Vuzix(VUZI) - 2023 Q2 - Quarterly Report

Part I – Financial Information This section provides Vuzix Corporation's unaudited consolidated financial statements and detailed notes for the periods ended June 30, 2023, and December 31, 2022 Item 1. Consolidated Financial Statements (Unaudited) This section presents Vuzix Corporation's unaudited consolidated financial statements and related notes for the periods ended June 30, 2023, and December 31, 2022 Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of June 30, 2023, and December 31, 2022 | Metric | June 30, 2023 | December 31, 2022 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Cash and Cash Equivalents | $48,582,005 | $72,563,943 | $(23,981,938) | | Total Current Assets | $68,321,314 | $91,241,241 | $(22,919,927) | | Total Assets | $110,562,604 | $132,312,550 | $(21,749,946) | | Total Current Liabilities | $6,825,090 | $15,277,358 | $(8,452,268) | | Total Liabilities | $7,023,800 | $15,582,512 | $(8,558,712) | | Total Stockholders' Equity | $103,538,804 | $116,730,038 | $(13,191,234) | Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in stockholders' equity for the three and six months ended June 30, 2023, and 2022 | Metric | January 1, 2023 | June 30, 2023 | Change | | :-------------------------------- | :-------------- | :------------ | :----- | | Total Stockholders' Equity | $116,730,038 | $103,538,804 | $(13,191,234) | | Net Loss (Six Months) | N/A | $(19,285,503) | N/A | | Stock-Based Compensation Expense (Six Months) | N/A | $6,550,479 | N/A | | Purchases of Treasury Stock (Six Months) | N/A | $(470,757) | N/A | Consolidated Statements of Operations This section presents the company's financial performance, including sales, gross profit, and net loss, for the three and six months ended June 30, 2023, and 2022 | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | % Change (YoY) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | % Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Total Sales | $4,690,835 | $3,007,758 | 56% | $8,882,196 | $5,510,810 | 61% | | Gross Profit | $972,386 | $265,409 | 266% | $1,848,392 | $741,077 | 149% | | Gross Profit % | 21% | 9% | 12 p.p. | 21% | 13% | 8 p.p. | | Loss From Operations | $(9,607,632) | $(10,000,981) | (4)% | $(20,454,837) | $(20,414,871) | 0% | | Net Loss | $(9,044,920) | $(10,021,668) | (10)% | $(19,285,503) | $(20,527,668) | (6)% | | Basic and Diluted Loss per Common Share | $(0.14) | $(0.16) | (12.5)% | $(0.31) | $(0.32) | (3.1)% | | Investment Income (6 Months) | N/A | N/A | N/A | $1,324,706 | $117,307 | 1029% | Consolidated Statements of Cash Flows This section details cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023, and 2022 | Cash Flow Activity (Six Months Ended June 30) | 2023 | 2022 | Change | | :------------------------------------------ | :-------------- | :-------------- | :----- | | Net Cash Flows Used in Operating Activities | $(12,085,707) | $(11,016,909) | $(1,068,798) | | Net Cash Flows Used in Investing Activities | $(11,440,020) | $(8,402,617) | $(3,037,403) | | Net Cash Flows Used in Financing Activities | $(456,211) | $(202,552) | $(253,659) | | Net Decrease in Cash and Cash Equivalents | $(23,981,938) | $(19,622,078) | $(4,359,860) | | Cash and Cash Equivalents - End of Period | $48,582,005 | $100,581,795 | $(51,999,790) | Notes to the Unaudited Consolidated Financial Statements This section provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies and specific financial items Note 1 – Basis of Presentation This note describes the basis of financial statement preparation, reclassifications, and significant customer concentration - Reclassified depreciation expense related to manufacturing operations from Operating Expenses to Cost of Sales for prior comparable periods, with no impact on Net Loss or Cash Flows[15][17] | Reclassification Impact (Three Months Ended June 30, 2022) | As Previously Presented | Re-classification | Revised | | :------------------------------------------------------- | :---------------------- | :---------------- | :------ | | Cost of Sales - Products Sold | $2,522,674 | $(70,784) | $2,451,890 | | Cost of Sales - Depreciation and Amortization | $0 | $231,163 | $231,163 | | Gross Profit | $425,788 | $160,379 | $265,409 | | Depreciation and Amortization (Operating Expenses) | $540,081 | $(160,379) | $379,702 | - One customer represented 75% of total product revenue for the three months ended June 30, 2023, and 45% for the same period in 2022, indicating significant