What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-24 compared with 2020-02-25 · 212 added, 203 removed, 1241 unchanged (25% of the section changed)

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Based upon the evaluation described above, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal controls over financial reporting

There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on effectiveness of controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

Management’s report on internal control over financial reporting

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February 24, 2021

Changes in internal controls over financial reporting

Limitations on effectiveness of controls

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

OTHER INFORMATION

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Our annual meeting of stockholders will be held at 10:00 a.m.

Pacific Time on Thursday, May 7, 2020, at our corporate headquarters located at 326 Bollay Drive, Goleta, California 93117.

Pacific Time on Monday, May 10, 2021, as a virtual meeting.

Holders of record at the close of business on Friday, March 12, 2021, will be entitled to vote at the meeting.

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The information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

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and Financial Statement Schedule

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Financial Statements

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2020, 2019 and 2018

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018

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We have audited the accompanying consolidated balance sheets of Inogen, Inc.

and subsidiary (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiary (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America .

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We believe that our audits provide a reasonable basis for our opinion .

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Sales Revenue (Amounts Deferred for Lifetime Warranty) – Refer to Note 2 to the financial statements.

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To determine the selling price of the lifetime warranty, the Company uses its best estimate of the SSP for the distinct performance obligation as the lifetime warranty is neither separately priced nor is the selling price available through third-party evidence.

To calculate the selling price associated with the lifetime warranties, management considers the profit margins of service revenue, the average estimated cost of lifetime warranties and the price of extended warranties.

Revenue from the distinct lifetime warranty is deferred after the delivery of the equipment and recognized based on an estimated mortality rate over five years, which is the estimated performance period of the contract based on the average patient life expectancy.

Total deferred revenue related to the lifetime warranty performance obligation totaled $17.7 million at December 31, 2019.

To estimate the selling price associated with the lifetime warranties, management considers the profit margins of service revenue, the average estimated cost of lifetime warranties and the price of extended warranties.

the average patient life expectancy.

Total deferred revenue related to the lifetime warranty performance obligation totaled $17.

1 million at December 31, 20 20 .

Determining the estimated SSP requires significant judgment by management, which is informed by considering Company specific and external data.

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We evaluated the methodology used by management to develop the stand-alone selling price and independently estimated the stand-alone selling price selected by management.

In performing these procedures, we compared the stand-alone selling price selected by management to the independent estimate, which utilized external evidence of similar term extended warranties for oxygen concentrators and internal cost plus margin estimates.

We evaluated the reasonableness of the deferred revenue service period by comparing to patient average life expectancy in medical and other industry publications.

We further evaluated the realization of deferred revenue by evaluating the appropriateness of the underlying mortality data.

Acquisitions (Technology Intangible Asset) — Refer to Notes 2, 3 and 4 to the financial statements

Critical Audit Matter Description

On August 9, 2019, the Company completed the acquisition of New Aera, Inc.

pursuant to and on the terms set forth in the Company’s merger agreement.

Under the agreement, all outstanding shares of capital stock of New Aera were cancelled and converted into the right to receive merger consideration with a value equal to up to $101.9 million in cash and earnout payments.

Assets and liabilities of the acquired company were recorded at their estimated fair values at the date of acquisition.

The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill.

The fair value assigned to the identifiable intangible asset was determined primarily by using the excess earnings method.

The key assumptions included in the excess earnings method included forecasted revenue, cost of revenue and the discount rate.

Purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including an acquired technology intangible asset of $77.7 million.

Given the significance of acquired technology relative to the overall acquisition, the estimation of fair value requires management to make significant estimates related to forecasted revenue, cost of revenue and the selection of the discount rate.

Auditing procedures to evaluate the reasonableness of fair value method utilized as well as the reasonableness of assumptions require a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation methodology utilized, forecasts of future revenues and cost of revenues and selection of the discount rate for the acquired technology intangible asset included the following, among others:

We tested the effectiveness of controls over the valuation of the acquired technology intangible asset, including management’s controls over the valuation methodology selected, forecasts of future revenues and cost of revenues, and the selection of the discount rate.

We evaluated management’s ability to accurately forecast future revenues and cost of revenue by comparing to management’s historical experience and other publicly available industry data.

With the assistance of our fair value specialists, we evaluated the reasonableness of the

valuation methodology;

discount rate

With respect to the discount rate, we developed a range of independent estimates using market and industry data and compared those to the discount rates selected by management.

/s/ DELOITTE & TOUCHE LLP

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Deferred tax liability - noncurrent

Other noncurrent liabilities

Total liabilities

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See accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

(amounts in thousands, except share and per share amounts)

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Total operating expense

Income from operations

Income (loss) from operations

Other income (expense)

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Total other income, net

Income before provision (benefit) for income taxes

Income (loss) before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income (loss)

Other comprehensive income (loss), net of tax

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Total other comprehensive income (loss), net of tax

Comprehensive income

Basic net income per share attributable to common stockholders (Note 2)

Diluted net income per share attributable to common stockholders (Note 2)

Weighted-average number of shares used in calculating net income per

Comprehensive income (loss)

Basic net income (loss) per share attributable to common stockholders (Note 2)

Diluted net income (loss) per share attributable to common stockholders (Note 2)

Weighted-average number of shares used in calculating net income (loss) per

share attributable to common stockholders:

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Employee stock purchases

Restricted stock awards issued

Vesting of restricted stock units

Shares withheld related to net

restricted stock settlement

Stock options exercised

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Restricted stock awards issued,

net of forfeitures

Vesting of restricted stock units

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Stock options exercised

Other comprehensive income

Other comprehensive loss

Balance, December 31, 2019

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Stock options exercised

Other comprehensive loss

Other comprehensive income

Balance, December 31, 2020

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Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

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Supplemental disclosures of cash flow information

Cash paid during the period for income taxes, net of refunds received

Cash paid (received) during the period for income taxes, net of refunds received

Supplemental disclosure of non-cash transactions

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(Company or Inogen) was incorporated in Delaware on November 27, 2001.

