What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-15 compared with 2021-02-24 · 184 added, 204 removed, 561 unchanged (41% of the section changed)

22 unchanged sentences

(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 the critical audit matter 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 account or disclosure to which it relates.

The communication of the critical audit matter 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 account or disclosure to which it relates.

Inventory valuation reserves

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To test the adequacy of the Company's inventory valuation reserve, we performed audit procedures that included, among others, testing the accuracy and completeness of the underlying data used in the estimation calculations and evaluating significant assumptions, specifically forecasted customer demand, technological and/or market obsolescence, and possible alternative uses.

We evaluated management’s ability to accurately estimate the amount of excess and obsolete inventory by comparing actual inventory write-off activity in recent years to management’s prior estimates of the inventory valuation reserve.

We also audited management’s calculation of the inventory valuation reserve by testing the mathematical accuracy of the Company’s reserve calculation.

9 unchanged sentences

Investments, short-term — 43,844

Accounts receivable, net of allowance for credit losses of $ 42 and $ 48 , respectively

Accounts receivable, net of allowance for credit losses of

$ 99 and $ 42 , respectively

34,179 25,063

11 unchanged sentences

Accrued expenses 20,454 13,516

Notes payable, current portion 9,188 —

Total current liabilities 41,307 20,725

Notes payable 24,746 24,522

Notes payable, non-current portion 15,799 24,746

Operating lease liability, non-current portion 8,796 5,886

Other non-current liability 134 85

Total non-current liabilities 30,717 24,562

Total liabilities 66,036 51,442

2 unchanged sentences

no shares issued and outstanding

Common Stock, $ 0.001 par value, 200,000,000 shares authorized at December 31, 2020 and 2019;

Common Stock, $ 0.001 par value, 200,000,000 shares authorized;

27,416,106 and 27,069,276 shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital 508,465 467,038

Accumulated other comprehensive income 29 102

Accumulated other comprehensive (loss) income ( 55 ) 29

Accumulated deficit ( 279,389 ) ( 237,347 )

18 unchanged sentences

Interest expense 2,128 2,117 2,119

Other (income) expense, net ( 145 ) ( 12 ) 16

Other expense (income), net 117 ( 145 ) ( 12 )

Total other expense (income) 2,120 880 ( 1,694 )

6 unchanged sentences

Net loss per share, basic and diluted $ ( 1.54 ) $ ( 2.19 ) $ ( 1.40 )

Weighted average common shares used to compute net loss per share, basic and diluted 26,073,418 23,804,452 14,579,662

Weighted average common shares used to compute

net loss per share, basic and diluted 27,262,979 26,073,418 23,804,452

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

2 unchanged sentences

(in thousands, except share amounts)

Common Stock Convertible

Preferred Stock

Shares Amount Additional

Shares Amount Accumulated

Comprehensive

4 unchanged sentences

Issuance of common stock 4,206 — 233 — — 233

Sale of common stock from initial public offering, net of offering expenses 7,762,500 8 112,032 — — — — 112,040

Sale of common stock from follow-on public offering, net of offering expenses 1,875,000 2 69,783 — — — — 69,785

Conversion of preferred stock to common stock 12,111,710 12 119,094 ( 76,235,050 ) ( 119,106 ) — — —

Conversion of warrants to purchase preferred stock to warrants to purchase common stock — — 855 — — — — 855

Stock-based compensation expense — — 1,219 — — — — 1,219

Other comprehensive loss — — — — — ( 52 ) — ( 52 )

Net loss — — — — — — ( 21,828 ) ( 21,828 )

Balance at December 31, 2018 23,401,675 23 310,941 — — ( 52 ) ( 146,913 ) 163,999

Stock options and warrants exercised 669,719 1 1,139 — — — — 1,140

Issuance of common stock 4,206 — 233 — — — — 233

Issuance of common stock for employee stock purchase plan 31,750 — 1,355 — — 1,355

13 unchanged sentences

Balance at December 31, 2020 27,069,276 27 467,038 29 ( 237,347 ) 229,747

Stock options exercised 323,860 — 11,476 — — 11,476

Issuance of common stock 1,463 — 301 — — 301

Issuance of common stock for employee stock purchase plan 21,507 — 3,472 — — 3,472

Stock-based compensation expense — — 26,178 — — 26,178

Other comprehensive loss — — — ( 84 ) — ( 84 )

Net loss — — — — ( 42,042 ) ( 42,042 )

Balance at December 31, 2021 27,416,106 $ 27 $ 508,465 $ ( 55 ) $ ( 279,389 ) $ 229,048