customer concentration[18] - Two customers represented 40% and 35% of total product revenue for the six months ended June 30, 2023[19] - The company adopted ASU 2016-13 (Credit Losses) effective January 1, 2023, with no material impact on consolidated financial statements[21] Note 2 – Revenue Recognition and Contracts with Customers This note details the company's revenue recognition policies and disaggregates revenue by type and recognition method | Revenue Type | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Products Sales | $4,425,162 | $2,898,892 | $8,616,523 | $5,401,944 | | Engineering Services | $265,673 | $108,866 | $265,673 | $108,866 | | Total Revenue | $4,690,835 | $3,007,758 | $8,882,196 | $5,510,810 | | Revenue Recognition Method (6 Months Ended June 30) | 2023 | 2022 | | :---------------------------------------- | :--- | :--- | | Point-in-Time | 97% | 98% | | Over Time – Input Method | 3% | 2% | - As of June 30, 2023, the company had approximately $80,000 of remaining performance obligations for a waveguide development project, expected to be recognized in Q3 2023[28] Note 3 – Loss Per Share This note explains the calculation of basic and diluted loss per share and the impact of anti-dilutive securities - Basic and diluted loss per share are identical due to net losses, rendering potential common shares anti-dilutive[30] | Metric | June 30, 2023 | June 30, 2022 | | :------------------------------------------------ | :------------ | :------------ | | Potentially Exercisable/Issuable Common Stock Equivalents | 8,658,642 | 8,528,668 | Note 4 – Inventories, Net This note provides a breakdown of inventory components, including purchased parts, work-in-process, finished goods, and obsolescence reserves | Inventory Component | June 30, 2023 | December 31, 2022 | | :------------------------ | :-------------- | :---------------- | | Purchased Parts and Components | $9,780,977 | $10,399,527 | | Work-in-Process | $518,460 | $344,242 | | Finished Goods | $2,468,476 | $1,941,689 | | Less: Reserve for Obsolescence | $(1,897,747) | $(1,417,489) | | Inventories, Net | $10,870,166 | $11,267,969 | Note 5 – Fixed Assets This note details the company's fixed assets, including tooling, manufacturing equipment, and leaseholds, and recent capital expenditures | Fixed Asset Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Tooling and Manufacturing Equipment | $8,866,022 | $6,065,445 | | Leaseholds | $1,472,898 | $826,329 | | Fixed Assets, Net | $6,814,005 | $3,878,505 | - Invested $2,774,513 in tooling and manufacturing equipment and leasehold improvements during the six months ended June 30, 2023, primarily for a new waveguide expansion project[32] - Construction on the new facility for waveguide expansion began in late December 2022 and is expected to be completed by the end of September 2023[32] Note 6 – Technology Licenses, Net This note outlines the company's technology licenses, associated amortization, and future funding commitments | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Licenses, Net | $28,504,870 | $30,158,689 | | Accumulated Amortization | $(3,938,486) | $(2,284,667) | - Remaining funding commitment of $3,500,000 for Atomistic technology licenses, payable over the next six months[36] | Amortization Expense (Technology Licenses) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Amortization Expense | $826,984 | $244,201 | $1,653,868 | $300,901 | Note 7 - Other Assets This note details other assets, including private corporation investments and software development costs | Other Asset Component | June 30, 2023 | December 31, 2022 | | :---------------------------------------- | :-------------- | :---------------- | | Total Private Corporation Investments (at cost) | $650,000 | $450,000 | | Software Development Costs, Net | $486,111 | $500,000 | | Total Other Assets | $1,649,132 | $1,581,143 | - Invested an additional $100,000 in preferred stock of a private corporation developing smart glasses software and $100,000 in preferred stock and warrants of a UK-based public company developing new semiconductor materials for displays during the six months ended June 30, 2023[37][38] - Made a final investment of $125,000 in Android operating system upgrades for its CPU platform, placed into service during Q2 2023, with total additional upgrades of $500,000 being amortized over 36 months[39] Note 8 – Accrued Expenses This note provides a breakdown of accrued expenses, including wages, professional services, and warranty