You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes to the consolidated financial statements included later in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in "Risk Factors" and "Special Note Regarding Forward-Looking Statements."

Overview

We are a late-stage development company that develops technology for the RF front-end market. Our focus is on continuing to create innovative technology, engage new customers, expand the number of license contracts for filter designs and build the necessary infrastructure to support anticipated growth.

We plan to continue to develop IP associated with high frequency/high-wide bandwidth filters (XBAR®-based filters), to expand our IP and trade secret libraries, and further the development of our WaveX™ multi-physics EDA platform. During the third quarter of 2019, we completed an investment and commercial agreement with Murata Manufacturing Co., Ltd., the first collaboration agreement leveraging our XBAR® IP. During 2020 we continued the development of filters under the commercial agreement, resulting in completion of the second milestone ahead of schedule in October. This milestone is significant as it recognizes achieving predetermined target performance, packaging and initial reliability. We expanded our relationship further by entering into agreements with Murata Manufacturing Co., Ltd., for the development of additional 5G XBAR® RF filters. In all licensing arrangements with our customers we intend to retain ownership of our technology, software, designs and related improvements. Our goal is to establish and leverage alliances with new and existing customers, who will help grow the market for our designs by integrating them with their own proprietary technology and products, or by using our software products for their own designs, thus combining their own particular strengths with ours to provide an extensive array of solutions. We continue to expand our foundry program, which allows fabless companies to enter into the filter business quickly and efficiently. It is through this foundry program that we expect to engage OEM's and Independent Design House's (IDH's) directly to provide a significant cost and time to market advantage.

Our costs include employee salaries and benefits, compensation paid to consultants, capital costs for research and other equipment, costs associated with development activities including travel and administration, legal expenses, sales and marketing costs, general and administration expenses, and other costs associated with a late-stage development, publicly-traded technology company. We continue to add employees, as needed, to support the development of our WaveX™ platform, applications and system test, research and development, as well as sales, marketing and administration functions, 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.

Merger Agreement

On February 14, 2022, we entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Resonant, Murata Electronics North America, Inc., a Texas corporation ("Murata"), and PJ Cosmos Acquisition Company, Inc., a Delaware corporation and wholly owned subsidiary of Murata ("Purchaser"). Murata is a wholly-owned subsidiary of MMC.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, on February 28, 2022 Purchaser commenced a cash tender offer (the "Offer") to purchase all of the outstanding shares of Resonant's common stock, par value $0.001 per share (the "Shares"), at a purchase price of $4.50 per Share, net to the tendering stockholder in cash, without interest and less any required withholding taxes (the "Per Share Amount"). Upon successful completion of the Offer, and subject to the terms and conditions of the Merger Agreement, Purchaser will be merged with and into Resonant (the "Merger"), and Resonant will survive the Merger as a wholly-owned subsidiary of Murata. At the effective time of the Merger (the "Effective Time"), each outstanding Share (other than Shares held by (i) Resonant, Murata or their respective subsidiaries immediately prior to the Effective Time and (ii) stockholders of Resonant who have properly and validly perfected their statutory appraisal rights under the Delaware General Corporation Law ("DGCL")) will automatically be converted into the right to receive the Per Share Amount on the terms and subject to the conditions set forth in the Merger Agreement.



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Table of Contents The initial expiration date of the Offer is the time that is one minute following 11:59 p.m., New York City time, on March 25, 2022, subject to extension in certain circumstances as required or permitted by the Merger Agreement and applicable law. The Offer is subject to the satisfaction of customary conditions, including, among others, that (i) at least that number of Shares validly tendered and not withdrawn (other than Shares tendered by guaranteed delivery where actual delivery has not occurred), when added to any Shares already owned by Murata or any of its controlled subsidiaries, if any, equal a majority of the outstanding Shares as of immediately prior to the time at which Purchaser first accepts for payment the Shares tendered in the Offer, (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iii) the other conditions set forth in Annex A to the Merger Agreement have been satisfied or waived.

The Merger Agreement contemplates that the Merger will be effected pursuant to Section 251(h) of the DGCL, which permits completion of the Merger upon the collective ownership by Murata, Purchaser and any other subsidiary of Murata of one share more than 50% of the number of Shares that are then issued and outstanding, and if the Merger is so effected pursuant to Section 251(h) of the DGCL, no stockholder vote will be required to consummate the Merger.