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

8 unchanged sentences

Depreciation and amortization 1,218 840 495

Accretion of investment discount ( 22 ) ( 983 ) ( 648 )

Amortization (accretion) of investment premium (discount) 14 ( 22 ) ( 983 )

Accretion of debt discount 240 224 268

2 unchanged sentences

Non-cash stock issuance for services rendered 301 294 233

Change in the fair value of preferred stock warrants — — 595

Other, net 56 ( 89 ) ( 143 )

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Financing activities

Proceeds from issuance of notes payable — — 8,000

Payment of debt fees — — ( 531 )

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Cash paid for interest $ 1,888 $ 1,893 $ 2,033

Purchases of property and equipment in accounts payable 816 — —

Issuance of preferred stock warrants — — 103

Change in property and equipment acquired but not yet paid 274 816 —

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

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Inspire Medical Systems, Inc.

is a medical technology company focused on the development and commercialization of innovative and minimally invasive solutions for patients with obstructive sleep apnea ("OSA").

is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA").

Our proprietary Inspire system is the first and only United States ("U.S.") Food and Drug Administration ("FDA") approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA.

Inspire therapy received premarket approval ("PMA") from the FDA in April 2014 and has been commercially available in certain European markets since November 2011.

In June 2018, Japan's Ministry of Health, Labour and Welfare approved Inspire therapy to treat moderate to severe OSA, and we are currently seeking reimbursement coverage in Japan.

Japan's Ministry of Health, Labour and Welfare ("MLHW") approved Inspire therapy to treat moderate to severe OSA in June 2018 and was formally added to the Japan National Health Insurance Payment Listing in June 2021.

In August 2020, the Australian Therapeutic Goods Administration approved Inspire therapy to treat moderate to severe OSA, and we are currently seeking reimbursement coverage in Australia.

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The results of operations for the year ended December 31, 2021 are not necessarily indicative of the operating results for any future periods.

Reverse Stock Split

In connection with our initial public offering of common stock ("IPO"), our board of directors and stockholders approved a 1-for-6.650 reverse stock split of our common stock.

The reverse stock split became effective on April 20, 2018.

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

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

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

Initial Public Offering

On May 7, 2018, we completed our IPO by issuing 7,762,500 shares of common stock, at an offering price of $ 16.00 per share, for net proceeds of approximately $ 112.0 million after deducting underwriting discounts, commissions, and offering expenses.

In connection with the IPO, our outstanding shares of convertible preferred stock were automatically converted into an aggregate of 12,111,710 shares of common stock, and our outstanding warrants to purchase shares of convertible preferred stock were automatically converted into warrants to purchase up to an aggregate of 100,558 shares of common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $ 0.9 million to additional paid-in capital ("APIC").

Follow-On Public Offerings

On December 11, 2018, we completed a follow-on offering that included our offer and sale of 1,875,000 shares of common stock and the selling stockholders’ offer and sale of 1,000,000 shares of common stock, at a public offering price of $ 40.00 per share.

We received net proceeds of approximately $ 69.8 million after deducting underwriting

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

discounts, commissions, and offering expenses.

We received no proceeds from the sale of our common stock by the selling stockholders.

On April 16, 2020, we completed a follow-on offering that included our offer and sale of 2,300,000 shares of common stock at a public offering price of $ 58.00 per share.

We received net proceeds of approximately $ 124.7 million after deducting underwriting discounts and commissions and offering expenses.

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements.

We use significant judgment when making estimates related to the allowance for credit losses, inventory reserves, warranty reserves, the valuations of our common stock prior to our IPO, and stock-based awards.

We use significant judgment when making estimates related to the allowance for credit losses, inventory reserves, warranty reserves, and stock-based awards.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Sales and expenses denominated in foreign currencies are translated at average exchange rates in effect throughout the year.

Foreign currency transaction gains and losses are included in other (income) expense, net in the statements of operations and comprehensive loss.

Assets and liabilities of foreign operations are remeasured at period-end exchange rates with the impacts of foreign currency remeasurement recognized in other (income) expense, net in the statements of operations and comprehensive loss.

At December 31, 2020 and 2019, our short-term investments consisted of commercial paper, corporate bonds, and U.S.

government securities, and at December 31, 2019 our short-term investments also included asset-backed securities, all of which are classified as available-for-sale and had maturities less than one year.

At December 31, 2019, our long-term investments consisted of corporate bonds.