obligations | Accrued Expense Component | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Accrued Wages and Related Costs | $478,116 | $843,537 | | Accrued Professional Services | $152,400 | $263,800 | | Accrued Warranty Obligations | $198,700 | $159,927 | | Total Accrued Expenses | $1,029,177 | $1,670,539 | | Accrued Warranty Obligations | Amount | | :-------------------------------- | :----- | | At December 31, 2022 | $159,927 | | Reductions for Settling Warranties | $(219,723) | | Warranties Issued During Year | $258,496 | | At June 30, 2023 | $198,700 | Note 9 – Income Taxes This note discusses factors influencing the effective income tax rate, such as foreign taxes and valuation allowances - Effective income tax rate is influenced by foreign income taxes, permanent differences, and a valuation allowance against U.S. deferred income tax assets[43] Note 10 – Capital Stock This note details authorized, issued, and outstanding common and preferred stock, including future share commitments and repurchases | Capital Stock Metric | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :-------------- | :---------------- | | Authorized Common Stock Shares | 100,000,000 | 100,000,000 | | Issued Common Stock Shares | 63,898,889 | 63,783,779 | | Outstanding Common Stock Shares | 63,319,217 | 63,319,107 | | Authorized Preferred Stock Shares | 5,000,000 | 5,000,000 | - Committed to issuing 1,750,000 to 2,874,754 common shares to Atomistic stockholders over the next 6 to 18 months, contingent on deliverables and milestones, as part of the technology license agreement[46][47] - Repurchased 115,000 shares of common stock at an average cost of $4.06 during Q1 2023 under a share buyback program that expired on March 2, 2023[48] Note 11 – Stock-Based Compensation This note outlines stock option activity, unrecognized compensation expense, and stock-based compensation expense excluding LTIP | Stock Option Activity (6 Months Ended June 30, 2023) | Number of Options | Weighted Average Exercise Price | | :----------------------------------------- | :---------------- | :------------------------------ | | Outstanding at December 31, 2022 | 2,805,673 | $7.80 | | Granted | 124,000 | $4.80 | | Exercised | (18,240) | $1.33 | | Expired or Forfeited | (36,791) | $10.64 | | Outstanding at June 30, 2023 | 2,874,642 | $7.67 | - Unrecognized stock compensation expense of $6,863,003 as of June 30, 2023, to be recognized over 2.2 years[51] - Issued 96,525 shares of common stock to independent board members with an aggregate fair value of approximately $500,000, expensed over 12 months starting July 1, 2023[52] | Stock-Based Compensation Expense (Excluding LTIP) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Expense | $1,083,064 | $1,222,733 | $2,212,630 | $2,573,343 | Note 12 – Long-Term Incentive Plan This note details stock-based compensation expense for the LTIP, unrecognized expense, and potential future compensation based on milestones | LTIP Stock-Based Compensation Expense | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Non-Cash Expense | $1,749,687 | $2,658,294 | $4,287,631 | $5,627,432 | - Unrecognized stock-based compensation expense for LTIP options is $12,922,301 as of June 30, 2023, to be recognized over three to four years[55] - Potential for an additional $34.1 million in non-cash stock-based compensation expense if all currently improbable operational milestones under the LTIP become probable or are achieved[55] | Unvested LTIP Options (June 30, 2023) | Number of Options | Criteria Achievement Weighting | | :------------------------------------ | :---------------- | :----------------------------- | | Total Unvested Options | 5,409,000 | N/A | | Equity Market Capitalization Target | 2,704,500 | 50% | | Last Twelve Months Revenue Target | 1,893,150 | 35% | | Last Twelve Months EBITDA Target | 811,350 | 15% | Note 13 – Litigation This note confirms the absence of material legal proceedings or litigation against the company - No material legal proceedings or litigation are currently active or contemplated against the company[58] Note 14 – Right-of-Use Assets and Liabilities This note details future lease payments, operating lease costs, and key lease terms for right-of-use assets and liabilities | Future Lease Payments (as of June 30, 2023) | Amount | | :---------------------------------------- | :----- | | 2023 (6 months remaining) | $348,826 | | 2024 | $191,120 | | 2025 | $132,982 | | Total Future Lease Payments | $672,928 | | Total Lease Liability