What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-16 · 159 added, 116 removed, 375 unchanged (42% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

June 30, 2022

September 30, 2022

December 31, 2021

18 unchanged sentences

Stockholders’ equity:

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

at June 30, 2022 and December 31, 2021;

no shares issued or

outstanding at June 30, 2022 and December 31, 2021.

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

at June 30, 2022 and December 31, 2021;

77,464,571 and

76,667,205 shares issued and outstanding at June 30, 2022 and

December 31, 2021, respectively.

Preferred Stock, $ 0.00001 par value, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021;

no shares issued or outstanding at September 30, 2022 and December 31, 2021.

Common Stock, $ 0.00001 par value, 200,000,000 shares authorized at September 30, 2022 and December 31, 2021;

77,722,402 and 76,667,205 shares issued and outstanding at September 30, 2022 and December 31, 2021, 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,

Costs and expenses:

33 unchanged sentences

( 350,570,506

Stock-based compensation - options

Stock-based compensation - RSUs

Stock-based compensation - performance

share units ("PSUs")

Stock-based compensation - ESPP

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance at September 30, 2022 (unaudited)

( 356,535,381

Stockholders'

8 unchanged sentences

Stock-based compensation - RSUs

Stock-based compensation - performance share units ("PSUs")

Stock-based compensation - PSUs

Stock-based compensation - ESPP

4 unchanged sentences

( 314,514,338

Stock-based compensation - options

Stock-based compensation - RSUs

Stock-based compensation - PSUs

Stock-based compensation - ESPP

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance at September 30, 2021 (unaudited)

( 326,978,864

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

For the Nine Months Ended

September 30,

Cash flows from operating activities:

9 unchanged sentences

Accounts payable

Accrued severance expense

Accrued expenses

Accrued severance expense

Operating lease liabilities

22 unchanged sentences

Note 2 – Liquidity and Management Plans

During the three and six months ended June 30, 2022, the Company recorded revenue of $ 232,971 and $ 448,932 , respectively.

During the three and six months ended June 30, 2021, the Company recorded revenue of $ 184,960 and $ 330,025 , respectively.

During the three and six months ended June 30, 2022, the Company recorded net losses of $ 7,017,749 and $ 14,170,467 , 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.

Net cash used in operating activities was $ 13,453,948 and $ 12,537,690 for the six months ended June 30, 2022 and 2021, respectively.

During the three and nine months ended September 30, 2022, the Company recorded revenue of $ 223,201 and $ 672,133 , respectively.

During the three and nine months ended September 30, 2021, the Company recorded revenue of $ 201,364 and $ 531,389 , respectively.

During the three and nine months ended September 30, 2022, the Company recorded net losses of $ 5,964,875 and $ 20,135,342 , 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.

Net cash used in operating activities was $ 18,838,453 and $ 22,498,803 for the nine months ended September 30, 2022 and 2021, 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 $ 27,043,751 during the fourth quarter of 2021, proceeds from contributions to the Company’s employee stock purchase plan (the “ESPP”), along with payments received from customers.

As of June 30, 2022, the Company had cash on hand of $ 35,669,685 .

The Company expects that cash on hand as of June 30, 2022, together with anticipated revenues, will be sufficient to fund the Company’s operations through August 2023.

As of September 30, 2022, the Company had cash and cash equivalents of $ 30,355,468 .

The Company expects that cash and cash equivalents as of September 30, 2022, together with anticipated revenues, will be sufficient to fund the Company’s operations through November 2023.

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

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The wireless charging system revenue consists of revenue from product development projects and production-level systems.

During the three and six months ended June 30, 2022, the Company recognized $ 232,971 and $ 448,932 , respectively, in revenue.

During the three and six months ended June 30, 2021, the Company recognized $ 184,960 and $ 330,025 , respectively, in revenue.

During the three and nine months ended September 30, 2022, the Company recognized $ 223,201 and $ 672,133 , respectively, in revenue.