Foreign currency transaction gains and losses are included in other expense (income), net in the statements of operations and comprehensive loss.

Assets and liabilities of foreign operations are remeasured at period-end exchange rates with the impacts of foreign currency remeasurement recognized in other expense (income), net in the statements of operations and comprehensive loss.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

At December 31, 2021, our long-term investments consisted of U.S.

government securities..

At December 31, 2020, our short-term investments consisted of commercial paper, corporate bonds, and U.S.

government securities.

Investments are reported at their estimated fair market values which are based on quoted, active or inactive market prices when available.

Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive income.

We had $0.0 million and $ 0.1 million of unrecognized income in our accumulated other comprehensive income balance at December 31, 2020 and 2019, respectively.

Any realized gains and losses are calculated on the specific identification method and reported net in other expense (income).

For both the years ended December 31, 2020 and 2019, we recognized approximately $ 0.1 million of gains, net.

Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive (loss) income.

We had $ 0.1 million of unrecognized loss and approximately $ 0 of unrecognized income in our accumulated other comprehensive (loss) income balance at December 31, 2021 and 2020, respectively.

Any realized gains and losses are calculated on the specific identification method and reported net in other expense (income) in the statements of operations and comprehensive loss.

For the years ended December 31, 2021 and 2020, we recognized $ 0 and $ 0.1 million of gains, net, respectively.

We recognize expected credit losses on investments in accordance with Accounting Standards Update ("ASU"), ASU 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), which we adopted effective January 1, 2020 using the modified retrospective approach.

2 unchanged sentences

government securities and cash equivalents are under a "zero-loss exception" for credit losses, meaning no credit loss risk calculation is necessary on those instruments due to the exceptionally low rate of default, which continues to decrease as the securities approach maturity, which for us is no longer than two years.

government securities, we use a discounted cash flow approach to calculate expected credit losses using estimated default rates based upon

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

historical loss data, current conditions, as well as expectations of future economic conditions.

government securities, we use a discounted cash flow approach to calculate expected credit losses using estimated default rates based upon historical loss data, current conditions, as well as expectations of future economic conditions.

We record changes in the allowance for credit losses for available-for-sale debt securities with a corresponding adjustment in credit loss expense on the statement of operations and comprehensive loss.

No reversal of a previously recorded allowance for credit losses may be made to an amount below zero.

The total allowance for credit losses was $ 0 at December 31, 2020.

The total allowance for credit losses was $ 0 at both December 31, 2021 and 2020.

Fair Value of Financial Instruments

We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, investments, and our previously outstanding preferred stock warrants.

We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

2 unchanged sentences

Level 1 — Observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data.

Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign exchange rates, and credit ratings.

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions.

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Commercial paper:

Short-term, highly liquid investments are included as a Level 2 measurement in the tables below.

Short-term, highly liquid investments are included as a Level 2 measurement in the table below.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Corporate bonds:

Consists of short- and long-term notes and bonds with various yields.

These are included as a Level 2 measurement in the tables below.

Asset-backed securities:

Consists of short-term, securitized investments backed by pools of credit card receivables.

These are included as a Level 2 measurement in the table below.

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Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Fair Value Measurements as of

4 unchanged sentences

Total cash equivalents 189,369 189,369 — —

Commercial paper $ 13,275 $ — $ 13,275 $ —

Corporate bonds 6,540 — 6,540 —

government securities 9,938 9,938 — —

9 unchanged sentences

Corporate bonds 6,540 — 6,540 —

Asset-backed securities 8,100 — 8,100 —

government securities 24,029 24,029 — —

9 unchanged sentences

However, as of December 31, 2021 and 2020, we limited our credit risk associated with cash equivalents by placing investments with banks we believe are highly creditworthy.

We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base.

We generally do not require collateral, and losses on accounts receivable have historically been within management's expectations.

INSPIRE MEDICAL SYSTEMS, INC.

1 unchanged sentence

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

We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base.

We generally do not require collateral, and losses on accounts receivable have historically not been significant.

Accounts Receivable and Allowance for Expected Credit Losses

2 unchanged sentences

Collateral or any other security to support payment of these receivables generally is not required.

We recognize expected credit losses on accounts receivable in accordance with Accounting Standards Update ("ASU"), ASU 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), which we adopted effective January 1, 2020 using the modified retrospective approach through a cumulative-effect adjustment to retained earnings.

We recognize expected credit losses on accounts receivable in accordance with ASU 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), which we adopted effective January 1, 2020 using the modified retrospective approach through a cumulative-effect adjustment to retained earnings.