Balance | $628,131 | | Operating Lease Costs | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Costs | $207,352 | $163,277 | $410,691 | $325,642 | - Weighted average discount rate for operating leases was 7.1%, and the weighted average remaining lease term was 1.5 years as of June 30, 2023[60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results for the three and six months ended June 30, 2023, highlighting key trends, critical accounting policies, and future outlook. It details revenue growth, gross profit improvements, and changes in operating expenses, alongside liquidity and capital resources Critical Accounting Policies and Significant Developments and Estimates This section discusses the critical accounting policies and significant estimates used in preparing the financial statements - Financial statements rely on estimates and assumptions for revenue recognition, bad debts, inventories, warranty reserves, long-lived assets, financial instrument fair value, stock compensation, LTIP milestones, and income taxes[63] - No significant changes in accounting policies for the three months ended June 30, 2023[65] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements that could impact the company's financial condition - The company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition or results[66] Business Matters This section describes Vuzix's core business, product offerings, market dynamics, and intellectual property strategy - Vuzix designs, manufactures, markets, and sells wearable computing devices (Smart Glasses and AR glasses) for enterprise, industrial, commercial, security, first responder, medical, and defense markets[67][68] - Provides custom solutions and engineering services for waveguides and display systems, aiming to advance technology and foster long-term supply/OEM relationships[68] - Operates in a rapidly changing technological market, requiring continuous product performance improvement and cost reduction[69] - Believes its intellectual property portfolio provides a leadership position in micro-display projection engines, waveguides, mechanical packaging, ergonomics, and optical systems[70] Recent Accounting Pronouncements This section refers to Note 1 for details on recently adopted accounting pronouncements - Refer to Note 1 for details on recent accounting pronouncements[71] Results of Operations This section analyzes the company's operational performance, including revenue, gross profit, and expenses, for the reported periods Comparison of Three Months Ended June 30, 2023 and 2022 This section compares the company's financial performance for the three months ended June 30, 2023, and 2022, highlighting key changes | Metric (3 Months Ended June 30) | 2023 | 2022 | Dollar Change | % Change | | :------------------------------ | :----------- | :----------- | :------------ | :------- | | Total Sales | $4,690,835 | $3,007,758 | $1,683,077 | 56% | | Sales of Products | $4,425,162 | $2,898,892 | $1,526,270 | 53% | | Sales of Engineering Services | $265,673 | $108,866 | $156,807 | 144% | | Gross Profit | $972,386 | $265,409 | $706,977 | 266% | | Gross Profit % | 21% | 9% | N/A | 12 p.p. | | Loss From Operations | $(9,607,632) | $(10,000,981) | $393,349 | (4)% | | Net Loss | $(9,044,920) | $(10,021,668) | $976,748 | (10)% | - Smart glasses revenue was the primary driver of the 53% increase in product sales, with unit sales of the M400 product increasing significantly[74] - Unapplied manufacturing overhead costs increased by $25,975 (8%) but decreased as a percentage of total sales from 11% to 8%[77] - Depreciation and amortization expense in cost of sales increased by 12% due to new manufacturing equipment coming online[78] - R&D expenses decreased by 5% ($159,592) due to reductions in external development expenses and supplies, partially offset by increased salary and benefits[80] - Selling and marketing expenses increased by 36% ($659,327) due to higher salary and benefits (headcount increase), advertising, tradeshows, and travel, partially offset by lower website costs[82] - G&A expenses decreased by 15% ($779,627) primarily due to a decrease in salary and benefits related expenses, driven by lower non-cash stock-based compensation[84] - Depreciation and amortization expense (not in cost of sales) increased by 156% ($593,520) primarily due to the amortization of the Atomistic technology license, which began in May 2022[85] - Total other income increased by $583,399, shifting from an expense to income, primarily