7 unchanged sentences
and filing for regulatory approvals.
−Removed: Our ability to generate revenue from product sales and become profitable will depend on our ability to successfully commercialize Barostim and any product enhancements we may advance in the future.
−Removed: We expect to derive future revenue by expanding our own dedicated salesforce and increasing awareness of Barostim among payors, physicians and patients.
−Removed: Our sales and marketing efforts are directed at electrophysiologists, HF specialists, general cardiologists and vascular surgeons because they are the primary users of our technology.
+Added: Our ability to generate revenue from product sales and become profitable will depend on our ability to continue to successfully commercialize Barostim and any product enhancements we may advance in the future.
+Added: We expect to derive future revenue by continuing to both expand our own dedicated salesforce and increase awareness of Barostim among payors, physicians and patients.
+Added: Our sales and marketing efforts are directed at EPs, HF specialists, interventional and general cardiologists and vascular surgeons because they are the primary users of our technology.
However, we consider hospitals, where the procedures are performed primarily in an outpatient setting, to be our customers, as they are the purchasing entities of Barostim in the U.S.
5 unchanged sentences
As a result, we have prioritized coverage by the CMS while simultaneously developing processes to engage commercial payors.
−Removed: As of July 2020, all Medicare Administrative Contractors have retired automatic coverage denial policies for our Current Procedural Terminology codes, thereby allowing hospitals to be paid for the Barostim procedure.
−Removed: Our reimbursement strategy involves continuing to broaden our current coverage and build our in-house market access team to assist patients and physicians in obtaining appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not exist.
+Added: All MACs have retired automatic coverage denial policies for our CPT codes, thereby allowing hospitals to be paid for the Barostim procedure.
+Added: Our reimbursement strategy involves continuing to broaden our current coverage and build our in-house market access team to obtain appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not exist.
Outside the U.S., reimbursement levels vary by country and within some countries by region.
−Removed: Barostim is eligible for reimbursement in certain countries in the European Union, such as Germany, where annual healthcare budgets for the hospital generally determine the number of patients to be treated and the prices to be paid for the related devices that may be purchased.
−Removed: We manage all aspects of manufacturing operations and product supply of Barostim, which include final assembly, testing and packaging of our implantable pulse generator and stimulation lead, at our headquarters in Minneapolis, Minnesota.
+Added: Barostim is eligible for reimbursement in certain countries in the EEA, such as Germany, where annual healthcare budgets for the hospital generally determine the number of patients to be treated and the prices to be paid for the related devices that may be purchased.
+Added: We manage all aspects of manufacturing operations and product supply of Barostim, which include final assembly, testing and packaging of our IPG and stimulation lead, at our headquarters in Minneapolis, Minnesota.
We utilize components or various subassemblies manufactured by third-party suppliers, some of which have significant lead times.
2 unchanged sentences
We seek to maintain higher levels of inventory to protect ourselves from supply interruptions and continue to seek to broaden and strengthen our supply chain through additional sourcing channels.
−Removed: From our inception until the IPO, we financed our operations primarily through preferred stock financings, and additionally, from sales of our Barostim products and amounts borrowed under our current and past credit facilities.
−Removed: We have devoted substantially all of our resources to research and development activities related to Barostim Therapy, including clinical and regulatory initiatives to obtain marketing approval and sales and marketing activities.
−Removed: We intend to use a portion of the IPO proceeds to continue funding the expansion of our direct sales force and commercial organization related to Barostim in the U.S.
−Removed: We also intend to continue investing in research and development in the near term to improve clinical outcomes, optimize patient adoption and comfort, increase patient access and enhance the physician and patient experience.
+Added: From our inception until the IPO, we financed our operations primarily through preferred stock financings, and additionally, from sales of our Barostim products and amounts borrowed under our credit facilities.
+Added: We then devoted substantially all of our resources to research and development activities related to Barostim Therapy, including clinical and regulatory initiatives to obtain marketing approval and sales and marketing activities.
+Added: We used a portion of the IPO proceeds to continue funding the expansion of our direct sales force and commercial organization related to Barostim in the U.S.
+Added: We continued investing in research and development in the near term to improve clinical outcomes, optimize patient adoption and comfort, increase patient access and enhance the physician and patient experience.
Longer term, we plan to explore Barostim’s potential to expand its indications for use to other cardiovascular diseases.
−Removed: As a result of these investments and our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financings.