The Company is a medical technology company that primarily develops, manufactures and markets innovative portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions.

The Company is a medical technology company that primarily develops, manufactures and markets innovative portable oxygen concentrators (POCs) used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions.

Traditionally, these patients have relied on stationary oxygen concentrator systems for use in the home and oxygen tanks or cylinders for mobile use, which the Company calls the delivery model.

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Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable.

Significant areas requiring the use of management estimates relate to revenue recognition and determining the stand-alone selling price (SSP) of performance obligations, inventory and rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and adjustments, warranty expense, stock compensation expense, depreciation and amortization, income tax provision and uncertain tax positions, fair value of financial instruments, fair value of acquired intangible assets and goodwill and fair value of earnout liabilities.

Significant areas requiring the use of management estimates relate to revenue recognition, warranty reserves and expense, determining the stand-alone selling price (SSP) and service period of performance obligations, rental asset valuations and write-downs, accounts receivable allowances for bad debts, returns and adjustments, impairment of long-lived assets, stock-based compensation expense, income taxes, fair value of acquired intangible assets and goodwill and fair value of earnout liabilities.

Actual results could differ from these estimates.

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Accordingly, revenue is recognized net of allowances for estimated returns and incentives.

The Company also offers a lifetime warranty for direct-to-consumer sales of its oxygen concentrators.

For a fixed price, the Company agrees to provide a fully functional oxygen concentrator for the remaining life of the patient.

For a fixed price, the Company also offers a lifetime warranty for direct-to-consumer sales for its oxygen concentrators.

Lifetime warranties are only offered to patients upon the initial sale of oxygen concentrators directly from the Company and are non-transferable.

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The increase in deferred revenue related to lifetime warranties for the years ended December 31, 2020 and December 31, 2019 was primarily driven by $ 5,258 and $ 8,757 , respectively, of payments received in advance of satisfying performance obligations, par tially offset by $ 5,908 and $ 5,903 of revenues recognized that were included in the deferred revenue balances as of December 31, 2020 and December 31, 2019, respectively .

Deferred revenue related to lifetime warranties was $ 17,728 and $ 14,874 as of December 31, 2019 and December 31, 2018, respectively, and is classified within deferred revenue – current and noncurrent deferred revenue in the consolidated balance sheet.

Deferred revenue related to lifetime warranties was $ 17,078 and $ 17,728 as of December 31, 2020 and December 31, 2019, respectively, and is classified within deferred revenue – current and noncurrent deferred revenue in the consolidated balance sheets.

The Company elected to apply the practical expedient in accordance with Accounting Standards Codification (ASC) 606 — Revenue Recognition and did not evaluate contracts of one year or less for the existence of a significant financing component .

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transfers to secondary insurances or patient responsibility have no net effect on revenue.

Rental revenue is earned for that entire month if the patient is on service on the first day of the 30 -day period commencing on the recurring date of service for a particular claim, regardless if there is a change in condition or death after that date.

Rental revenue is earned for that entire month if the patient is on service on the first day of the 30 -day period commencing on the recurring date of service for a particular claim, regardless of whether there is a change in condition or death after that date.

Included in rental revenue are unbilled amounts for which the revenue recognition criteria had been met as of period-end but were not yet billed to the payor.

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In addition, the Company estimates potential future adjustments and write-offs of these unbilled amounts and includes these estimates in the allowance for adjustments and write-offs of rental revenue which is netted against gross receivables.

Product Warranty

The Company generally provides a warranty against defects in material and workmanship.

The Company provides a 3-year, 5-year or lifetime warranty on Inogen One systems sold and a 3-year and lifetime warranty on Inogen At Home systems sold.

The Tidal Assist® Ventilator (TAV ® ) system has a 1-year and a 3-year warranty.

The Company also offers a lifetime warranty for direct-to-consumer sales of its oxygen concentrators.

For a fixed price, the Company agrees to provide a fully functional oxygen concentrator for the remaining life of the patient.

Lifetime warranties are only offered to patients upon the initial sale of oxygen concentrators directly from the Company and are non-transferable.

The Company’s products are subject to regulatory and quality standards.

The Company establishes an accrued liability for the estimated warranty costs at the time of revenue recognition, with a corresponding provision to cost of goods sold.

The Company evaluates the liability quarterly.

Warranty costs are primarily estimated based on product return rates, historical warranty repair costs incurred and historical failure rates.

The Company may make further adjustments to the warranty reserve when deemed appropriate, giving additional consideration to length of time the product version has been sold and future expectations of performance based on new features and capabilities.

Actual warranty costs could differ materially from the estimated amounts.

