What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-23 compared with 2021-03-24 · 114 added, 68 removed, 492 unchanged (27% of the section changed)

2 unchanged sentences

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

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

Balance Sheets as of December 31, 2021 and 2020

46 unchanged sentences

Property and equipment, net

Right-of-use lease assets

Operating right-of-use lease assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accrued expenses

Accrued severance

Operating lease liabilities, current portion

9 unchanged sentences

no shares issued or

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

authorized at December 31, 2020 and December 31, 2019, respectively;

61,292,412 and 33,203,806 shares issued and outstanding at

December 31, 2020 and December 31, 2019, respectively.

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

at December 31, 2021 and December 31, 2020;

76,667,205 and

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

and December 31, 2020, respectively.

Additional paid-in capital

12 unchanged sentences

General and administrative

Severance expense

Cost of services revenue

2 unchanged sentences

Other income (expense):

Interest income, net

Interest income

Loss on disposal of property and equipment

12 unchanged sentences

Issuance of shares for RSUs

Shares withheld for payroll tax on RSUs

Shares withheld for payroll tax on PSUs

Shares returned

Exercise of stock options

Shares purchased from contributions to the ESPP

Issuance of shares and warrants in a private placement, net

of $ 1,680,844 in issuance costs

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

2 unchanged sentences

( 294,972,746

Stock-based compensation - stock options

Stock-based compensation - restricted stock units (“RSUs”)

2 unchanged sentences

Issuance of shares for RSUs

Issuance of shares for PSUs

Shares purchased from contributions to the ESPP

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Accrued expenses

Accrued severance expense

Operating lease liabilities

5 unchanged sentences

Cash flows from financing activities:

Net proceeds from the sales of common stock

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

Proceeds from the exercise of stock options

Proceeds from contributions to employee stock purchase

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 increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents - beginning

2 unchanged sentences

Common stock issued for RSUs

Common stock issued for PSUs

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

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

The Company has developed its WattUp® technology, consisting of proprietary semiconductor chipsets, software, hardware designs and antennas, that enables radio frequency (“RF”) based charging for electronic devices, providing wire-free contact and non-contact charging solutions, with the potential to enable charging with mobility.

The Company believes its proprietary WattUp technology can be utilized in consumer electronics such as wearables, hearing aids, earbuds, Bluetooth headsets, Internet of Things (“IoT”) devices, smartphones, tablets, e-book readers, keyboards, mice, remote controls, rechargeable lights, cylindrical batteries, medical devices and other devices with charging requirements that would otherwise require battery replacement or wired power connection.

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 medial 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.

Note 2 – Liquidity and Management Plans

2 unchanged sentences

Net cash used in operating activities was $ 28,720,389 and $ 24,791,545 for the years ended December 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 and $ 4,557,693 during the fourth quarter of 2019, along with payments received under product development projects.

The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 53,556,202 during 2020 and $ 27,043,751 during the fourth quarter of 2021, proceeds from contributions to the employee stock purchase plan (“ESPP”), along with payments received from customers.

As of December 31, 2021, the Company had cash on hand of $ 49,071,414 .

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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.

Note 3 – Summary of Significant Accounting Policies

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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).

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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 year ended December 31, 2020, the Company recognized $ 197,350 in product development projects revenue, $ 0 in royalty revenue and $ 130,000 in contract services revenue.

During the year ended December 31, 2019, the Company recognized $ 193,043 in product development projects revenue, $ 7,100 in royalty revenue and $ 0 in contract services revenue.

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

The Company also provided contract services revenue for Dialog in 2020.

During the years ended December 31, 2021 and 2020, the Company recognized $ 756,793 and $ 197,350 in product development projects revenue, respectively.

During the years ended December 31, 2021 and 2020, the Company recognized $ 0 and $ 130,000 in contract services revenue.

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

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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.

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 over the period of time that the services are performed.

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

Note 3 – Summary of Significant Accounting Policies, continued

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Total potentially dilutive securities

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

The table above includes 1,618,123 warrants expiring October 6, 2022, with an exercise price of $ 23.00 and 1,666,666 warrants expiring March 1, 2024, with an exercise price of $ 10.00 .

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.

7 unchanged sentences

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740),” Simplifying the Accounting for Income Taxes .

ASU 2019-12 removes certain exceptions under Topic 740 and improves consistent application by clarifying and amending existing guidance.

In May 2021, the FASB issued ASU No.

2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).” ASU 2021-04 clarifies accounting for modifications or exchanges of equity-classified warrants.

This standard is effective for annual reporting periods beginning after December 15, 2021.

