What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-11 · 153 added, 112 removed, 351 unchanged (43% of the section changed)

2 unchanged sentences

BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

1 unchanged sentence

Cash and cash equivalents

Accounts receivable

Accounts receivable, net

Prepaid expenses and other current assets

6 unchanged sentences

Accrued expenses

Accrued severance expense

Operating lease liabilities, current portion

6 unchanged sentences

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

at June 30, 2021 and December 31, 2020;

at September 30, 2021 and December 31, 2020;

no shares issued or

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

at June 30, 2021 and December 31, 2020, respectively;

and 61,292,412 shares issued and outstanding at June 30, 2021

and December 31, 2020, respectively.

at September 30, 2021 and December 31, 2020, respectively;

63,155,272 and 61,292,412 shares issued and outstanding at

September 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital

7 unchanged sentences

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Operating expenses:

2 unchanged sentences

General and administrative

Severance expense

Cost of services revenue

31 unchanged sentences

( 314,514,338

Stock-based compensation - stock

Stock-based compensation - restricted

stock units ("RSUs")

Stock-based compensation - performance

share units ("PSUs")

Stock-based compensation - employee

stock purchase plan ("ESPP")

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance, September 30, 2021 (unaudited)

( 326,978,864

Energous Corporation

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)

Stockholders'

23 unchanged sentences

( 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

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

1 unchanged sentence

CONDENSED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended

September 30,

Cash flows from operating activities:

9 unchanged sentences

Accounts payable

Accrued severance expense

Accrued expenses

Operating lease liabilities

Deferred revenue

Net cash used in operating activities

6 unchanged sentences

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

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, public safety and military 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.

Note 2 – Liquidity and Management Plans

During the three and six months ended June 30, 2021, the Company recorded revenue of $ 184,960 and $ 330,025 , respectively, and during the three and six months ended June 30, 2020, the Company recorded $ 114,375 and $ 175,850 , respectively.

During the three and six months ended June 30, 2021, the Company recorded net losses of $ 11,015,829 and $ 19,541,592 , respectively, and during the three and six months ended June 30, 2020, the Company recorded net losses of $ 8,204,666 and $ 16,802,402 , respectively.

Net cash used in operating activities was $ 12,537,690 and $ 13,215,844 for the six months ended June 30, 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 June 30, 2021, the Company had cash on hand of $ 38,226,214 .

The Company expects that cash on hand as of June 30, 2021, together with anticipated revenues, will be sufficient to fund the Company’s operations into August 2022.

During the three and nine months ended September 30, 2021, the Company recorded revenue of $ 201,364 and $ 531,389 , respectively, and during the three and nine months ended September 30, 2020, the Company recorded $ 61,500 and $ 237,350 , respectively.

During the three and nine months ended September 30, 2021, the Company recorded net losses of $ 12,464,526 and $ 32,006,118 , respectively, and during the three and nine months ended September 30, 2020, the Company recorded net losses of $ 7,556,837 and $ 24,359,239 , respectively.

Net cash used in operating activities was $ 22,498,803 and $ 19,435,940 for the nine months ended September 30, 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, an at-the-market (“ATM”) offering during October 2021 (see Note 9 – Subsequent Events), proceeds from contributions to the employee stock purchase plan (“ESPP”), along with payments received from customers.

As of September 30, 2021, the Company had cash on hand of $ 28,282,188 .

The Company expects that cash on hand as of September 30, 2021, together with anticipated revenues and with ATM financing during October 2021, will be sufficient to fund the Company’s operations into November 2022.

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

2 unchanged sentences

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

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, competition and global market fluctuations.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic.

21 unchanged sentences

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update No.

The Company follows Accounting Standards Update No.

2014-09, "Revenue from Contracts with Customers" (Topic 606).

5 unchanged sentences

Recognize revenue when the performance obligations are met or delivered.

The Company’s revenue primarily consists of product development projects revenue and royalty revenue from Dialog.

The Company also provides contract services for Dialog.

During the three months ended June 30, 2021, the Company recognized $ 184,960 in product development projects revenue, $ 0 in royalty revenue and $ 0 in contract services revenue.