The adoption of ASU 2016-13 did not have a material impact on the amount and timing of credit losses recognized in our financial statements.

Each reporting period, we estimate the credit loss related to accounts receivable based on a migration analysis of accounts grouped by individual receivables delinquency status, and apply our historic loss rate adjusted for management's assumption of future market conditions.

Any change in the allowance subsequent to the effective date of January 1, 2020 from new receivables acquired, or changes due to credit deterioration on previously existing receivables, is recorded in selling, general and administrative expenses.

Write-offs of receivables considered uncollectible, and any related subsequent recoveries of previously written off receivables, are deducted from the allowance.

Any change in the allowance from new receivables acquired, or changes due to credit deterioration on previously existing receivables, is recorded in selling, general and administrative expenses.

Write-offs of receivables considered uncollectible are deducted from the allowance.

Specific accounts receivable are written-off once a determination is made that the amount is uncollectible.

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The determination of a reserve for excess and obsolete inventory involves management exercising judgment to determine the required reserve, considering future demand, product life cycles, introduction of new products and current market conditions.

The reserve for excess and obsolete inventory was $ 0.1 million as of both December 31, 2020 and 2019.

The reserve for excess and obsolete inventory was $ 0.3 million and $ 0.1 million as of December 31, 2021 and 2020, respectively.

INSPIRE MEDICAL SYSTEMS, INC.

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Our cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors.

We did not record any material impairment charges on long-lived assets during the years ended December 31, 2020, 2019, or 2018.

We did not record any impairment charges on long-lived assets during the years ended December 31, 2021, 2020, or 2019.

Accrued Expenses

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Interest 160 160

Product warranty liability 468 159

Current operating lease liability 312 —

1 unchanged sentence

Total accrued expenses $ 20,454 $ 13,516

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"), which we adopted effective January 1, 2019 using the modified

INSPIRE MEDICAL SYSTEMS, INC.

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

retrospective approach.

The adoption of ASC 606 did not have a material impact on the amount and timing of revenue recognized in our financial statements.

The following table shows the changes in our estimated product warranty liability accrual, included in accrued liabilities:

Year Ended December 31,

2021 2020 2019

Balance at beginning of period $ 159 $ 115 $ 21

Accruals of warranties issued 576 137 156

Settlements of warranty claims ( 267 ) ( 93 ) ( 62 )

Balance at the end of the period $ 468 $ 159 $ 115

Revenue Recognition

We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").

Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms.

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Research and development expenses consist primarily of product development, clinical and regulatory affairs, quality assurance, consulting services, and other costs associated with products and technologies in development.

These expenses include employee compensation, including stock-based compensation, supplies, materials, consulting, and travel expenses related to research and development programs.

Clinical expenses include clinical trial design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical trials.

Stock-Based Compensation

We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors.

The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and directors.

We also offer an employee stock purchase plan which allows participating employees to purchase shares of our common stock at a discount through payroll deductions.

These expenses include employee compensation, including stock-based compensation, supplies, materials,

INSPIRE MEDICAL SYSTEMS, INC.

1 unchanged sentence

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

consulting, and travel expenses related to research and development programs.

Clinical expenses include clinical trial design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical trials.

Stock-Based Compensation

We maintain an equity incentive plan to provide lon g-term incentives for eligible employees, consultants, and members of the board of directors.

The plan allows for the issuance of restricted stock units ("RSUs") and non-statutory and incentive stock options to employees and RSUs and non-statutory stock options to consultants and directors.

We also offer an employee stock purchase plan which allows participating employees to purchase shares of our common stock at a discount through payroll deductions.

We recognize equity-based compensation expense for awards of equity instruments to employees and directors based on the grant date fair value of those awards in accordance with ASC Topic 718, Stock Compensation ("ASC 718").

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

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

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

We estimate the fair value of stock options using the Black-Scholes option pricing model and the fair value of RSUs is equal to the closing price of our common stock on the grant date.

The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model.

We have not granted any restricted shares.

We have not granted any stock-based awards to our consultants.

The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (i) the expected share price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) the expected dividend yield.

Due to the lack of a public market for the trading of our common stock and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.

Due to our limited operating history and a lack of company specific historical and implied volatility data, we have incorporated our historical stock trading volatility with those of a peer group of public companies for the calculation of volatility.

The group of peer companies have characteristics similar to us, including stage of product development and focus on the life science industry.

The historical volatility is calculated based on a period of time commensurate with the expected term assumption.

