What changed in this filing

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Item 1. Financial Statements

2022-05-02 compared with 2021-11-08 · 111 added, 176 removed, 237 unchanged (55% of the section changed)

2 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

4 unchanged sentences

Property and equipment, net

Operating lease right-of-use asset

Other non-current assets

Liabilities and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current liabilities:

1 unchanged sentence

Accrued expenses

Warrant liability

Current portion of long-term debt

Total current liabilities

Long-term debt

Operating lease liability, non-current portion

Other long-term liabilities

Total liabilities

Commitments and contingencies

Convertible preferred stock, $ 0.01 par value, 10,000,000 and 237,370,645 authorized as of September 30, 2021 and December 31, 2020, respectively;

0 and 223,541,754 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Stockholders’ equity (deficit):

Common stock, $ 0.01 par value, 200,000,000 and 625,217,795 authorized as of September 30, 2021 and December 31, 2020, respectively;

20,351,779 and 360,412 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Commitments and contingencies (Notes 5 and 10)

Stockholders’ equity:

Common stock, $ 0.01 par value, 200,000,000 authorized as of March 31, 2022 and December 31, 2021;

20,486,971 and 20,399,337 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

Three months ended

Nine months ended

September 30,

Cost of goods sold

5 unchanged sentences

Interest expense

Other income (expense), net

Other expense, net

Loss before income taxes

10 unchanged sentences

comprehensive

Balances as of June 30, 2021

Exercise of stock options

Employee stock compensation

Issuance of common stock, net of offering costs

Reverse stock split

Conversion of Series G preferred stock

( 223,541,754 )

Net loss for the three months ended September 30, 2021

Cumulative translation adjustment

Balances as of September 30, 2021

Balances as of June 30, 2020

Exercise of stock options

Employee stock compensation

Issuance of Series G preferred stock, net of costs

Accretion of Series G issuance costs

Net loss for the three months ended September 30, 2020

Cumulative translation adjustment

Balances as of September 30, 2020

stockholders’

preferred stock

comprehensive

Balances as of December 31, 2021

1 unchanged sentence

Employee stock compensation

Issuance of common stock, net of offering costs

Reverse stock split

Conversion of Series G preferred stock

( 223,541,754 )

Net loss for the nine months ended September 30, 2021

Net loss for the three months ended March 31, 2022

Cumulative translation adjustment

Balances as of September 30, 2021

Balances as of March 31, 2022

Balances as of December 31, 2020

Exercise of stock options

Repurchase of common stock

Employee stock compensation

Issuance of Series G preferred stock, net of costs

Accretion of Series G issuance costs

Net loss for the nine months ended September 30, 2020

Net loss for the three months ended March 31, 2021

Cumulative translation adjustment

Balances as of September 30, 2020

Balances as of March 31, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities:

15 unchanged sentences

Proceeds from the exercise of common stock options

Proceeds from issuance of Series G Preferred Stock, net of fees

Payments related to reverse stock split

Proceeds from the issuance of common stock, net of offering costs

Net cash provided by financing activities

10 unchanged sentences

(the “Company”) was incorporated in Delaware and is headquartered in Minneapolis, Minnesota.

The Company has developed and is marketing a medical device, BAROSTIM NEO, for heart failure (“HF”) and resistant hypertension.

The Company has developed and is marketing a medical device, Barostim, for heart failure (“HF”) and resistant hypertension.

The Company is focused on the sale of its product in the U.S.

19 unchanged sentences

Cash and cash equivalents include highly liquid investments with an original maturity of three months or less.

As of September 30, 2021 and December 31, 2020, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value.

As of March 31, 2022 and December 31, 2021, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

Customer credit terms are established prior to shipment with the standard generally being net 30 days.

We do not record an allowance on our trade accounts receivable but monitor the collectability of individual customer accounts on an ongoing basis.

Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis.

The Company regularly reviews inventory quantities in consideration of actual loss experiences, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

Operating leases are included in operating lease right-of-use (“ROU”) asset, accrued expenses, and operating lease liability – non-current portion in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

We used the incremental borrowing rate based on information readily available at the time of recognition to determine the present value of the lease payments.

The determination of our incremental borrowing rate requires management judgement based on information available at lease commencement.

Revenue recognition

The Company sells its products primarily through a direct sales force and to a lesser extent through a combination of sales agents and independent distributors.

The Company’s revenue consists primarily of the sale of its BAROSTIM NEO, which consists of two implantable components:

The Company’s revenue consists primarily of the sale of its Barostim, which consists of two implantable components:

a pulse generator and a stimulation lead.