During the three and nine months ended September 30, 2021, the Company recognized $ 201,364 and $ 531,389 , respectively, in revenue.

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

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

Note 3 – Summary of Significant Accounting Policies, continued

Research and Development

2 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 $ 3,209,910 and $ 6,103,694 for the three months ended June 30, 2022 and 2021, respectively.

The Company incurred research and development costs of $ 6,737,056 and $ 10,694,938 for the six months ended June 30, 2022 and 2021, respectively.

Note 3 – Summary of Significant Accounting Policies, continued

The Company incurred research and development costs of $ 2,885,830 and $ 4,737,159 for the three months ended September 30, 2022 and 2021, respectively.

The Company incurred research and development costs of $ 9,622,886 and $ 15,432,097 for the nine months ended September 30, 2022 and 2021, 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, 2022, no liability for unrecognized tax benefits was required to be reported.

As of September 30, 2022, no liability for unrecognized tax benefits was required to be reported.

The guidance from ASC 740, Income Taxes, 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 and six months ended June 30, 2022 or 2021.

No interest or penalties were recorded during the three and nine months ended September 30, 2022 or 2021.

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 6,212,707 and 6,323,445 for the three months ended June 30, 2022 and 2021, respectively, and 6,212,707 and 6,323,445 for the six months ended June 30, 2022 and 2021, respectively because their inclusion would be anti-dilutive.

The computation of diluted loss per share excludes potentially dilutive securities of 6,346,398 and 5,843,167 for the three months ended September 30, 2022 and 2021, respectively, and 6,346,398 and 5,843,167 for the nine months ended September 30, 2022 and 2021, 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

1 unchanged sentence

Total potentially dilutive securities

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

Note 3 – Summary of Significant Accounting Policies, continued

The table above includes 1,618,123 warrants that subsequently expired on October 6, 2022, which had an exercise price of $ 23.00 and 1,666,666 warrants expiring on March 1, 2024, which have an exercise price of $ 10.00 .

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

1 unchanged sentence

Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities.

Note 3 – Summary of Significant Accounting Policies, continued

ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.

5 unchanged sentences

Management’s Evaluation of Subsequent Events

The Company evaluates events that have occurred after the balance sheet date of June 30, 2022, 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, 2022, through the date which the financial statements are available to be issued.

Note 4 – Commitments and Contingencies

2 unchanged sentences

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

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

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

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

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

Costa Mesa Lease

3 unchanged sentences

Per the lease, the lease commencement date is October 1, 2021 and the expiry date is September 30, 2023.

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 Company did not have control of the new office space until October 2021, at which time the Company recorded a new ROU lease asset of $ 104,563 and operating lease liability of $ 104,563 .

The new Costa Mesa lease has 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 .

Note 4 – Commitments and Contingencies, continued

Operating Lease Commitments

The Company follows ASC 842, Leases, (“Topic 842”) and recognizes the required right-of-use assets and operating lease liabilities on its balance sheet.

The Company anticipates having future total lease payments of $ 2,446,936 during the period from the third quarter of 2022 to the third quarter of 2025.

As of June 30, 2022, the Company has total operating lease right-of-use assets of $ 2,318,717 , current portion of operating lease liabilities of $ 721,500 and long-term portion of operating lease liabilities of $ 1,615,527 .

The weighted average remaining lease term is 3.2 years as of June 30, 2022.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of June 30, 2022 is as follows:

The Company follows ASC 842, Leases, (“Topic 842”) and recognizes the required ROU assets and operating lease liabilities on its balance sheet.

The Company anticipates having future total lease payments of $ 2,239,006 during the period from the fourth quarter of 2022 to the third quarter of 2025.

As of September 30, 2022, the Company has total operating lease ROU assets of $ 2,139,949 , current portion of operating lease liabilities of $ 709,014 and long-term portion of operating lease liabilities of $ 1,436,339 .

