What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-10-31 · 115 added, 135 removed, 249 unchanged (50% of the section changed)

2 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

17 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.01 par value, 200,000,000 authorized as of September 30, 2023 and December 31, 2022;

20,813,612 and 20,663,736 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value, 200,000,000 authorized as of March 31, 2024 and December 31, 2023;

21,593,173 and 20,879,199 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

Three months ended

Nine months ended

September 30,

Cost of goods sold

17 unchanged sentences

stockholders’

Balances as of June 30, 2023

Exercise of stock options

Employee stock compensation

Net loss for the three months ended September 30, 2023

Cumulative translation adjustment

Balances as of September 30, 2023

Balances as of June 30, 2022

Exercise of stock options

Employee stock compensation

Net loss for the three months ended September 30, 2022

Cumulative translation adjustment

Balances as of September 30, 2022

comprehensive

stockholders’

Balances as of December 31, 2023

Exercise of stock options

Proceeds from Employee Stock Purchase Plan

Employee stock compensation

Net loss for the nine months ended September 30, 2023

Issuance of common stock

Issuance of common stock upon net exercise of common warrants

Net loss for the three months ended March 31, 2024

Cumulative translation adjustment

Balances as of September 30, 2023

Balances as of March 31, 2024

Balances as of December 31, 2022

Exercise of stock options

Proceeds from Employee Stock Purchase Plan

Employee stock compensation

Net loss for the nine months ended September 30, 2022

Net loss for the three months ended March 31, 2023

Cumulative translation adjustment

Balances as of September 30, 2022

Balances as of March 31, 2023

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 Employee Stock Purchase Plan

Proceeds from the issuance of common stock

Proceeds from debt financing

23 unchanged sentences

The results of operations for the interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole or any other future period.

The condensed consolidated financial statements include the accounts of CVRx, Inc., its wholly owned subsidiary, CVRx Switzerland LLC, and its sales branch in Italy.

The condensed consolidated financial statements include the accounts of CVRx, Inc., its wholly owned subsidiary, CVRx Switzerland LLC, and its sales branch in Italy, which was closed during 2023.

All intercompany balances and transactions have been eliminated in consolidation.

JOBS Act accounting election

The Company is an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

As a result, the Company has elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

We are an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

As a result, we have elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

Use of estimates

4 unchanged sentences

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

As of September 30, 2023 and December 31, 2022, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value.

Additionally, as of September 30, 2023 and December 31, 2022, a majority of our cash and cash equivalents were maintained with two financial institutions in the U.S., and our current deposits are likely in excess of insured limits.

As of March 31, 2024 and December 31, 2023, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value.

Additionally, as of March 31, 2024 and December 31, 2023, a majority of our cash and cash equivalents were maintained with two financial institutions in the U.S., and our current deposits are likely in excess of insured limits.

Accounts Receivable

4 unchanged sentences

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.

We regularly review 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.

4 unchanged sentences

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, which consists of two implantable components:

We sell our products primarily through a direct sales force and to a lesser extent through a combination of sales agents and independent distributors.

Our revenue consists primarily of the sale of our Barostim, which consists of two implantable components:

a pulse generator and a stimulation lead.

Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer;

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and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

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.

We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services it transfers to the customer.

We recognize net revenue on product sales, adjusted for any applicable estimates of variable consideration, when the customer obtains control of our product, which generally occurs at a point in time upon delivery based on the contractual shipping terms of a contract.

Our contracts have a single performance obligation, and our payment terms with customers are generally between 30 and 90 days.

Variable consideration related to certain customer rebates is estimated based on the amounts expected to be paid under the agreement with the customer.

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 ASC Topic 718, Compensation—Stock Compensation (“ASC 718”).

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 (“FASB”) 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.

1 unchanged sentence

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.

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 November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public companies to disclose for each reportable segment the significant expense categories and amounts for such expenses.

ASU 2023-07 is effective for annual periods beginning December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

This ASU will be effective for our annual period ended December 31, 2024.

