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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from                          to                         
Commission file number 001-33508
 Item
Edgio, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware20-1677033
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
11811 North Tatum Blvd., Suite 3031,
Phoenix, AZ 85028
(Address of principal executive offices, including Zip Code)
(602850-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act;
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareEGIONasdaq
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 such filing requirements for the past 90 days.    Yes      No  
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).    Yes      No  
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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated 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    No  
The number of shares outstanding of the registrant’s Common Stock, par value $0.001 per share, as of August 31, 2023: 224,956,212 shares.


Table of Contents
EDGIO, INC.
FORM 10-Q
Quarterly Period Ended June 30, 2023
TABLE OF CONTENTS
  Page
PART I. FINANCIAL INFORMATION
Item 1.FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022
Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022
Unaudited Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022
Unaudited Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2023 and 2022
Unaudited Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2023 and 2022
Notes to Unaudited Consolidated Financial Statements
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 4.CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
Item 1.LEGAL PROCEEDINGS
Item 1A.RISK FACTORS
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Item 3.DEFAULTS UPON SENIOR SECURITIES
Item 4.MINE SAFETY DISCLOSURES
Item 5.OTHER INFORMATION
Item 6.EXHIBITS
SIGNATURES
 


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Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the words “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events, as well as trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These statements include, among other things:
our beliefs regarding delivery traffic growth trends and demand for digital content and edge services;
our expectations regarding revenue, costs, expenses, gross margin, and capital expenditures;
our plans regarding investing in our Media and Applications platforms, our coordinated complete solution to deliver instant, secure, and reliable digital experiences, as well as other products and technologies;
our beliefs regarding the competition within the digital edge platform industry;
our beliefs regarding the growth of our business and how that impacts our liquidity and capital resources requirements;
our expectations regarding headcount and our ability to recruit personnel;
the impact of certain new accounting standards and guidance as well as the time and cost of continued compliance with existing rules and standards;
our plans with respect to investments in marketable securities;
our expectations and strategies regarding acquisitions;
our expectations regarding litigation and other pending or potential disputes;
our ability to remediate the material weaknesses identified in internal control over financial reporting;
our determination to restate the prior period consolidated financial statements and its impact on investor confidence and reputational issues;
our ability to maintain an effective system of internal controls;
our estimations regarding taxes and belief regarding our tax reserves;
our approach to identifying, attracting and keeping new and existing clients, our focus on core market growth segments where we have a right-to-win, as well as our expectations regarding client turnover;
the sufficiency of our sources of funding;
our beliefs regarding our interest rate risk;
our beliefs regarding inflation risks;
our beliefs regarding expense and productivity of and competition for our sales force;
our beliefs regarding the significance of our large clients;
our beliefs regarding the United States and global economy; and
our beliefs regarding the impact of health epidemics and pandemics, such as the COVID-19 pandemic, on our current and potential clients, our balance sheet, financial condition, and results of operations.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under the caption “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC”).
In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
The forward-looking statements contained herein are based on our current expectations and assumptions and on information available as of the date of the filing of this Quarterly Report on Form 10-Q. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless expressly indicated or the context requires otherwise, the terms “Edgio,” “company,” “we,” “us,” and “our” in this document refer to Edgio, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries. All information is presented in thousands, except per share amounts, client count, headcount and where specifically noted.


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PART I. FINANCIAL INFORMATION
Item 1.        Financial Statements


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Edgio, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
June 30,
2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$36,188 $55,275 
Marketable securities 18,734 
Accounts receivable, net (1)63,563 84,627 
Income taxes receivable155 105 
Prepaid expenses and other current assets (1)36,778 36,374 
Total current assets136,684 195,115 
Property and equipment, net73,667 73,467 
Operating lease right of use assets4,816 5,290 
Deferred income taxes2,925 2,338 
Goodwill168,775 169,156 
Intangible assets, net80,948 91,661 
Other assets (1)2,582 5,353 
Total assets$470,397 $542,380 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable (1)$63,799 $52,776 
Deferred revenue10,132 9,286 
Operating lease liability obligations3,621 4,557 
Income taxes payable3,155 3,133 
Financing obligations8,944 6,346 
Other current liabilities (1)55,271 76,160 
Total current liabilities144,922 152,258 
Convertible senior notes, net123,070 122,631 
Operating lease liability obligations, less current portion7,730 9,181 
Deferred income taxes1,431 596 
Deferred revenue, less current portion2,247 2,949 
Financing obligations, less current portion14,208 13,784 
Other long-term liabilities858 1,658 
Total liabilities294,466 303,057 
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 7,500 shares authorized; no shares issued
  and outstanding
  
Common stock, $0.001 par value; 300,000 shares authorized; 223,380 and 222,232 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively
223 222 
Common stock contingent consideration16,300 16,300 
Additional paid-in capital814,405 807,507 
Accumulated other comprehensive loss(11,321)(11,665)
Accumulated deficit(643,676)(573,041)
Total stockholders’ equity175,931 239,323 
Total liabilities and stockholders’ equity$470,397 $542,380 
(1)    Includes amounts due to/from related parties. See Notes 6, 9, and 20 for further details.

The accompanying notes are an integral part of the unaudited consolidated financial statements.