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

The Company is currently evaluating the impact the planned adoption of this standard will have on its financial statements.

In November 2021, the FASB issued ASU No.

2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.

ASU 2021-10 requires business entities to disclose certain types of government assistance they receive in the notes to the financial statements.

This standard is effective for annual reporting periods beginning after December 15, 2021.

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

Management’s Evaluation of Subsequent Events

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Accrued compensation

Accrued research and development

Accrued legal expenses

4 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 .

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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 was October 1, 2021 and concludes on September 30, 2023, and the Company did not take control of the new office space until October 2021, at which time the Company recorded a new right-of-use asset of $ 104,563 and operating lease liability of $ 104,563 .

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

Operating Lease Commitments

In February 2016, the FASB issued its final standard on lease accounting, ASU No.

In February 2016, the FASB issued its updated standard on lease accounting, ASU No.

2016-02, “Leases (Topic 842),” which superseded Topic 840, “Leases,” which was further modified in ASU No.

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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 the 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 .

In June 2021, the Company renewed the agreement for an additional three years , and the Company is required to remit quarterly payments of approximately $ 233,000 through the second quarter of 2024.

Note 6 – Commitments and Contingencies, continued

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As of December 31, 2021, $ 346,457 of the 2021 amount was not yet paid and is included in accrued expenses.

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

Severance and Change in Control Agreement

2 unchanged sentences

If Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) the Company will pay the full amount of Executive’s premiums under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the six to 12 month period following the Executive’s termination.

Amended Employee Agreement – Stephen Rizzone

Note 6 – Commitments and Contingencies, continued

Executive Employee Agreement – Cesar Johnston

On December 9, 2021, the Company announced that Cesar Johnston had been appointed as the Company’s Chief Executive Officer.

In connection with Mr.

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

Johnston executed an offer letter dated as of December 6, 2021.

Under the offer letter, Mr.

Johnston will receive an annual base salary of $ 400,000 per year.

Beginning in year 2022, he will be 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 w ill r ece i ve , 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 w ill ve st 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 .

Johnston will further be eligible for (a) an additional equity award in the amount of 287,000 performance share units to acquire shares of the Company’s common stock, which will vest up to one third per year over a three year period commencing January 1, 2022 and ending December 31, 2024, upon the achievement of performance criteria to be mutually established by Mr.

Johnston and the Compensation Committee, and (b) an additional equity award of up to 25,000 performance share units per calendar year for 2022, 2023 and 2024, respectively, based on outperformance per calendar year, as determined by the Compensation Committee with approval of the Board of Directors.

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.

The Johnston A&R CIC Agreement additionally provides that, in the event of 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 150 % of his target bonus plus a prorated bonus for the year in which the termination occurs, (b) any outstanding unvested equity awards held by Mr.

Johnston (including any equity awards that vest upon satisfaction of performance criteria) will accelerate in full and become vested and (c) if Mr.

Johnston timely elects continued coverage under COBRA, the Company or its successor will pay the full amount of Mr.

Johnston’s COBRA premiums on his behalf for 18 months

Johnston is also eligible to receive all customary and usual benefits generally available to senior executives of the Company.

Note 6 – Commitments and Contingencies, continued

Executive Transition Agreement – Stephen Rizzone

On April 3, 2015, the Company entered into an Amended and Restated Executive Employment Agreement with Stephen R.

3 unchanged sentences

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.

Rizzone is also eligible to receive all customary and usual benefits generally available to senior executives of the Company.

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:

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.

During the year ended December 31, 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 December 31, 2021, the Company had unpaid accrued severance expense of $ 975,439 .

Note 6 – Commitments and Contingencies, continued

10 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 7 – Stockholders’ Equity

3 unchanged sentences

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.

Note 7 – Stockholders’ Equity, continued

On August 9, 2018, the Company filed a shelf registration statement on Form S-3, which became effective on August 17, 2018.

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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 quarter of 2020.

Note 7 – Stockholders’ Equity continued

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

The Company raised net proceeds of $ 27,043,751 (net of $ 868,122 in issuance costs), during the fourth quarter of 2021 under the ATM.

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.

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 .

Common Stock Outstanding

Our outstanding common shares typically include shares that are deemed delivered under US GAAP.

Our outstanding common shares typically include shares that are deemed delivered under U.S.

Shares that are deemed delivered currently include shares that have vested, but have not yet been delivered, under tax-deferred equity awards, as well as shares purchased under our Employee Stock Purchase Program (“ESPP”) where actual transfer of shares normally occurs a few days after the completion of the purchase periods.