During the six months ended June 30, 2021, the Company recognized $ 330,025 in product development projects revenue, $ 0 in royalty revenue and $ 0 in contract services revenue.

During the three months ended June 30, 2020, the Company recognized $ 25,000 in product development projects revenue, $ 0 in royalty revenue and $ 89,375 in contract services revenue.

During the six months ended June 30, 2020, the Company recognized $ 45,850 in product development projects revenue, $ 0 in royalty revenue and $ 130,000 in contract services revenue.

The Company’s revenue primarily consists of product development projects revenue.

The Company also provided contract services for Dialog in 2020.

During the three months and nine months ended September 30, 2021, the Company recognized $ 201,364 and $ 531,389 , respectively, in product development projects revenue, During the three and nine months ended September 30, 2020, the Company recognized $ 61,500 and $ 107,350 , respectively, in product development projects revenue.

During the three and nine months ended September 30, 2021, the Company did no t recognize any contract services revenue.

During the three and nine months ended September 30, 2020, the Company recognized $ 0 and $ 130,000 , respectively, in contract services revenue.

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

4 unchanged sentences

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

The Company records royalty revenue from its manufacturing partner, Dialog, and such royalty revenue is recognized at a point in time based on shipments from Dialog to its customers.

The Company recognizes contract services revenue from Dialog over the period of time that the services are performed.

The costs associated with this revenue are recognized as the services are performed and are included in cost of services revenue.

The Company recognized contract services revenue from Dialog in 2020 over the period of time that the services are performed.

The costs associated with this revenue were recognized as the services were performed and were included in cost of services revenue.

Note 3 – Summary of Significant Accounting Policies, continued

3 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 $ 6,103,694 and $ 4,330,433 for the three months ended June 30, 2021 and 2020, respectively, and the Company incurred research and development costs of $ 10,694,938 and $ 8,905,736 for the six months ended June 30, 2021 and 2020, respectively.

The Company incurred research and development costs of $ 4,737,159 and $ 4,003,642 for the three months ended September 30, 2021 and 2020, respectively, and the Company incurred research and development costs of $ 15,432,097 and $ 12,909,378 for the nine months ended September 30, 2021 and 2020, respectively.

Stock-Based Compensation

6 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 June 30, 2021, no liability for unrecognized tax benefits was required to be reported.

As of September 30, 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 six months ended June 30, 2021 or 2020.

No interest or penalties were recorded during the three or nine months ended September 30, 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 6,323,445 and 6,945,580 for the three months ended June 30, 2021 and 2020, respectively, and 6,323,445 and 6,945,580 for the six months ended June 30, 2021 and 2020, respectively, because their inclusion would be anti-dilutive.

The computation of diluted loss per share excludes potentially dilutive securities of 5,843,167 and 5,990,698 for the three months ended September 30, 2021 and 2020, respectively, and 5,843,167 and 5,990,698 for the nine months ended September 30, 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 June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Warrants issued to private investors

2 unchanged sentences

Note 3 – Summary of Significant Accounting Policies, continued

As of January 1, 2019, the Company determines if an arrangement is a lease at the inception of the arrangement.

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

The Company applies the short-term lease recognition exemption and recognizes lease payments in profit or loss at lease commencement for facility or equipment leases that have a lease term of 12 months or less and do not include a purchase option whose exercise is reasonably certain.

18 unchanged sentences

Management’s Evaluation of Subsequent Events

The Company evaluates events that have occurred after the balance sheet date of June 30, 2021, 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 September 30, 2021, through the date which the financial statements are available to be issued.

Note 4 – Commitments and Contingencies

2 unchanged sentences

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 .

The lease agreement includes space on the first floor of the building that had been previously subleased.

Upon expiration of the original lease on September 30, 2019, the new monthly lease payment starting October 1, 2019 was $ 52,970 and is subject to annual escalations up to a maximum monthly lease payment of $ 64,941 .

4 unchanged sentences

Upon expiration of the original lease on September 30, 2019, the new monthly lease payment starting October 1, 2019 was $ 9,773 and is 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.

Per the lease, the stated commencement date is October 1, 2021 and concludes September 30, 2023, and the Company did not have control of the new office space until October 2021, at which time the Company recorded a new right-of-use lease asset of $ 104,563 and operating lease liability of $ 104,563 .