Fair value accounting

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(amounts in thousands)

gains (losses)

Money market accounts

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Treasury securities

Agency mortgage-backed securities

As of December 31, 2019

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The Company records the assets or liabilities associated with derivative instruments and hedging activities at fair value based on Level 2 inputs in other current assets or other current liabilities, respectively, in the consolidated balance sheet.

The Company had a related payable of $ 514 and a related receivable of $ 472 as of December 31, 2019 and 2018, respectively.

The Company classifies the foreign currency derivative instruments within Level 2 in the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of whether it is designated and qualifies for hedge accounting.

The Company had a related payable of $ 863 and $ 514 as of December 31, 2020 and 2019, respectively.

The Company documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness.

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gains (losses)

on marketable

comprehensive

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As of December 31, 2019

gains (losses) on

gains (losses)

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(amounts in thousands)

income (loss)

Balance as of December 31, 2018

Other comprehensive income

Other comprehensive income (loss)

Balance as of December 31, 2019

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The earnout period for recognized revenue is each calendar year beginning with calendar year 2019 and ending on the calendar year in which the earnout consideration equals the earnout cap.

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of the acquisition date and December 31, 2019.

The following table provides quantitative information about Level 3 inputs for fair value measurement of the earnout liability as of the acquisition date, December 31, 2019 and December 31, 2020.

Significant increases or decreases in these inputs in isolation could result in a significant impact on our fair value measurement:

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December 31, 2019

December 31, 2020

Revenue volatility

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The reconciliation of the earnout liability measured and carried at fair value on a recurring basis is as follows:

Twelve months ended

(amounts in thousands)

December 31, 2019

Balance at beginning of period

Balance as of December 31, 2018

Addition for acquisition

Change in fair value

Balance at end of period

Balance as of December 31, 2019

Change in fair value

Balance as of December 31, 2020

The Company recorded $ 672 and $ 0 of preacquisition loss recoveries that can be withheld from any earnout amounts payable as of December 31, 2020 and December 31, 2019, respectively.

Cash, cash equivalents, and marketable securities

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Money market accounts

Treasury securities

Total cash and cash equivalents

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Treasury securities

Agency mortgage-backed securities

Total marketable securities

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and when recording the allowances for rental reserve adjustments and doubtful accounts, the rental revenue adjustments account (contra rental revenue account) is charged.

Prior to the adoption of ASC 842, the Company separately recorded an allowance for doubtful accounts by charging bad debt expense, which is now recorded as part of rental revenue adjustments during the year ended December 31, 2019.

As of December 31, 2020 and December 31, 2019, included in accounts receivable on the consolidated balance sheets were earned but unbilled receivables of $ 459 and $ 590 , respectively.

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Total allowances - accounts receivable

Prior to the adoption of ASC 842, the Company separately recorded an allowance for doubtful accounts by charging bad debt expense.

Upon adoption of ASC 842, such balances are recorded as part of rental revenue adjustments to report rental revenue at an expected collectible amount.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, marketable securities and accounts receivable.

At times, cash account balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation (FDIC).

At times, cash account balances may be in excess of the amounts insured by the Federal

Deposit Insurance Corporation (FDIC).

However, management believes the risk of loss to be minimal.

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The Company also sells its products direct-to-consumers on a primarily prepayment basis.

One single customer represented more than 10% of the Company’s total revenue for the year ended December 31, 2020.

No single customer represented more than 10% of the Company’s total revenue for the year ended December 31, 2019.

One single customer represented more than 10% of the Company’s total revenue for the years ended December 31, 2018 and 2017.

One single customer represented more than 10% of the Company’s total revenue for the year ended December 31, 2018.

Two customers each represented more than 10% of the Company’s net accounts receivable balance with accounts receivable balances of $ 8,417 and $ 7,044 , respectively, as of December 31, 2020, and $ 10,695 and $ 5,228 , respectively, as of December 31, 2019.

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In accordance with ASC 360, long-lived assets to be held are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable.

The Company periodically reviews the carrying value of long-lived assets to determine whether or not impairment to such value has occurred.

No impairments were recorded as of December 31, 2019 and 2018.

No impairments were recorded as of December 31, 2020 or 2019.

Goodwill and intangible assets

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Interim testing of goodwill for impairment is also required whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or asset below its carrying amount.

No impairments were recorded as of December 31, 2019 and 2018.

The Company periodically reviews the carrying value of long-lived assets to determine whether or not impairment to such value has occurred.

If the carrying amount of goodwill exceeds the implied estimated fair value, an impairment charge to current operations is recorded to reduce the carrying value to the implied estimated fair value.

There were no accumulated impairment losses as of December 31, 2020 or 2019.

The Company will first assess qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount.

If, based on a review of qualitative factors, it is more likely than not that the fair value is less than its carrying amount, the Company will use a quantitative approach, and calculate the fair value and compare it to its carrying amount.

If the fair value exceeds the carrying amount, there is no indication of impairment.

If the carrying amount exceeds the fair value, an impairment loss is recorded equal to the difference.

The Company performed an assessment of qualitative factors and determined that no events or circumstances existed that would lead to a determination that it is more likely than not that the fair value of indefinite-lived assets were less than the carrying amount.

As such, a quantitative analysis was not required to be performed as of December 31, 2020 or December 31, 2019.