+Added: On October 31, 2022, we entered into a loan and security agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of term loans described in Note 5 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.
+Added: As a result of these investments and our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financing.
Recent developments
−Removed: Since it was reported to have surfaced in December 2019, a novel strain of coronavirus (“COVID-19”) has spread across the world and has been declared a pandemic by the World Health Organization.
−Removed: Efforts to contain the spread of COVID-19 have been significant and governments around the world, including in the U.S., have implemented severe travel restrictions, social distancing requirements, quarantines, stay-at-home orders and other significant restrictions.
−Removed: As a result, the current COVID-19 pandemic has presented a substantial public health and economic challenge and is affecting hospitals, physicians, patients, communities and business operations, as well as contributing to significant volatility and negative pressure on the U.S.
+Added: Since it was reported to have surfaced in December 2019, a novel strain of coronavirus disease, COVID-19, has spread across the world and has been declared a pandemic by the World Health Organization.
+Added: Efforts to contain the spread of COVID-19 have been significant and governments around the world, including in the U.S., implemented severe travel restrictions, social distancing requirements, quarantines, stay-at-home orders and other significant restrictions.
+Added: As a result, the COVID-19 pandemic presented a substantial public health and economic challenge and is affecting hospitals, physicians, patients, communities and business
+Added: operations, as well as contributing to significant volatility and negative pressure on the U.S.
and world economy and in financial markets.
1 unchanged sentence
Beginning in March 2020, our revenue was negatively impacted by COVID-19 as healthcare facilities and clinics began restricting in-person access to their clinicians, reducing patient consultations and treatments or temporarily closing their facilities.
−Removed: As a result, substantially all of our then-scheduled procedures were postponed, and numerous other cases could not be scheduled.
−Removed: During May 2020, the widespread shutdown resulted in key physician-society conferences being moved to a virtual setting, which directly impacted our planned commercial launch in the U.S.
−Removed: In response to the COVID-19 pandemic, we have implemented a variety of measures intended to help us manage its impact while maintaining business continuity to support our customers and patients.
+Added: In response to the COVID-19 pandemic, we implemented a variety of measures intended to help us manage its impact while maintaining business continuity to support our customers and patients.
These measures include:
7 unchanged sentences
and Europe began to gradually perform elective procedures again during the fourth quarter of 2020.
−Removed: We believe the recovery of our business in the fourth quarter of 2020 and through most of fiscal year 2021 is an encouraging sign for when remaining shelter-in-place and hospital limitations are lifted.
As the pandemic eased throughout 2021, we experienced the following positive trends:
2 unchanged sentences
● Hospitals accepting patients for elective procedures at closer to pre-pandemic levels in the U.S.
−Removed: However, procedure volumes were again negatively impacted by the Delta and Omicron variants of COVID-19 in the third and fourth quarters of 2021.
−Removed: We believe the challenges resulting from COVID-19 will likely continue for the duration of the pandemic.
−Removed: The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new
−Removed: information that may emerge concerning the severity and spread of COVID-19 and its variants and the actions to contain the spread of COVID-19 and its variants or treat its impact.
+Added: However, procedure volumes were again negatively impacted by the Delta and Omicron variants of COVID-19 in the third and fourth quarters of 2021 and continuing into the first quarter of 2022.
+Added: By March 2022 and continuing through the date of this Annual Report on Form 10-K, implant centers resumed procedures at more normal levels.
+Added: The extent to which the business recovers from the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and spread of COVID-19 and its variants and the actions to contain the spread of COVID-19 and its variants or treat its impact.
Factors affecting our performance
5 unchanged sentences
● Raising awareness among payors to build upon reimbursement for Barostim;
−Removed: ● Investing in research and development to foster innovation and further simplify Barostim procedure;
+Added: ● Investing in research and development to foster innovation and further simplify the Barostim procedure;
● Leveraging our manufacturing capacity to further improve our gross margins.
16 unchanged sentences
The manufacturing overhead costs of Barostim are directly aligned to our production volume and therefore the cost per product is reduced if production levels increase.
−Removed: While we expect our gross margin to be positively affected over time to the extent we are successful in selling more product through our direct sales force and by increasing our production volumes, it will likely fluctuate from
−Removed: period to period as we continue to introduce new products and adopt new manufacturing processes and technologies.