8 unchanged sentences

The Company recognizes net revenue on product sales when the customer obtains control of the Company’s product, which generally occurs at a point in time upon delivery based on the contractual shipping terms of a contract.

Stock-Based Compensation

We recognize equity-based compensation expense for awards of equity instruments to employees and non-employees based on the grant date fair value of those awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”).

ASC 718 requires all equity-based compensation awards to employees and non-employee directors, including grants of restricted shares and stock options, to be recognized as expense in the statements of operations and comprehensive loss based on their grant date fair values.

We estimate the grant date fair value of stock options using the Black-Scholes option pricing model.

We use an estimate of the value of our common stock, with the assistance of an independent appraiser, to determine the fair value of options.

We account for forfeitures as they occur.

We expense the fair value of our equity-based compensation awards

granted to employees on a straight-line basis over the associated service period, which is generally the period in which the related services are received.

Recent accounting pronouncements

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, Leases (“Topic 842”) .

The purpose of Topic 842 is to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet, including those previously classified as operating leases under current U.S.

GAAP and disclosing key information about leasing arrangements.

Topic 842 is effective for private companies and smaller reporting companies for annual periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted, and the Company must elect whether the date of initial application is the beginning of the earliest comparative period presented in the financial statements, or the beginning of the period of adoption.

While the Company is still in the process of determining the effect that the new standard will have on its financial position and results of operations, the Company expects to recognize additional assets and corresponding liabilities on its condensed consolidated balance sheets, as a result of its operating lease portfolio as disclosed in Note 10 — Commitments and Contingencies.

On January 1, 2022, the Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases , utilizing the alternative modified retrospective transition approach.

Under the alternative modified retrospective transition approach, the reported results for 2022 reflect the application of Topic 842 guidance, whereas comparative periods and their respective disclosures prior to the adoption of Topic 842 are presented using the legacy guidance of ASC 840.

As a result of adopting the new standard, the Company recognized right-of-use assets of $ 579,000 and lease liabilities of $ 561,000 as of January 1, 2022.

The lease liabilities represent the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate as of January 1, 2022.

The corresponding ROU assets are recorded based on the lease liabilities and the cumulative difference between rent expense and the amounts paid under the lease.

The Company did not elect any practical expedients.

Selected balance sheet information

Inventory consists of the following at:

September 30,

(in thousands)

2 unchanged sentences

Property and equipment, net consists of the following at:

September 30,

(in thousands)

5 unchanged sentences

Accumulated depreciation and amortization

Depreciation expense was $ 42,000 and $ 17,000 for the three months ended September 30, 2021 and 2020, respectively, and $ 112,000 and $ 52,000 for the nine months ended September 30, 2021 and 2020, respectively.

Depreciation expense was $ 62,000 and $ 33,000 for the three months ended March 31, 2022 and 2021, respectively.

Accrued expenses consist of the following at:

September 30,

(in thousands)

1 unchanged sentence

Paid time off

Interest payable

Customer rebates

Operating lease liability, current portion

Employee stock purchase plan

Fair value measurements

5 unchanged sentences

● Level 3 — Inputs are unobservable for the asset or liability.

The following table sets forth the Company’s liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy:

(in thousands)

Balance as of December 31, 2020

Convertible preferred stock warrant liability

Total liabilities

The convertible preferred stock warrant liability related to warrants issued in connection with loan and security agreements entered into in September 2014, as amended in July 2015, in May 2016 and in September 2019.

These warrants were originally issued to purchase shares of Series F-2 convertible preferred stock and Series G convertible preferred stock (“Series G Preferred Shares”).

In connection with the closing of the initial public offering (“IPO”), these convertible preferred stock warrants became warrants to purchase 108,406 shares of common stock and were reclassified to equity.

The convertible preferred stock warrant liability also related to a warrant issued to Biosense Webster, Inc.

(“BWI”), an affiliate of Johnson & Johnson Innovation — JJDC, Inc., to purchase Series G Preferred Shares with an exercise price of $ 0.01 per share.

In connection with the closing of the IPO, the BWI warrant to purchase Series G Preferred Shares became exercisable to purchase 607,725 shares of common stock at an exercise price of $ 0.16 per share .

There was no convertible preferred stock warranty liability as of the periods ended March 31, 2022 and December 31, 2021.

The Company’s recurring fair value measurements using significant unobservable inputs (Level 3) related solely to the Company’s convertible preferred stock warrant liability.