We are currently evaluating the effect of this new guidance on our condensed consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public business entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 is effective for annual periods beginning after December 15, 2023.

This ASU will be effective for our annual period ended December 31, 2024.

We are evaluating the impact of this new guidance on our income tax disclosures.

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)

7 unchanged sentences

Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease.

Depreciation expense was $ 137,000 and $ 127,000 for the three months ended September 30, 2023 and 2022, respectively, and $ 393,000 and $ 284,000 for the nine months ended September 30, 2023 and 2022, respectively.

Depreciation expense was $ 131,000 and $ 129,000 for the three months ended March 31, 2024 and 2023, respectively.

Accrued expenses consist of the following at:

September 30,

(in thousands)

Paid time off

Clinical trial and other professional fees

Customer rebates

Accrued interest payable

Employee stock purchase plan

Clinical trial and other professional fees

Operating lease liability, current portion

Innovatus Loan Agreement

On October 31, 2022, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP, as the collateral agent and a lender, under which the Company may borrow, subject to the Company’s achievement of certain milestones, up to a total of $ 50.0 million in a series of term loans.

On the closing date, the Company borrowed the minimum amount of $ 7.5 million under the Loan Agreement.

On March 10, 2023, the Company borrowed the $ 7.5 million remaining under the first tranche of the Loan Agreement , with $ 4.0 million received on March 13, 2023, and $ 3.5 million received on March 15, 2023 .

On October 31, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP, 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.

On the closing date, we borrowed the minimum amount of $ 7.5 million under the Loan Agreement.

On March 10, 2023, we borrowed the $ 7.5 million remaining under the first tranche of the Loan Agreement.

On December 15, 2023, we borrowed an additional $ 15.0 million under the second tranche of the Loan Agreement.

The Loan Agreement initially requires interest only payments through November 2027, followed by three monthly principal and interest payments.

1 unchanged sentence

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 %.

The Term Loans are secured by substantially all of the personal property of the Company.

The Company has the option to draw down (i) up to $ 30.0 million less the amount funded from the first tranche between September 1, 2023 and December 15, 2023 if the Company achieves trailing three months revenue of $ 5.75 million prior to June 30, 2023 (which was achieved), and (ii) up to $ 20.0 million between September 1, 2024 and December 15, 2024 if the Company achieves trailing three months revenue of $ 9.0 million prior to June 30, 2024.

A performance covenant takes effect at the earlier of September 30, 2025 or the third tranche funding, requiring that the Company achieve 50 % of the trailing twelve months revenue target set in the Board-approved revenue plan in effect for such period.

The Loan Agreement requires the payment of certain penalties if the Term Loans are paid off prior to maturity for any reason, including pursuant to an acceleration clause, and includes various restrictive covenants, including a restriction on the payment of dividends or making other distributions or payments on the Company’s capital stock, subject to limited exceptions.

The Company was in compliance with these covenants as of September 30, 2023.

In connection with the Loan Agreement, the Company recorded $ 0.8 million of debt issuance costs and discounts as a reduction of long-term debt.

The Term Loans are secured by substantially all of our personal property.

We have the option to draw down 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.

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.

We were in compliance with these covenants as of March 31, 2024.

In connection with the Loan Agreement, we recorded $ 1.0 million of debt issuance costs and discounts as a reduction of long-term debt.

The annual principal maturities of debt under the Loan Agreement are as follows:

September 30,

(in thousands)

4 unchanged sentences

On April 21, 2023, we extended the operating lease for our office space in Minneapolis, Minnesota for an additional 49 consecutive months through August 31, 2028.

On November 7, 2023, we expanded our existing office space with the addition of 7,615 square feet of property adjacent to our principal executive offices and our manufacturing facility.

The term on this expanded property is for 57 consecutive months that will run concurrently with the term on the existing lease.

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 three

Our operating lease agreement includes an option to renew for one additional period of three 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, as it is not reasonably certain of exercise.