+Added: While we expect our gross margin to be positively affected over time to the extent we are successful in selling more product through our direct sales force and by increasing our production volumes, it will likely fluctuate from period to period as we continue to introduce new products and adopt new manufacturing processes and technologies.
Research and development expenses
1 unchanged sentence
R&D expenses also include costs associated with product design efforts, development prototypes, testing, clinical trial programs and regulatory activities, contractors and consultants, equipment and software to support our development, facilities and information technology.
−Removed: We expense research and development costs as they are incurred.
+Added: We expense R&D costs as they are incurred.
We expect R&D expenses to increase in absolute dollars as we continue to develop enhancements to Barostim.
−Removed: Our R&D expenses may fluctuate from period to period due to the timing and extent of our product development and clinical trial expenses related to Barostim in HFrEF.
+Added: R&D expenses may fluctuate from period to period due to the timing and extent of our product development and clinical trial expenses related to Barostim in HFrEF.
Selling, general and administrative expenses
4 unchanged sentences
In addition, we will continue to increase our international presence and to develop and assist our channel partners.
−Removed: We also expect our administrative expenses will increase as we increase our headcount and information technology to support our operations as a public company.
−Removed: Additionally, we anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with being a public company.
However, we expect our SG&A expenses to decrease as a percentage of revenue as our revenue grows.
1 unchanged sentence
Interest expense consists of interest on our debt and amortization of associated debt discount.
−Removed: Other expense, net
+Added: Other income (expense), net
+Added: Other income, net consists primarily of interest income on our interest-bearing account.
Other expense, net consists primarily of the fair value adjustments related to our formerly outstanding convertible preferred stock warrants, which were accounted for as a liability and marked-to-market at each reporting period.
1 unchanged sentence
Other items include losses on the extinguishment of debt, interest income earned on our cash and cash equivalents and the effect of exchange rates on our foreign currency-denominated asset and liability balances.
−Removed: Translation adjustments are recorded as foreign currency gains (losses) in the consolidated statements of operations and comprehensive loss.
Provision for income taxes
11 unchanged sentences
Interest expense
−Removed: Other expense, net
+Added: Other income (expense), net
Loss before income taxes
8 unchanged sentences
was $18.0 million for the year ended December 31, 2022, an increase of $8.9 million, or 97%, over the year ended December 31, 2021.
−Removed: Total HF revenue units in the U.S.
−Removed: totaled 290 and 32 for the years ended December 31, 2021 and 2020, respectively.
HF revenue in the U.S.
totaled $17.6 million and $8.4 million for the years ended December 31, 2022 and 2021, respectively.
−Removed: The increase was primarily driven by the continued growth following the commercial launch in 2020, which resulted in the expansion into new sales territories and increased physician and patient awareness of Barostim.
+Added: The increase was primarily driven by continued growth as a result of the expansion into new sales territories and new accounts, as well as increased physician and patient awareness of Barostim.
+Added: Total HF revenue units in the U.S.
+Added: totaled 587 and 290 for the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022, the Company had a total of 106 active implanting centers, as compared to 46 as of December 31, 2021.
1 unchanged sentence
The number of sales territories in the U.S.
−Removed: increased by eight to a total of 14 during the year ended December 31, 2021.
−Removed: A sales territory is an established regional area held by an account manager, typically after six months of employment.
+Added: increased by 12 to a total of 26 during the year ended December 31, 2022.
+Added: A sales territory is an established regional area held by an account manager, typically after six to nine months of employment.
Legacy hypertension revenue in the U.S.
−Removed: totaled $0.7 million for each of the years ended December 31, 2021 and 2020.
−Removed: Revenue generated in Europe was $3.9 million for the year ended December 31, 2021, a decrease of $0.4 million, or 10%, over the year ended December 31, 2020.
−Removed: Total revenue units in Europe decreased to 176 for the year ended December 31, 2021, from 193 for the prior year period.
−Removed: The decrease is due to reduced procedure volumes resulting from the Delta and Omicron variants of COVID-19 in 2021.
+Added: totaled $0.5 million and $0.7 million for each of the years ended December 31, 2022 and 2021, respectively.
+Added: Revenue generated in Europe was $4.4 million for the year ended December 31, 2022, an increase of $0.6 million, or 14%, over the year ended December 31, 2021.
+Added: Total revenue units in Europe increased to 231 for
+Added: the year ended December 31, 2022, from 176 for the prior year period.
+Added: The revenue increase was primarily due to the lessening impact of the COVID-19 pandemic in Europe.