The convertible preferred stock warrant liability was remeasured at each financial reporting period with any changes in fair value being recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

In connection with the closing of the IPO, all of the outstanding convertible preferred stock warrants were converted to common stock warrants.

The convertible preferred stock warrant liability was remeasured at each financial reporting period with any changes in fair value being recognized as a component of other expense, net in the condensed consolidated statements of operations and comprehensive loss.

In connection with the closing of the initial public offering (“IPO”), all of the outstanding convertible preferred stock warrants were converted to common stock warrants.

The related liability was remeasured at the time of the IPO and reclassed to additional paid-in capital.

The fair value of the convertible preferred stock warrant liability was determined using the Black-Scholes option pricing model with the following inputs during the nine months ended:

The following table sets forth a summary of changes in the estimated fair value of the Company’s convertible preferred stock warrants during the nine months ended:

September 30,

The following table sets forth a summary of changes in the estimated fair value of the Company’s convertible preferred stock warrants during the three months ended:

(in thousands)

3 unchanged sentences

End of the period

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the periods ended September 30, 2021 and December 31, 2020.

Horizon loan agreement

In September 2019, the Company entered into a loan and security agreement (“Horizon loan agreement”) with Horizon Technology Finance Corporation (“Horizon”) under which it could borrow up to a total of $ 20.0 million at a floating per annum rate equal to 10 % plus the amount by which the 30-day U.S.

dollar LIBOR rate on the first business day of the month exceeds 2.2 %.

The Horizon loan agreement initially required interest only payments through October 2021 and then 36 monthly principal and interest payments beginning in November 2021.

A final payment of $ 0.7 million, equal to 3.5 % of the original principal, is due in October 2024.

The Horizon loan agreement initially required the Company to maintain cash on deposit of not less than $ 5.0 million in accounts over which Horizon maintained an account control agreement.

This minimum cash on deposit requirement was released in July 2020, following the satisfaction of a financing milestone.

The borrowings are collateralized by all or substantially all of the assets of the Company.

The Horizon loan agreement requires the payment of certain penalties if the loan is paid off prior to maturity for any reason, including pursuant to a subjective acceleration clause, and includes various restrictive covenants, including a restriction on the payment of dividends.

The Company was in compliance with these covenants as of September 30, 2021.

In August 2020, the Company entered into an amended agreement with Horizon to extend the interest only period through April 2022, followed by 30 monthly principal and interest payments beginning in May 2022.

In connection with the Horizon loan agreement, the Company recorded $ 1.1 million of debt issuance costs and discounts as a reduction of long-term debt.

Of this total, $ 0.5 million related to legal fees and an investment bank fee and $ 0.6 million related to the warrants to purchase Series G Preferred Shares issued by the Company.

These warrants were exercisable on the grant date at a price of $ 0.80 per share and expire in September 2029.

The Company used the Black-Scholes option pricing model to determine the grant date fair value of these warrants.

The annual principal maturities of debt as of September 30, 2021 are as follows (in thousands):

Unamortized debt costs and discounts

current portion

Long-term debt

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the periods ended March 31, 2022 and 2021.

We lease 23,890 square feet of office space in Minneapolis, Minnesota, which houses our principal executive offices and our manufacturing facility.

We lease this space under an operating lease agreement that commenced December 1, 2008 and expires July 31, 2024.

We intend to add new facilities as we grow, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.

Our operating lease agreement includes an option to renew for one additional period of five years .

The exercise of the lease renewal option is at our sole discretion and was not included in the lease term for the calculation of the ROU asset and lease liability upon adoption of Accounting Standards Update 2016-02, Leases (Topic 842) on January 1, 2022, as it is not reasonably certain of exercise.

In addition to base rent, we will also pay our proportionate share of operating expenses, as defined in the lease.

These payments will be made monthly and will be adjusted annually to reflect actual charges incurred for operating expenses, such as common area maintenance, taxes and insurance.

The following table presents the lease balances within the condensed consolidated balance sheets:

(in thousands)

Right-of-use assets:

Operating lease right-of-use asset

Operating lease liabilities:

Accrued expenses

Operating lease liability, non-current portion

Total operating lease liabilities

Maturities of our lease liability for our operating lease are as follows as of March 31, 2022:

(in thousands)

Total undiscounted lease payments

imputed interest

Present value of lease liability

As of March 31, 2022, the remaining lease term was 2.3 years and the discount rate was 5.0 %.

The operating cash outflows from our operating lease were $ 0.2 million for the three months ended March 31, 2022.