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

There are no voting rights for shares that are deemed delivered under U.S.

GAAP until the actual delivery of shares takes place.

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

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.

Note 8 – Stock Based Compensation

1 unchanged sentence

2013 Equity Incentive Plan

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.

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 December 31, 2021, 1,779,806 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

3 unchanged sentences

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.

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 December 31, 2021, 2,411,013 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

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On May 21, 2015, the Company’s stockholders approved the ESPP.

Effective on May 26, 2020, the Company’s stockholders approved the amendment and restatement of the Employee Stock Purchase Plan to increase the number of shares reserved for issuance through equity-based instruments thereunder by 250,000 shares, bringing to 850,000 the total number of shares approved for issuance under that plan.

Effective on June 16, 2021, the Company’s stockholders approved the amendment and restatement of the Employee Stock Purchase Plan to increase the number of shares reserved for issuance through equity-based instruments thereunder by 700,000 shares, bringing to 1,550,000 the total number of shares approved for issuance under that plan.

Under the ESPP, employees may designate an amount not less than 1 % but not more than 10 % of their annual compensation for the purchase of Company shares.

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

The aggregate intrinsic value of options exercised was $ 0 and $ 55,940 for the years ended December 31, 2020 and 2019, respectively.

The aggregate intrinsic value of options exercised was $ 0 for the years ended December 31, 2021 and 2020.

No options were granted during the years ended December 31, 2021 and 2020.

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

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

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

During the year ended December 31, 2021, the Compensation Committee granted employees RSUs under which the holders have the right to receive 38,500 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.

In accordance with ASC 505-50, the Company estimates the fair value of the unvested portion of the RSU award each reporting period using the closing price of the Company’s common stock.

At December 31, 2021, the unamortized value of the RSUs was $ 3,626,770 .

8 unchanged sentences

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.

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

During the year ended December 31, 2021, the Compensation Committee granted various employees PSUs under which the holders have the right to receive an aggregate 1,465,713 shares of common stock.

These awards were granted under the 2015 Performance Share Unit Plan.

The awards granted vest upon achievement of Company-wide revenue goals.

Compensation expense amortization for all PSU awards was $ 5,831,928 and $( 88,348 ) for the years ended December 31, 2021 and 2020, respectively.

40 unchanged sentences

General and administrative

Severance expense

Note 9 – Income Taxes

6 unchanged sentences

Deferred income taxes represent the tax effects of differences between the financial reporting and tax bases of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.

As of December 31, 2021 and 2020, deferred tax assets consisted principally of net operating loss and tax credit carryforwards, research and development costs and stock-based compensation, and such deferred tax assets were fully reserved.

The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

37 unchanged sentences

Stock-based compensation

Meals and entertainment

Executive compensation

True-up of federal deferred taxes

True-up of state deferred taxes

10 unchanged sentences

Dialog presently owns approximately 2.3 % of the Company’s outstanding common shares.

The Company recorded $ 0 and $ 7,100 in royalty revenue for the years ended December 31, 2020 and 2019, respectively, pursuant to the Strategic Alliance Agreement.

The Company recorded $ 0 in royalty revenue for the each of the years ended December 31, 2021 and 2020, pursuant to the Strategic Alliance Agreement.

Additionally, the Company recorded $ 0 and $ 130,000 in contract services revenue during the years ended December 31, 2021 and 2020, respectively.

The Company also recorded related expenses of $ 0 and $ 126,539 in cost of services revenue during the years ended December 31, 2021 and 2020, respectively.

Note 11 – Unaudited Quarterly Financial Information

Summarized quarterly information for the years ended December 31, 2020 and 2019 is listed below:

For the quarter ended

Operating expenses

Loss per share, basic and diluted

Operating expenses

Loss per share, basic and diluted

Additionally, the Company incurred $ 408,000 and $ 0 in chip development expense from Dialog during the years ended December 31, 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 11 – Customer Concentration

Three customers accounted for approximately 66 % of the Company’s revenue for the year ended December 31, 2020 and four customers accounted for approximately 52 % of the Company’s revenue for the year ended December 31, 2019.

Three customers accounted for approximately 42 % of the Company’s revenue for the year ended December 31, 2021 and three customers accounted for approximately 66 % of the Company’s revenue for the year ended December 31, 2020.

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

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

Note 13 – Subsequent Event

On February 8, 2021, Renesas Electronics Corporation announced the planned acquisition of Dialog Semiconductor Corporation.

The Company has a strategic agreement with Dialog (see Note 6 – Commitments and Contingencies, Strategic Alliance Agreement ).

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

Changes in and Disagreements with Accountants 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