The number of sales territories in Europe remained consistent at six during the year ended December 31, 2022.
3 unchanged sentences
Gross profit was $17.5 million for the year ended December 31, 2022, an increase of $8.1 million, or 86%, over the year ended December 31, 2021.
−Removed: Gross margin decreased to 72% for the year ended December 31, 2021, compared to 76% for the year ended December 31, 2020.
−Removed: Gross margin for the year ended December 31, 2021 was lower due to a larger percentage of our revenue units coming from full systems versus battery replacements for existing patients.
−Removed: This was partially offset by an increase in the average selling price.
+Added: Gross margin increased to 78% for the year ended December 31, 2022, compared to 72% for the year ended December 31, 2021.
+Added: Gross margin for the year ended December 31, 2022 was higher due to a decrease in the cost per unit and an increase in the average selling price.
+Added: This was partially offset by a larger percentage of our revenue units coming from full systems versus battery replacements.
Research and development expenses
R&D expenses increased $2.5 million, or 33%, to $10.0 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
−Removed: This change was primarily driven by a $0.4 million increase in clinical study expenses, a $0.4 million increase in compensation expenses as a result of increased headcount, and a $0.4 million increase in non-cash stock-based compensation expense.
+Added: This change was primarily driven by a $1.8 million increase in compensation expenses, mainly as a result of increased headcount, a $0.4 million increase in consulting fees, a $0.2 million increase in clinical study expenses and a $0.1 million increase in non-cash stock-based compensation expense.
Selling, general and administrative expenses
SG&A expenses increased $22.2 million, or 80%, to $50.0 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
−Removed: This change was driven by an increase of $9.0 million in compensation expenses, including salaries and commissions, and other employee-related expenses, mainly as a result of increased headcount, a $3.1 million increase in marketing and advertising expenses, primarily related to the commercialization of Barostim in the U.S., a $1.4 million increase in non-cash stock-based compensation expense, a $1.3 million increase related to D&O insurance costs incurred as a result of becoming a public company, a $1.2 million increase in travel expenses and a $1.0 million increase in consulting expenses.
+Added: This change was driven by a $12.3 million increase in compensation expenses, mainly as a result of increased headcount, a $2.4 million increase in travel expenses, a $1.8 million increase in non-cash stock-based compensation expense, a $1.7 million increase in marketing and advertising expenses, primarily related to the commercialization of Barostim in the U.S., a $1.2 million increase related to D&O insurance costs incurred as a result of becoming a public company, a $0.9 million increase in professional fees, and a $0.6 million increase in consulting expenses.
Interest expense
Interest expense decreased $2.1 million, or 93%, to $0.2 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
−Removed: This was driven by the repayment of the outstanding debt in November 2021 under the Horizon loan agreement.
−Removed: Other expense, net
−Removed: Other expense, net was $14.8 million for the year ended December 31, 2021, compared to other expense, net of $40,000 for the year ended December 31, 2020.
−Removed: The expense in 2021 was primarily driven by a $13.7 million increase in expense related to the increase in fair value of our convertible preferred stock warrants due to the change in the value of our common stock from December 31, 2020 to July 2, 2021, which is the date the warrants converted to common stock warrants.
+Added: This was driven primarily by the repayment of the outstanding debt in November 2021 under the Horizon loan agreement.
+Added: Other income (expense), net
+Added: Other income, net was $1.4 million for the year ended December 31, 2022, compared to other expense, net of $14.8 million for the year ended December 31, 2021.
+Added: Other income, net in 2022 was primarily driven by $1.5 million in interest income on our interest-bearing account.
+Added: Other expense, net in 2021 was primarily driven by a $13.7 million increase in expense related to the increase in fair value of our convertible preferred stock warrants due to the change in the value of our common stock from December 31, 2021 to July 2, 2021, which is the date the warrants converted to common stock warrants.
The expense in 2021 was also due to a $1.3 million loss on debt extinguishment in connection with the November 2021 repayment of the outstanding debt under the Horizon loan agreement.
6 unchanged sentences
Our net cash used in operating activities for the years ended December 31, 2022 and 2021, was $42.7 million and $27.7 million, respectively.
−Removed: Prior to the IPO, our operations were financed primarily by aggregate net proceeds from the sale of our convertible preferred stock of $383.1 million, as well as debt financings.
