What changed in this filing

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Item 1. Financial Statements

2023-05-17 compared with 2022-11-10 · 174 added, 176 removed, 358 unchanged (49% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

September 30, 2022

March 31, 2023

December 31, 2022

11 unchanged sentences

Accrued severance expense

Warrant liability

Operating lease liabilities, current portion

5 unchanged sentences

Stockholders’ equity:

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.

Preferred Stock, $ 0.00001 par value, 10,000,000 shares authorized at March 31, 2023 and December 31, 2022;

no shares issued or outstanding at March 31, 2023 and December 31, 2022.

Common Stock, $ 0.00001 par value, 200,000,000 shares authorized at March 31, 2023 and December 31, 2022;

91,032,030 and 78,944,954 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively.

Additional paid-in capital

7 unchanged sentences

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Costs and expenses:

3 unchanged sentences

General and administrative

Severance expense

Total costs and expenses

Loss from operations

Other income:

Other (expense) income:

Offering costs related to warrant liability

Interest income

Total other income

Total other (expense) income

Basic and diluted loss per common share

13 unchanged sentences

Proceeds from contributions to the ESPP

Issuance of shares in an at-the-market ("ATM") placement, net of $68,637 in issuance costs

Issuance of shares in a sale of common stock, net of $3,166,139 in issuance costs and fair value of a liability warrant

Balance at March 31, 2023 (unaudited)

( 369,327,806

Stock-based compensation - options

Stock-based compensation - RSUs

Stock-based compensation - ESPP

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance at June 30, 2022 (unaudited)

( 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'

1 unchanged sentence

( 336,400,039

Stock-based compensation - RSUs

Stock-based compensation - ESPP

Issuance of shares for RSUs

Proceeds from contributions to the ESPP

Balance at March 31, 2021 (unaudited)

( 303,498,509

Stock-based compensation - RSUs

Stock-based compensation - PSUs

Stock-based compensation - ESPP

Issuance of shares for RSUs

Issuance of shares for PSUs

Proceeds from contributions to the ESPP

Balance at June 30, 2021 (unaudited)

( 314,514,338

Stock-based compensation - options

Stock-based compensation - RSUs

Stock-based compensation - PSUs

Stock-based compensation - ESPP

1 unchanged sentence

Proceeds from contributions to the ESPP

Balance at September 30, 2021 (unaudited)

Balance at March 31, 2022 (unaudited)

( 343,552,757

2 unchanged sentences

CONDENSED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

4 unchanged sentences

Changes in operating lease right-of-use assets

Inventory net realizable adjustment

Bad debt expense

Offering costs allocated to warrants

Changes in operating assets and liabilities:

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Cash flows from financing activities:

Net proceeds from an ATM offering

Net proceeds from a sale of common stock and warrant issuance

Proceeds from contributions to employee stock purchase plan

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents – beginning

1 unchanged sentence

Supplemental disclosure of non-cash investing and financing activities:

Increase in operating lease right-of-use assets and operating lease liabilities

Common stock issued for RSUs

Common stock issued for PSUs

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

6 unchanged sentences

Note 2 – Liquidity and Management Plans

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 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.

During the three months ended March 31, 2023 and 2022, the Company recorded revenue of $ 96,676 and $ 215,961 , respectively.

During the three months ended March 31, 2023 and 2022, the Company recorded net losses of $ 6,652,507 and $ 7,152,718 , respectively.

Net cash used in operating activities was $ 5,364,355 and $ 6,356,971 for the three months ended March 31, 2023 and 2022, respectively.

The Company is currently meeting its liquidity requirements through the proceeds of securities offerings that raised net proceeds of $ 27,043,751 during 2021, $ 744,787 during 2022 and $ 5,351,888 during the first quarter of 2023, along with proceeds from contributions to the Company’s employee stock purchase plan (the “ESPP”) and payments received from customers.

As of March 31, 2023, the Company had cash and cash equivalents of $ 26,339,960 .

The Company expects that cash and cash equivalents as of March 31, 2023, together with anticipated revenues, will be sufficient to fund the Company’s operations through May 2024.

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

13 unchanged sentences

Note 3 – Summary of Significant Accounting Policies, continued

The Company’s significant estimates and assumptions include the valuation of stock-based compensation instruments, recognition of revenue, inventory valuation, the useful lives of long-lived assets, and the valuation allowance on deferred tax assets.