The new Costa Mesa lease has a total $ 106,688 in lease payments with an initial monthly lease payment of $ 4,369 starting October 1, 2021 and is subject to an annual escalation up to a maximum monthly lease payment of $ 4,522 .

Operating Lease Commitments

5 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 $ 1,002,084 during the period from the third quarter of 2021 to the third quarter of 2022.

As of June 30, 2021, the company has total operating lease right-of-use assets of $ 899,355 , current portion operating lease liabilities of $ 785,484 and long-term portion of operating lease liabilities of $ 194,176 .

The weighted average remaining lease term is 1.2 years as of June 30, 2021.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of June 30, 2021 is as follows:

The Company anticipates having future total lease payments of $ 779,292 during the period from the fourth quarter of 2021 to the third quarter of 2022.

As of September 30, 2021, the company has total operating lease right-of-use assets of $ 699,202 , current portion operating lease liabilities of $ 765,209 and long-term portion of operating lease liabilities of $ 0 .

The weighted average remaining lease term is 1.0 years as of September 30, 2021.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of September 30, 2021 is as follows:

Total future lease payments

15 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 June 30, 2021, the Company accrued $ 391,578 in expense under the Bonus Plan, which will be paid during the third quarter of 2021.

During the three months ended June 30, 2020, the Company accrued $ 392,929 in expense under the Bonus Plan, which was paid during the third quarter of 2020.

During the six months ended June 30, 2021 and 2020, the Company accrued $ 783,156 and $ 677,520 , respectively, in expense under the Bonus Plan.

During the three months ended September 30, 2021, the Company accrued $ 304,377 in expense under the Bonus Plan, which will be paid during the fourth quarter of 2021.

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

During the nine months ended September 30, 2021 and 2020, the Company recorded $ 1,087,533 and $ 867,248 , respectively, in expense under the Bonus Plan.

The expense under the Bonus Plan is recorded under operating expenses on the Company’s Condensed Statement of Operations within each executive’s department.

Severance and Change in Control Agreement

9 unchanged sentences

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 (see Note 9 – Subsequent Event).

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

In connection with Mr.

Rizzone’s retirement, the Company and Mr.

Rizzone entered into an Executive Transition Agreement (“Separation Agreement”), providing for continued employment through August 31, 2021.

Upon his termination of employment, the Separation Agreement provides severance payments and benefits to Mr.

Rizzone consistent with the terms of his existing employment agreement with the Company, including without limitation:

compensation-based payments of $ 1,460,000 in the aggregate, payable under a certain payment scheme as set forth therein, an additional lump sum cash payment of $ 2,000,000 , a pro-rated bonus payment for the two months of employment during the current quarterly bonus period payable at the same time bonus payments are made to other executives of the Company, settlement of deferred vested restricted stock units and an extension of the exercise periods of all stock options held by Mr.

Rizzone until the one year anniversary of his termination date, and additional benefits related to Mr.

Rizzone’s medical insurance.

In addition, the Company will pay-off all amounts owed under a lease agreement relating to a Company Car and Mr.

Rizzone will receive the title to the vehicle.

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

Note 4 – Commitments and Contingencies, continued

During the three months ended September 30, 2021, the Company recognized $ 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 September 30, 2021, the Company had unpaid accrued severance expense of $ 1,102,832 .

Strategic Alliance Agreement

4 unchanged sentences

Each party will retain all of its intellectual property.

Note 4 – Commitments and Contingencies, continued

Strategic Alliance Agreement continued

The Alliance Agreement has an initial term of seven years and will automatically renew annually thereafter unless terminated by either party upon 180 days’ prior written notice.

3 unchanged sentences

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

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

There is a wind down period included in the Alliance Agreement which will conclude in September 2024.

During the wind down period, the Alliance Agreement’s terms will continue to apply to the Company’s products that are covered by certain existing customer relationships, except that the parties’ respective exclusivity rights have terminated.

Note 5 – Stockholders’ Equity

7 unchanged sentences

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, pursuant to this shelf registration statement.

Note 5 – Stockholders’ Equity, continued

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:

3 unchanged sentences

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 or six months ended June 30, 2021.