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Edgio, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Revenue (1)$95,765 $63,586 $197,713 $118,925 
Cost of revenue:
Cost of services (1)(2)66,742 38,718 134,095 71,391 
Depreciation — network3,788 6,791 7,398 12,639 
Total cost of revenue70,530 45,509 141,493 84,030 
Gross profit25,235 18,077 56,220 34,895 
Operating expenses:
General and administrative (1)14,480 26,812 31,316 42,645 
Sales and marketing (1)16,167 10,834 35,789 18,461 
Research and development (1)18,739 12,171 39,755 21,749 
Depreciation and amortization5,692 1,508 11,299 2,540 
Restructuring charges3,336 4,368 3,836 5,066 
Total operating expenses58,414 55,693 121,995 90,461 
Operating loss(33,179)(37,616)(65,775)(55,566)
Other income (expense):
Interest expense(1,701)(1,458)(3,278)(2,888)
Interest income152 33 549 60 
Other, net(545)(1,146)(1,354)(1,859)
Total other expense(2,094)(2,571)(4,083)(4,687)
Loss before income taxes(35,273)(40,187)(69,858)(60,253)
Income tax expense (benefit)379 (19,589)777 (19,383)
Net loss$(35,652)$(20,598)$(70,635)$(40,870)
Net loss per share:
Basic$(0.16)$(0.14)$(0.32)$(0.28)
Diluted$(0.16)$(0.14)$(0.32)$(0.28)
Weighted-average shares used in per share calculation:
Basic222,914 151,776 222,688 143,652 
Diluted222,914 151,776 222,688 143,652 

(1)Includes revenue and costs from related parties. See Note 20 for further details.
(2)    Cost of services excludes amortization related to intangible assets, including technology, customer relationships, and trade names, which are included in depreciation and amortization in operating expenses.

The accompanying notes are an integral part of the unaudited consolidated financial statements.


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Edgio, Inc.
Unaudited Consolidated Statements of Comprehensive Loss
(In thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Net loss$(35,652)$(20,598)$(70,635)$(40,870)
Other comprehensive gain (loss), net of tax:
Unrealized (loss) gain on investments(8)55 (6)(33)
Foreign currency translation gain (loss)117 (2,464)350 (3,035)
Other comprehensive gain (loss)109 (2,409)344 (3,068)
Comprehensive loss$(35,543)$(23,007)$(70,291)$(43,938)
The accompanying notes are an integral part of the unaudited consolidated financial statements.


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Edgio, Inc.
Unaudited Consolidated Statements of Stockholders' Equity
(In thousands)
For the Three Months Ended June 30, 2023
Common StockCommon Stock Contingent ConsiderationAdditional
Paid-In Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal
SharesAmount
Balance March 31, 2023222,702 $223 $16,300 $811,571 $(11,430)$(608,024)$208,640 
Net loss— — — — — (35,652)(35,652)
Change in unrealized gain on available-for-sale investments, net of taxes— — — — (8)— (8)
Foreign currency translation adjustment, net of taxes— — — — 117 — 117 
Vesting of restricted stock units678 — — — — — — 
Share-based compensation— — — 2,834 — — 2,834 
Balance June 30, 2023223,380 $223 $16,300 $814,405 $(11,321)$(643,676)$175,931 
For the Three Months Ended June 30, 2022
Common StockCommon Stock Contingent ConsiderationAdditional
Paid-In Capital
Accumulated Other Comprehensive Loss
SharesAmountAccumulated DeficitTotal
Balance March 31, 2022138,178 $138 $ $590,249 $(9,004)$(456,794)$124,589 
Net loss— — — — — (20,598)(20,598)
Change in unrealized loss on available-for-sale investments, net of taxes— — — — 55 — 55 
Foreign currency translation adjustment, net of taxes— — — — (2,464)— (2,464)
Exercise of common stock options57 — 57 — — 57 
Vesting of restricted stock units544 1 — (1)— —  
Restricted stock units surrendered in lieu of withholding taxes(170)— — (524)— — (524)
Issuance of common stock under employee stock purchase plan280 — — 728 — — 728 
Share-based compensation— — — 5,595 — — 5,595 
Capital Contributions— — — 1,884 — — 1,884 
Issuance of common stock for business acquisition76,925 77 — 186,566 — — 186,643 
Common stock contingent consideration related to business acquisition— — 16,900 — — — 16,900 
Issuance of common stock for employee compensation arrangements3,892 4 — 9,415 — — 9,419 
Balance June 30, 2022219,706 $220 $16,900 $793,969 $(11,413)$(477,392)$322,284 



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For the Six Months Ended June 30, 2023
Common StockCommon Stock Contingent ConsiderationAdditional
Paid-In Capital
Accumulated Other Comprehensive LossAccumulated DeficitTotal
SharesAmount
Balance December 31, 2022222,232 $222 $16,300 $807,507 $(11,665)$(573,041)$239,323 
Net loss— — — — — (70,635)(70,635)
Change in unrealized gain on available-for-sale investments, net of taxes— — — — (6)— (6)
Foreign currency translation adjustment, net of taxes— — — — 350 — 350 
Exercise of common stock options6 — — 3 — — 3 
Vesting of restricted stock units1,181 1 — (1)— —  
Restricted stock units surrendered in lieu of withholding taxes(39)— — (194)— — (194)
Share-based compensation— — — 7,090 — — 7,090 
Balance June 30, 2023223,380 $223 $16,300 $814,405 $(11,321)$(643,676)$175,931 
For the Six Months Ended June 30, 2022
Common StockCommon Stock Contingent ConsiderationAdditional
Paid-In Capital
Accumulated Other Comprehensive Loss
SharesAmountAccumulated DeficitTotal
Balance December 31, 2021134,337 $134 $ $576,807 $(8,345)$(436,522)$132,074 
Net loss— — — — — (40,870)(40,870)
Change in unrealized loss on available-for-sale investments, net of taxes— — — — (33)— (33)
Foreign currency translation adjustment, net of taxes— — — — (3,035)— (3,035)
Exercise of common stock options3,195 3 — 8,040 — — 8,043 
Vesting of restricted stock units1,522 2 — (2)— —  
Restricted stock units surrendered in lieu of withholding taxes(488)— — (1,809)— — (1,809)
Issuance of common stock under employee stock purchase plan280 — — 728 — — 728 
Share-based compensation— — — 12,340 — — 12,340 
Capital Contributions— — — 1,884 — — 1,884 
Issuance of common stock for business acquisition76,968 77 — 186,566 — — 186,643 
Common stock contingent consideration related to business acquisition— — 16,900 — — — 16,900 
Issuance of common stock for employee compensation arrangements3,892 4 — 9,415 — — 9,419 
Balance June 30, 2022219,706 $220 $16,900 $793,969 $(11,413)$(477,392)$322,284 
The accompanying notes are an integral part of the unaudited consolidated financial statements.