The Merger Agreement places limitations on Resonant's ability to engage in certain types of transactions without Murata's consent during the period between the signing of the Merger Agreement and the Effective Time. During this period, Resonant may not raise additional capital through the sale of securities or incur debt. Further, other than in transactions in the ordinary course of business or within specified dollar limits and certain other limited exceptions, Resonant generally may not acquire other businesses, make investments in other persons, or sell, lease, or encumber our assets.

The Merger Agreement contains certain termination rights for each of us and Murata. Among such rights, and subject to certain limitations, either Resonant or Murata may terminate the Merger Agreement if the Offer is not completed by June 14, 2022, which date may be extended to August 14, 2022 under certain circumstances. The Merger Agreement also provides that upon termination of the Merger Agreement under specified circumstances, we may be required to pay Murata a termination fee of $11.2 million or Murata may be required to pay us a termination fee of $15.0 million. In addition, upon termination of the Merger Agreement under specified circumstances, we may be required to reimburse Murata for up to $3.0 million of expenses. Any expenses we reimburses Murata would be offset against and reduce the amount of the termination fee otherwise payable by us to Murata.

The COVID-19 Pandemic

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).

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.

We will continue to consider the potential impact of the COVID-19 pandemic on our business operations. Although no material impairment or other effects have been identified to date related to the COVID-19 pandemic, there is substantial uncertainty in the nature and degree of its continued effects over time. That uncertainty affects management's accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions as additional events and information become known.

Results of Operations

Comparison of the Years Ended December 31, 2021 and 2020



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Table of Contents 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 the years ended December 31, 2021 and 2020, we recognized $2.2 million and $3.2 million, respectively, of revenue. We derive a substantial majority of our revenues from a major Tier 1 RF filter manufacturer. We have recorded $6.8 million of deferred revenue as of December 31, 2021, which we expect to recognize over the remainder of the contracts, generally the next four years. Additionally, we expect to continue to recognize sales-based royalty revenue from our license agreements.

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 $3.4 million from $19.5 million in 2020 to $22.9 million in 2021. The increase was the result of higher development costs of $1.8 million related to our WaveX™ and XBAR® technology development, $0.4 million of increased legal and other expenses related to our patent strategy program, and $1.6 million increase in employment costs and compensation expense associated with headcount increases, offset by a decrease of $0.3 million of severance related to a restructuring that occurred in the first quarter of 2020. We anticipate that our research and development expenses will continue 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 increased $3.1 million, from $12.1 million in 2020 to $15.2 million in 2021. The increase was primarily a product of increased compensation expenses for employees and consultants of $2.0 million, increased travel expense of $0.1 million as COVID restrictions have started to lift and other increased operating expenses including insurance, investor relations, legal and accounting of $0.9 million . We anticipate that our sales, marketing and administration expenses may continue to increase as a result of anticipated growth.

Interest and Investment Income. Interest and investment income decreased from $66,000 in 2020 to zero in 2021 primarily due to decreased cash and investment balances and lower interest rates. We expect interest income to fluctuate in proportion to our cash and investment balances.

Income Taxes. We have earned minimal revenues and are currently operating at a loss. In addition to minimum taxes in the states where we conduct business, we are also responsible for income taxes in Switzerland related to the earnings of our foreign subsidiary, GVR. The provision for income taxes primarily represents the minimum taxes we incurred during the year.

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 December 31, 2021, we have raised aggregate gross proceeds of $155.9 million through the use of loans, 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 warrants and stock options.

We had current assets of $21.9 million and current liabilities of $7.0 million as of December 31, 2021, resulting in working capital of $14.9 million. This compares to working capital of $19.8 million as of December 31, 2020. The change in working capital is primarily the result of use of cash in our normal business operations offset by the proceeds from the issuance of equity.

As of December 31, 2021, our accumulated deficit totaled $186.9 million. In the year ended December 31, 2021 our net loss totaled $36.0 million and we used $22.1 million of cash for operating activities, the purchase of property and equipment and expenditures for patents. To date we have not generated significant revenues to enable profitability. We expect to continue to incur significant losses. These factors raise substantial doubt regarding our ability to continue as a going concern. At December 31, 2021 we had cash and cash equivalents of $21.2 million. In the absence of additional customer contracts, we