2 unchanged sentences

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

September 30,

(in thousands)

5 unchanged sentences

Total operating lease liabilities

Maturities of our lease liability for our operating lease are as follows as of September 30, 2023:

September 30,

Maturities of our lease liability for our operating lease are as follows as of March 31, 2024:

(in thousands)

2023, remainder

Total undiscounted lease payments

1 unchanged sentence

Present value of lease liability

As of September 30, 2023, the remaining lease term was 4.9 years and the discount rate was 5.0 %.

The operating cash outflows from our operating lease were $ 0.3 million for each of the nine months ended September 30, 2023 and 2022.

As of March 31, 2024, the remaining lease term was 4.4 years and the weighted average discount rate was 6.7 %.

The operating cash outflows from our operating lease were $ 0.1 million for each of the three months ended March 31, 2024 and 2023.

Stockholders’ equity

Common Stock Warrants

The Company has common stock warrants exercisable for 716,131 shares of common stock upon conversion at a weighted average exercise price of $ 2.39 per share.

We have common stock warrants exercisable for 108,406 shares of common stock upon conversion at a weighted average exercise price of $ 14.92 per share outstanding at March 31, 2024.

Johnson & Johnson Innovation – JJDC, Inc.

had common stock warrants exercisable for 607,725 shares of our common stock with an exercise price of $ 0.16 per share that were all exercised through a net exercise transaction for 604,000 shares of common stock during the three months ended March 31, 2024.

At-the-Market (“ATM”) Offering

In January 2024, we commenced an ATM offering, which allows us to issue and sell shares of our common stock having an aggregate offering price of up to $ 50.0 million .

We issued 23,364 shares of common stock for gross proceeds of $ 0.6 million under the ATM offering during the three months ended March 31, 2024.

We have remaining capacity to issue and sell up to approximately $ 49.4 million of additional shares of common stock under this ATM offering.

Stock-based compensation

Summary of plans and activity

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

In June 2001, our 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, 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 2021, the Company’s Board of Directors and stockholders established the 2021 Equity Incentive Plan (“2021 Plan”).

In 2021, our Board of Directors and stockholders established the 2021 Equity Incentive Plan (“2021 Plan”).

The number of shares of common stock initially reserved for issuance under the 2021 Plan was 1,854,490 newly reserved shares in addition to the 600,737 shares that remained available for issuance under the 2001 Plan.

1 unchanged sentence

The annual increase resulted in an additional 1,043,959 shares being reserved for issuance under the 2021 Plan as of January 1, 2024.

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.

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.

Awards granted under the 2021 Plan will have such vesting schedules and other terms as determined by the Compensation Committee and stock options and stock appreciation rights have a maximum term of 10 years from the grant date.

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

As of September 30, 2023, there were 1,724,683 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.

As of March 31, 2024, there were 1,880,988 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 our common stock on the date of grant.

During the years 2008 through the initial public offering (the “IPO”), 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 options were not granted under the 2001 Plan or the 2021 Plan, but terms are substantially the same as our 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, 2023

Options exercisable as of September 30, 2023

As of September 30, 2023, stock options outstanding included 8,796 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of September 30, 2023, the weighted average remaining contractual life was 7.5 years.

For options exercisable as of September 30, 2023, the weighted average remaining contractual life was 6.4 years.

The Company’s Board of Directors and stockholders also established an Employee Stock Purchase Plan (the “ESPP”).

( 1,180,316 )

Balance as of March 31, 2024

Options exercisable as of March 31, 2024

As of March 31, 2024, stock options outstanding included 4,520 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of March 31, 2024, the weighted average remaining contractual life was 7.1 years.

For options exercisable as of March 31, 2024, the weighted average remaining contractual life was 5.9 years.

Our Board of Directors and stockholders also established an Employee Stock Purchase Plan (the “ESPP”).

The number of shares of common stock initially reserved for issuance under the ESPP was 278,170 .

The shares available for issuance under the ESPP 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 shares available for issuance under the ESPP 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 our 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 208,791 shares being reserved for issuance under the ESPP as of January 1, 2024.