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Edgio, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 Six Months Ended June 30,
 20232022
Operating activities
Net loss$(70,635)$(40,870)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization18,697 15,179 
Share-based compensation8,559 14,303 
Foreign currency remeasurement loss1,354 683 
Deferred income taxes (19,280)
(Gain) on sale of property and equipment (10)
Accounts receivable charges632 278 
(Accretion) amortization of (discount) premium on marketable securities(258)484 
Noncash interest expense439 420 
Noncash capital contribution from parent 447 
Changes in operating assets and liabilities:
Accounts receivable20,432 (10,284)
Prepaid expenses and other current assets(1,088)(5,183)
Income taxes receivable(50)(555)
Other assets857 1,006 
Accounts payable and other current liabilities(14,983)26,713 
Deferred revenue2,497 1,905 
Income taxes payable(2,083)(603)
Other long term liabilities(799)(57)
Net cash used in operating activities (36,429)(15,424)
Investing activities
Purchases of marketable securities(9,579)(8,179)
Sale and maturities of marketable securities28,565 22,871 
Purchases of property and equipment(4,284)(23,856)
Proceeds from sale of property and equipment 10 
Cash acquired from acquisition of business 29,829 
Net cash provided by investing activities 14,702 20,675 
Financing activities
Proceeds from capital contributions2,135  
Proceeds from financing obligations1,733 5,502 
Repayment of financing obligations(1,902)(2,832)
Payments of employee tax withholdings related to restricted stock vesting(194)(1,809)
Proceeds from employee stock plans3 8,771 
Net cash provided by financing activities1,775 9,632 
Effect of exchange rate changes on cash and cash equivalents865 (1,626)
Net (decrease) increase in cash and cash equivalents(19,087)13,257 
Cash and cash equivalents, beginning of period55,275 41,918 
Cash and cash equivalents, end of period$36,188 $55,175 
Supplemental disclosure of cash flow information
Cash paid during the period for interest$1,463 $2,446 
Cash paid during the period for income taxes, net of refunds$224 $1,002 
Common stock issued in connection with acquisition of business$ $186,146 
Common stock contingent consideration related to business combination$ $16,900 
Common stock issued for employee compensation arrangements$ $9,419 
Noncash additions to financing receivables$4,438 $10,489 
Noncash additions to short-term financing liabilities$1,918 $2,627 
Noncash additions to long-term financing liabilities$2,520 $7,862 
Property and equipment remaining in accounts payable and other current liabilities$7,056 $1,139 
The accompanying notes are an integral part of the unaudited consolidated financial statements.


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Edgio, Inc.
Notes to Unaudited Consolidated Financial Statements
June 30, 2023
1. Nature of Business
Edgio, Inc. (“Edgio”) is a globally-scaled, edge-enabled solutions provider for fast, secure, and frictionless digital experiences. Our solutions include customer-focused edge platforms running on top of our Global Network, Media and Applications Platforms. The media platform enables companies to stream large files (video, software downloads, live events) across the globe in a fast and secure way. The Edgio applications platform enables our clients to build, secure, and accelerate their web-based applications.
We were incorporated in Delaware in 2003, and have operated in the Phoenix metropolitan area since 2001 and elsewhere throughout the United States since 2003. We began international operations in 2004. On June 15, 2022, we changed our corporate name from Limelight Networks, Inc. to Edgio, Inc.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”). They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that are, in the opinion of management, necessary for the fair presentation of the interim periods presented and of a normal recurring nature. This quarterly report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and footnotes included in our annual report on Form 10-K for the fiscal year ended December 31, 2022. All information is presented in thousands, except per share amounts and where specifically noted.
The consolidated financial statements include accounts of Edgio and our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of the consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results and outcomes may differ from those estimates. The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any future periods.
In accordance with its accounting policies, the company reviews the estimated useful lives of its property and equipment on an ongoing basis. In January 2023, we completed an assessment of the useful lives of our network equipment and concluded to adjust our estimate of the useful life of our network equipment from three to five years due to advances in technology and improvements in how we operate our network equipment. The effect of this change in estimate, effective January 1, 2023, was a reduction of $3,364 and $7,134, primarily in depreciation - network expense in cost of services within our consolidated statement of operations, a decrease in net loss by approximately $3,249 and $6,850, and a decrease in basic and diluted loss per share by $0.01 and $0.03, for the three and six months ended June 30, 2023, respectively.
Restatement of Previously Issued Consolidated Financial Statements
The company restated the consolidated financial statements for the years ended December 31, 2021 and 2020 presented in its Annual Report on Form 10-K for the year ended December 31, 2022, necessary to correct for the following errors: (i) accounting for certain financing arrangements (as failed sale leasebacks), (ii) accounting treatment for certain transitional services, and (iii) other immaterial adjustments. In addition, the company restated its unaudited quarterly financial data for the periods ended September 30, 2022 and 2021, June 30, 2022 and 2021, and March 31, 2022 and 2021. Such restated and unaudited quarterly financial data and related impacted amounts were presented in the company's Annual Report on Form 10-K for the year ended December 31, 2022. All amounts in this quarterly report on Form 10-Q affected by the restatement, including but not limited to the three and six months ended June 30, 2022, reflect such restated amounts. For the three and six months ended June 30, 2023, we incurred restatement related expenses of $2,588 and $4,763, respectively, included in general and administrative within our unaudited consolidated statement of operations.