The ATM Program was completed as of the end of 2020 and no further securities were sold during the three or nine months ended September 30, 2021.

Common Stock Outstanding

7 unchanged sentences

Effective on June 16, 2021, 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 1,500,000 shares, bringing to 8,785,967 the total number of shares approved for issuance under that plan.

As of June 30, 2021, 2,414,623 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

As of September 30, 2021, 2,537,844 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

Effective on May 26, 2020, the Company’s stockholders approved the amendment and restatement of the 2014 Non-employee Equity Compensation Plan to increase the number of shares reserved for issuance through equity-based instruments thereunder by 800,000 shares, bringing to 1,650,000 the total number of shares approved for issuance under that plan.

As of June 30, 2021, 917,013 shares of common stock remain eligible to be issued through equity-based instruments under the 2014 Non-Employee Equity Compensation Plan.

As of September 30, 2021, 879,922 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 June 16, 2021, 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 1,700,000 shares, bringing to 5,110,104 the total number of shares approved for issuance under that plan.

As of June 30, 2021, 2,379,888 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

As of September 30, 2021, 2,513,901 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

Note 6 – Stock-Based Compensation, continued

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 June 30, 2021, 138,679 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

As of September 30, 2021, 111,679 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 June 30, 2021, 685,374 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 237,247 through payroll withholdings to the ESPP for the offering period ended June 30, 2021 and shares were deemed delivered on that date.

Note 6 – Stock-Based Compensation, continued

As of September 30, 2021, 685,374 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 124,801 through payroll withholdings to the ESPP as of September 30, 2021 for the current offering period that will end on December 31, 2021 and shares will be deemed delivered on that date.

Stock Option Activity

The following is a summary of the Company’s stock option activity during the six months ended June 30, 2021:

The following is a summary of the Company’s stock option activity during the nine months ended September 30, 2021:

Outstanding at January 1, 2021

Outstanding at June 30, 2021

Outstanding at September 30, 2021

Exercisable at January 1, 2021

Exercisable at June 30, 2021

As of June 30, 2021, the unamortized value of options was $ 0 .

Exercisable at September 30, 2021

As of September 30, 2021, the unamortized value of options was $ 0 .

Restricted Stock Units (“RSUs”)

During the six months ended June 30, 2021, the Compensation Committee granted various employees RSUs covering 964,885 shares of common stock under the 2013 Equity Incentive Plan.

During the nine months ended September 30, 2021, the Compensation Committee granted various employees RSUs covering 979,385 shares of common stock under the 2013 Equity Incentive Plan.

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

During the six months ended June 30, 2021, the Compensation Committee and the Board of Directors granted various non-employees RSUs covering 135,000 shares of common stock under the 2014 Non-employee Equity Compensation Plan.

Note 6 – Stock-Based Compensation, continued

During the nine months ended September 30, 2021, the Compensation Committee and the Board of Directors granted various non-employees RSUs covering 172,091 shares of common stock under the 2014 Non-employee Equity Compensation Plan.

The awards vest over terms ranging from one to four years

During the six months ended June 30, 2021, the Board of Directors granted an employee RSUs covering 7,000 shares of common stock under the 2017 Equity Inducement Plan.

During the nine months ended September 30, 2021, the Board of Directors granted an employee RSUs covering 34,000 shares of common stock under the 2017 Equity Inducement Plan.

The award vests over a term of four years.

As of June 30, 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 $ 4,763,288 .

As of September 30, 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 $ 3,237,533 .

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 1.5 y ea r s .

A summary of the activity related to RSUs for the six months ended June 30, 2021 is presented below:

A summary of the activity related to RSUs for the nine months ended September 30, 2021 is presented below:

Outstanding at January 1, 2021

RSUs forfeited

Outstanding at June 30, 2021

Note 6 – Stock-Based Compensation, continued

Outstanding at September 30, 2021

Performance Share Units (“PSUs”)

Performance share units (“PSUs”) are grants that vest upon the achievement of certain performance goals.

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

During the six months ended June 30, 2021, the Compensation Committee of the Board of Directors granted various employees PSUs covering 1,465,713 shares of common stock under the Company’s 2015 Performance Share Unit Plan.