The ESPP permits certain of the Company’s U.S.

employees to purchase shares of the Company’s common stock at a price per share not less than 85 % of the l ower of

(i) the closing market price per share of the Company’s common stock on the first day of the applicable purchase period or (ii) the closing market price per share of the Company’s common stock on the purchase date at the end of the applicable six-month purchase period.

The first purchase date under the ESPP was September 30, 2022.

For the nine months ended September 30, 2023, 34,421 shares of common stock were purchased under the ESPP for $ 0.5 million of employee contributions.

As of September 30, 2023, there were 540,489 shares available for issuance under the ESPP.

The ESPP permits certain of our U.S.

employees to purchase shares of our common stock at a price per share not less than 85 % of the l ower of (i) the closing market price per share of our common stock on the first day of the applicable purchase period or (ii) the closing market price per share of our common stock on the purchase date at the end of the applicable six-month purchase period.

As of March 31, 2024, there were 712,425 shares available for issuance under the ESPP.

Stock-based compensation expense

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options and ESPP purchase rights on the grant date.

The Company measures stock-based compensation expense based on the grant date fair value of the award and recognizes compensation expense over the requisite service period, which is generally the vesting period for stock options and the offering period for ESPP purchase rights.

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

We use the Black-Scholes option pricing model to determine the fair value of stock options and ESPP purchase rights on the grant date.

We measure stock-based compensation expense based on the grant date fair value of the award and recognize compensation expense over the requisite service period, which is generally the vesting period for stock options and the offering period for ESPP purchase rights.

The amount of stock-based compensation expense recognized for stock option awards during a period is based on the

portion of the awards that are ultimately expected to vest.

The amount of stock-based compensation expense recognized for ESPP purchase rights during a period is based on the estimated purchase rights as of the grant date.

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 nine months ended September 30, 2023 and 2022:

September 30,

We account 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, 2024 and 2023:

Weighted average fair value of options granted

8 unchanged sentences

3.40 % to 4.18

The following table provides the weighted average fair value of ESPP purchase rights and the related assumptions used in the Black-Scholes option pricing model for the nine months ended September 30, 2023 and 2022:

September 30,

The following table provides the weighted average fair value of ESPP purchase rights and the related assumptions used in the Black-Scholes option pricing model for the three months ended March 31, 2024 and 2023:

Weighted average fair value per ESPP purchase right

1 unchanged sentence

Expected volatility

76.2 % to 84.6

51.3 % to 62.9

Expected dividend yield

Risk-free interest rate

4.77 % to 5.53

0.22 % to 2.52

The Company reviews these assumptions on a periodic basis and adjusts them, as necessary.

The expected term of a stock option award was determined based on the Company’s analysis of historical exercise behavior while taking into consideration various participant demographics and option characteristics.

The expected term of an ESPP purchase right is based on the offering period.

We utilize the simplified method to develop the estimate of the expected term.

We review these assumptions on a periodic basis and adjust them, as necessary.

We utilize the simplified method to develop the estimate of the expected term for stock option awards and ESPP purchase rights.

The expected volatility is based upon observed volatility of comparable public companies.

The expected dividend yield is assumed to be zero , as the Company has never paid dividends and has no current plans to do so.

The expected dividend yield is assumed to be zero , as we have never paid dividends and have no current plans to do so.

The risk-free interest rate is based on the yield on U.S.

2 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

5 unchanged sentences

Cost of goods sold

As of September 30, 2023, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 14.1 million.

As of September 30, 2023, the related weighted average period over which the expense is expected to be recognized is approximately 2.5 years.

As of September 30, 2023 and December 31, 2022, 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, 2023 and 2022 was $ 40,000 and $ 32,000 , respectively.

Provision for income taxes for the nine months ended September 30, 2023 and 2022 was $ 108,000 and $ 81,000 , respectively.

As of December 31, 2022, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $ 361.0 million and $ 6.2 million, respectively.