The group of representative companies have characteristics similar to us, including stage of product development and focus on the life science industry.

We use the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees and directors as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

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In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable.

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

The determination of our incremental borrowing rate requires management

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

judgment based on information available at lease commencement.

The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives.

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We account for income taxes using the liability method.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

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Comprehensive loss consists of net loss and changes in unrealized gains and losses due to interest rate fluctuations and other external factors on investments classified as available-for-sale.

Accumulated other comprehensive income is presented in the accompanying balance sheets as a component of stockholders' equity.

Accumulated other comprehensive (loss) income is presented in the accompanying balance sheets as a component of stockholders' equity.

Loss Per Share

1 unchanged sentence

Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period.

Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of stock options and warrants were antidilutive in those periods.

Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all potentially dilutive shares consisting of outstanding stock options, unvested RSUs, and shares issuable under our employee stock purchase plan were antidilutive in those periods.

Purchase Commitments

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We have reviewed and considered all recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Our investments are classified as available-for-sale and consist of the following:

2 unchanged sentences

Cost Gains Losses Fair Value

Commercial paper $ 13,275 $ — $ — $ 13,275

Corporate bonds 6,543 — ( 3 ) 6,540

government securities $ 9,993 $ — $ ( 55 ) $ 9,938

Short-term investments $ 43,815 $ 32 $ ( 3 ) $ 43,844

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Long-term investments $ 9,993 $ — $ ( 55 ) $ 9,938

December 31, 2020

3 unchanged sentences

Corporate bonds 6,543 — ( 3 ) 6,540

Asset-backed securities 8,097 5 ( 1 ) 8,101

government securities 23,997 32 — 24,029

Short-term investments $ 43,815 $ 32 $ ( 3 ) $ 43,844

Corporate bonds 6,258 18 — 6,276

Long-term investments $ 6,258 $ 18 $ — $ 6,276

As of December 31, 2021 and 2020, we had no investments with a contractual maturity of greater than two years.

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This lease commenced January 15, 2019 and expired November 30, 2020.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

In May 2019, we entered into a new, non-cancelable operating lease agreement for the same space directly with the landlord.

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Beginning December 1, 2020, in addition to base rent, we also pay our proportionate share of the operating expenses, as defined in the lease.

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

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

conjunction with this lease, the landlord agreed to provide Inspire with a $ 0.6 million rent abatement and a refurbishment allowance in the amount of the cost of any leasehold improvements, not to exceed approximately $ 1.1 million upon Inspire providing the necessary documentation evidencing the costs of the leasehold improvements that are completed by May 31, 2022.

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

In conjunction with this lease, the landlord provided Inspire with a $ 0.6 million rent abatement and a refurbishment allowance in the amount of the cost of any leasehold improvements, not to exceed $ 1.1 million upon Inspire providing the necessary documentation evidencing the costs of the leasehold improvements that are completed by May 31, 2022.

However, the lease allows us to allocate the refurbishment allowance against base rent instead of taking a tenant improvement reimbursement.

At this time, we intend to allocate the full amount of the refurbishment allowance against base rent.

The total minimum lease payments related to this lease is $ 7.4 million.

In August 2021, we entered into a new, non-cancelable operating lease agreement for approximately 25,000 square feet of additional corporate office space with our existing landlord.

The initial lease term commenced on October 1, 2021 and expires May 31, 2028 with an option to renew for one additional period of five years at the then-prevailing market rate.

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 when the lease commenced on October 1, 2021 as it is not reasonably certain of exercise.

Beginning October 1, 2021, in addition to base rent on the additional space, we also pay our proportionate share of the operating expenses, as defined in the lease.

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

In conjunction with this lease, the landlord provided a $ 0.2 million rent abatement and a refurbishment allowance in the amount of the cost of any leasehold improvements, not to exceed $ 0.4 million upon Inspire providing the necessary documentation evidencing the costs of the leasehold improvements that are completed by May 31, 2022.

However, the lease allows us to allocate the refurbishment allowance against base rent instead of taking a tenant improvement reimbursement.

At this time, we intend to allocate the full amount of the refurbishment allowance against base rent.

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

7 unchanged sentences

Year Ended December 31,

2021 2020 2019

Operating lease cost $ 1,125 $ 1,035 $ 1,021

1 unchanged sentence

Total lease cost $ 2,126 $ 1,107 $ 1,050

Variable lease costs consist primarily of taxes, insurance and common area maintenance costs on our current corporate office lease, which commenced December 1, 2020, and our prior corporate office lease, which expired March 31, 2019.