Finite-lived intangible assets are amortized over their useful lives and are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Technology, customer relationships and non-compete agreements are amortized using the straight-line method.

Technology and customer relationships are amortized using the straight-line method.

Business combinations

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The Company reviews at least quarterly and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

At this time, the Company has no accrual related to lawsuits, claims, investigations and proceedings.

Research and development

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Advertising costs, which approximated $ 34,180 , $ 40,251 and $ 30,755 during the years ended December 31, 2020, 2019 and 2018, respectively, are expensed as incurred, excluding the production costs of direct response advertising.

Advertising costs are included in sales and marketing expense in the accompanying consolidated statements of comprehensive income.

Advertising costs are included in sales and marketing expense in the accompanying consolidated statements of comprehensive income (loss).

The Company accounts for income taxes in accordance with ASC 740 — Income Taxes .

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A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

The Company accounts for uncertainties in income tax in accordance with ASC 740-10 — Accounting for Uncertainty in Income Taxes .

The Company accounts for uncertainties in income taxes in accordance with ASC 740-10 — Accounting for Uncertainty in Income Taxes .

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company recognizes interest and penalties on taxes, if any, within its income tax provision on its consolidated statements of comprehensive income .

The Company recognizes interest and penalties on taxes, if any, within its income tax provision (benefit) on its consolidated statements of comprehensive income (loss).

Accounting for stock-based compensation

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Foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to functional currency are reflected as a component of foreign currency exchange gains or losses in other income (expense) in the consolidated statements of comprehensive income.

Government grants

The Company may receive cash payments from government grants during a public health emergency (PHE).

The Company considers the nature and substance of the government grant and records the cash payment in accordance with the terms and conditions of the grant.

Income is deferred until all considerations required for receiving the grant are met and is recognized in the consolidated statements of comprehensive income (loss) based on the nature of the terms and conditions of the grant.

In 2020, the Company

received a grant of $ 6,200 from the Public Health and Social Services Emergency Fund (Relief Fund), which was among the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act signed into law on March 27, 2020.

During 2020, the Company recorded $ 5,300 in other income, which was associated with lost revenues from the COVID-19 PHE, and a $ 900 benefit in general and administrative expense due to COVID-19 PHE related costs incurred in the period.

Earnings per share

Earnings per share (EPS) is computed in accordance with ASC 260 — Earnings per Share and is calculated using the weighted-average number of common shares outstanding during each period.

Earnings (loss) per share (EPS) is computed in accordance with ASC 260 — Earnings per Share and is calculated using the weighted-average number of common shares outstanding during each period.

Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents (which can include dilution of outstanding stock options, restricted stock units and restricted stock awards) unless the effect is to reduce a loss or increase the income per share.

For purposes of this calculation, common stock subject to repurchase by the Company, options, and other dilutive awards are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive.

Basic earnings per share is calculated using the Company’s weighted-average outstanding common shares.

Diluted earnings per share is calculated using the Company’s weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

Basic earnings (loss) per share is calculated using the Company’s weighted-average outstanding common shares.

Diluted earnings (loss) per share is calculated using the Company’s weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method.

The computation of EPS is as follows:

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Numerator—basic and diluted:

Net income (loss)

Weighted-average common shares - basic common stock (1)

Weighted-average common shares - diluted common stock

Net income per share - basic common stock

Net income per share - diluted common stock

Net income (loss) per share - basic common stock

Net income (loss) per share - diluted common stock (2)

Denominator calculation from basic to diluted:

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however, such dividends are not paid until the restrictions lapse.

The computations of diluted net income attributable to common stockholders excluded common stock options, restricted stock units, and restricted stock awards, which were anti-dilutive for the years ended December 31, 2019, 2018 and 2017.

Due to a net loss for the year ended December 31, 2020, diluted loss per share is the same as basic.

The computations of diluted net income (loss) attributable to common stockholders excluded common stock options, restricted stock units, and restricted stock awards, which were anti-dilutive for the year ended December 31, 2020.

Business segments

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Recently issued accounting pronouncements not yet adopted

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The new guidance also improves consistent application of and simplifies U.S.

GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

The Company is currently evaluating the effect of the new guidance.

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Accounting for Credit Losses (Topic 326) .

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The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities.

The ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted.

The Company is currently evaluating the new guidance but does not expect it to have a material impact on the Company’s consolidated financial statement presentation or results.

The Company adopted this standard on January 1, 2020 , and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

In January 2017, the FASB issued ASU No.

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Under the new guidance, an entity should recognize an impairment charge for the amount by which a reporting unit’s carrying value exceeds its fair value.

The ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

The Company is currently evaluating the effect of the new guidance but does not expect it to have a material impact on the Company’s consolidated financial statement presentation or results.

The Company adopted this standard on January 1, 2020 , and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

In August 2018, the FASB issued ASU No.

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The new guidance modifies the disclosure requirements on fair value measurements.

The ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

While the Company continues to evaluate the effect of adopting this guidance, the Company expects the fair value disclosures related to financial instruments, derivative instruments and hedging activities and earnout liabilities will be subject to the new standard.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The new guidance also improves consistent application of and simplifies US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted.

The Company is currently evaluating the effect of the new guidance.

Recently adopted accounting pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) .

The new guidance requires organizations that lease assets—referred to as “lessees”—to recognize on the consolidated balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than twelve months.