Amortization for all PSU awards was $ 2,695,847 for the three and six months ended June 30, 2021 and $0 and $ ( 88,348 ) for the three and six months ended June 30, 2020, respectively.

As of June 30, 2021, the unamortized value of the PSUs was $ 1,198,389 .

The goals are commonly related to the Company’s revenue and achievement of sales and marketing goals.

During the nine months ended September 30, 2021, the Compensation Committee of the Board of Directors granted various employees PSUs covering 1,465,713 shares of common stock under the Company’s 2015 Performance Share Unit Plan.

Amortization for all PSU awards was $ 843,741 and $ 3,539,588 for the three and nine months ended September 30, 2021, respectively, and $ 0 and $( 88,348 ) for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, the unamortized value of the PSUs was $ 733,189 .

The unamortized amount will be expensed over a weighted average period of 0.3 years.

A summary of the activity related to PSUs for the six months ended June 30, 2021 is presented below:

A summary of the activity related to PSUs for the nine months ended September 30, 2021 is presented below:

Average Grant

2 unchanged sentences

PSUs forfeited

Outstanding at June 30, 2021

Outstanding at September 30, 2021

Employee Stock Purchase Plan (“ESPP”)

The most recent offering period under the ESPP started on January 1, 2021 and concluded on June 30, 2021.

The current offering period under the ESPP started on July 1, 2021 and will conclude on December 31, 2021.

The recently completed offering period under the ESPP started on January 1, 2021 and concluded on June 30, 2021.

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

1 unchanged sentence

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 six months ended June 30, 2021 and 2020, respectively, which represents the fair value of the option, consisting of three main components:

Note 6 – Stock-Based Compensation, continued

The weighted-average grant-date fair value of the purchase option for each designated share purchased under this plan was approximately $ 1.05 and $ 1.11 for the nine months ended September 30, 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 $ 60,651 and $ 41,308 for the three months ended June 30, 2021 and 2020, respectively, and the Company recognized compensation expense for the plan of $ 117,967 and $ 84,135 for the six months ended June 30, 2021 and 2020, respectively.

The Company estimated the fair value of ESPP purchase options granted during the six months ended June 30, 2021 and 2020 using the Black-Scholes option pricing model.

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

Six Months Ended

June 30, 2021

Six Months Ended

June 30, 2020

The Company recognized compensation expense for the plan of $ 76,814 and $ 96,056 for the three months ended September 30, 2021 and 2020, respectively, and the Company recognized compensation expense for the plan of $ 194,781 and $ 180,191 for the nine months ended September 30, 2021 and 2020, respectively.

The Company estimated the fair value of ESPP purchase options granted during the nine months ended September 30, 2021 and 2020 using the Black-Scholes option pricing model.

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

Nine Months Ended

September 30, 2021

Nine Months Ended

September 30, 2020

$1.80 - $2.78

$1.77 - $2.96

Dividend yield

1 unchanged sentence

Risk-free interest rate

0.05% - 0.09%

0.17% - 1.57%

Expected life

Note 6 – Stock-Based Compensation, continued

Stock-Based Compensation Expense

The following tables summarize total stock-based compensation costs recognized for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June,

The following tables summarize total stock-based compensation costs recognized for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Nine Months Ended September,

Stock options

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

General and administrative

Severance expense

Note 7 – Related Party Transactions

1 unchanged sentence

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 June 30, 2021, none of the warrants remain outstanding.

As of June 30, 2021, Dialog owns approximately 2.8 % of the Company’s outstanding common shares.

The Company recorded $ 0 and $ 0 for the three months ended June 30, 2021 and 2020, respectively, and $ 0 and $ 0 in for the six months ended June 30, 2021 and 2020, respectively, in royalty revenue.

Additionally, the Company recorded $ 0 and $ 89,375 in contract services revenue performed by Dialog during the three months ended June 30, 2021 and 2020, respectively, and the Company recorded $ 0 and $ 130,000 in contract services revenue performed by Dialog during the six months ended June 30, 2021 and 2020, respectively.