The Company’s significant estimates and assumptions include the valuation of stock-based compensation instruments, recognition of revenue, inventory valuation, fair value of warrant liabilities and the valuation allowance on deferred tax assets.

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

5 unchanged sentences

The Company maintains its cash deposits with major financial institutions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Note 3 – Summary of Significant Accounting Policies, continued

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

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

The Company’s derivative liabilities recognized at fair value on a recurring basis are a level 3 measurement (see Note 8 – Fair Value Measurement).

Revenue Recognition

6 unchanged sentences

Recognize revenue when or as the performance obligations are satisfied.

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

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

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

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.

During the three months ended March 31, 2023 and 2022, the Company recognized $ 96,676 and $ 215,961 , respectively, in 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 revenue associated with the sale of production-level systems at the point in time at which control over the product is transferred to the customer.

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

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

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

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 $ 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.

The Company incurred research and development costs of $ 3,078,524 and $ 3,527,146 for the three months ended March 31, 2023 and 2022, respectively.

Stock-Based Compensation

1 unchanged sentence

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

Note 3 – Summary of Significant Accounting Policies, continued

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

3 unchanged sentences

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

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

As of March 31, 2023, 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 nine months ended September 30, 2022 or 2021.

No interest or penalties were recorded during the three months ended March 31, 2023 and 2022.

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 6,346,398 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.

The computation of diluted loss per share excludes potentially dilutive securities of 12,890,622 and 5,682,499 , as outlined in the table below, for the three months ended March 31, 2023 and 2022, respectively, because their inclusion would be anti-dilutive.

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Warrants issued to private investors

Ended March 31,

Warrants issued to investors

Options to purchase common stock

Total potentially dilutive securities

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 table above includes 1,666,666 warrants expiring on March 1, 2024, which have an exercise price of $ 10.00 and 8,250,000 warrants expiring on March 28, 2029, which have an exercise price of $ 0.40 .

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

8 unchanged sentences

Management’s Evaluation of Subsequent Events

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.

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

Note 4 – Commitments and Contingencies

1 unchanged sentence

San Jose Lease

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 .

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

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

1 unchanged sentence

Costa Mesa Lease

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

Upon expiration of the original lease on September 30, 2019, the new monthly lease payment starting October 1, 2019 was $ 9,773 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 lease commencement date is October 1, 2021 and the expiry date is September 30, 2023.

On September 22, 2021, the Company signed a new lease for office space for its engineers based in Costa Mesa, California.

Per the lease, the lease commencement date is October 1, 2021 and the expiration 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 ROU lease asset of $ 104,563 and operating lease liability of $ 104,563 .

2 unchanged sentences

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:

The Company anticipates having future total lease payments of $ 1,858,460 during the period from the second quarter of 2023 to the third quarter of 2025.

As of March 31, 2023, the Company has total operating lease ROU assets of $ 1,778,512 , current portion of operating lease liabilities of $ 702,780 and long-term portion of operating lease liabilities of $ 1,090,639 .

The weighted average remaining lease term is 2.5 years as of March 31, 2023.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of March 31, 2023 is as follows:

Total future lease payments

2 unchanged sentences

Hosted Design Software Agreement

On June 25, 2015, the Company entered into a three-year agreement to license electronic design automation software in a hosted environment.

Pursuant to the agreement, under which services began in July 2015, the Company is required to remit quarterly payments.

In June 2021, the Company entered into its latest renewal of 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.

In June 2021, the Company entered into an electronic design automation software in a hosted environment license agreement with a term of three-years under which the Company is required to remit quarterly payments of approximately $ 233,000 through the second quarter of 2024.

Litigations, Claims, and Assessments

4 unchanged sentences

To be eligible to receive a bonus under the Bonus Plan, an executive officer must be continuously employed throughout the applicable performance period, and in good standing, and achieve the performance objectives selected by the Compensation Committee.

Note 4 – Commitments and Contingencies, continued

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

During the three months ended September 30, 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.

During the three months ended March 31, 2023 and 2022, the Company recorded $ 62,001 and $ 125,468 in expense, respectively, under the Bonus Plan.

As of December 31, 2022, $ 688,364 was accrued and unpaid under the Bonus Plan, of which $ 560,533 was paid during the three months ended March 31, 2023.

The remaining $ 109,452 from 2022 is expected to be paid during the second quarter of 2023.