The Company adopted the standard using the modified retrospective transition method at the adoption date of January 1, 2019 that does not require restatement of its comparative periods presented, allows it to apply the standard as of the adoption date and record a cumulative adjustment in retained earnings.

As permitted under the transition guidance, the Company carried forward the assessment of whether the Company’s contracts contain or are leases, classification of the Company’s leases and remaining lease terms.

The Company elected the practical expedients to not record leases with an initial term of twelve months or less on the consolidated balance sheet and to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs.

The Company recognized approximately $ 6,400 of operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets upon adoption on January 1, 2019.

The Company also recognizes equipment rental revenue over the non-cancelable lease term, which is one month, less estimated adjustments, in accordance with Topic 842, effective January 1, 2019 .

The impact on rental revenue as a result of the adoption did not have a material impact on the Company’s consolidated financial presentation or results.

There were no cumulative adjustments recorded to retained earnings as a result of the adoption.

As a result of adoption of Topic 842, the bad debt expense account associated with the rental revenue allowance for doubtful account is charged to rental revenue instead of general and administrative expense upon adoption.

This change results in decreased rental revenue and decreased operating expense.

In August 2017, the FASB issued ASU No.

2017-12, Derivatives and Hedging , which changes both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results, in order to better align an entity’s risk management activities and financial reporting for hedging relationships.

The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.

The Company adopted this standard on January 1, 2020 , and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

In January 2018, the FASB issued ASU No.

2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

The new guidance permits entities the option to reclassify tax effects that are stranded in accumulated other comprehensive income as a result of the implementation of the Tax Cuts and Jobs Act to retained earnings.

The Company adopted this standard on January 1, 2019 using the beginning of the period of adoption method and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

In June 2018, the FASB issued ASU No.

2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting .

The new guidance modifies the accounting for nonemployee share-based payments.

The Company adopted this standard on January 1, 2019 and adoption of this standard did not have a material impact on the Company’s consolidated financial statement presentation or results.

Prior period reclassifications

Certain amounts in prior periods have been reclassified to conform with current period presentation.

On August 6, 2019, the Company entered into an Agreement and Plan of Merger (Merger Agreement) by and among the Company, New Aera, Inc., a Delaware corporation, Move Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company, and Gregory J.

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The key assumption included in the simulation included revenue recognized.

Preliminary fair values of assets acquired and liabilities assumed have been updated for deferred taxes.

The purchase accounting for this acquisition has been finalized.

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Balance as of December 31, 2020

As of December 31, 2020, the Company had no accumulated impairment losses related to goodwill.

Intangible assets

There were no impairments recorded related to the Company’s intangible assets as of December 31, 2019 and 2018.

Amortization expense for intangible assets for the years ended December 31, 2019, 2018 and 2017 was $ 4,160 , $ 1,265 and $ 507 , respectively.

There were no accumulated impairment losses related to the Company’s intangible assets as of December 31, 2020.

Amortization expense for intangible assets for the years ended December 31, 2020, 2019 and 2018 were as follows:

Years ended December 31,

(amounts in thousands)

Research and development expense

Sales and marketing expense

General and administrative expense

The following tables represent the changes in net carrying values of the intangibles as of the respective dates:

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Customer relationships

Non-compete agreement

Annual estimated amortization expense for each of the succeeding fiscal years is as follows:

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Accrued inventory (in-transit and unvouchered receipts) and trade payables

Accrued litigation settlement

Accrued purchasing card liability

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There are no economic penalties for the Company to extend the lease, and it is not reasonably assured that the Company will exercise the extension options.

Based on the present value of the lease payments for the remaining lease term of the Company’s existing leases, the Company recognized operating lease right-of-use assets and operating lease liabilities of $ 6,418 on January 1, 2019.

Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

The operating leases do not contain material residual value guarantees or material restrictive covenants.

As a result of the MedSupport acquisition, the Company leases a property owned by a related party.

Rent expense, including short-term lease cost, was $ 2,864 , $ 2,288 , and $ 1,638 for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company leases a property owned by a related party.

Operating lease cost for the property was $ 33 , $ 31 , and $ 33 for the years ended December 31, 2020, 2019 and 2018, respectively, which was included in the total operating lease cost.

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December 31, 2020

Twelve months ended

December 31, 2019

Cash paid for operating lease liabilities

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Total lease liabilities

As of December 31, 2019, the Company has additional operating leases for its corporate headquarters in California and commercial and industrial space in Texas that have not yet commenced, with total minimum lease payments of $ 27,215 .

As of December 31, 2020, the Company has additional operating leases for its corporate headquarters in California and industrial space in Texas that have not yet commenced, with total minimum lease payments of $ 21,446 .

Lease payments for its corporate headquarters will increase annually by the lesser of the change, if any, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S.

Department of Labor or three and one-half percent ( 3.5 %) at each annual adjustment date thereafter.

Lease payments for the Company’s commercial and industrial space in Texas will increase annually by two and one-half percent ( 2.5 %) at each annual adjustment date thereafter.

These operating leases will commence in 2020 with a lease term of 10 - 11 years .

This table does not include lease payments that were not fixed at commencement or modification.