The Company recorded $ 0 and $ 86,995 in cost of services revenue associated with contract services performed for Dialog during the three months ended June 30, 2021 and 2020, respectively, and the Company recorded $ 0 and $ 126,539 in cost of services revenue associated with contract services performed for Dialog during the six months ended June 30, 2021 and 2020, respectively.

Additionally, the Company incurred $ 183,000 and $ 0 in chip development expense from Dialog, during the three months ended June 30, 2021 and 2020, respectively, and the Company incurred $ 183,000 and $ 0 in chip development expense from Dialog during the six months ended June 30, 2021 and 2020, respectively.

As of September 30, 2021, none of the warrants remain outstanding.

As of September 30, 2021, Dialog owns approximately 2.8 % of the Company’s outstanding common shares.

The Company recorded $ 0 and $ 0 for the three months ended September 30, 2021 and 2020, respectively, and $ 0 and $ 0 in for the nine months ended September 30, 2021 and 2020, respectively, in royalty revenue.

Additionally, the Company recorded $ 0 and $ 0 in contract services revenue performed for Dialog during the three months ended September 30, 2021 and 2020, respectively, and the Company recorded $ 0 and $ 130,000 in contract services revenue performed for Dialog during the nine months ended September 30, 2021 and 2020, respectively.

The Company recorded $ 0 and $ 0 in cost of services revenue associated with contract services performed for Dialog during the three months ended September 30, 2021 and 2020, respectively, and the Company recorded $ 0 and $ 126,539 in cost of services revenue associated with contract services performed for Dialog during the nine months ended September 30, 2021 and 2020, respectively.

Additionally, the Company incurred $ 225,000 and $ 0 in chip development expense from Dialog, during the three months ended September 30, 2021 and 2020, respectively, and the Company incurred $ 408,000 and $ 0 in chip development expense from Dialog during the nine months ended September 30, 2021 and 2020, respectively.

On September 20, 2021, the Company was notified by Dialog, recently acquired by Renesas Electronics Corporation, that it was terminating the strategic alliance agreement between the Company and Dialog.

Note 8 – Customer Concentrations

Three customers accounted for approximately 64 % of the Company’s revenue for the three months ended June 30, 2021, and two customers accounted for approximately 96 % of the Company’s revenue for the three months ended June 30, 2020.

Four customers accounted for approximately 72 % of the Company’s revenue for the six months ended June 30, 2021, and two customers accounted for approximately 85 % of the Company’s revenue for the six months ended June 30, 2020.

Three customers accounted for approximately 62 % of the accounts receivable balance as of June 30, 2021.

Two customers accounted for approximately 61 % of the Company’s revenue for the three months ended September 30, 2021, and four customers accounted for approximately 81 % of the Company’s revenue for the three months ended September 30, 2020.

Four customers accounted for approximately 62 % of the Company’s revenue for the nine months ended September 30, 2021, and three customers accounted for approximately 78 % of the Company’s revenue for the nine months ended September 30, 2020.

Two customers accounted for approximately 70 % of the accounts receivable balance as of September 30, 2021.

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

Note 9 – Subsequent Event

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.

In connection with Mr.

Rizzone’s retirement, the Company and Mr.

Rizzone entered into an Executive Transition Agreement (“Separation Agreement”), providing for continued employment through August 31, 2021.

Upon his termination of employment, the Separation Agreement provides severance payments and benefits to Mr.

Rizzone consistent with the terms of his existing employment agreement with the Company, including without limitation:

Rizzone until the one year anniversary of his termination date, and additional benefits related to Mr.

Rizzone’s medical insurance.

In addition, the Company will pay-off all amounts owed under a lease agreement relating to a Company Car and Mr.

Rizzone will receive the title to the vehicle.

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

Note 9 – Subsequent Events

On October 4, 2021, the Company filed with the Securities and Exchange Commission (“SEC”) a prospectus supplement covering the issuance and sale of shares of the Company’s common stock having an aggregate offering price up to $ 35,000,000 pursuant to the Company’s at-the-market offering program (the “ATM”).

As of October 31, 2021, the Company has sold 12,229,433 shares for gross proceeds of $ 27,911,873 under the ATM, and a net of $ 27,060,301 after approximately $ 851,572 in broker commissions and issuance costs.

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