The weighted average remaining lease term is 3.0 years as of September 30, 2022.

Note 4 – Commitments and Contingencies, continued

A reconciliation of undiscounted cash flows to lease liabilities recognized as of September 30, 2022 is as follows:

Total future lease payments

12 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, 2022, the Company accrued $ 275,990 in expense under the Bonus Plan, which will be paid during the third quarter of 2022.

During the three months ended June 30, 2021, the Company accrued $ 391,578 in expense under the Bonus Plan, which was paid during the third quarter of 2021.

During the six months ended June 30, 2022 and 2021, the Company accrued $ 501,792 and $ 783,156 in expense under the Bonus Plan, respectively.

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

Note 4 – Commitments and Contingencies, continued

During the three months ended September 30, 2022, the Company accrued $ 465,241 in expense under the Bonus Plan, which will be paid during the fourth quarter of 2022 and the first quarter of 2023.

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

During the nine months ended September 30, 2022 and 2021, the Company recognized $ 967,033 and $ 1,087,533 in expense under the Bonus Plan, respectively.

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

Severance and Change in Control Agreement

1 unchanged sentence

Under the Severance Agreement, if an Executive is terminated in a qualifying change in control termination, the Company agrees to pay the Executive six to 12 months of that Executive’s monthly base salary.

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.

If an Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) the Company will pay the full amount of the 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.

Note 4 – Commitments and Contingencies, continued

Executive Employee Agreement – Cesar Johnston

7 unchanged sentences

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 RSUs 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 PSUs to acquire shares of the Company’s common stock, which 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 PSUs per calendar year for 2022, 2023 and 2024, respectively, based on outperformance of agreed upon goals per calendar year, as determined by the Compensation Committee with approval of the Board.

As of June 30, 2022, the PSUs had no t yet been granted.

On July 20, 2022, the Compensation Committee approved by unanimous written consent, the PSU grants to Mr.

Johnston pursuant to the terms of Mr.

Johnston’s offer letter and subject to the outperformance of certain performance metrics as determined by the Compensation Committee.

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 RSUs 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 shall 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 shall 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 .

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

Johnston is eligible for (a) an additional equity award in the amount of 287,000 PSUs to acquire shares of the Company’s common stock, to vest at various amounts to be agreed upon by the Board 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 PSUs per calendar year for each of 2022, 2023 and 2024, based on outperformance of agreed upon goals per calendar year, as determined by the Compensation Committee with approval of the Board.

On July 20, 2022, the Board approved, by unanimous written consent, the grant to Mr.

Johnston of up to 287,000 PSUs pursuant to the terms of Mr.

Johnston’s offer letter.

The 287,000 PSUs that have been approved shall vest as follows:

(a) up to 187,000 PSU shares shall vest on December 31, 2022, subject to Mr.

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

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

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

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

As of September 30, 2022, only 187,000 PSUs have approved performance criteria.

In connec ti o n w ith M r.

6 unchanged sentences

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.

Note 4 – Commitments and Contingencies, continued

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

4 unchanged sentences

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

Note 4 – Commitments and Contingencies, continued

Executive Transition Agreement – Stephen Rizzone

17 unchanged sentences

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

As of June 30, 2022, the Company had unpaid accrued severance expense of $ 732,424 pertaining to Mr.

As of September 30, 2022, the Company had unpaid accrued severance expense of $ 572,016 pertaining to Mr.

Rizzone’s Separation Agreement which is expected to be paid through August 31, 2023.

7 unchanged sentences

Sahejpal that were due to vest in the 12 months after his departure, totaling RSUs covering 85,943 shares, were accelerated.

The Company recorded $ 633,444 in total severance expense pertaining to Mr.

Sahejpal’s departure for the three and six months ended June 30, 2022.

As of June 30, 2022, the Company had unpaid accrued severance expense of $ 12,396 pertaining to Mr.