Supplemental information for comparative periods

As of December 31, 2018, prior to the adoption of Topic 842, future minimum payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year were as follows:

(amounts in thousands)

Operating leases (1)

Total minimum payments

(1) Includes future minimum payments for leases which have not yet commenced.

The components of the Company’s income before provision for income taxes are as follows:

Lease payments for the Company’s industrial space in Texas will increase annually by two and one-half percent ( 2.5 %) at each annual adjustment date

These operating leases are estimated to commence in the first quarter of 202 1 with a leas e term of approximately 10 years .

This table above exc lude s lease payments that were not fixed at commencement or modification.

The components of the Company’s income (loss) before provision (benefit) for income taxes are as follows:

Years ended December 31,

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United States

Income before provision for income taxes

The provision for income taxes consists of the following:

Income (loss) before provision (benefit) for income taxes

The provision (benefit) for income taxes consists of the following:

Years ended December 31,

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Total deferred tax expense (benefit)

Tax benefit for change in valuation allowance

Total deferred tax expense (benefit), net

Income tax expense (benefit)

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Stock-based compensation

Change in valuation allowance

R&D credit, net of reserve

Expiration of net operating losses

Effect of U.S tax law change

Effective income tax rate

On December 22, 2017, TCJA was enacted into law, which significantly changes existing U.S.

tax law and includes numerous provisions that affect the Company’s business.

Changes include, but are not limited to, a corporate tax rate decrease from 34 % to 21 % effective for tax years beginning after December 31, 2017, expensing of capital expenditures, the transition of U.S.

international taxation from a worldwide tax system to a territorial system, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings, and limitations on the deductibility of certain executive compensation and other deductions .

Company is required to recognize the effect of the tax law changes in the period of enactment, including the transition tax, re-measuring the Company’s U.S.

deferred tax assets and liabilities, as well as reassessing the net realizability of the Company’s deferred tax assets and liabilities.

During the fourth quarter of 2017, the Company recorded a provisional net charge of $ 7,578 related to the TCJA due to the remeasurement of its deferred tax assets .

The re was no impact related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings.

As of December 31, 2018, the Company completed its evaluation and analysis of the TCJA and there was no additional adjustment to the provisional amount recorded in the fourth quarter of 2017 .

The Company operates in several taxing jurisdictions, including U.S.

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Additions based on tax positions related to current year

Reductions based on tax positions related to prior year

Additions based on tax positions related to prior year

Balance at end of period

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The total intrinsic value of options exercised during the years ended December 31, 2020, 2019, and 2018 was $ 494 , $ 7,910 , and $ 98,743 , respectively.

The unrecognized compensation expense related to non-vested stock-based compensation granted under the Plans as of December 31, 2019 was $ 691 .

This amount is expected to be recognized over a weighted-average period of 0.3 years.

As of December 31, 2020, all stock-based compensation expense for options granted under the Plans was recognized.

Stock incentive awards

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The portion of the Stock Award that is earned may equal or be less than the targeted number of shares subject to the Stock Award depending on whether the performance criteria are met.

Stock Awards activity for the years ended December 31, 2019 and December 31, 2018 are summarized below:

Stock Awards activity for the years ended December 31, 2020, 2019 and 2018 are summarized below:

Restricted stock units

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Unvested restricted stock awards outstanding as of December 31, 2017 (1)

Forfeited/canceled

Unvested restricted stock awards outstanding as of December 31, 2018 (1)

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The employee stock-based compensation expense recognized for the years ended December 31, 2020, 2019 and 2018 has been reduced for estimated forfeitures of stock option plan awards at a rate of 7.3 %, 7.3 % and 7.3 %, respectively.

The employee stock-based compensation expense recognized for the years ended December 31, 2019, 2018 and 2017 was reduced for estimated forfeitures of restricted stock at a rate of 4.4 %, 4.7 % and 6.0 %, respectively.

The employee stock-based compensation expense recognized for the years ended December 31, 2020, 2019 and 2018 has been reduced for estimated forfeitures of restricted stock at a rate of 4.7 %, 4.4 % and 4.7 %, respectively.

ASC 718 – Compensation-Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

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Stock-based compensation cost for stock options and employee stock purchase plan are determined at the grant date using the Black-Scholes option pricing model.

The following table displays the assumptions that have been applied to estimate the fair value of stock option awards on the date of grant using the Black-Scholes option pricing model.

During 2019 and 2018, the Company did not grant any stock option awards.

Expected term (years)

Risk free interest rate

Expected dividend yield

Under these assumptions, the total weighted-average fair value of stock options granted during the year ended December 31, 2017 was $ 8,929 .

During the years ended December 31, 2020, 2019 and 2018, the Company did not grant any stock option awards.

The following table displays the assumptions that have been applied to estimate the fair value of the Company’s shares to be issued under the ESPP using the Black-Scholes option pricing model.

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Under the terms of this plan, eligible employees are able to make contributions to the plan on a tax-deferred basis.

The Company began matching employees’ contributions, effective January 1, 2017.

The Company contributed $ 871 , $ 865 , and $ 557 , net of forfeitures, to the 401(k) plan for the years ended December 31, 2019, 2018 and 2017, respectively.

The Company matched employees’ contributions from

January 1, 2017 through June 30, 2020 .

The Company suspended its 401(k) match, effective July 1, 2020.

The Company contributed $ 455 , $ 871 , and $ 865 , net of forfeitures , to the 401(k) plan for the year s ended December 31, 20 20 , 201 9 and 201 8 , respectively .