Prior to January 1, 2019, we recorded operating lease rent expense under ASC 840 on a straight-line basis over the period of the lease.

Rent expense was $ 0.2 million for the year ended December 31, 2018.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Variable lease costs consist primarily of taxes, insurance and common area maintenance costs on our current corporate office leases, the first of which commenced December 1, 2020, and our prior corporate office lease, which expired March 31, 2019.

Maturities of our lease liability for our operating lease are as follows as of December 31, 2021:

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Present value of lease liability $ 9,108

As of December 31, 2020, the remaining lease term was 7.4 years and the discount rate was 5.2 %.

The operating cash outflows from our operating leases were $ 1.0 million for each of the years ended December 31, 2020 and 2019.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

As of December 31, 2021, the remaining lease term on both operating leases was 6.4 years and the weighted average discount rate was 5.3 %.

The operating cash outflows from our operating leases were $ 0.1 million, $ 1.0 million, and $ 1.0 million for the years ended December 31, 2021 and 2020, and 2019, respectively.

Long-Term Debt

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In February 2018, we borrowed an additional $ 8.0 million under the term B loan facility portion of the credit facility for a total of $ 24.5 million outstanding under the credit facility.

On March 27, 2019, we amended the loan and security agreement.

In March 2019, we amended the loan and security agreement.

The amendment modified the terms of the loan and security agreement to:

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Upon closing the amendment to the loan and security agreement, payment of the previously accrued final payment under the credit facility was required.

In addition to the principal and interest payments, under the credit facility, we are required to pay a final payment fee of 3.50 % on all amounts outstanding, which is being accreted using the effective interest rate method over the term of the loan and security agreement and shall be due at the earlier of maturity or prepayment.

Borrowings are prepayable at our option in whole, but not in part, together with all accrued and unpaid interest thereon and, if not previously made, the final payment, subject to a prepayment fee of 2.00 % if such borrowings are prepaid prior to March 27, 2021 and 1.00 % if such borrowings are prepaid on or after March 27, 2021.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

of the loan and security agreement and shall be due at the earlier of maturity or prepayment.

The credit facility includes affirmative and restrictive covenants and events of default, including the following events of default:

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We were in compliance with the affirmative and restrictive covenants as of December 31, 2021.

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Expected future principal payments for the credit facility are as follows:

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The plan allows for eligible employees to defer a portion of their eligible compensation up to the maximum allowed by IRS Regulations.

We may elect to make a voluntary contribution to the plan.

We have not made contributions since inception.

Stockholders' Equity

As of December 31, 2021, we had not made contributions since inception.

Beginning January 1, 2022, we elected to begin making voluntary matching contributions to the plan.

We match 50 % of the first 6 % of each participating employee's contribution, up to 3 % of eligible earnings.

Our match contributions are made to funds designated by the participant, none of which are based on Inspire common stock.

Stockholders' Equity and Stock-Based Compensation

Preferred Stock

We have 10,000,000 shares of authorized preferred stock.

As of December 31, 2020 and 2021, no preferred stock had been issued.

Preferred Stock Warrants and Common Stock Warrants

In connection with the borrowing completed in February 2018 (see Note 5), we issued 233,577 ten -year warrants to purchase Series F preferred shares of stock at an exercise price of $ 1.37 per share.

In connection with the closing of the IPO in May 2018, the warrants to purchase shares of preferred stock automatically converted into warrants to purchase shares of common stock, resulting in the reclassification of the related convertible preferred stock warrant liability of $ 0.9 million to APIC.

Upon the closing of the IPO, the warrants to purchase 630,372 shares of preferred stock at a weighted average exercise price of $ 1.46 per share became exercisable to purchase 100,558 shares of common stock at weighted average exercise price of $ 9.38 per share.

The warrants were exercised during 2018 and 2019 and are no longer outstanding.

Stock-Based Compensation

Stock Options

Stock-Based Compensation Plans

We adopted the 2007 Stock Incentive Plan (the "2007 Plan") in November 2007, which terminated in accordance with its terms on November 28, 2017;

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Upon the IPO, no further grants were made under the 2017 Plan and we adopted the 2018 Stock Incentive Plan (the "2018 Plan").

The purpose of the 2018 Plan is to promote the interest of our company and our stockholders by aiding in attracting and retaining employees, officers, consultants, independent contractors, and directors capable of assuring the future success of our business and to afford such persons an opportunity to acquire a proprietary interest in our company.

The board of directors may amend, alter, suspend, discontinue, or terminate the 2018 Plan at any time with the approval of our stockholders.

