RESONANT: Management’s Discussion and Analysis of Financial Position and Results of Operations (Form 10-Q)


This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe”, “may”, “will” , “Potentially”, “estimate”, “continue”, “anticipate”, “intend to”, “could”, “could”, “plan”, “plan”, “” ” are intended to identify forward-looking statements.

These forward-looking statements speak only as of the date of this Form 10-Q and are subject to uncertainties, assumptions and business and economic risks. As such, our actual results could differ materially from those stated in forward-looking statements due to the factors referenced in the subsection “Risk Factors” set forth in Part II, Article 1A of this report and Part I, Article 1A of our annual report, and similar discussions in our other reports filed with the Security and Trade Commission. You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance or the events and circumstances described in the forward-looking statements will be achieved or will occur. We assume no obligation to publicly update any forward-looking statements for any reason after the date of this Form 10-Q to conform such statements to actual results or to changes in our expectations, except as required by law. . The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, with the understanding that our future results, levels of activity, performance, events and circumstances actuals may be noticeably different from what we expect. Overview

We are an advanced stage development company developing technology for the RF front end market. Our goal is to continue to create innovative technology, engage new customers, increase the number of license agreements for filter designs, and build the necessary infrastructure to support expected growth.

We plan to continue to develop the intellectual property associated with high frequency / wide bandwidth filters (XBAR® based filters), expand our intellectual property and trade secrets libraries, and further develop our EDA platform. multi-physics WaveX ™. While we remain a filter design licensing company, we are also investigating the possibility of licensing some or all of our WaveX ™ software design suite and certain patents to potential customers in the RFFE industry. During the third quarter of 2019, we entered into an investment and commercial agreement with Murata Manufacturing Co., Ltd., the first collaborative arrangement to leverage our XBAR® intellectual property. In all license agreements with our customers, we intend to retain ownership of our technology, software, designs and related improvements. Our goal is to establish and operate alliances with new and existing customers, who will help develop the market for our designs by integrating them with their own technologies and proprietary products, or by using our software products for their own designs, thus combining their own strengths with ours to provide a wide range of solutions. We continue to expand our foundry program, which allows millless companies to enter the filter industry quickly and efficiently. It is through this foundry program that we plan to engage directly with OEMs and Independent Design Houses (IDHs) to provide a significant cost and time-to-market advantage.

Our costs include salaries and employee benefits, compensation paid to consultants, investment costs for research and other equipment, costs associated with development activities, including travel and administration, fees legal, sales and marketing costs, general and administrative costs and other costs associated with an advanced, publicly traded technology company. We continue to add employees as needed to support the development of our WaveX â„¢ platform, application and system testing, research and development, as well as sales, marketing and marketing functions. administration, to support our efforts.

  The amounts that we actually spend for any specific purpose may vary
significantly and will depend on a number of factors including, but not limited
to, our expected cash resources, the pace of progress of our commercialization
and development efforts, actual needs with respect to product testing, research
and development, market conditions, and changes in or revisions to our marketing
strategies. In addition, we may invest in complementary products, technologies
or businesses.
Recent Developments
COVID-19-- The ongoing COVID-19 pandemic has negatively impacted the United
States, Asia and Europe, the major markets in which we operate. Although we have
seen improvements in the United States, the major markets in which we operate
continue to experience COVID-19 cases and recurring shutdowns. The pandemic's
ultimate impact on our operations and financial performance depends in part on
many factors not within our control and that vary by region, including, without
limitation: restrictive governmental and business actions that continue to be
taken in response (including travel restrictions and other workforce
limitations); economic stimulus, funding and relief programs and other
governmental economic responses; the effectiveness of governmental actions;
economic uncertainty in key global markets; levels of economic contraction or
growth; the impact of the pandemic on health and safety; the emergence of new
strains of the virus; the impact of vaccine efforts; the

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pace of recovery if and when the pandemic ultimately subsides; and how
significantly the number of cases increases as economies reopen and restrictive
governmental and business actions are relaxed.
Restrictions on travel and the imposition of stay-at-home or work remote
conditions have impacted our operations and those of our clients. While we have
not experienced major disruptions, clients have requested engagement deferrals
and our employees' ability to deliver our products and services has been
impacted. We continue to actively communicate with and listen to our customers
to best ensure that we are responding to their needs in the current environment
with innovative solutions that will not only be beneficial now but also over the
long-term. However, our ability to interact with customers has been impacted by
the current environment. For example, we believe that our inability to meet
in-person with current or prospective customers, as well as the cancellation or
postponement of Company-sponsored events or third-party events at which our
products are featured, may have a negative impact on our business.
  If restrictions continue for an extended period of time, we may, among other
issues, experience delays in product development, a decreased ability to support
our customers, further disruptions in sales and marketing activities and an
overall lack of productivity. Similarly, significant outbreaks, continued travel
restrictions, stay-at-home or work remote conditions, or other restrictions may
impact our customers' ability to manufacture or deliver raw materials or provide
key components or services, which could result in delays in the demand from our
customers to produce designs. The pandemic may also impact the expansion of
current and/or the roll out of new services which could impact our customers'
demand for their products, which could reduce their demand for our products or
services. While we don't know and cannot quantify specific impacts, we expect we
may be negatively affected if we encounter delays in our product development
efforts, reductions in demand due to disruptions in the operations of our
customers or their end customers, disruptions in local and global economies,
volatility in the global financial markets, overall reductions in demand, or
other COVID-19 ramifications.
Results of Operations
Comparison of the Three and Six Months Ended June 30, 2021 and 2020
   Revenues. Revenues consist primarily of the recognized portion of the
transaction price associated with our contracts from customers recognized over
time as the obligations under the terms of the contract are satisfied.
Generally, the transaction price includes both upfront and milestone payments
which we expect to receive in exchange for providing services. Revenues also
include royalties from shipments of our licensed designs. For each of the three
months ended June 30, 2021 and 2020, we recognized a total of $0.6 million of
revenue. For the six months ended June 30, 2021 and 2020, we recognized a total
of $1.2 million and $1.1 million, respectively, of revenue. Overall revenue
remained flat over the periods as we continue to work on our current contracts,
primarily our collaboration and license agreement with Murata Manufacturing Co.,
Ltd., a major Tier 1 RF filter manufacturer. We derive a substantial majority of
our revenues from a single customer. Additionally, during 2021, there have been
nominal increases in our sales-based royalty revenue. We have recorded $0.8
million of deferred revenue as of June 30, 2021, which we expect to recognize
over the remainder of the contracts.
Research and Development.  These expenses relate to direct engineering and other
costs associated with the development and commercialization of our technology,
including the development of filter designs for our customers and consist
primarily of the compensation costs of employees and consultants, including
stock-based compensation, and to a lesser extent, development related costs for
facilities, equipment, software and supplies. We also include the costs for our
intellectual property development program under research and development. This
program focuses on patent strategy and invention extraction.
Research and development expenses increased $1.1 million from $4.8 million in
the second quarter of 2020 to $5.9 million in the second quarter of 2021 and
increased $0.9 million, from $10.3 million in the first half of 2020 to $11.2
million in the first half of 2021. The increases in the three and six month
periods were primarily a result of increased costs related to development of our
WaveX™ and XBAR® technology, increases in stock based compensation and increased
costs associated with expanding our patent portfolio. For the remainder of the
year we expect research and development expenses to increase due to higher
development costs and additional headcount.
Sales, Marketing and Administration Expenses. These expenses relate to our sales
and marketing efforts and our back-office support and include compensation costs
of employees and consultants, including stock-based compensation. They also
include expenses for facilities, travel expenses, telecommunications, investor
relations, insurance and professional fees.
Sales, marketing and administration expenses were $3.8 million for the second
quarter of 2021 compared to $3.0 million in the second quarter of 2020, and $7.9
million in the first half of 2021 compared to $6.1 million in the first half of
2020. The increase in the three month period is primarily related to increased
compensation expenses for employees and consultants of $0.5 million, increased
travel expenses of $0.1 million and other increased expenses of $0.1 million.
The increase for the six month period was primarily related to increased
compensation expenses for employee and consultants of $1.0 million, costs
related to the filing of our universal shelf registration statement of $0.1
million and other increased operating

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expenses, including insurance, legal, accounting and marketing of $0.6 million.
We anticipate that our sales, marketing and administration expenses will remain
consistent with the current quarter.
Interest and Investment Income (Expense).  Interest and investment expense for
the three and six months ended June 30, 2021 was $3,000 and $6,000,
respectively. Interest and investment income for the three and six months ended
June 30, 2020 was $7,000 and $64,000, respectively. The income in 2020
represented interest income on our cash and investment balances while the
expense in 2021 represented interest expense recorded in connection with a
finance lease for equipment.