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Adopted Accounting Standards
None.
Recently Issued Accounting Standards applicable to Edgio, Inc.
None.
Significant Accounting Policies
There have been no changes in the significant accounting policies from those that were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Our contractual arrangements with customers generally specify monthly billing terms, and we apply the variable consideration allocation exception and record revenue based on actual usage during the month. Certain contracts contain minimum commitments over the contractual term; however, we generally have concluded that these commitments are not substantive. Accordingly, the consideration for these contracts is substantially considered variable and is recognized based on actual usage as we apply the variable consideration allocation exception to these contracts. These customers have entered into contracts with contract terms generally from one to ten years.
As of June 30, 2023, we have approximately $61,214 of remaining unsatisfied performance obligations for contracts with terms over one year. Of the remaining unsatisfied performance obligations, we expect to recognize 25% in 2023, 34% in 2024, 17% in 2025, 7% in 2026, and the remainder in 2027 and thereafter.
From time to time, we enter into arrangements in which we receive payments from customers based upon contractual billing schedules. We record accounts receivables when the right to consideration becomes unconditional. Contract liabilities primarily reflect deferred revenue from advance payments we have received from customers. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue. Revenue recognized in the three and six months ended June 30, 2023 from amounts included in deferred revenue at the beginning of the period was $1,566 and $4,236, respectively. Revenue recognized in the three and six months ended June 30, 2022 from amounts included in deferred revenue at the beginning of the period was $742 and $2,841, respectively.
3. Business Acquisitions
Edgecast Acquisition
On June 15, 2022, Edgio completed the acquisition (the Edgecast Acquisition) of 100% of the equity interests of Edgecast Inc., a California corporation (“Edgecast”), and certain Edgecast-related businesses and assets from College Parent for total purchase consideration of $199,837. The total purchase consideration included 75,842 shares of our common stock allocated to the Edgecast Acquisition. Edgecast is a leading provider of edge security, content delivery, and video services. Edgio accounted for the acquisition in accordance with ASC 805, Business Combinations, which requires the assets acquired and liabilities assumed to be recognized on the balance sheet at their fair values as of the acquisition date.
We retained an independent third-party valuation firm to assist in our valuation of the acquired assets and liabilities.
The following table presents the allocation of the purchase price consideration for Edgecast:
Consideration:
Common stock$192,956 
Common stock - contingent consideration16,300 
Less: Consideration allocated to employee compensation arrangements(9,419)
Total consideration allocated to Edgecast Acquisition
$199,837 
The fair value of our common stock consideration was based on the 79,734 shares issued to College Parent and the opening price of our common stock of $2.42 per share on the acquisition closing date. Inclusive within the common stock consideration, and pursuant to the purchase agreement, Edgio issued 7,287 shares of common stock in exchange for cash from