due to a 466% increase in investment income from higher interest rates and a decrease in foreign exchange losses[86] - No provision for income taxes in either period[87] Comparison of Six Months Ended June 30, 2023 and 2022 This section compares the company's financial performance for the six months ended June 30, 2023, and 2022, detailing significant trends | Metric (6 Months Ended June 30) | 2023 | 2022 | Dollar Change | % Change | | :------------------------------ | :----------- | :----------- | :------------ | :------- | | Total Sales | $8,882,196 | $5,510,810 | $3,371,386 | 61% | | Sales of Products | $8,616,523 | $5,401,944 | $3,214,579 | 60% | | Sales of Engineering Services | $265,673 | $108,866 | $156,807 | 144% | | Gross Profit | $1,848,392 | $741,077 | $1,107,315 | 149% | | Gross Profit % | 21% | 13% | N/A | 8 p.p. | | Loss from Operations | $(20,454,837) | $(20,414,871) | $(39,966) | 0% | | Net Loss | $(19,285,503) | $(20,527,668) | $1,242,165 | (6)% | - Product sales increased by 60%, primarily driven by significantly higher unit sales of the M400 smart glasses, partially offset by higher average sales discounts due to larger volume reseller sales[89] - Unapplied manufacturing overhead costs increased by 22% but decreased as a percentage of total sales from 13% to 10%, influenced by Q1 2023 supply chain issues and Q2 finished goods upgrades[92] - Depreciation and amortization expense in cost of sales increased by 51% due to new manufacturing equipment brought online in the first half of 2023[93] - R&D expenses decreased by 3% ($193,239) due to reductions in external development expenses, recruiting, and supplies, partially offset by increased salary and benefits[95] - Selling and marketing expenses increased by 29% ($1,134,997) due to higher salary and benefits (headcount increases), travel, and advertising/tradeshows, partially offset by lower website costs[97] - G&A expenses decreased by 10% ($1,061,082) primarily due to a decrease in salary and benefits related expenses (lower non-cash stock-based compensation) and reduced accounting/tax/legal expenses, partially offset by increased shareholder/IR, consulting, travel, and insurance costs[99] - Depreciation and amortization expense (not in cost of sales) increased by 203% ($1,298,541) primarily due to the amortization of the Atomistic technology license, which began in May 2022[100] - Total other income increased by $1,282,131, shifting from an expense to income, primarily due to a 1029% increase in investment income from higher interest rates and a decrease in foreign exchange losses, partially offset by increased income and other taxes[101] - No provision for income taxes in either period[102] Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations and fund operations, including cash position and capital expenditures | Metric | June 30, 2023 | December 31, 2022 | Change | | :-------------------------- | :-------------- | :---------------- | :----- | | Cash and Cash Equivalents | $48,582,005 | $72,563,943 | $(23,981,938) | | Current Assets | $68,321,314 | $91,241,241 | $(22,919,927) | | Current Liabilities | $6,825,090 | $15,277,358 | $(8,452,268) | | Working Capital | $61,496,224 | $75,963,883 | $(14,467,659) | | Cash Flow Activity (6 Months Ended June 30) | 2023 | 2022 | | :------------------------------------------ | :-------------- | :-------------- | | Net Cash Used in Operating Activities | $(12,085,707) | $(11,016,909) | | Net Cash Used in Investing Activities | $(11,440,020) | $(8,402,617) | | Net Cash Used in Financing Activities | $(456,211) | $(202,552) | - Investing activities included $8 million for technology license fees, $2.77 million for manufacturing equipment and leasehold improvements (waveguide expansion), and $0.34 million for patents/trademarks[106] - The company has an accumulated deficit of $263,507,583 as of June 30, 2023, and its operations have historically been financed primarily through equity securities sales[109][110] - No current or long-term debt obligations other than $3.5 million in current licensing fee commitments[108] Forward Looking Statements This section outlines the nature of forward-looking statements, associated risks, and the company's disclaimer regarding future updates - Forward-looking statements cover trends in operating expenses, competitive pressures, product market acceptance, technological advances, customer attraction/retention, inventory management, supply chain, brand, product defects, reliance on third-party