+Added: Prior to the IPO, our operations were financed primarily by aggregate net proceeds from the sale of our convertible preferred stock of $383.1 million, as well as debt financing.
In September 2019, we entered into the Horizon loan agreement to borrow $20.0 million, which was fully repaid on November 3, 2021.
−Removed: In July 2020, we completed an equity financing pursuant to which we issued 62,500,000 shares of Series G Preferred Shares at a price of $0.80 per share, for net proceeds of $49.8 million after deducting offering expenses.
+Added: In July 2020, we completed an equity financing pursuant to which we issued 62,500,000 shares of Series G convertible preferred stock at a price of $0.80 per share, for net proceeds of $49.8 million after deducting offering expenses.
On July 2, 2021, we closed our IPO for net proceeds from the offering, after deducting the underwriting discount and other offering expenses payable by us, of $133.2 million.
+Added: On October 31, 2022, we entered into the Loan Agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of term loans described in Note 5 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.
+Added: On November 4, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co., as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” or ATM offering, to or through the agent.
+Added: As of December 31, 2022, no shares have been sold.
Our future liquidity and capital funding requirements will depend on numerous factors, including:
8 unchanged sentences
● the emergence of competing technologies or other adverse market developments.
−Removed: We believe that our existing cash resources together with revenue will be sufficient to meet our forecasted requirements for operating liquidity, capital expenditures and debt services for at least the next three years.
−Removed: If these sources are insufficient to satisfy our liquidity requirements, however, we may seek to sell additional equity or enter into a loan agreement.
+Added: We believe that our existing cash resources and term loan facility together with revenue will be sufficient to meet our forecasted requirements for operating liquidity, capital expenditures and debt services for at least the next three years.
+Added: If these sources are insufficient to satisfy our liquidity requirements, however, we may seek to sell additional equity or enter into an additional loan agreement.
If we raise additional funds by issuing equity securities, our stockholders would experience dilution.
−Removed: Debt financing, if available, may involve covenants further restricting our operations or our ability to incur additional debt.
−Removed: Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.
+Added: Additional debt financing, if available, may involve covenants further restricting our operations or our ability to incur additional debt.
+Added: Any such debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.
Additional financing may not be available at all or may only be available in amounts or on terms that we do not deem to be favorable.
9 unchanged sentences
Cash used in operating activities
+Added: Net cash used in operating activities for the year ended December 31, 2022 was $42.7 million and consisted primarily of a net loss of $41.4 million and a decrease in net operating assets of $5.6 million, partially offset by $3.9 million from non-cash stock-based compensation expense and $0.4 million from the depreciation of property and equipment.
+Added: Net operating assets consisted primarily of inventory, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses to support the growth of our operations.
Net cash used in operating activities for the year ended December 31, 2021 was $27.7 million and consisted primarily of a net loss of $43.1 million and a decrease in net operating assets of $1.6 million, partially offset by non-cash charges of $13.3 million related to the fair value adjustment to our convertible preferred stock warrants, $1.9 million from non-cash stock-based compensation expense and $1.3 million from the loss on debt extinguishment.
Net operating assets consisted primarily of inventory, accounts receivable and accrued expenses to support the growth of our operations.
−Removed: Net cash used in operating activities for the year ended December 31, 2020 was $16.1 million and consisted primarily of a net loss of $14.1 million and a decrease in net operating assets of $2.9 million.
−Removed: Net operating assets consisted primarily of inventory, accounts receivable, accounts payable and accrued expenses to support the growth of our operations.
Cash used in investing activities:
1 unchanged sentence
Cash provided by financing activities:
+Added: Net cash provided by financing activities for the year ended December 31, 2022 was $7.5 million and consisted of $7.5 million related to proceeds from debt financing, $0.6 million related to proceeds from the Employee Stock Purchase Plan and $0.2 million related to proceeds from the exercise of common stock options, partially offset by debt financing costs of $0.8 million.
Net cash provided by financing activities for the year ended December 31, 2021 was $111.9 million and consisted primarily of proceeds from the issuance of common stock of $133.2 million, partially offset by the repayment of the outstanding debt balance and related fees of $21.3 million.
−Removed: Net cash provided by financing activities for the year ended December 31, 2020 was $49.8 million and consisted entirely of proceeds from the issuance of Series G convertible preferred stock.
−Removed: In September 2019, we entered into the Horizon loan agreement under which we borrowed $20.0 million, which is the maximum borrowing under the Horizon loan agreement.