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College Parent of $30,000. As the economic substance of this issuance was to provide additional cash to Edgecast for liabilities that existed prior to the business combination and the transaction occurred on June 15, 2022, Edgio concluded that this was part of the business combination, and therefore, should be considered as part of the consideration transferred in exchange for the acquisition of Edgecast. The initial common stock purchase consideration of 79,734 shares was adjusted downward for 3,892 shares issued for employee compensation arrangements accounted for as separate transactions as further discussed below.
The purchase agreement contains an “earn-out” or contingent consideration provision in the event that the price of our common stock exceeds certain thresholds during the period ending on the third anniversary of the acquisition date of the transaction (the “Earnout Period”), Edgio will be required to issue approximately up to an additional 12,685 shares of our common stock to College Parent (the “common stock contingent consideration”). If during the Earnout Period, the closing share price of our common stock exceeds the following share prices for 10 trading days in any 30 consecutive trading day period the following number of shares of our common stock will be issued: (a) approximately 5,398 shares of our common stock if the closing share price of our common stock exceeds $6.1752 per share, (b) approximately 4,048 shares of our common stock if the closing share price of our common stock exceeds $8.2336 per share, and (c) approximately 3,239 shares of our common stock if the closing share price of our common stock exceeds $10.2920 per share. Edgio estimated that the fair value of the common stock contingent consideration, with the assistance of a third-party valuation specialist using a Monte Carlo simulation, and concluded it was $16,300 as of the acquisition date.
As a result of the Edgecast Acquisition, certain cash awards that existed for Edgecast’s employees require the transferred employee to provide services to Edgio in the post-combination period in order for the cash award to be earned. When the awards are earned, Edgio will either a) pay the employees the amount earned and will subsequently be reimbursed by College Parent or b) College Parent will directly pay the employee the amount earned. Edgio considered whether the employee awards were part of the Edgecast Acquisition's purchase consideration, or separate transactions, and not part of purchase accounting. Under ASC 805, a transaction entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity, rather than primarily for the benefit of the acquiree (or its former owners) before the combination, is likely to be a separate transaction. The employee awards represent compensation for post-combination services rendered to Edgio and the reimbursement right was initiated by Edgio for the future economic benefit of the combined entity. Accordingly, Edgio concluded the employee awards represent transactions separate from the Edgecast Acquisition. Edgio allocated $9,419 of the total consideration transferred to College Parent to the employee compensation arrangements based on the post-combination fair value of the employee awards. As service is required to be rendered for the award to be earned, Edgio will recognize expense as the employee performs service. The employee compensation arrangements related to post-combination services and the related reimbursement right resulted in the recognition of $6,573 in prepaid expenses and other current assets and $2,846 in other assets on June 15, 2022.
During the three and six months ended June 30, 2023, Edgio recorded $844 and $1,510, in compensation expense within our unaudited consolidated statements of operations as a result of the employee compensation arrangements. Of the $844 of compensation expense, $182, $64, $49, and $549 was recorded to cost of services, general and administrative, sales and marketing, and research and development, respectively. Of the $1,510 of compensation expense, $293, $167, $91, and $959 was recorded to cost of services, general and administrative, sales and marketing, and research and development, respectively. During the three and six months ended June 30, 2022, Edgio recorded $997 in compensation expense within our unaudited consolidated statements of operations as a result of the employee compensation arrangements. Of the $997 of compensation expense, $206, $178, $41, and $572 was recorded to cost of services, general and administrative, sales and marketing, and research and development, respectively. The employee compensation arrangements are time-based vesting only and the unrecognized compensation expense was $1,186 as of June 30, 2023, of which $898 is expected to be recognized during the remainder of 2023 and the remainder in 2024.
The Edgecast Acquisition was accounted for under the acquisition method of accounting and the operating results of Edgecast have been included in our unaudited consolidated financial statements as of the acquisition date. Under the acquisition method of accounting, the aggregate amount of consideration paid by us was allocated to Edgecast’s net tangible assets and intangible assets based on their estimated fair values as of the acquisition date. The excess of the purchase price over the value of the net tangible assets and intangible assets was recorded to goodwill. The factors contributing to the recognition of goodwill were based upon our conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. Goodwill, which is non-deductible for tax purposes, represents expected synergies and the assembled workforce at the time of the acquisition.



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The following table summarizes the final allocation of the purchase consideration to the acquisition date fair value of the assets, including intangible assets, liabilities assumed and related goodwill acquired:
Cash (inclusive of $30,000 as described above)
$30,037 
Accounts receivable48,669 
Income taxes receivable119 
Prepaid expenses and other current assets 5,676 
Property and equipment 32,185 
Operating lease right of use assets1,365 
Goodwill 56,546 
Intangible assets
  Customer relationships41,000 
  Technology49,000 
Other assets1,220 
Total assets acquired265,817 
Accounts payable and accrued liabilities6,917 
Deferred revenue1,259 
Operating lease liability obligations3,071 
Income taxes payable2,465 
Other current liabilities27,500 
Operating lease liability obligations, less current portion2,531 
Deferred income taxes22,237 
Total liabilities65,980 
Total purchase consideration$199,837 
The fair value of acquired property and equipment was valued using the market approach and indirect cost approach and primarily consists of computer and networking equipment. The weighted-average depreciation period for the acquired property and equipment was 3.0 years at the acquisition date. The fair value of the acquired intangible assets was determined as follows, customer relationships, utilizing the excess earnings method, and technology, utilizing the relief from royalty method. The amortization period of the acquired intangible assets was 7.0 years for customer relationships and 4.0 for technology at the acquisition date. The deferred income tax liability was $22,237, primarily as a result of the fair value attributable to the identifiable intangible assets.
Transaction costs incurred by us in connection with the Edgecast Acquisition were $14,139 and $19,382 for the three and six months ended June 30, 2022, respectively, and were recorded within general and administrative expenses within our unaudited consolidated statements of operations. There were no transaction costs incurred related to the Edgecast Acquisition for the three and six months ended June 30, 2023.
Unaudited Pro Forma Financial Information
The following unaudited pro forma combined financial information presents combined results of Edgio and Edgecast as if the acquisition of Edgecast has occurred on January 1, 2021:
 Three Months Ended June 30,Six Months Ended June 30,
 20222022
Revenue$131,851 $265,457 
Net loss$(28,243)$(62,966)
These unaudited pro forma combined financial statements include adjustments to reflect fair value adjustments related to property and equipment depreciation, customer relationships and technology amortization, compensation expense related to the employee compensation arrangements, exclusion of interest income related to loan receivables settled at the acquisition date, and the effects of the adjustments on income taxes and net loss. Additionally, the pro forma adjustments include adjustments to reflect non-recurring transaction costs of $14,139 and $19,382, incurred in the three and six months ended