The Company recorded $ 0 and $ 633,444 in total severance expense pertaining to Mr.

Sahejpal’s departure for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, the Company had unpaid accrued severance expense of $ 8,018 pertaining to Mr.

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

Note 4 – Commitments and Contingencies, continued

Strategic Alliance Agreement

4 unchanged sentences

Each party will retain all of its intellectual property.

Note 4 – Commitments and Contingencies, continued

The Alliance Agreement has an initial term of seven years , with automatic renewal annually thereafter unless terminated by either party upon 180 days’ prior written notice.

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

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

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 $ 75,000,000 .

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, pursuant to this shelf registration statement.

This shelf registration statement has expired and no additional shares will be sold thereunder.

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:

1 unchanged sentence

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

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

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

(the “ATM Program”).

3 unchanged sentences

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 Program.

As of March 31, 2022, the Company has $ 7,088,127 remaining on this shelf registration statement.

As of September 30, 2022, the Company has $ 7,088,127 remaining on this shelf registration statement.

During the period from October 1, 2022 through November 7, 2022, the Company made additional sales under the ATM Program (see Note 9 – Subsequent Events).

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.

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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, 2022, 609,384 shares of common stock remain eligible to be issued through equity-based instruments under the 2013 Equity Incentive Plan.

As of September 30, 2022, 1,180,012 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, 2022, 738,326 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, 2022, 634,867 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, 2022, 2,411,013 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

As of September 30, 2022, 2,124,013 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

2017 Equity Inducement Plan

On December 28, 2017, the Board approved the 2017 Equity Inducement Plan.

Under the plan, the Board reserved 600,000 shares for the grant of RSUs.

Under the 2017 Equity Inducement Plan, the Board reserved 600,000 shares for the grant of RSUs.

These grants will be administered by the Board or a committee of the Board.

2 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, 2022, 140,861 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

On July 20, 2022, the Board increased the number of shares of common stock reserved and available for issuance under the plan by 2,000,000 shares.

As of September 30, 2022, 1,569,170 shares of common stock remain available to be issued through equity-based instruments under the 2017 Equity Inducement Plan.

On July 20, 2022, the Board increased the number of shares of common stock reserved and available for issuance under the 2017 Equity Inducement Plan by 2,000,000 shares.

Employee Stock Purchase Plan

In April 2015, the Company’s Board approved the ESPP, under which 600,000 shares of common stock have been reserved for purchase by the Company’s employees, subject to the approval by the stockholders.

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

4 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, 2022, 353,751 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 164,728 through payroll withholdings to the ESPP for the offering period ended June 30, 2022 and shares were be deemed delivered on that date.

Note 6 – Stock-Based Compensation, continued

As of September 30, 2022, 353,751 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 84,977 through payroll withholdings to the ESPP as of September 30, 2022 for the current offering period which will end on December 31, 2022 with shares deemed delivered on that date.

Stock Option Activity

During the six months ended June 30, 2022, the Board granted our Chief Executive Officer 300,000 stock options under the 2013 Equity Incentive Plan at an exercise price of $ 1.27 per share with half of the options vesting on the second anniversary of the vesting start date and a quarter of the options vesting on each of the two following anniversaries .

The Company estimated the fair value of stock options granted during the six months ended June 30, 2022 using the Black-Scholes option pricing model.

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

Six Months Ended

During the nine months ended September 30, 2022, the Board granted our Chief Executive Officer 300,000 stock options under the 2013 Equity Incentive Plan at an exercise price of $ 1.27 per share with half of the options vesting on the second anniversary of the vesting start date and a quarter of the options vesting on each of the two following anniversaries .

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

No stock options were granted during the first quarter or third quarter of 2022.