Income taxes. We have earned minimal income and are currently operating at a loss. In the past three and six months June 30, 2021 and 2020, our only tax payable was on minimum taxes in the states where we operate.

Liquidity and Capital Resources
Financing Activities
We have earned minimal revenues since inception.  Our operations have been
funded with initial capital contributions and proceeds from the sale of equity
securities and debt.
As of June 30, 2021, we have raised aggregate gross proceeds of $149.6 million
through the use of loans and convertible debt, and sales of equity pursuant to
our initial public offering, secondary underwritten offerings, an at-the-market
equity program, private placement financings, and the exercise of stock options
and warrants.
We had current assets of $23.4 million and current liabilities of $5.5 million
at June 30, 2021, resulting in working capital of $17.9 million.  This compares
to working capital of $19.1 million at June 30, 2020 and $19.8 million at
December 31, 2020. The change in working capital is primarily the result of cash
used in our normal business operations, offset by proceeds from the issuance of
equity securities.

From June 30, 2021, our cumulative deficit amounts to $ 168.8 million. In the past six months June 30, 2021 our net loss totaled $ 17.9 million and we used
$ 14.4 million cash flow for operating activities, the purchase of property, plant and equipment and expenses for patents. To date, we have not generated significant revenue to enable profitability. We expect to continue to suffer significant losses. These factors raise significant doubts about our ability to continue to operate. TO June 30, 2021 we had cash and cash equivalents of $ 22.7 million. In the absence of a significant increase in revenues, these cash resources will provide sufficient funding until the second quarter of 2022. We are subject to the risks and uncertainties associated with a new business. We have also been affected by the COVID-19 pandemic which has added additional risks and uncertainties. Our continued operation depends on our future profitability. We are actively pursuing the expansion of our technology portfolio, increasing our revenue opportunities by achieving deliverables under current customer contracts and entering into new customer contracts, and effectively managing operations and exploring business opportunities. cost reduction. We may not be successful in these efforts. We may need to seek to raise additional capital from the sale of equity securities or from debt. There can be no assurance that additional financing will be available to us on acceptable terms, if at all, in which case we may be required to significantly reduce our operating expenses, which could affect our ability to execute our plan. ‘business and, ultimately, our viability as a company. Even if it is available, this capital can have a dilutive effect on existing shareholders. The accompanying condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustment relating to the recoverability and classification of the amounts of assets recognized or to the amounts and classification of liabilities that could result from the outcome of this uncertainty. Cash flow analysis

Operating activities used cash of $ 13.4 million in the first six months of 2021 and $ 12.5 million in the first six months of 2020. The increase is primarily the result of higher net loss and changes in working capital, partially offset by higher non-cash expenses. Investing activities used cash of $ 1.0 million in the first six months of 2021 and $ 0.7 million in the first six months of 2020 due to purchases of property, plant and equipment and patent expenses.

Fundraising activities provided liquidity of $ 12.2 million in the first six months of 2021 due to the net proceeds of our mark-to-market share program and the exercise of stock options. Fundraising activities provided liquidity of $ 26.4 million
in the first six months of 2020 due to the net proceeds from the guaranteed sale of equity securities concluded in February 2020. Off-balance sheet transactions


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We do not have off-balance sheet arrangements. Critical accounting policies and estimates Our discussion and analysis of the financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in United States of America. Certain accounting policies and estimates are particularly important to an understanding of our financial condition and results of operations and require the exercise of significant judgment on the part of our management or may be materially affected by changes in a period. to the other in factors or economic conditions which are beyond our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses its judgment to determine the appropriate assumptions to use in determining certain estimates. These estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observation of industry trends, information provided by our customers and information available from other sources. external, if applicable. While the nature of the COVID 19 situation is dynamic, we have taken its impact into account when developing our estimates and assumptions. Actual results may differ from management’s estimates and assumptions.

A description of our critical accounting policies which represent the most significant judgments and estimates used in the preparation of our financial statements has been provided in the section Management’s Discussion and Analysis of Financial Condition and Results of Operations of our annual report on form. 10-K for the year ended December 31, 2020. There have been no changes to our accounting policies and critical estimates described in the annual report on Form 10-K for the year ended. December 31, 2020 which had a material impact on our condensed consolidated financial statements and accompanying notes. Recently published and adopted accounting statements Recent accounting statements are detailed in note 2 of our condensed consolidated financial statements included in part I, section 1 of this quarterly report on form 10-Q. Article 3.

                 Quantitative and Qualitative Disclosures About Market
   Not Applicable

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