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June 30, 2022, respectively, and non-recurring restructuring charges related to the Edgecast Acquisition of $3,715 incurred in the three and six months ended June 30, 2022, as of the beginning of the comparable prior reporting period.
The pro forma financial information is not intended to represent or be indicative of the actual results of operations of the combined business that would have been reported had the acquisition of Edgecast been completed at the beginning of the fiscal year 2021, nor is it representative of future operating results of Edgio.
4. Investments in Marketable Securities
The following is a summary of marketable securities (designated as available-for-sale) as of December 31, 2022:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Certificate of deposit$40 $ $ $40 
Commercial paper5,884   5,884 
Corporate notes and bonds11,395  16 11,379 
Treasury bills985   985 
Agency bonds486   486 
Total marketable securities$18,790 $ $16 $18,774 
The amortized cost and estimated fair value of marketable securities as of December 31, 2022, by maturity are shown below:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Available-for-sale securities:
Due in one year or less$18,750 $ $16 $18,734 
Due after one year and through five years (1)
40   40 
Total marketable securities$18,790 $ $16 $18,774 
(1) Classified in other assets.
5. Accounts Receivable, net
Accounts receivable, net include:
 June 30,December 31,
 20232022
Accounts receivable$68,753 $90,046 
Less: credit allowance(889)(1,514)
Less: allowance for doubtful accounts(4,301)(3,905)
Total accounts receivable, net$63,563 $84,627 
The following is a roll-forward of the allowance for doubtful accounts related to trade accounts receivable for the six months ended June 30, 2023 and the twelve months ended December 31, 2022:
Six Months Ended
Twelve Months Ended
June 30, 2023December 31, 2022
Beginning of period$3,905 $1,500 
  Provision for credit losses632 2,413 
  Recoveries/write-offs(236)(8)
End of period$4,301 $3,905 


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6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets include:
 June 30,December 31,
 20232022
Prepaid bandwidth and backbone$5,266 $7,431 
VAT receivable6,842 5,805 
Prepaid expenses and insurance5,132 5,352 
Financing receivables5,855 3,218 
Related party receivable7,472 7,962 
Vendor deposits and other6,211 6,606 
Total prepaid expenses and other current assets$36,778 $36,374 
7. Property and Equipment, net
Property and equipment, net include:
 June 30,December 31,
 20232022
Network equipment$180,812 $176,899 
Computer equipment and software3,408 3,680 
Furniture and fixtures1,315 1,322 
Leasehold improvements6,022 6,017 
Other equipment17 17 
Total property and equipment191,574 187,935 
Less: accumulated depreciation (117,907)(114,468)
Total property and equipment, net$73,667 $73,467 
Cost of revenue depreciation expense related to property and equipment was $3,788 and $6,791, for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, cost of revenue depreciation expense related to property and equipment was approximately $7,398 and $12,639, respectively.
Operating expense depreciation and amortization expense related to property and equipment was $292 and $336, for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, operating expense depreciation and amortization expense related to property and equipment was $586 and $582, respectively.
8. Goodwill and Other Intangible Assets
We have recorded goodwill as a result of past business acquisitions. We concluded that we have one reporting unit and assigned the entire balance of goodwill to this reporting unit as of June 30, 2023. We review goodwill for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may exceed their fair value. During the six months ended June 30, 2023, management identified a goodwill impairment indicator related to a decline in the company's stock price. The estimated fair value of the reporting unit is determined using a market approach. Our market capitalization is adjusted for a control premium based on the estimated average and median control premiums of transactions involving companies comparable to us. We noted that the estimated fair value of our reporting unit, using an estimated control premium of 30%, on June 30, 2023 exceeded carrying value by approximately $18,635 or 11%. Adverse changes to certain key assumptions as described above could result in a future goodwill impairment charge to earnings.
Management will continue to monitor the relevant goodwill impairment indicators to determine whether a goodwill impairment charge to earnings is appropriate, and such impairment charge, if any, could be material.
The changes in the carrying amount of goodwill for the six months ended June 30, 2023, were as follows:
Balance, December 31, 2022$169,156 
Foreign currency translation adjustment(381)
Balance, June 30, 2023$168,775 



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Intangible assets consisted of the following as of June 30, 2023:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Trade name$91 $(56)$35 
Client relationships48,090 (8,625)39,465 
Technology57,480 (16,032)41,448 
Total other intangible assets$105,661 $(24,713)$80,948 
Aggregate expense related to amortization of other intangible assets for the three and six months ended June 30, 2023 was $5,400 and $10,713, respectively . There were no impairment charges incurred in the three and six months ended June 30, 2023.
As of June 30, 2023, the weighted-average remaining useful lives of our acquired intangible assets were 1.2 years for trade name, 5.6 years for client relationships, and 3.0 years for technology, and 4.2 years in total, for all acquired intangible assets.
Intangible assets consisted of the following as of December 31, 2022:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Trade name$91 $(40)$51 
Client relationships48,090 (4,960)43,130 
Technology57,480 (9,000)48,480 
Total other intangible assets$105,661 $(14,000)$91,661 
Aggregate expense related to amortization of other intangible assets for the three and six months ended June 30, 2022 was $1,172 and $1,958, respectively. There were no impairment charges incurred in the three and six months ended June 30, 2022.
As of December 31, 2022, the weighted-average remaining useful lives of our acquired intangible assets were 1.7 years for trade name, 6.1 years for client relationships, and 3.4 years for technology, and 4.7 years in total, for all acquired intangible assets.
As of June 30, 2023, future amortization expense related to our other intangible assets is expected to be recognized as follows:
Remainder of 2023$10,712 
202421,415 
202521,394 
202613,141 
20275,911 
Thereafter8,375 
Total$80,948 