suppliers, intellectual property, litigation, key personnel, accounting estimates, investments, foreign regulations, liquidity, and general economic conditions[112] - All forward-looking statements are subject to risks and uncertainties, including those described in "Risk Factors" in the Annual Report on Form 10-K, which may cause actual results to differ materially[114] - The company disclaims any obligation to update forward-looking statements in the future, except as required by applicable securities laws[115] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure primarily stems from interest rate fluctuations on its cash and short-term investments and foreign currency exchange rates from international business activities. It invests excess cash in high-quality short-term corporate debt and does not currently hedge foreign currency risk, estimating that market risks are unlikely to have a material adverse effect - Exposed to market risk from interest rate changes on short-term corporate debt investments and foreign currency exchange rates (Japan and Europe)[116] - Does not currently hedge foreign currency exchange rate risk[116] - Estimates that market risk associated with international operations is unlikely to have a material adverse effect[116] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2023, and concluded they were effective. There have been no material changes in internal control over financial reporting during the most recent fiscal quarter Evaluation of Disclosure Controls and Procedures This section details management's conclusion on the effectiveness of disclosure controls and procedures as of June 30, 2023 - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2023[117] Changes in Internal Control over Financial Reporting This section reports on any material changes in internal control over financial reporting during the most recent fiscal quarter - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[118][120] Part II – Other Information This section provides additional information not covered in Part I, including legal proceedings, risk factors, and equity security sales Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings or litigation, nor is it aware of any such proceedings contemplated against it - No material legal proceedings or litigation are currently active or contemplated against the company[122] Item 1A. Risk Factors There have been no material changes to the risk factors previously discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2022. These risks could materially affect the business, financial condition, and future results - No material changes to the risk factors from the Annual Report on Form 10-K for the year ended December 31, 2022[123] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended June 30, 2023, the company issued 96,525 shares of common stock to its independent board members as part of their annual retainer, relying on an exemption from registration for transactions not involving a public offering. There were no purchases of equity securities - Issued 96,525 common shares to independent board members as annual retainer during Q2 2023, exempt from registration[124] - No purchases of equity securities during the period[125] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the period - No defaults upon senior securities[125] Item 4. Mine Safety Disclosure This item is not applicable to the company - Not Applicable[125] Item 5. Other Information No other information to report under this item - None[125] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO (Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL documents for financial statements | Exhibit No. | Description | | :---------- | :---------- | | 31.1 | Certification of the Chief Executive Officer of the Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | | 31.2 | Certification of the Chief Financial Officer of the Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | | 32.1 | Certification of the Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | | 32.2 | Certification of the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | | 101 | Inline XBRL Document set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q. | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* | Signatures This section contains the official signatures of the company's principal executive and financial officers, certifying the report - Report signed by Paul Travers (President, CEO) and Grant Russell (EVP, CFO) on August 8, 2023[132]