Stockholders’ equity

Initial Public Offering

During 2016, the Company issued 72,125,000 shares of Series G Preferred Shares at a price of $ 0.80 per share, for net proceeds to the Company of approximately $ 57.4 million after deducting offering expenses payable by the Company.

The same Series G investors agreed to purchase an additional $ 35.3 million of Series G Preferred Shares upon the Company’s achievement of a certain operational milestone, subject to limited closing conditions.

In January 2019, May 2019, and August 2019 , the Series G investors purchased additional Series G Preferred Shares, resulting in net proceeds to the Company of $ 24.7 million.

In July of 2020, the Company issued 62,500,000 additional Series G Preferred Shares, at a price of $ 0.80 per share, for net proceeds to the Company of $ 49.8 million after deducting offering expenses payable by the Company.

On May 31, 2016, holders of the requisite number of the Company’s then-outstanding convertible preferred stock approved the conversion of all preferred stock into shares of the Company’s common stock in connection with a new equity financing.

Accordingly, all of the Company’s then-outstanding preferred stock was converted on a one -for-one basis into shares of the Company’s common stock.

Under the terms of the equity financing, each prior holder of preferred stock who purchased a required amount of securities in the new financing was entitled to exchange certain of the shares of common stock received in the conversion described above into new prime series of preferred stock corresponding to the series of preferred stock from which the common stock was previously converted.

All of the previously held Series A-1, B-1, C-1, D-1, E-1 and F preferred stock had similar features as the Series A-2 preferred stock (“Series A-2 Preferred Shares”), Series B-2 preferred stock (“Series B-2 Preferred Shares”), Series C-2 preferred stock (“Series C-2 Preferred Shares”), Series D-2 preferred stock (“Series D-2 Preferred Shares”), Series E-2 preferred stock (“Series E-2 Preferred Shares”), and Series F-2 preferred stock (“Series F-2 Preferred Shares”) described below.

The Series A-2, Series B-2, Series C-2, Series D-2, Series E-2, Series F-2 and Series G Preferred Shares are referred to collectively as the “Preferred Shares.”

On July 2, 2021, the Company closed its IPO of 8,050,000 shares of its common stock at a public offering price of $ 18.00 per share, which included 1,050,000 shares of common stock issued upon the exercise in full by the underwriters of their option to purchase additional shares, for net proceeds from the IPO, after

deducting the underwriting discount and other offering expenses payable by the Company totaling $ 1.6 million, of $ 133.2 million.

Upon the closing of the IPO, all shares of convertible preferred stock were automatically converted into common stock.

Series G Preferred Shares were converted into common stock on a 15.819 -for-1 basis, and all other shares of convertible preferred stock were automatically converted into common stock on a 39.548 -for-1 basis.

Series G convertible preferred stock was converted into common stock on a 15.819 -for-1 basis, and all other shares of convertible preferred stock were automatically converted into common stock on a 39.548 -for-1 basis.

The conversion of the outstanding preferred stock resulted in an aggregate of 11,929,584 shares of common stock.

3 unchanged sentences

The par value of the common stock was not adjusted as a result of the reverse stock split.

Adjustments corresponding to the reverse stock split were made to the ratio at which the convertible preferred stock will convert into common stock in connection with the closing of the IPO.

Accordingly, all share and per-share amounts for all periods presented in these financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split and the adjustment of the conversion ratio of the convertible preferred stock.

Adjustments corresponding to the reverse stock split were made to the ratio at which the convertible preferred stock converted into common stock in connection with the closing of the IPO.

Accordingly, all share and per-share

amounts for all periods presented in these financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split and the adjustment of the conversion ratio of the convertible preferred stock.

Common Stock Warrants

4 unchanged sentences

In June 2001, the Company’s Board of Directors and stockholders established the 2001 Stock Incentive Award Plan (“2001 Plan”).

Under the 2001 Plan, as amended, 2,674,749 shares of common stock had been reserved for the issuance of incentive stock options granted to employees, nonemployee directors, consultants or independent contractors.

Options granted under the 2001 Plan have vesting terms that range from the day of grant to four years and expire within a maximum term of 10 years from the grant date.

Under the 2001 Plan, as amended, 2,674,749 shares of common stock had been reserved for the issuance of incentive stock options granted to employees, non-employee directors, consultants or independent contractors.

Options granted under the 2001 Plan have vesting terms that range from the date of grant to four years and expire within a maximum term of 10 years from the grant date.

In connection with the IPO in 2021, the Company’s Board of Directors and stockholders established the 2021 Equity Incentive Plan (“2021 Plan”).