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9. Other Current Liabilities
Other current liabilities include:
 June 30,December 31,
 20232022
Accrued compensation and benefits$22,726 $19,982 
Accrued cost of revenue16,242 27,422 
Accrued interest payable1,912 1,823 
Related party payable2,248 9,931 
Restructuring charges and accrued legal fees5,726 6,184 
Other accrued expenses6,417 10,818 
Total other current liabilities$55,271 $76,160 
10. Debt
Convertible Senior Notes - Due 2025
On July 27, 2020, we issued $125,000 aggregate principal amount of 3.50% Convertible Senior Notes due 2025 (the “Notes”), including the initial purchasers’ exercise in full of their option to purchase an additional $15,000 principal amount of the Notes, in a private placement to qualified institutional buyers in an offering exempt from registration under the Securities Act of 1933, as amended. The net proceeds from the issuance of the Notes was $120,741 after deducting transaction costs.
The Notes are governed by an indenture (the “Indenture”) between us, as the issuer, and U.S. Bank, National Association, as trustee. The Notes are senior, unsecured obligations of ours and will be equal in right of payment with our senior, unsecured indebtedness; senior in right of payment to our indebtedness that is expressly subordinated to the notes; effectively subordinated to our senior, secured indebtedness, including future borrowings, if any, under our amended credit facility with First Citizens Bank (formerly Silicon Valley Bank) (“FCB”), to the extent of the value of the collateral securing that indebtedness; and structurally subordinated to all indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the Notes become automatically due and payable.
As a result of the restatement of our previously issued consolidated financial statements described in Note 2, we were unable to file our Annual Report on Form 10-K for the year ended December 31, 2022 on a timely basis. For the same reason, we were also unable to timely file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023. Pursuant to the terms of the Indenture, on April 12, 2023, we notified the Trustee that due to our failure to timely file with the SEC our Annual Report on Form 10-K for the year ended December 31, 2022, a default (as defined in the Indenture) had occurred.
On April 17, 2023, a holder of the Notes delivered a notice of default to U.S. Bank National Association (the “Trustee”) and the company notifying us that we were in breach of the Indenture for failing to provide the Trustee our Annual Report on Form 10-K for the year ended December 31, 2022. Under the terms of the Indenture, such default matured into an event of default (the “Reporting Event of Default”) on June 17, 2023. On July 21, 2023, the Trustee for the Notes delivered a notice of default to the company notifying us that we were in breach of the Indenture for failing to provide the Trustee our Quarterly Report on Form 10-Q for the three months ended March 31, 2023. Under the terms of the Indenture, such default was cured with the filing of this Quarterly Report.
By notice to the holders of the Notes and the Trustee on June 12, 2023 and in accordance with the Indenture, we notified the Trustee that due to our failure to timely file with the SEC our Annual Report on Form 10-K, the company elected that the sole remedy for the Reporting Event of Default during the period beginning on June 17, 2023 (the “Reporting Event of Default Date”) and ending on the earlier of (x) 365 calendar days after the Reporting Event of Default Date and (y) the date on which we deliver the Annual Report for the year ended December 31, 2022 to the Trustee will consist of the accrual of additional interest (“Special Interest”) at a rate equal to one quarter of one percent (0.25%) of the principal amount of the outstanding Notes for the first 180 calendar days on which Special Interest accrues and, thereafter, at a rate per annum equal to one half of one percent (0.50%) of the principal amount of the outstanding Notes. The Notes will be subject to acceleration pursuant to the Indenture on account of the Reporting Event of Default if we fail to pay Special Interest when due under the Indenture. We delivered our Annual Report for the year ended December 31, 2022 to the Trustee on June 29, 2023, and as a result we incurred an immaterial amount of Special Interest charges for the three and six months ended June 30, 2023.


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The Notes mature on August 1, 2025, unless earlier converted, redeemed or repurchased in accordance with their term prior to the maturity date. Interest is payable semiannually in arrears on February 1 and August 1 of each year, beginning on February 1, 2021. The holders of the Notes may convert all or any portion of their Notes at their option only in the following circumstances:
(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price per share of our common stock exceeds 130% of the conversion price of $8.53 for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
(2) during the five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the measurement period) in which the trading price per $1 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;
(3) upon the occurrence of certain corporate events or distributions of our common stock;
(4) if we call such Notes for redemption; and
(5) at any time from, and including, May 1, 2025, until the close of business on the second scheduled trading day immediately before the maturity date.
On or after May 1, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in minimum principal amount denominations of $1 or any integral multiple of $1 in excess thereof, at the option of the holder regardless of the foregoing circumstances. Upon conversion, we may satisfy our conversion obligation by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at our election, in the manner and subject to the terms and conditions provided in the Indenture. The Notes have an initial conversion rate of 117.2367 shares of our common stock per $1 principal amount of Notes, which is equal to an initial conversion price of approximately $8.53 per share of our common stock. The initial conversion price of the Notes represents a premium of approximately 27.5% over the last reported sale price of our common stock on The Nasdaq Global Select Market of $6.69 per share on July 22, 2020. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will increase the conversion rate in certain circumstances for a holder who elects to convert its Notes in connection with such a corporate event or convert its Notes called (or deemed called) for redemption in connection with such notice of redemption, provided that the conversion rate will not exceed 149.4768 share of our common stock per $1 principal amount of Notes, subject to adjustment.
We may not redeem the Notes prior to August 4, 2023. We may redeem for cash all, or any portion in an authorized denomination, of the Notes, at our option, on or after August 4, 2023, and on or prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, whether or not consecutive, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes, which means that we are not required to redeem or retire the Notes periodically.
If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
As of June 30, 2023, the conditions allowing holders of the Notes to convert had not been met and therefore the Notes are not yet convertible. The Notes are classified as long-term debt on our unaudited consolidated balance sheets as of June 30, 2023, and December 31, 2022.


