related to the Company’s revenue, market capitalization or market share price of the common stock.

Amortization for all PSU awards was $ 0 and $ 0 for the three months ended September 30, 2020 and 2019, respectively and amortization for all PSU awards was $( 88,348 ) and $ 0 for the nine months ended September 30, 2020 and 2019, respectively.

A summary of the activity related to PSUs for the nine months ended September 30, 2020 is presented below:

During the three months ended March 31, 2021, the Compensation Committee of the Board of Directors granted various employees PSUs covering 1,450,713 shares of common stock under the Company’s 2015 Performance Share Unit Plan.

Amortization for all PSU awards was $ 0 and $( 88,348 ) for the three months ended March 31, 2021 and 2020, respectively.

A summary of the activity related to PSUs for the three months ended March 31, 2021 is presented below:

Average Grant

2 unchanged sentences

PSUs forfeited

Outstanding at September 30, 2020

Outstanding at March 31, 2021

Employee Stock Purchase Plan (“ESPP”)

The current offering period under the ESPP started on July 1, 2020 and will conclude on December 31, 2020.

The recently completed offering period under the ESPP started on January 1, 2020 and concluded on June 30, 2020.

During the year ended December 31, 2019, there were two offering periods for the ESPP.

The first offering period started on January 1, 2019 and concluded on June 30, 2019.

The second offering period started on July 1, 2019 and concluded on December 31, 2019.

The weighted-average grant-date fair value of the purchase option for each designated share purchased under this plan was approximately $ 1.11 and $ 2.05 for the nine months ended September 30, 2020 and 2019, respectively, which represents the fair value of the option, consisting of three main components:

The current offering period under the ESPP started on January 1, 2021 and will conclude on June 30, 2021.

During the year ended December 31, 2020, there were two offering periods.

The first offering period began January 1, 2020 and concluded on June 30, 2020.

The second offering period began on July 1, 2020 and concluded on December 31, 2020.

The weighted-average grant-date fair value of the purchase option for each designated share purchased under this plan was approximately $ 0.75 and $ 0.57 for the three months ended March 31, 2021 and 2020, respectively, which represents the fair value of the option, consisting of three main components:

(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 compensation expense for the plan of $ 96,056 and $ 62,055 for the three months ended September 30, 2020 and 2019, respectively, and $ 180,191 and $ 272,629 for the nine months ended September 30, 2020 and 2019, respectively.

The Company estimated the fair value of ESPP purchase options granted during the nine months ended September 30, 2020 and 2019 using the Black-Scholes option pricing model.

The Company recognized compensation expense for the plan of $ 57,316 and $ 42,827 for the three months ended March 31, 2021 and 2020, respectively.

The Company estimated the fair value of ESPP purchase options granted during the three months ended March 31, 2021 and 2020 using the Black-Scholes option pricing model.

The fair values of stock options granted were estimated using the following assumptions:

Nine Months Ended

September 30, 2020

Nine Months Ended

September 30, 2019

$1.77 - $2.96

$4.27 - $5.79

Three Months Ended

March 31, 2021

Three Months Ended

March 31, 2020

Dividend yield

1 unchanged sentence

Risk-free interest rate

0.17% - 1.57%

2.10% - 2.51%

Expected life

1 unchanged sentence

Stock-Based Compensation Expense

The following tables summarize total stock-based compensation costs recognized for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended September 30,

Nine Months Ended September 30,

The following tables summarize total stock-based compensation costs recognized for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The total amount of stock-based compensation was reflected within the statements of operations as:

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

4 unchanged sentences

On November 7, 2016 and June 28, 2017, the Company and Dialog entered into securities purchase agreements under which Dialog acquired a total of 1,739,691 shares and received warrants to purchase up to 1,417,565 shares.

As of September 30, 2020, none of the warrants remain outstanding.

As of September 30, 2020, Dialog owns approximately 4.0 % of the Company’s outstanding common shares.

The Company recorded $ 0 and $ 0 for the three months ended September 30, 2020 and 2019, respectively, and $ 0 and $ 7,100 for the nine months ended September 30, 2020 and 2019, respectively, in royalty revenue pursuant to the Strategic Alliance Agreement.

Additionally, the Company recorded $ 0 and $ 0 in contract services revenue performed for Dialog during the three months ended September 30, 2020 and 2019, respectively, and $ 130,000 and $ 0 in contract services revenue performed for Dialog during the nine months ended September 30, 2020 and 2019, respectively.

The Company recorded $ 0 and $ 0 in cost of services revenue associated with the contract services performed for Dialog during the three months ended September 30, 2020 and 2019, respectively, and $ 126,539 and $ 0 in cost of services revenue during the nine months ended September 30, 2020 and 2019, respectively.

As of March 31, 2021, none of the warrants remain outstanding.

As of March 31, 2021, Dialog owns approximately 2.8 % of the Company’s outstanding common shares.

The Company recorded $ 0 and $ 0 for the three months ended March 31, 2021 and 2020, respectively, in royalty revenue.

Additionally, the Company recorded $0 and $ 40,625 in contract services revenue performed by Dialog during the three months ended March 31, 2021 and 2020.

The Company recorded $ 0 and $ 39,544 in cost of services revenue associated with contract services performed for Dialog during the three months ended March 31, 2021 and 2020, respectively.

Note 8 – Customer Concentrations

Four customers accounted for approximately 81 % of the Company’s revenue for the three months ended September 30, 2020, and three customers accounted for 100 % of the Company’s revenue for the three months ended September 30, 2019.

Three customers accounted for approximately 78 % of the Company’s revenue for the nine months ended September 30, 2020 and three customers accounted for approximately 55 % of the Company’s revenue for the nine months ended September 30, 2019.

Four customers accounted for approximately 95 % of the accounts receivable balance as of September 30, 2020.

Four customers accounted for nearly 100 % of the accounts receivable balance as of December 31, 2019.

Note 9 – Subsequent Events

On October 2, 2020, the Company received $ 3,165,868 in ATM proceeds, which were recorded as a receivable as of September 30, 2020 (see Note 5 – Stockholders’ Equity).

Subsequent to October 2, 2020, and through November 4, 2020, the Company received an additional $ 4,206,475 in net ATM proceeds from the issuance of 1,605,810 common shares.

One customer accounted for approximately 69 % of the Company’s revenue for the three months ended March 31, 2021, and two customers accounted for approximately 82 % of the Company’s revenue for the three months ended March 31, 2020.

One customer accounted for approximately 64 % of the accounts receivable balance as of March 31, 2021.

Four customers accounted for approximately 92 % of the accounts receivable balance as of December 31, 2020.

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

What changed 10-Q

Item 1. Financial Statements