1 unchanged sentence

The shares available for issuance under the 2021 Plan will automatically increase on the first day of each year, commencing January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to 5 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or such lesser number of shares as determined by the Board of Directors.

The annual increase resulted in an additional 1,019,967 shares being reserved for issuance under the 2021 Plan as of January 1, 2022.

The 2021 Plan provides for the issuance of stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards and cash incentive awards to employees, consultants and non-employee directors of the Company and its subsidiaries.

1 unchanged sentence

No further awards can be made under the 2001 Plan following the adoption of the 2021 Plan.

As of September 30, 2021, there were 1,791,888 shares available for future issuance under the 2021 Plan.

As of March 31, 2022, there were 2,042,964 shares available for future issuance under the 2021 Plan.

Options are granted at exercise prices not less than the fair market value (as determined by the Board of Directors) of the Company’s common stock on the date of grant.

During the years 2008 through September 30, 2021, the Board of Directors authorized the grant of stock options for the purchase of shares of common stock to the employers of certain nonemployee directors.

The options were not granted under the 2001 Plan or the 2021 Plan, but terms are substantially the same as the Company’s standard form of option agreement for nonemployee directors as they have an exercise price not less than the fair market value on the grant date and vest over 48 months from the date of grant.

During the years 2008 through March 31, 2022, the Board of Directors authorized the grant of stock options for the purchase of shares of common stock to the employers of certain non-employee directors.

The options were not granted under the 2001 Plan or the 2021 Plan, but terms are substantially the same as the Company’s standard form of option agreement for non-employee directors as they have an exercise price not less than the fair market value on the grant date and vest over 48 months from the date of grant.

The following is a summary of stock option activity:

2 unchanged sentences

Cancelled / Forfeited

Balance as of September 30, 2021

Options exercisable as of September 30, 2021

As of September 30, 2021, stock options outstanding included 9,993 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of September 30, 2021, the weighted average remaining contractual life was 8.4 years.

For options exercisable as of September 30, 2021, the weighted average remaining contractual life was 7.3 years.

Balance as of March 31, 2022

Options exercisable as of March 31, 2022

As of March 31, 2022, stock options outstanding included 9,993 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of March 31, 2022, the weighted average remaining contractual life was 8.3 years.

For options exercisable as of March 31, 2022, the weighted average remaining contractual life was 6.9 years.

In connection with the IPO, the Company’s Board of Directors and stockholders also established an Employee Stock Purchase Plan (the “ESPP”).

1 unchanged sentence

The shares available for issuance under the ESPP will automatically increase on the first day of each year, commencing January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to 1 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or such lesser number of shares as determined by the Board of Directors.

The annual increase resulted in an additional 203,993 shares being reserved for issuance under the ESPP as of January 1, 2022.

The ESPP will permit certain of the Company’s U.S.

1 unchanged sentence

The Company expects the first purchase period to commence in 2022.

Accordingly, as of September 30, 2021, no shares of common stock have been purchased under the ESPP.

Accordingly, as of March 31, 2022, no shares of common stock have been purchased under the ESPP.

As of March 31, 2022 there were 482,163 shares available for issuance under the ESPP.

Stock-based compensation expense

2 unchanged sentences

The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest.

The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.

The following table provides the weighted average fair value of options granted to employees and the related assumptions used in the Black-Scholes option pricing model for the nine months ended September 30, 2021.

No options were issued during the nine months ended September 30, 2020.

September 30,

The Company accounts for forfeitures as they occur.

The following table provides the weighted average fair value of options granted to employees and the related assumptions used in the Black-Scholes option pricing model for the three months ended March 31, 2022.

Weighted average fair value of options granted

13 unchanged sentences

Treasury securities for a period approximating the expected term of the options being valued.

For the three and nine months ended September 30, 2021 and 2020, the Company recognized stock-based compensation expense as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company recognized stock-based compensation expense for the periods indicated:

Three months ended

(in thousands)

2 unchanged sentences

Cost of goods sold

As of September 30, 2021, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 6.3 million.

As of September 30, 2021, the related weighted average period over which it is expected to be recognized is approximately 3.5 years.

Performance-Based options

As of September 30, 2021, the Company had 10,493 stock options outstanding that contained vesting conditions contingent on the achievement of certain milestones.

Assuming continued service by the employees, the options would start vesting over a 48-month period upon achievement of the performance criteria.

As of September 30, 2021, the Company determined that the likelihood of achieving the milestones was not probable and therefore no stock-based compensation expense was recorded.