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The net carrying amount of the liability and equity components of the Notes consisted of the following:
June 30,December 31,
20232022
Liability component:
  Principal$125,000 $125,000 
  Unamortized transaction costs(1,930)(2,369)
Net carrying amount$123,070 $122,631 
Interest expense recognized related to the Notes was as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Contractual interest expense$1,170 $1,094 $2,276 $2,188 
Amortization of transaction costs221 211 439 420 
Total$1,391 $1,305 $2,715 $2,608 
As of June 30, 2023, and December 31, 2022, the estimated fair value of the Notes was $109,094 and $107,031, respectively. We estimated the fair value based on the quoted market prices in an inactive market on the last trading day of the reporting period, which are considered Level 2 inputs.
Capped Call Transactions
In connection with the offering of the Notes, we entered into privately negotiated capped call transactions with certain counterparties (collectively, the Capped Calls). The Capped Calls have an initial strike price of approximately $8.53 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have an initial cap price of $13.38 per share, subject to certain adjustments. The Capped Calls are generally intended to reduce or offset the potential economic dilution of approximately 14.7 million shares to our common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. As the Capped Calls are considered indexed to our own stock and are equity classified, they are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $16,400 incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital.
Line of Credit
In November 2015, we entered into the original Loan and Security Agreement (the “Credit Agreement”) with FCB. Since the inception, there have been eleven amendments, with the most recent amendment being on September 7, 2023. Under the tenth amendment, entered into in June 2023, our borrowing capacity was reduced to the lesser of the commitment amount of $50,000 or 50% of eligible accounts receivable while the maturity date remains at April 2, 2025. All outstanding borrowings owed under the Credit Agreement, if any, become due and payable no later than the final maturity date of April 2, 2025. As of June 30, 2023 and December 31, 2022, we had no outstanding borrowings.
As of June 30, 2023, borrowings under the Credit Agreement bear interest at the greater of the current prime rate minus 0.25% or 4%. In the event of default, obligations shall bear interest at a rate per annum that is 3% above the then applicable rate.
Amendment fees and other commitment fees are included in interest expense. During the three months ended June 30, 2023 and 2022, there was no interest expense and fees expense and amortization was $63 and $10, respectively. During the six months ended June 30, 2023 and 2022, there was no interest expense and fees expense and amortization was $87 and $20, respectively.
Any borrowings are secured by essentially all of our domestic personal property, with a negative pledge on intellectual property. FCB’s security interest in our foreign subsidiaries is limited to 65% of the voting stock of each such foreign subsidiary.
We are required to maintain an Adjusted Quick Ratio of at least 1.0 to 1.0. We are also subject to certain customary limitations on our ability to, among other things, incur debt, grant liens, make acquisitions and other investments, make certain restricted payments such as dividends, dispose of assets or undergo a change in control. As of June 30, 2023 and December 31,


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2022 we were not in compliance with our Adjusted Quick Ratio requirement. On September 7, 2023, under the eleventh amendment and June 27, 2023, under the tenth amendment, we have received a waiver for, among other thing, our non-compliance for the quarters ended June 30, 2023 and March 31, 2023, respectively.
11. Restructuring Charges
In the second quarter of 2023, the company's board of directors approved a restructuring plan to reduce its operating costs to continue to optimize its business model and increase efficiencies. This plan entailed a reduction in force of approximately 134 employees, or approximately 12% of the company’s global workforce. For the three and six months ended June 30, 2023, we incurred $3,336 of restructuring charges primarily related to this plan. Remaining future estimated restructuring charges of approximately $500 are expected to be incurred in the third quarter of 2023. These charges, which will be cash expenditures, consist of one-time severance charges and continuation of health benefits.
In the fourth quarter of 2022, management committed to a separate action to restructure strategic and financial objectives and to optimize resources for long term growth including a reduction in global workforce. For the three months ended June 30, 2023, no costs were incurred related to this plan. For the six months ended June 30, 2023, relating to this action, we incurred $500 of costs which primarily consisted of employee severance and related benefits costs. Future restructuring charges related to this plan, are expected to be immaterial.
During the three and six months ended June 30, 2022, we incurred $4,368 and $5,066 of restructuring charges, respectively, of which the majority related to previously disclosed restructuring plans and were due to facility impairment charges and employee severance and related benefits costs. Actions related to this restructuring program are substantially complete.
The following table summarizes the activity of our restructuring accrual (recorded in other current liabilities on our unaudited consolidated balance sheet) during the three and six months ended June 30, 2023:
Employee Severance and Related BenefitsShare-Based CompensationFacilities Related ChargesTotal
Balance as of December 31, 2022$2,772 $240 $3,172 $6,184 
Costs incurred (recorded in restructuring charges)500   500 
Cash disbursements(1,488) (698)(2,186)
Balance as of March 31, 2023$1,784 $240 $2,474 $4,498 
Costs incurred (recorded in restructuring charges)
3,336   3,336 
Cash disbursements(1,502) (606)(2,108)
Balance as of June 30, 2023$3,618 $240 $1,868 $5,726 
The following table summarizes the activity of our restructuring accrual during the three and six months ended June 30, 2022:
Employee Severance and Related BenefitsShare-Based CompensationFacilities Related ChargesTotal
Balance as of January 1, 2022$235 $ $180 $415 
Costs incurred (recorded in restructuring charges)(93) 791 698 
Cash disbursements(142) (687)(829)
Noncash charges  3 3