The fair values of stock options granted during the second quarter of 2022 were estimated using the following assumptions:

Three Months Ended

June 30, 2022

3 unchanged sentences

Expected life

The following is a summary of the Company’s stock option activity during the six months ended June 30, 2022:

The following is a summary of the Company’s stock option activity during the nine months ended September 30, 2022:

Outstanding at January 1, 2022

Outstanding at June 30, 2022

Outstanding at September 30, 2022

Exercisable at January 1, 2022

Exercisable at June 30, 2022

As of June 30, 2022, the unamortized fair value of options was $ 276,817 .

Exercisable at September 30, 2022

As of September 30, 2022, the unamortized fair value of options was $ 255,253 .

The unamortized amount will be expensed over a weighted average period of 2.8 years.

Performance Share Units (“PSUs”)

On July 20, 2022, the Board granted the Company’s Chief Executive Officer, Cesar Johnston, up to 287,000 PSUs under the Company’s 2015 Performance Share Unit Plan pursuant to the terms of Mr.

Johnston’s offer letter with the Company (See Note 4 – Commitments and Contingencies).

The up to 287,000 PSUs that have been approved shall vest as follows:

(a) up to 187,000 PSU shares shall vest on December 31, 2022, subject to Mr.

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

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

As of September 30, 2022, only 187,000 PSUs have approved performance criteria.

Note 6 – Stock-Based Compensation, continued

As of September 30, 2022, the unamortized fair value of the PSUs was $ 84,670 .

The unamortized amount will be expensed over a weighted average period of 0.25 years.

A summary of the activity related to PSUs for the nine months ended September 30, 2022 is presented below:

Average Grant

Date Fair Value

Outstanding at January 1, 2022

PSUs forfeited

Outstanding at September 30, 2022

Restricted Stock Units (“RSUs”)

During the six months ended June 30, 2022, the Board granted various employees RSUs covering 1,018,450 shares of common stock under the 2013 Equity Incentive Plan.

During the nine months ended September 30, 2022, the Board granted various employees RSUs covering 1,038,700 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, 2022, the Compensation Committee and the Board granted various non-employees RSUs covering 179,096 shares of common stock under the 2014 Non-employee Equity Compensation Plan.

During the nine months ended September 30, 2022, the Compensation Committee and the Board granted various non-employees RSUs covering 290,055 shares of common stock under the 2014 Non-Employee Equity Compensation Plan.

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

During the six months ended June 30, 2022, the Board granted various employees RSUs covering 20,000 shares of common stock under the 2017 Equity Inducement Plan.

During the nine months ended September 30, 2022, the Board granted various employees RSUs covering 601,000 shares of common stock under the 2017 Equity Inducement Plan.

The awards vest over four years .

Note 6 – Stock-Based Compensation, continued

As of June 30, 2022, t h e un am or ti ze d fair v a l u e o f t h e R SUs w a s $ 2,927,707 .

As of September 30, 2022, t h e un am or ti ze d fair v a l u e o f t h e R SUs w a s $ 3,212,555 .

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 1.9 y ea r s .

A summary of the activity related to RSUs for the six months ended June 30, 2022 is presented below:

A summary of the activity related to RSUs for the nine months ended September 30, 2022 is presented below:

Outstanding at January 1, 2022

RSUs forfeited

Outstanding at June 30, 2022

Outstanding at September 30, 2022

Employee Stock Purchase Plan (“ESPP”)

The most recent offering period under the ESPP started on January 1, 2022 and concluded on June 30, 2022.

The current offering period under the ESPP started on July 1, 2022 and will conclude on December 31, 2022.

The recently completed offering period under the ESPP started on January 1, 2022 and concluded on June 30, 2022.

During the year ended December 31, 2021, there were two offering periods.

1 unchanged sentence

The second offering period began on July 1, 2021 and concluded on December 31, 2021.