As of March 31, 2024, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 27.9 million.

As of March 31, 2024, the related weighted average period over which the expense is expected to be recognized is approximately 2.6 years.

On January 30, 2024, we amended the terms and conditions of certain stock option award agreements granted under the 2001 Plan and 2021 Plan between us and our former CEO in connection with his retirement, which occurred on February 11, 2024.

The option agreements were amended to provide that, if not already vested at the time of termination of his employment due to retirement, the options will continue to vest on the previously scheduled vesting dates following his retirement, subject to his compliance with certain covenants.

Additionally, the option agreements were modified so that the options may be exercised, to the extent vested, by our former CEO until the earlier of (a) five years following his retirement date, or (b) the applicable option expiration date.

The modification of these option awards resulted in an additional $ 8.4 million of non-cash stock-based compensation expense recognized during the three months ended March 31, 2024.

As of March 31, 2024 and December 31, 2023, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position.

Provision for income taxes for the three months ended March 31, 2024 and 2023 was $ 38,000 and $ 34,000 , respectively.

As of December 31, 2023, we had federal and state net operating loss carryforwards (“NOLs”) of approximately $ 389.9 million and $ 7.3 million, respectively.

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

As of December 31, 2022, the Company had federal and state tax credit carryforwards of approximately $ 9.3 million and $ 1.8 million, respectively.

As of December 31, 2023, we had federal and state tax credit carryforwards of approximately $ 9.8 million and $ 2.0 million, respectively.

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 NOLs and could be triggered by subsequent sales of securities by the Company or its stockholders.

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, as amended, and similar state provisions.

We have not performed a detailed analysis to determine whether an ownership change has occurred.

Such a change of ownership would limit our utilization of the NOLs and could be triggered by subsequent sales of securities by us or our stockholders.

Loss Per Share

1 unchanged sentence

Three Months Ended

Nine months ended

September 30,

Weighted average common shares outstanding — basic and diluted

Net loss per share attributable to common stockholders — basic and diluted

The Company’s potentially dilutive securities, which include stock options and warrants to purchase shares of common stock, have been excluded from the computation of diluted net loss per share attributable to common stockholders, as the effect would be to reduce the net loss per share attributable to common stockholders.

Our potentially dilutive securities, which include stock options and warrants to purchase shares of common stock, have been excluded from the computation of diluted net loss per share attributable to common stockholders, as the effect would be to reduce the net loss per share attributable to common stockholders.

Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

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,

We 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:

Three months ended

Options to purchase common stock

1 unchanged sentence

Commitments and 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, 2023 or December 31, 2022.

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

We accrue 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 March 31, 2024 or December 31, 2023.

Employee benefit plans

The Company sponsors a voluntary defined-contribution employee retirement plan (the “401(k) plan”) for its U.S.

We sponsor a voluntary defined-contribution employee retirement plan (the “401(k) plan”) for our U.S.

The 401(k) plan provides that each participant may contribute pre-tax or post-tax compensation up to the statutory limit allowable.

Under the 401(k) plan, each participant is fully vested in his or her deferred salary contributions when contributed.

The Company does not provide matching contributions to employees.

Beginning January 1, 2024, we adopted a policy to match a portion of employee contributions for all qualified employees participating in the 401(k) plan.

We recorded an expense for matching contributions of $ 0.2 million and $ 0 for the three months ended March 31, 2024 and 2023, respectively.

Segment, geographic information, and revenue disaggregation

1 unchanged sentence

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.

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

and its Chief Executive Officer evaluate performance based primarily on revenue in the geographic locations in which the Company operates.

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

We have 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, we have determined that we have a single reportable and operating segment structure.

We and our Chief Executive Officer evaluate performance based primarily on revenue in the geographic locations in which the Company operates.

We derive all our 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 periods indicated (in thousands):

Three months ended

Nine months ended

September 30,

Other countries

As of September 30, 2023 and December 31, 2022, long-lived assets were located primarily in the U.S.

As of March 31, 2024 and December 31, 2023, 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