As of March 31, 2022, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 9.1 million.

As of March 31, 2022, the related weighted average period over which the expense is expected to be recognized is approximately 3.3 years.

Early exercise of stock options

3 unchanged sentences

This repurchase right expires based upon the original option vesting schedule.

As of September 30, 2021 and 2020, there have been no early exercises and therefore there is no liability recorded for the early exercise of stock options.

As of both September 30, 2021 and 2020, a valuation allowance was recorded against all deferred tax assets due to the Company’s cumulative net loss position.

Provision for income taxes for the three months ended September 30, 2021 and 2020 was $ 23,000 and $ 19,000 , respectively.

Provision for income taxes for the nine months ended September 30, 2021 and 2020 was $ 66,000 and $ 64,000 , respectively.

As of March 31, 2022 and 2021, there have been no early exercises and therefore there is no liability recorded for the early exercise of stock options.

As of March 31, 2022 and December 31, 2021, a valuation allowance was recorded against all deferred tax assets due to the Company’s cumulative net loss position.

Provision for income taxes for the three months ended March 31, 2022 and 2021 was $ 26,000 and $ 17,000 , respectively.

As of December 31, 2021, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $ 324.8 million and $ 6.5 million, respectively.

The federal NOLs begin to expire in 2021 and the state NOLs began expiring in 2020.

The federal NOLs began expiring in 2021 and the state NOLs began expiring in 2020.

As of December 31, 2021, the Company had federal and state tax credit carryforwards of approximately $ 8.9 million and $ 1.6 million, respectively.

The federal and state tax credit carryforwards begin to expire in 2021 and 2028, respectively.

Utilization of net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986 and similar state provisions.

The federal tax credit carryforwards began expiring in 2021 and the state tax credit carryforwards will begin expiring in 2028.

Utilization of NOLs may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986 and similar state provisions.

The Company has not performed a detailed analysis to determine whether an ownership change has occurred.

Such a change of ownership would limit the Company’s utilization of the net operating losses and could be triggered by subsequent sales of securities by the Company or its stockholders.

Such a change of ownership would limit the Company’s utilization of the NOLs and could be triggered by subsequent sales of securities by the Company or its stockholders.

(Loss) Earnings Per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data):

Three Months Ended September 30,

Nine Months Ended September 30,

Accretion of preferred stock to redemption value

Net loss attributable to common stockholders

Basic and diluted net loss per share attributable to common stockholders was calculated for the periods indicated (in thousands, except share and per share data):

Three months ended

Weighted average common shares outstanding — basic and diluted

3 unchanged sentences

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Nine Months Ended September 30,

Three months ended

Options to purchase common stock

3 unchanged sentences

Commitments and contingencies

Operating Leases

The Company has entered into an operating lease agreement for its office, manufacturing and research facility, which expires in 2024.

Rent expense for the three months ended September 30, 2021 and 2020 was $ 91,000 and $ 90,000 , respectively.

Rent expense for the nine months ended September 30, 2021 and 2020 was $ 279,000 and $ 276,000 , respectively.

Future minimum lease payments under all operating leases as of September 30, 2021, are as follows for the years ending (in thousands):

December 31, 2021

December 31, 2022

December 31, 2023

December 31, 2024

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business.

The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.

There have been no contingent liabilities requiring accrual or disclosure as of September 30, 2021 or December 31, 2020.

There have been no contingent liabilities requiring accrual or disclosure as of March 31, 2022 or December 31, 2021.

Employee benefit plans

6 unchanged sentences

The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance.

The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level.

Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level.

Accordingly, the Company has determined that it has a single reportable and operating segment structure.

1 unchanged sentence

The Company derives all its revenues from sales to customers in Europe and the U.S.

The following table provides revenue by country for each location accounting for more than 10% of the total revenue for the three and nine months ended (in thousands):

The following table provides revenue by country for each location accounting for more than 10% of the total revenue for the periods indicated (in thousands):

Three months ended

Nine months ended

September 30,

Other countries

As September 30, 2021 and 2020, long-lived assets were located primarily in the U.S.

Subsequent events

On November 3, 2021 the Company fully repaid all amounts outstanding under the $ 20.0 million principal amount Horizon loan agreement.

The total repayment amount was $ 21.3 million, inclusive of prepayment and other fees, and will be reflected within the Company’s financial statements for the fiscal year ended December 31, 2021.

As of March 31, 2022 and December 31, 2021, long-lived assets were located primarily in the U.S.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements