UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact name of registrant as specified in its charter)
| ||
State or other jurisdiction of | (I.R.S. Employer |
| ||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol(s) |
| Name of each exchange on which registered: |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | |
|
|
|
|
|
|
Smaller reporting company | Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes
As of August 10, 2020, there were
Vuzix Corporation
INDEX
2
Part 1: FINANCIAL INFORMATION
Item 1: Consolidated Financial Statements
VUZIX CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) |
| |||||
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
ASSETS |
|
|
|
| ||
Current Assets |
|
|
|
| ||
Cash and Cash Equivalents | $ | | $ | | ||
Accounts Receivable, Net |
| |
| | ||
Accrued Project Revenue |
| |
| — | ||
Note Receivable | | | ||||
Inventories, Net |
| |
| | ||
Licenses | | — | ||||
Manufacturing Vendor Prepayments |
| |
| | ||
Prepaid Expenses and Other Assets |
| |
| | ||
Total Current Assets |
| |
| | ||
Long-Term Assets |
|
|
|
| ||
Fixed Assets, Net |
| |
| | ||
Operating Lease Right-of-Use Asset | | | ||||
Patents and Trademarks, Net |
| |
| | ||
Licenses, Net |
| |
| | ||
Intangible Asset, Net |
| |
| | ||
Other Assets, Net |
| |
| | ||
Total Assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
| ||
Current Liabilities |
|
|
|
| ||
Accounts Payable | $ | | $ | | ||
Unearned Revenue |
| |
| | ||
Accrued Expenses |
| |
| | ||
Taxes Payable |
| |
| | ||
Operating Lease Right-of-Use Liability | | | ||||
Current Portion of Debt | | — | ||||
Total Current Liabilities |
| |
| | ||
Long-Term Liabilities | ||||||
Operating Lease Right-of-Use Liability | | | ||||
Long-Term Portion of Debt | | — | ||||
Total Long-Term Liabilities | | | ||||
Total Liabilities |
| |
| | ||
Stockholders' Equity |
|
|
|
| ||
Preferred Stock - $ |
| |
| | ||
Common Stock - $ |
| |
| | ||
Additional Paid-in Capital |
| |
| | ||
Accumulated Deficit |
| ( |
| ( | ||
Total Stockholders' Equity |
| |
| | ||
Total Liabilities and Stockholders' Equity | $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
3
VUZIX CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Preferred Stock | Common Stock | Additional | Accumulated | ||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Total | ||||||
Balance - January 1, 2020 | | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
Stock-Based Compensation Expense |
| — |
| — |
| |
| |
| |
| — |
| | |||||
Proceeds from Common Stock Offerings |
| — |
| — |
| |
| |
| |
| — |
| | |||||
Direct Costs of Common Stock Offerings |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Net Loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance - June 30, 2020 |
| | $ | |
| | $ | | $ | | $ | ( | $ | |
Preferred Stock | Common Stock | Additional | Accumulated | ||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Total | ||||||
Balance - April 1, 2020 | | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
Stock-Based Compensation Expense |
| — |
| — |
| |
| |
| |
| — |
| | |||||
Proceeds from Common Stock Offering |
| — |
| — |
| |
| |
| |
| — |
| | |||||
Direct Costs of Common Stock Offering |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Net Loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance - June 30, 2020 |
| | $ | |
| | $ | | $ | | $ | ( | $ | |
Preferred Stock | Common Stock | Additional | Accumulated | ||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Total | ||||||
Balance - January 1, 2019 | | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
Stock-Based Compensation Expense |
| — |
| — |
| |
| |
| |
| — |
| | |||||
Net Loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance - June 30, 2019 |
| | $ | |
| | $ | | $ | | $ | ( | $ | |
Preferred Stock | Common Stock | Additional | Accumulated | ||||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-In Capital |
| Deficit |
| Total | ||||||
Balance - April 1, 2019 | | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
Exercise of Warrants |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||
Stock-Based Compensation Expense |
| — |
| — |
| |
| |
| |
| — |
| | |||||
Net Loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance - June 30, 2019 |
| | $ | |
| | $ | | $ | | $ | ( | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