As of March 31, 2023, the Company had accrued $ 171,453 under the Bonus Plan, including the $ 109,452 remaining accrual from 2022 and the additional $ 62,001 accrued during the first quarter of 2023, which is expected to be paid between the second quarter of 2023 and the first quarter of 2024.

Severance and Change in Control Agreement

2 unchanged sentences

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

5 unchanged sentences

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.

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

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 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 .

J ohn st o n received , s ub j ec t to con ti nue d emp l oymen t, ( a ) a s pec i a l one -ti m e si gn - o n bonu s in t h e amoun t o f $ 120 , 000 , payab le in two equa l i n st a ll men ts o f $ 60 , 00 0 eac h o n t h e first pay r o ll da te in 202 2 an d t h e first pay r o ll da te a ft e r Decembe r 6 , 2022 , ( b ) a g r an t o f 150 , 00 0 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 vested o n Decembe r 6 , 202 2 an d t h e r ema i n i n g t w o t h ir d s o f wh i c h 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 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 each year by the Board 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.

8 unchanged sentences

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.

As of March 31, 2023, the Board had not yet approved the performance criteria applicable to the up to additional 50,000 PSU shares that will vest on each of December 31, 2023 and 2024;

therefore, these PSUs have not been considered granted.

Note 4 – Commitments and Contingencies, continued

In connec ti o n w ith M r.

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

As of March 31, 2023, the Company had unpaid accrued severance expense of $ 249,610 pertaining to Mr.

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

3 unchanged sentences

Sahejpal’s severance and change of control agreement with the Company, Mr.

Sahejpal received payments and benefits including compensation equal to 12 months of Mr.

Sahejpal’s then-current salary of $ 261,250 , 12 months of maximum potential bonus of $ 261,250 , and 12 months of COBRA reimbursements.

Sahejpal received payments and benefits including compensation equal to twelve months of Mr.

Sahejpal’s then-current salary of $ 261,250 , twelve months of maximum potential bonus of $ 261,250 , and twelve months of COBRA reimbursements.

In addition, all RSUs held by Mr.

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

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.

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

Note 4 – Commitments and Contingencies, continued

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

Sahejpal’s agreement.

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.

5 unchanged sentences

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 (see Note 9 – Related Party Transactions for expenses incurred by the Company from Renesas Electronics Corporation).

Note 5 – Stockholders’ Equity

10 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 under the ATM Program.

Note 5 – Stockholders’ Equity, continued

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

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 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).

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

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

During the first quarter of 2023, the Company raised $ 2,674,697 (net of $ 68,637 in issuance costs) under the ATM Program.

As of March 31, 2023, the Company has $ 3,526,605 remaining on this shelf registration statement.

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 .

Pursuant to this registration statement, on March 28, 2023, the Company completed an underwritten offering pursuant to which it issued and sold an aggregate of (i) 8,250,000 shares of its common stock (the “Shares”) and (ii) warrants to purchase up to 8,250,000 shares of its common stock (the “2023 Warrants”), for net proceeds of $ 2,677,191 , after deducting underwriting discounts, commission and expenses payable by the Company.

The 2023 Warrants were immediately exercisable upon issuance and have a term of six years and an exercise price of $ 0.40 .

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

Common Stock Outstanding

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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 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.

As of March 31, 2023, 1,248,896 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 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.

As of March 31, 2023, 546,238 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 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.

Note 6 – Stock-Based Compensation, continued

As of March 31, 2023, 2,275,438 shares of common stock remain eligible to be issued through equity-based instruments under the 2015 Performance Share Unit Plan.

2017 Equity Inducement Plan

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

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.

As of March 31, 2023, 1,041,170 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.

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.

As of March 31, 2023, 201,619 shares of common stock remain eligible to be issued under the ESPP.

Employees contributed $ 65,134 through payroll withholdings to the ESPP as of March 31, 2023 for the current offering period which will end on June 30, 2023 with shares deemed delivered on that date.

Stock Option Activity

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 .

In February 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.

No stock options were granted during the three months ended March 31, 2023.

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

5 unchanged sentences

Expected life

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

Note 6 – Stock-Based Compensation, continued

The following is a summary of the Company’s stock option activity during the three months ended March 31, 2023:

Outstanding at January 1, 2023

Outstanding at September 30, 2022

Outstanding at March 31, 2023

Exercisable at January 1, 2023

Exercisable at September 30, 2022

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

Exercisable at March 31, 2023

As of March 31, 2023, the unamortized fair value of options was $ 212,594 .

The unamortized amount will be expensed over a weighted average period of 2.4 years.

Performance Share Units (“PSUs”)

PSUs are grants that vest upon the achievement of certain performance goals.

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

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.

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

As of 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 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 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 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.

On December 31, 2022, 135,575 PSUs were achieved, vested and deemed delivered on that date.

As of March 31, 2023, the performance criteria for an additional up to 100,000 PSUs had not been approved by the Board.

There was no PSU activity for the three months ended March 31, 2023 and 2022.

During the three months ended March 31, 2023, the Compensation Committee granted various employees RSUs covering 48,750 shares of common stock under the 2013 Equity Incentive Plan.

The awards vest over four years .

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 .

During the three months ended March 31, 2023, the Compensation Committee granted various non-employees RSUs covering 124,452 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 three months ended March 31, 2023, the Compensation Committee granted various employees RSUs covering 535,000 shares of common stock under the 2017 Equity Inducement Plan.

The awards vest over four years .

Note 6 – Stock-Based Compensation, continued

As of March 31, 2023, 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 $ 2,469,552 .

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 2.0 y ea r s .

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

A summary of the activity related to RSUs for the three months ended March 31, 2023 is presented below:

Outstanding at January 1, 2023

RSUs forfeited

Outstanding at September 30, 2022

Outstanding at March 31, 2023

Employee Stock Purchase Plan (“ESPP”)

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.

The current offering period under the ESPP started on January 1, 2023 and will conclude on June 30, 2023.

During the year ended December 31, 2022, there were two offering periods.

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The second offering period began on July 1, 2022 and concluded on December 31, 2022.

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:

The weighted-average grant-date fair value of the purchase option for each designated share purchased under the ESPP was approximately $ 0.27 and $ 0.40 for the three months ended March 31, 2023 and 2022, 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 $ 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 Company recognized compensation expense for the ESPP of $ 24,740 and $ 40,973 for the three months ended March 31, 2023 and 2022, respectively.

The Company estimated the fair value of ESPP purchase options granted during the three months ended March 31, 2023 and 2022 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, 2022

Nine Months Ended

September 30, 2021

$0.96 - $1.25

$1.80 - $2.78

Three Months Ended March 31,

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 nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 30,

The following tables summarize total stock-based compensation costs recognized for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development

1 unchanged sentence

General and administrative

Severance expense

Note 7 – Warrant Liability

2023 Warrants

In March 2023, the Company issued 8,250,000 warrants to purchase up to 8,250,000 shares of its common stock.

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

Each 2023 Warrant is exercisable for one share of the Company’s common stock at a price of $ 0.40 per share (“Exercise Price”), subject to adjustment in certain circumstances including in the event of stock dividends and splits, or a recapitalization, merger, consolidation, tender offer, reorganization, or other change in control of the Company.

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

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

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

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

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

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

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

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

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

Note 8 – Fair Value Measurements

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

Balance as of March 31, 2023

Cash and cash equivalents

Warrant liability

Balance as of December 31, 2022

Cash and cash equivalents

Warrant liability

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

2023 Warrants

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

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

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

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

At March 31, 2023

Exercise price

Term (in years)

Risk-free rate

Dividend yield

The change in the fair value of the 2023 Warrant liability was determined to be zero during the three months ended March 31, 2023 (see Note 7 – Warrant Liability).

Note 9 – 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 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.

As of March 31, 2023, none of the warrants remain outstanding.

As of March 31, 2023, Dialog owns approximately 1.9 % of the Company’s outstanding common shares.

The Company did no t record any revenue during the three months ended March 31, 2023 and 2022.

The Company incurred $ 124,055 and $ 0 in chip test development expense from Renesas Electronics Corporation, which acquired Dialog in August 2021 (“Renesas”), during the three months ended March 31, 2023 and 2022, respectively.

On September 20, 2021, the Company was notified by Dialog that it was terminating the Alliance Agreement between the Company and Dialog.

Note 10 – Customer Concentrations

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.

Two customers accounted for approximately 84 % of the Company’s revenue for the three months ended March 31, 2023, and two customers accounted for approximately 53 % of the Company’s revenue for the three months ended March 31, 2022.

Two customers accounted for approximately 80 % of the Company’s accounts receivable balance as of March 31, 2023.

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

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