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Table of Contents believe these cash resources, along with anticipated cash generated from existing customer contracts, will provide sufficient funding into the third quarter of 2022. We are subject to the risks and uncertainties associated with a new business. Our continuance as a going concern is dependent on future profitability. We are actively pursuing expanding our technology portfolio, increasing our revenue opportunities by completing deliverables under current customer contracts and entering into new customer contracts, and efficiently managing operations and exploring cost saving opportunities. We may not be successful in these efforts. As further described above, on February 14, 2022, the Company entered into a Merger Agreement for our proposed acquisition by Murata. If the merger is unable to be completed, we may need to seek to raise additional capital from the sale of equity securities or incurrence of indebtedness. There can be no assurance that additional financing will be available to us on acceptable terms, or at all in which case we might be forced to make substantial reductions in our operating expenses which could adversely affect our ability to implement our business plan and ultimately our viability as a company. Even if available, such capital may be dilutive to existing stockholders. The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

The Merger Agreement for our proposed acquisition by Murata, described in the introduction to this management's discussion and analysis, places certain limitations on our use of cash and on our ability to raise capital through the sale of equity securities or incurrence of debt.

Cash Flow Analysis

Operating activities used cash of $20.1 million in 2021 and $21.6 million in 2020. The decrease is primarily the result of an increase in non-cash items, deferred revenue and salary accruals, partially offset by an increase in net loss primarily driven by an increase in operating expenses.

Investing activities used cash of $2.0 million in 2021 and $1.6 million in 2020. In both years, the cash used was a result of purchases of property and equipment and expenditures for patents.

Financing activities provided cash of $18.2 million in 2021 and $37.5 million in 2020. The cash provided in 2021 was the result of proceeds from the sales of equity securities from our at-the-market program and exercises of stock options. The cash provided in 2020 was the result of proceeds from the sales of equity securities from an underwritten public offering and from our at-the-market program.

Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements.

Contractual Obligations and Known Future Cash Requirements

Indemnification Agreements

In the ordinary course of business, we may enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of comprehensive loss, consolidated statements of stockholders' equity or consolidated statements of cash flows.

Our material cash requirements include the following contractual and other obligations.

Purchasing Commitments

We have non-cancelable purchasing commitments that we incur in the ordinary course of business. The purchase commitments covered by these agreements are for less than one year and aggregate to $0.7 million as December 31, 2021.

Operating Lease Commitments



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Table of Contents We lease various office facilities, including our corporate headquarters in Austin, Texas, as well as our offices in Goleta, California, San Mateo, California and Anyang, South Korea under operating lease agreements. The terms of the lease agreements provide for rental payments on a graduated basis. We recognize rent expense on a straight-line basis over the lease periods. As of December 31, 2021, we had operating lease payment obligations of $1.7 million, with $0.6 million payable within 12 months.

Finance Lease Commitments

We have one finance lease for lab equipment. As of December 31, 2021, we had finance lease payment obligations of $0.2 million, with $0.1 million payable within 12 months.

Critical Accounting Policies and Estimates

Our critical accounting estimates are included in our significant accounting policies as described in Note 2 of the consolidated financial statements included in Item 8, Financial Statements and Supplemental Data, of this Annual Report on Form 10-K. Those consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. Critical accounting estimates are those that we believe are most important to the portrayal of our financial condition and results of operations. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our estimates are evaluated on an ongoing basis and are drawn from historical operations, current trends, future business plans and other factors that management believes are relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the following accounting estimates reflect the more significant judgments and estimates we use in preparing our consolidated financial statements.

Revenue Recognition-We recognize revenue in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers.

Revenue is recognized upon the transfer of control of promised goods or services to the customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We are required to use estimates to determine the transaction price in the contract as well as the time over which we will satisfy the performance obligations. The determination of the transaction price may include estimates of amounts we expect to receive, including milestones that we may achieve which would result in additional payments upon achievement. These estimates are used for recognition of our revenue primarily related to upfront non-refundable fees received in connection with filter design projects with customers. Our performance obligation is to design a licensable filter in accordance with customer specifications. For the years ended December 31, 2021 and 2020, the majority of our revenue was recognized over time as services were provided. We recognize revenue over the course of the estimated design development phase based on efforts expended to date. Significant estimation is involved in determining the efforts that will be expended for the contract duration. The estimation of costs over the contract period have a material impact on the revenue we recognize over the contract period and they require significant judgement on the part of management. At the end of each reporting period, we reassess our measure of progress and adjust revenue when appropriate.

Recently Issued and Adopted Accounting Pronouncements

Recent accounting pronouncements are detailed in Note 2 of the consolidated financial statements included in Item 8, Financial Statements and Supplemental Data, of this Annual Report on Form 10-K.

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