−Removed: Amounts outstanding under the Horizon loan agreement bore interest at a floating per annum rate equal to 10% plus the amount by which the 30-day U.S.
−Removed: dollar LIBOR rate on the first business day of the month exceeded 2.2%.
−Removed: The Horizon loan agreement initially required interest only payments through October 2021 and then 36 monthly principal and interest payments beginning in November 2021.
−Removed: In August 2020, we 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 May 2022.
−Removed: A final payment of $0.7 million, equal to 3.5% of the original principal, was due to be paid in October 2024.
−Removed: On November 3, 2021, we fully repaid our outstanding principal balance of $20.0 million and incurred an additional $1.3 million related to a loss on debt extinguishment in connection
−Removed: with the Horizon loan agreement.
−Removed: We were in compliance with all covenants at the time the principal balance was fully repaid.
+Added: On October 31, 2022, we entered into the Loan Agreement with Innovatus, as the collateral agent and a lender, under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of term loans.
+Added: On the closing date, we borrowed the minimum amount of $7.5 million
+Added: under the Loan Agreement.
+Added: The term loans advanced pursuant to the Loan Agreement (collectively, the “Term Loans”) bear interest at a floating rate per annum equal to the sum of (a) the greater of (i) the prime rate and (ii) 5.50% plus (b) 2.65%.
+Added: The Term Loans mature on January 31, 2028 and require interest-only payments until November 1, 2027.
+Added: The Term Loans are secured by substantially all of our personal property.
+Added: We have the option to draw down (i) the remaining $7.5 million of the first tranche from the filing date of our Annual Report on Form 10-K for the year ended December 31, 2022 until September 30, 2023, (ii) up to $30.0 million less the amount funded from the first tranche between September 1, 2023 and December 15, 2023 if we achieve trailing three months revenue of $5.75 million prior to June 30, 2023, and (iii) up to $20.0 million between September 1, 2024 and December 15, 2024 if we achieve trailing three months revenue of $9.0 million prior to June 30, 2024.
+Added: A performance covenant takes effect at the earlier of September 30, 2025 or the third tranche funding requiring that we achieve 50% of the trailing twelve months revenue target set in the Board-approved revenue plan in effect for such period.
Critical accounting policies and estimates
−Removed: The preparation of consolidated financial statements in conformity with U.S.
−Removed: GAAP requires our management to make estimates and judgments that affect the amounts reported in our consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K.
+Added: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and judgments that affect the amounts reported in our consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable and supportable under the circumstances.
5 unchanged sentences
The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and non-employee directors.
−Removed: In connection with the IPO, we adopted the 2021 Plan under which we may grant equity incentive awards to eligible employees (including our named executive officers), non-employee directors and consultants in order to enable us to obtain and retain services of these individuals, which we deem as essential to our long-term success.
+Added: In connection with the IPO, we adopted the 2021 Equity Incentive Plan under which we may grant equity incentive awards to eligible employees (including our named executive officers), non-employee directors and consultants in order to enable us to obtain and retain services of these individuals, which we deem as essential to our long-term success.
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”).
−Removed: ASC 718 requires all equity-based compensation awards to employees and nonemployee 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.
+Added: 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.
1 unchanged sentence
The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (i) the fair value of common stock, (ii) the expected share price volatility, (iii) the expected term of the award, (iv) the risk-free interest rate and (v) the expected dividend yield.
−Removed: ● Fair value of common stock — Given the absence of a public trading market for our common stock prior to the IPO, the fair value of our common stock was determined by our Board of Directors with the assistance of an unrelated third-party valuation firm.
+Added: ● Fair value of common stock — Given the absence of a public trading market for our common stock prior to the IPO, the fair value of our common stock was determined by our Board of Directors with the
+Added: assistance of an unrelated third-party valuation firm.
The valuation was determined in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation.
For the valuation as of the date of pricing of the IPO, the fair value of our common stock was determined by our Board of Directors to be the public offering price of the shares of common stock issued in the IPO.
−Removed: For valuations after the completion of the IPO, our Board of Directors will determine the fair value of each share of common stock based on the closing price of our common stock as reported on the date of grant.
+Added: For valuations after the completion of the IPO, our Board of Directors determines the fair value of each share of common stock based on the closing price of our common stock as reported on the date of grant.
Future expense amounts for any particular period could be affected by changes in our assumptions or market conditions.
15 unchanged sentences
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.