VUZIX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
The Three Months Ended June 30, | The Six Months Ended June 30, | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
Sales: |
|
|
|
|
|
|
|
| ||||
Sales of Products | $ | | $ | | $ | | $ | | ||||
Sales of Engineering Services |
| |
| |
| |
| | ||||
Total Sales |
| |
| |
| |
| | ||||
Cost of Sales: |
|
|
|
|
|
|
|
| ||||
Cost of Sales - Products Sold |
| |
| |
| |
| | ||||
Cost of Sales - Engineering Services |
| |
| |
| |
| | ||||
Total Cost of Sales |
| |
| |
| |
| | ||||
Gross Profit (exclusive of depreciation shown separately below) |
| |
| |
| |
| | ||||
Operating Expenses: |
|
|
|
|
|
|
|
| ||||
Research and Development |
| |
| |
| |
| | ||||
Selling and Marketing |
| |
| |
| |
| | ||||
General and Administrative |
| |
| |
| |
| | ||||
Depreciation and Amortization |
| |
| |
| |
| | ||||
Impairment of Patents and Trademarks |
| — |
| — |
| |
| — | ||||
Total Operating Expenses |
| |
| |
| |
| | ||||
Loss from Operations |
| ( |
| ( |
| ( |
| ( | ||||
Other Income (Expense): |
|
|
|
|
|
|
|
| ||||
Investment Income |
| |
| |
| |
| | ||||
Other Taxes |
| ( |
| ( |
| ( |
| ( | ||||
Foreign Exchange Gain (Loss) |
| |
| ( |
| ( |
| ( | ||||
Total Other Income (Expense) |
| ( |
| |
| ( |
| | ||||
Loss Before Provision for Income Taxes |
| ( |
| ( |
| ( |
| ( | ||||
Provision for Income Taxes |
| — |
| — |
| — |
| — | ||||
Net Loss |
| ( |
| ( |
| ( |
| ( | ||||
Preferred Stock Dividends |
| ( |
| ( |
| ( |
| ( | ||||
Loss Attributable to Common Stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and Diluted Loss per Share | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted-average Shares Outstanding - Basic and Diluted |
| |
| |
| |
| |
The accompanying notes are an integral part of these consolidated financial statements.
5
VUZIX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, | ||||||
| 2020 |
| 2019 | |||
Cash Flows from Operating Activities |
|
|
|
| ||
Net Loss | $ | ( | $ | ( | ||
Non-Cash Adjustments |
|
|
|
| ||
Depreciation and Amortization |
| |
| | ||
Amortization of Software Development Costs in Cost of Sales - Products |
| |
| | ||
Stock-Based Compensation |
| |
| | ||
Impairment of Patents and Trademarks |
| |
| — | ||
(Increase) Decrease in Operating Assets |
|
|
|
| ||
Accounts Receivable |
| ( |
| ( | ||
Accrued Project Revenue |
| ( |
| ( | ||
Inventories |
| ( |
| ( | ||
Vendor Prepayments |
| ( |
| | ||
Prepaid Expenses and Other Assets |
| ( |
| | ||
Increase (Decrease) in Operating Liabilities |
|
|
|
| ||
Accounts Payable |
| ( |
| ( | ||
Accrued Expenses |
| ( |
| ( | ||
Customer Deposits |
| — |
| ( | ||
Unearned Revenue |
| ( |
| | ||
Income and Other Taxes Payable |
| |
| | ||
Net Cash Flows Used in Operating Activities |
| ( |
| ( | ||
Cash Flows from Investing Activities |
|
|
|
| ||
Purchase of Fixed Assets |
| ( |
| ( | ||
Investments in Patents and Trademarks |
| ( |
| ( | ||
Investments in Licenses and Other Intangible Assets |
| ( |
| ( | ||
Net Cash Used in Investing Activities |
| ( |
| ( | ||
Cash Flows from Financing Activities |
|
|
|
| ||
Net Proceeds from Sale of Equity |
| |
| — | ||
Proceeds from Term Note |
| |
| — | ||
Net Cash Flows from Financing Activities |
| |
| — | ||
Net Increase (Decrease) in Cash and Cash Equivalents |
| |
| ( | ||
Cash and Cash Equivalents - Beginning of Period |
| |
| | ||
Cash and Cash Equivalents - End of Period | $ | | $ | | ||
Supplemental Disclosures |
|
|
|
| ||
Unamortized Common Stock Expense included in Prepaid Expenses | $ | | $ | | ||
Non-Cash Investment in Licenses | $ | | $ | — | ||
Stock-Based Compensation Expense - Expensed less Previously Issued | $ | | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
6
VUZIX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation
The accompanying unaudited consolidated financial statements of Vuzix Corporation (“the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, the unaudited consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Certain re-classifications may have been made to prior periods to conform with current reporting. The results of the Company’s operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results of the Company’s operations for the full fiscal year or any other period.
The accompanying interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto of the Company as of December 31, 2019, as reported in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2020.
Going Concern
The accompanying unaudited consolidated financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. These unaudited consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should we be unable to continue as a going concern. The Company incurred net losses for the six months ended June 30, 2020 of $
The Company’s cash requirements are primarily for funding operating losses, research and development, working capital, and capital expenditures. Our cash requirements related to funding operating losses depend upon numerous factors, including new product development activities, our ability to commercialize our products, our products’ timely market acceptance, selling prices and gross margins, and other factors. Historically, the Company has met its cash needs primarily by the sale of equity securities.
On May 10, 2020, the Company entered into a securities purchase agreement with certain purchasers for the sale of an aggregate of
The Company’s management intends to take actions necessary to continue as a going concern, as discussed herein. The Company will need to grow its business significantly to become profitable and self-sustaining on a cash flow basis or it will be required to raise new equity and/or debt capital. Management’s plans concerning these matters and managing our liquidity include, among other things:
● | the expected growing success of our third-generation monocular device for enterprise, the M400 Smart Glasses, which entered production near the end of the third quarter of 2019, and to date customer interest and adoption of the M400 has been more rapid than earlier models; |
● | the introduction of the M4000 in the Fall of 2020 which will be the Company’s next generation see-through waveguide-based product specifically designed for the enterprise market; |
7
● | the continued sale of our existing M300XL finished goods and Blade component inventory, of which we have significant levels; |
● | increased efforts to further promote our engineering services programs, which result in overall higher gross margins since such programs enable the absorption of some of our operating costs by utilizing a significant portion of our internal engineering fixed salary costs; |
● | continued to pursue licensing and strategic opportunities around our waveguide technologies with potential OEMs, which would include the receipt of upfront licensing fees and on-going supply agreements; |
● | implementation of a Company-wide voluntary payroll reduction program where employees could take salary reductions between |
● | decreased tradeshow and external PR expenditures; |
● | right-sized operations and implemented greater control of operating costs across all areas of the Company, including head-count freezes or reductions; |
● | delayed or curtailed discretionary and non-essential capital expenditures not related to near-term new products; |
● | reduced the rate of new product introductions and leveraged existing platforms to reduce new product development and engineering costs; and |
● | further reduced the rate of research and development spending on new technologies, particularly the use of external contractors. |
Based upon our current amount of cash on hand, management’s historical ability to raise capital, and our ability to manage our cost structure and adjust operating plans if and as required, we have concluded that substantial doubt of our ability to continue as a going concern has been alleviated.
Customer Concentrations
For the three months ended June 30, 2020, no one customer represented more than
For the six months ended June 30, 2020, no one customer represented more than
As of June 30, 2020, three customers represented
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including
8
but not limited to accounts receivable. ASU 2016-13 will become effective for the Company on January 1, 2023 and early adoption is permitted. The Company does not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.
Note 2 – Revenue Recognition and Contracts with Customers
Disaggregated Revenue
The Company’s total revenue was comprised of four major product lines: Smart Glasses Sales, OEM Product Sales, Waveguide and Display Engine Sales, and Engineering Services. The following table summarizes the revenue recognized by major product line:
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
Revenues |
|
|
|
|
|
|
|
| ||||
Smart Glasses Sales | $ | | $ | | $ | | $ | | ||||
OEM Product Sales |
| — |
| |
| — |
| | ||||
Waveguide and Display Engine Sales |
| — |
| |
| — |
| | ||||
Engineering Services |
| |
| |
| |
| |||||
Total Revenue | $ | | $ | | $ | | $ | |
Significant Judgments
Under Topic 606 “Revenue from Contracts with Customers”, there are judgments used that could potentially impact both the timing of our satisfaction of performance obligations and our determination of transaction prices used in determining revenue recognized by major product line. Judgments made include considerations in determining our transaction prices and when our performance obligations are satisfied for our standard product sales that include an end-user 30-day right to return if not satisfied with our product and include general payment terms that are between Net 30 and 60 days. For our Engineering Services, performance obligations are recognized over time using the input method and the estimated costs to complete each project are considered significant judgments.
Performance Obligations
Revenues from our performance obligations are typically satisfied at a point in time for Smart Glasses, Waveguides and Display Engines, and our OEM Products, which are recognized when the customer obtains control and ownership, which is generally upon shipment. The Company also records revenue for performance obligations relating to our Engineering Services over time by using the input method measuring progress toward satisfying the performance obligations. Satisfaction of our performance obligations related to our Engineering Services is measured by the Company’s costs incurred as a percentage of total expected costs to project completion as the inputs of actual costs incurred by the Company are directly correlated with progress of completing the contract. As such, the Company believes that our methodologies for recognizing revenue over time for our Engineering Services correlate directly with the transfer of control of the underlying assets to our customers.
Our standard product sales include a
( ) month assurance-type product warranty. In the case of certain of our OEM products and waveguide sales, some include a standard product warranty of up to ( ) months to allow distribution channels to offer the end customer a full ( ) months of coverage. We offer extended warranties to customers, which extend the standard product warranty on product sales for an additional ( ) month period. All revenue related to extended product warranty sales is deferred and recognized over the extended warranty period. Our Engineering Services contracts vary from contract to contract but typically include payment terms of Net 30 days from date of billing, subject to an agreed upon customer acceptance period.9
The following table presents a summary of the Company’s net sales by revenue recognition method as a percentage of total net sales for the six months ended June 30, 2020:
| % of Total Net Sales |
| |
Point-in-Time |
| | % |
Over Time – Input Method |
| | % |
Total |
| | % |
Remaining Performance Obligations
As of June 30, 2020, the Company had less than $
As of June 30, 2020, the Company had $
Note 3 – Loss Per Share
Basic loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution from the assumed exercise of stock options and warrants, and the conversion of convertible preferred shares. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are anti-dilutive. Since the Company reported a net loss for the three and six months ended June 30, 2020 and 2019, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. As of June 30, 2020 and 2019, there were
Note 4 – Inventories, Net
Inventories are stated at the lower of cost and net realizable value and consisted of the following:
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
Purchased Parts and Components | $ | | $ | | ||
Work-in-Process |
| |
| | ||
Finished Goods |
| |
| | ||
Less: Reserve for Obsolescence |
| ( |
| ( | ||
Inventories, Net | $ | | $ | |
10
Note 5 – Licenses, Net
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
Licenses | $ | | $ | | ||
Less: Accumulated Amortization |
| ( |
| ( | ||
Additions |
| |
| — | ||
| | |||||
Less: Current Portion | ( | — | ||||
Licenses, Net | $ | | $ | |
In January 2020, the Company entered into a global non-exclusive master reseller agreement for certain smart glasses software under which it committed to sell a minimum number of software licenses in 2020. The amount capitalized, included in current assets on the Consolidated Balance Sheets, will be expensed to cost of goods sold during the period based upon actual software licenses sold, with any of the remaining prepaid licenses expensed at the end of the term of the master reseller agreement.
Note 6 – Debt
Long-term debt consisted of the following:
June 30, | December 31, |
| |||||
| 2020 |
| 2019 | ||||
Unsecured Term Note - | $ | | $ | — | |||
Less: Amount Due Within One Year |
| ( |
| — | |||
Amount Due After One Year | $ | | $ | — |
On April 21, 2020, the Company entered into a Paycheck Protection Program (“PPP”) Term Note (“PPP Note”) under the Paycheck Protection Program of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “US SBA”). The Company received total proceeds of $
Note 7 – Intangible Asset, Net
| June 30, |
| December 31, | |||
2020 | 2019 | |||||
Intangible Asset | $ | | $ | | ||
Less: Accumulated Amortization |
| ( |
| ( | ||
Intangible Asset, Net | $ | | $ | |
On October 4, 2018, the Company entered into amendment No. 1 to agreements (the “TDG Amendment”) with TDG Acquisition Company, LLC (“TDG”), aka Six15 Technologies, LLC. The TDG Amendment amends certain provisions of prior agreements between Vuzix and TDG, including an asset purchase agreement dated June 15, 2012, and an authorized reseller agreement dated June 15, 2012.
11
Pursuant to the TDG Amendment, the Company will be permitted to engage in sales of heads-up display components or subsystems (and any services to support such sale) for incorporation into a finished good or system for sale to military organizations, subject to certain conditions. The Company will also be permitted to sell its products to defense and security organizations that include business customers and governmental entity customers that primarily provide security and defense services, including police, fire fighters, EMTs, other first responders, and homeland and border security. The Company will owe TDG commissions with respect to all such sales until June 15, 2022, when the amendment and original non-compete agreements expire, after which the Company will be free to sell any product to any customer world-wide with no commission liability to TDG.
Total commissions expense under this agreement for the three months ended June 30, 2020 and 2019 was $
Total amortization expense for this intangible asset for the three months ended June 30, 2020 and 2019 was $
Note 8 – Accrued Expenses
Accrued expenses consisted of the following:
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
Accrued Wages and Related Costs | $ | | $ | | ||
Accrued Professional Services |
| |
| | ||
Accrued Warranty Obligations |
| |
| | ||
Other Accrued Expenses |
| |
| | ||
Total | $ | | $ | |
The Company has warranty obligations in connection with the sale of certain of its products. The warranty period for its products is generally
( ) months. The costs incurred to provide for these warranty obligations are estimated and recorded as an accrued liability at the time of sale. The Company estimates its future warranty costs based on product-based historical performance rates and related costs to repair.The changes in the Company’s accrued warranty obligations for the six months ended June 30, 2020 and the balance as of December 31, 2019 were as follows:
Accrued Warranty Obligation at December 31, 2019 | $ | | |
Reductions for Settling Warranties |
| ( | |
Warranties Issued During Period |
| | |
Accrued Warranty Obligations at June 30, 2020 | $ | |
Note 9 – Income Taxes
The Company’s effective income tax rate is a combination of federal, state and foreign tax rates and differs from the U.S. statutory rate due to taxes on foreign income, permanent differences including tax-exempt interest, and the resolution of tax uncertainties, offset by a valuation allowance against U.S. deferred income tax assets.
12
Note 10 – Capital Stock
Preferred stock
The Board of Directors is authorized to establish and designate different series of preferred stock and to fix and determine their voting powers and other special rights and qualifications. A total of
On January 2, 2015, the Company closed a sale of Series A Preferred Stock to Intel Corporation (the "Series A Purchaser"), pursuant to which we issued and sold an aggregate of
Each share of Series A Preferred Stock is entitled to receive dividends at a rate of
The Series A Purchaser has the right, but not the obligation, to participate in any proposed issuance by the Company of its securities, subject to certain exceptions and in such amount as is sufficient to maintain the Series A Purchaser’s ownership percentage in the Company, calculated immediately prior to such applicable financing, at a purchase price equal to the per share price of the Company’s securities in such applicable financing.
Common Stock
The Company’s authorized common stock consists of
Historically, the Company has met its cash needs primarily by the sale of equity securities. On May 10, 2020, the Company entered into a securities purchase agreement with certain purchasers for the sale of an aggregate of
On May 4, 2020, the Company implemented a Company-wide voluntary payroll reduction program for all employees, pursuant to which they could take salary reductions between of
13
Note 11 – Stock Warrants
A summary of the various changes in warrants during the six months ended June 30, 2020 is as follows:
Number of | ||
Warrants | ||
Warrants Outstanding at December 31, 2019 |
| |
Exercised During the Period |
| |
Issued During the Period |
| |
Expired During the Period |
| |
Warrants Outstanding at June 30, 2020 |
| |
Of the outstanding warrants as of June 30, 2020,
Note 12 – Stock-Based Compensation
A summary of stock option activity for the six months ended June 30, 2020 is as follows:
Weighted | |||||
Number of | Average | ||||
| Options |
| Exercise Price | ||
Outstanding at December 31, 2019 |
| | $ | | |
Granted |
| |
| | |
Exercised |
| |
| | |
Expired or Forfeited |
| ( |
| | |
Outstanding at June 30, 2020 |
| | $ | |
The weighted average remaining contractual term for all options as of June 30, 2020 and December 31, 2019 was
As of June 30, 2020, there were
As of June 30, 2020, there were
The weighted average fair value of option grants was calculated using the Black-Scholes-Merton option pricing method. At June 30, 2020, the Company had approximately $
On May 4, 2020, the Company implemented a Company-wide voluntary payroll reduction program for all employees, pursuant to which they could take salary reductions between of
14
For the three months ended June 30, 2020 and 2019, the Company recorded total stock-based compensation expense, including stock awards, of $