A total of 1,386,809 shares of common stock were initially reserved for issuance under the 2018 Plan,

INSPIRE MEDICAL SYSTEMS, INC.

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

and this share reserve will automatically be supplemented each January 1, commencing on January 1, 2019 and ending on and including January 1, 2028, by an amount of shares equal to the lesser of:

The board of directors may amend, alter, suspend, discontinue, or terminate the 2018 Plan at any time with the approval of our stockholders.

A total of 1,386,809 shares of common stock were initially reserved for issuance under the 2018 Plan, and this share reserve will automatically be supplemented each January 1, commencing on January 1, 2019 and ending on and including January 1, 2028, by an amount of shares equal to the lesser of:

a) 739,631 shares, b) 4 % of the shares outstanding on the final day of the immediately preceding fiscal year and c) such smaller number of shares as determined by the board of directors.

As of December 31, 2021, there were 3,250,937 shares reserved for issuance under the 2018 Plan, of which 1,272,049 shares were available for issuance.

Prior to the IPO, the exercise price of stock options represented fair value of the common stock at the time of issuance and was determined by the board of directors with the assistance of a third-party valuation specialist.

Post-IPO, options are granted at the exercise price, which is equal to the closing price of our stock on the date of grant.

The following table presents the components and classification of stock-based compensation expense recognized for stock options and RSUs granted under the 2017 Plan, the 2018 Plan and under our Employee Stock Purchase Plan (the "ESPP"):

Year Ended December 31,

2021 2020 2019

Stock options $ 24,703 $ 11,823 $ 5,699

Restricted stock units 105 — —

Employee stock purchase plan 1,370 994 498

Total stock-based compensation $ 26,178 $ 12,817 $ 6,197

Cost of goods sold $ 341 $ 170 $ 121

Research and development 4,419 1,931 689

Selling, general and administrative 21,418 10,716 5,387

Total stock-based compensation $ 26,178 $ 12,817 $ 6,197

Stock Options

Options are granted at the exercise price, which is equal to the closing price of our stock on the date of grant.

The stock options granted to employees include a four -year service period and 25 % vest after the first year of service and the remainder vest in equal monthly installments over the next 36 months of service.

The stock options granted to the board of directors vest in one , two , or three equal annual installments, in each case subject to the director's continuous services through the applicable vesting date.

The stock options granted to the board of directors vest in one or three equal annual installments, in each case subject to the director's continuous services through the applicable vesting date.

The stock options have a contractual life of ten years .

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

A summary of stock option activity and related information is as follows:

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Exercised ( 664,617 ) $ 1.71 $ 35,305

Forfeited ( 39,958 ) $ 3.64

Forfeited/expired ( 45,829 ) $ 36.39

Outstanding at December 31, 2019 2,844,164 $ 30.41 7.9 $ 124,585

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Exercised ( 624,315 ) $ 11.29 $ 54,821

Forfeited ( 45,829 ) $ 36.39

Forfeited/expired ( 66,123 ) $ 44.57

Outstanding at December 31, 2020 2,857,564 $ 66.09 7.9 $ 351,626

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Exercised ( 323,860 ) $ 35.44 $ 58,360

Forfeited ( 66,123 ) $ 44.57

Forfeited/expired ( 115,771 ) $ 118.85

Outstanding at December 31, 2021 2,646,235 $ 80.41 7.1 $ 397,015

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The aggregate intrinsic value of outstanding options is the difference between the closing price as of the date outstanding and the exercise price of the underlying stock options.

The total grant date fair value of options vested during the year was $ 11.1 million, $ 5.1 million and $ 0.2 million for the years ended December 31, 2020, 2019 and 2018.

Total stock compensation recognized, before taxes, was as follows:

Year Ended December 31,

2020 2019 2018

Cost of goods sold $ 170 $ 121 $ 9

Research and development 1,931 689 51

Selling, general and administrative 10,716 5,387 1,159

Total stock-based compensation $ 12,817 $ 6,197 $ 1,219

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

As of December 31, 2020, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2024 related to unvested employee and non-employee director stock-based awards is $ 72.7 million and the weighted average period over which the unearned stock-based compensation is expected to be recognized is 2.9 years.

The total grant date fair value of options vested during the year was $ 23.9 million, $ 11.1 million and $ 5.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2025 related to unvested employee and non-employee director stock options is $ 67.5 million which we expect to recognize over a weighted average period of 2.4 years.

If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense.