Commitments and contingencies

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Purchase obligations

The Company had approximately $ 54,500 of outstanding purchase orders with its outside vendors and suppliers as of December 31, 2019.

The Company had approximately $ 60,200 of outstanding purchase orders due within one year with its outside vendors and suppliers as of December 31, 2020.

Warranty obligation

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Compliance with such laws and regulations can be subject to future government review and interpretation as well as regulatory actions unknown or unasserted at this time.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) ensures health insurance portability, reduces healthcare fraud and abuse, guarantees security and privacy of health information, and enforces standards for health information.

The Health Information Technology for Economic and Clinical Health Act (HITECH Act) imposes notification requirements of certain security breaches relating to protected health information.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted to ensure health insurance portability, reduce healthcare fraud and abuse, guarantee security and privacy of health information, and enforce standards for health information.

The Health Information Technology for Economic and Clinical Health Act (HITECH Act), in part, imposes notification requirements of certain security breaches relating to protected health information.

The Company believes that it complies in all material respects with the provisions of those regulations that are applicable to the Company’s business.

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(Breathe), a subsidiary of Hill-Rom Holdings, filed a lawsuit against Inogen, Inc., New Aera, Inc., Silverbow Development, LLC, and Todd W.

Allum in the United States District Court for the Northern District of California.

Breathe alleged willful infringement on certain patents, declared that inventorship was incorrectly assigned and their rights to certain patents filed by New Aera, Inc.

and Silverbow Development LLC, breach of contract, inducing breach of contract, interference with contract, and violation of California business and professional code section 17200.

The complaint seeks inventorship of patents to be corrected, injunctive relief, compensatory and punitory damages in an unspecified amount including trebling of all damages awarded with respect to infringement of the ‘250 patent, costs and expenses, including attorneys’ fees and expert fees, prejudgment and post-judgment interest and such other relief as the court deems proper.

The Company intends to vigorously defend itself against these allegations.

Allum in the United States District Court for the Northern District of California (N.D.

Breathe alleged:

willful infringement of the ‘250 patent assigned to Breathe;

that inventorship was incorrectly assigned and that Breathe owns rights to certain patents filed by New Aera, Inc.

and Silverbow Development LLC;

breach of contract;

inducing breach of contract;

interference with contract;

and violation of California Business and Professional Code Section 17200.

The complaint seeks to correct inventorship of certain patents now owned by the Company, injunctive relief, compensatory and punitory damages in an unspecified amount including trebling of all damages awarded with respect to infringement of the ‘250 patent, costs and expenses, including attorneys’ fees and expert fees, prejudgment and post-judgment interest and such other relief as the court deems proper.

On March 31, 2020, Breathe filed a First Amended Complaint in which it dropped the patent infringement claims in the N.D.

Lawsuit and added another claim for violation of California Business and Professional Code Section 17200.

On the same day, Breathe re-filed the ‘250 patent infringement claims in the United States District Court for the Central District of California (C.D.

On August 17, 2020, the court in the N.D.

Lawsuit ordered that Breathe’s claims be arbitrated, with the sole exception of the correction of inventorship claim, which the court ordered be stayed pending completion of the arbitration on the other claims.

On September 4, 2020, Breathe filed a demand for arbitration with the American Arbitration Association, in which Breathe reiterated the claims it filed in the N.D.

On January 20, 2021, the Company entered into a comprehensive settlement agreement with Breathe, which has resolved all disputes in the two lawsuits and the arbitration filed by Breathe.

As a result of the settlement agreement, the lawsuits and arbitration have been dismissed.

The Company recorded a contingent liability of $ 8,000 during the year ended December 31, 2020.

The related payable was recorded in accounts payable and accrued expenses and receivable from the New Aera acquisition escrow account in prepaid expenses and other current assets as of December 31, 2020.

Securities class action and derivative lawsuits

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On January 23, 2020, the defendants filed a motion to dismiss the second amended complaint.

On September 2, 2020, the court denied the defendants’ motion to dismiss without prejudice and instructed defendants to file another motion to dismiss if the parties are unable to resolve the issues relating to the second amended complaint.

The Company filed its motion to dismiss on October 28, 2020;

that motion is currently pending.

The Company intends to vigorously defend itself against these allegations.

6 unchanged sentences

Between October 7, 2019 and October 31, 2019, three additional shareholder derivative complaints were filed in the United States District Court for the Central District of California based on similar factual allegations.

These lawsuits purport to bring claims on behalf of Inogen for breach of fiduciary duty, unjust enrichment, waste of corporate assets, insider trading and misappropriation of information, and violations of section 14(a) of the Securities Exchange Act of 1934, as amended.

These lawsuits purport to bring claims on behalf of Inogen for breach of

fiduciary duty, unjust enrichment, waste of corporate assets, insider trading and misappropriation of information, and violations of section 14(a) of the Securities Exchange Act of 1934, as amended.

On January 13, 2020, the court consolidated the four derivative lawsuits before it under the name In re Inogen, Inc.

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The complaints seek compensatory damages in unspecified amounts, changes to the Company’s corporate governance and internal procedures, return of compensation, disgorgement of profits from sale of stock, costs and expenses, including attorneys’ fees and expert fees, and such other relief as the court deems proper.

