Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

The Company may be a party to routine claims or litigation incidental to its business. The Company does not believe that it is a party to any pending legal proceeding that is likely to have a material adverse effect on its business, financial condition or results of operations or cash flows.

Royalty Agreement

The Company has entered into license agreements to use certain technology in its design and manufacture of its products. The agreements require royalty fees for each semiconductor sold using the licensed technology. Total royalty expense incurred in connection with these contracts during the three months ended June 30, 2023 and 2022 was $953 and $262, respectively. Total royalty expense incurred in connection with these contracts during the six months ended June 30, 2023 and 2022 was $1,433 and $504, respectively. These expenses are included in cost of goods sold in the condensed consolidated statements of operations. Accrued royalties of $199 and $544 are included in accrued expenses in the Company’s condensed consolidated balance sheets as of June 30, 2023 and consolidated balance sheets as of December 31, 2022, respectively.

Tax Distributions

To the extent the Company has funds legally available, the board of directors will approve distributions to each member of ADK LLC, prior to March 15 of each year, in an amount per unit that, when added to all other distributions made to such member with respect to the previous calendar year, equals the estimated federal and state income tax liabilities applicable to such member as the result of its, his or her ownership of the units and the associated net taxable income allocated with respect to such units for the previous calendar year. There were no distributions approved by the board of directors or paid by the Company during the six months ended June 30, 2023 and 2022.