The weighted-average grant-date fair value of the purchase option for each designated share purchased under this plan was approximately $ 0.40 and $ 0.75 for the six months ended June 30, 2022 and 2021, respectively, which represents the fair value of the option, consisting of three main components:

The weighted-average grant-date fair value of the purchase option for each designated share purchased under the ESPP was approximately $ 0.36 and $ 1.05 for the nine months ended September 30, 2022 and 2021, 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 ESPP of $ 41,428 and $ 60,651 for the three months ended June 30, 2022 and 2021, respectively, and the Company recognized compensation expense for the ESPP of $ 82,401 and $ 117,967 for the six months ended June 30, 2022 and 2021, respectively.

The Company estimated the fair value of ESPP purchase options granted during the six months ended June 30, 2022 and 2021 using the Black-Scholes option pricing model.

The Company recognized compensation expense for the ESPP of $ 22,084 and $ 76,814 for the three months ended September 30, 2022 and 2021, respectively, and the Company recognized compensation expense for the ESPP of $ 104,485 and $ 194,781 for the nine months ended September 30, 2022 and 2021, respectively.

Note 6 – Stock-Based Compensation, continued

The Company estimated the fair value of ESPP purchase options granted during the nine months ended September 30, 2022 and 2021 using the Black-Scholes option pricing model.

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

Six Months Ended

June 30, 2022

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2022

Nine Months Ended

September 30, 2021

$0.96 - $1.25

$1.80 - $2.78

Dividend yield

1 unchanged sentence

Risk-free interest rate

0.19% - 2.52%

0.05% - 0.09%

Expected life

Stock-Based Compensation Expense

The following tables summarize total stock-based compensation costs recognized for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

The following tables summarize total stock-based compensation costs recognized for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 30,

Stock options

Note 6 – Stock-Based Compensation, continued

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

5 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 March 31, 2022, none of the warrants remain outstanding.

As of June 30, 2022, Dialog owns approximately 2.2 % of the Company’s outstanding common shares.

The Company did not record any revenue during the three or six months ended June 30, 2022 and 2021.

The Company incurred $ 0 and $ 183,000 from Dialog in chip development expense during the three months ended June 30, 2022 and 2021, respectively, and the Company incurred $ 0 and $ 183,000 from Dialog in chip development expense during the six months ended June 30, 2022 and 2021, respectively.

As of September 30, 2022, none of the warrants remain outstanding.

As of September 30, 2022, Dialog owns approximately 2.2 % of the Company’s outstanding common shares.

The Company did not record any revenue during the three or nine months ended September 30, 2022 and 2021.

The Company incurred $ 0 and $ 225,000 from Dialog in chip development expense during the three months ended September 30, 2022 and 2021, respectively, and the Company incurred $ 0 and $ 408,000 from Dialog in chip development expense during the nine months ended September 30, 2022 and 2021, respectively.

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.

Note 8 – Customer Concentrations

Four customers accounted for approximately 88 % of the Company’s revenue for the three months ended June 30, 2022, and three customers accounted for approximately 64 % of the Company’s revenue for the three months ended June 30, 2021.

Four customers accounted for approximately 69 % of the Company’s revenue for the six months ended June 30, 2022, and four customers accounted for approximately 72 % of the Company’s revenue for the six months ended June 30, 2021.

Four customers accounted for approximately 85 % of the accounts receivable balance as of June 30, 2022.

Two customers accounted for approximately 87 % of the Company’s revenue for the three months ended September 30, 2022, and two customers accounted for approximately 61 % of the Company’s revenue for the three months ended September 30, 2021.

One customer accounted for approximately 46 % of the Company’s revenue for the nine months ended September 30, 2022, and four customers accounted for approximately 62 % of the Company’s revenue for the nine months ended September 30, 2021.

Four customers accounted for approximately 99 % of the accounts receivable balance as of September 30, 2022.

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

Note 9 – Subsequent Events

During the period from October 1, 2022 through November 7, 2022, the Company raised net proceeds of $ 453,180 (net of $ 11,632 in issuance costs) under its ATM Program.

As of November 7, 2022, the Company has $ 6,623,315 remaining on the ATM Program.

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