On December 23, 2019 and January 6, 2020, plaintiffs filed cross-motions to consolidate the two cases and to appoint lead counsel.

On May 15, 2020, the court consolidated the two derivative lawsuits before it under the name In re Inogen, Inc.

S’holder Deriv.

, Lead Case No.

1:19-cv-01723-MN-JLH.

On July 8, 2020, the court ordered that the consolidated action be stayed pending the resolution of the motion to dismiss in the securities class action, In re Inogen, Inc., Sec.

Department of Health and Human Services and the Centers for Medicare and Medicaid Services lawsuit

On September 21, 2020, Inogen filed a lawsuit against defendants, Alex M.

Azar, Secretary of the Department of Health and Human Services (HHS), in his official capacity, Seema Verma, Administrator of the Centers for Medicare and Medicaid Services (CMS), in her official capacity and Palmetto GBA, LLC.

The lawsuit seeks to invalidate the defendants’ arbitrary and capricious decision to retract a valid HCPCS code to Inogen’s Tidal Assist ® Ventilator (TAV ® ), thereby eliminating reimbursements for the ventilator, in violation of the Administrative Procedures Act (5 U.S.C.

§§ 551 , et seq.

Further, CMS’s failure to provide notice and the opportunity to comment on a change in HCPCS code verification for the Sidekick Tidal Assist Ventilator and similar devices constitutes a violation of the procedural right provided under the Social Security Act (42 U.S.C.

§§ 1395hh(a)(2)), and Inogen’s due process rights.

Other litigation

6 unchanged sentences

These contracts were comprised of offsetting contracts with the same counterparty, each expires within one to twelve months .

During the years ended December 31, 2019, 2018, and 2017, these contracts had, net of tax, an unrealized loss of $ 694 , an unrealized gain of $ 404 , and an unrealized loss of $ 121 , respectively.

During the years ended December 31, 2020, 2019, and 2018, these contracts had, net of tax, an unrealized loss of $ 289 , an unrealized loss of $ 694 , and an unrealized gain of $ 404 , respectively.

The nonperformance risk of the Company and the counterparty did not have a material impact on the fair value of the derivatives.

During the years ended December 31, 2020, 2019 and 2018, there were no ineffective portions relating to these hedges and the hedges remained effective through their respective settlement dates.

As of December 31, 2019, the Company had eleven designated hedges and one non-designated hedges.

As of December 31, 2018, the Company had twenty-nine designated hedges and four non-designated hedges.

As of December 31, 2020, the Company had seventeen designated hedges and no non-designated hedges.

As of December 31, 2019, the Company had eleven designated hedges and one non-designated hedge.

Quarterly summary of information (unaudited)

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Diluted common shares

Due to net loss for period Q4 December, dilutive loss per share is the same as basic.

Due to net loss for periods Q1 March, Q3 September and Q4 December, diluted loss per share is the same as basic.

(amounts in thousands, except share and per share amounts)

1 unchanged sentence

Total revenue

Income before benefit for income taxes

Benefit for income taxes

Net income per share attributable to

Income (loss) before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share attributable to

common stockholders:

Weighted-average number of shares used in

calculating net income per share attributable

calculating net income (loss) per share attributable

to common stockholders:

1 unchanged sentence

Diluted common shares

Earnings per share is computed independently for each of the quarters presented.

Due to net loss for period Q4 December, diluted loss per share is the same as basic.

Earnings (loss) per share is computed independently for each of the quarters presented.

Therefore, the sum of the quarterly amounts will not necessarily equal the total for the year.

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Thirteenth Amended and Restated Certificate of Incorporation of the Registrant.

Filed Herewith

Amended and Restated Bylaws of the Registrant.

Filed Herewith

Specimen Common Stock Certificate of the Registrant.

3 unchanged sentences

Description of Securities.

Filed Herewith

Form of Director and Executive Officer Indemnification Agreement.

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Employment and Severance Agreement, dated August 17, 2018, between the Registrant and Bart Sanford.

Third Amendment to lease, dated July 14, 2020, between Registrant and Rockbridge Investments, L.P.

Employment and Severance Agreement, dated August 17, 2020, between the Company and Arron Retterer .

Employment and Severance Agreement between the Company and Nabil Shabshab, dated January 22, 2021.

Transition Agreement and Release by and between the Company and Scott Wilkinson, dated January 22, 2021.

Filed Herewith

First Amendment to Agreement and Plan of Merger, dated August 6, 2019 between the Company and New Aera, dated January 18, 2021.

Filed Herewith

Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.

8 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document

Filed Herewith

XBRL Taxonomy Extension Schema Document

9 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

/s/ Scott Wilkinson

Scott Wilkinson

/s/ Nabil Shabshab

Nabil Shabshab

Chief Executive Officer

2 unchanged sentences

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Scott Wilkinson and Alison Bauerlein, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue thereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nabil Shabshab and Alison Bauerlein, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Scott Wilkinson

/s/ Nabil Shabshab

Chief Executive Officer, President and Director

February 24, 2021

Scott Wilkinson

Nabil Shabshab

(Principal Executive Officer)

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February 24, 2021

/s/ Scott Beardsley

February 25, 2020

Scott Beardsley

/s/ Raymond Huggenberger

2 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.

What changed 10-K

Item 9A. Controls and Procedures