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We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option pricing model using the fair market value of our common stock on the date of grant and a number of other assumptions.

These assumptions include, but are not limited to, estimates regarding the expected term of the awards, estimates of the stock volatility over a duration that approximates the expected term of the awards, estimates of the risk-free rate, and estimates of expected dividend rates.

Due to our limited amount of historical exercise, forfeiture, and expiration activity, we have opted to use the "simplified method" for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting terms and the original contractual term of the option.

We will continue to analyze our expected term assumption as more historical data becomes available.

Due to our limited operating history and a lack of company specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.

When selecting these public companies on which we have based our expected stock price volatility, we generally selected companies with comparable characteristics to it, including enterprise value, stages of clinical development, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards.

The historical volatility data was computed using the weekly closing prices for the selected companies' shares over historical periods that approximate calculated expected term of our stock-based awards.

We will continue to analyze the historical stock price volatility assumption as more historical data for our common stock becomes available.

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

government Treasury instruments with maturities similar to the expected term of our stock options.

The expected dividend assumption is based on our history of not paying dividends and our expectation that we will not declare dividends for the foreseeable future.

The amount of stock-based compensation expense is recognized on a straight-line basis over the vesting term and is reduced by actual forfeitures as they occur.

These assumptions include estimates regarding the expected term of the awards, estimates of the stock volatility over a duration that approximates the expected term of the awards, estimates of the risk-free rate, and estimates of expected dividend rates.

The fair value of options granted to employees and directors during the years ended December 31, 2021, 2020, and 2019 was estimated as of the grant date using the Black-Scholes option pricing model using the following assumptions:

INSPIRE MEDICAL SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

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

Year Ended December 31,

2021 2020 2019

Expected life (years) 5.50 - 6.25

Expected term (years) 5.50 - 6.25

Expected volatility 54.9 - 55.9 %

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Weighted average fair value $ 113.71 $ 73.93 $ 30.69

Expected Term — Due to our limited amount of historical exercise, forfeiture, and expiration activity, we have opted to use the "simplified method" for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting terms and the original contractual term of the option.

We will continue to analyze our expected term assumption as more historical data becomes available.

Expected Volatility — Due to our limited operating history and a lack of company specific historical and implied volatility data, we have incorporated our historical stock trading volatility with those of a group of similar companies that are publicly traded for the calculation of volatility.

When selecting this peer group of public companies on which we have based our expected stock price volatility, we generally selected companies with comparable characteristics to it, including enterprise value, stages of clinical development, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards.

We will continue to analyze the historical stock price volatility assumption as more historical data for our common stock becomes available.

Risk-Free Interest Rate — The risk-free rate assumption is based on the U.S.

government Treasury instruments with maturities similar to the expected term of our stock options.

Expected Dividend Yield — The expected dividend assumption is based on our history of not paying dividends and our expectation that we will not declare dividends for the foreseeable future.

The amount of stock-based compensation expense is recognized on a straight-line basis over the vesting term and is reduced by actual forfeitures as they occur.

Restricted Stock Units

RSUs are share awards that entitle the holder to receive freely tradable shares of our common stock upon vesting.

The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions.

The RSUs include a four-year service period and vest in equal installments on each of the first four anniversaries of the date of grant, provided the employee remains continuously employed with the Company.

The fair value of the RSUs is equal to the closing price of our common stock on the grant date.

A summary of RSUs and related information is as follows:

Restricted Stock Units Weighted Average

Grant Date Fair Value Aggregate Intrinsic Value (in thousands)

Unvested at December 31, 2020 — $ — $ —

Granted 2,275 $ 201.51

Unvested at December 31, 2021 2,275 $ 201.51 $ 524

There were no RSUs granted prior to 2021.

The aggregate intrinsic value of RSUs outstanding was based on our closing stock price on the last trading day of the period.

As of December 31, 2021, there was $ 0.4 million of unrecognized stock-based compensation expense related to RSUs to be recognized over a period of 3.1 years.

INSPIRE MEDICAL SYSTEMS, INC.

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As of December 31, 2021, 744,596 shares were available for future issuance under the ESPP.

We recognized stock-based compensation expense associated with the ESPP of $ 1.0 million, $ 0.5 million, and $ 0 for the years ended December 31, 2020, 2019, and 2018, respectively.

Due to our cumulative net loss position, a valuation allowance has been required to be established for all deferred tax assets as of December 31, 2021, 2020, and 2019.

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2021 2020 2019

Federal and state $ 70 $ — $ —

United States $ 23 $ 70 $ —

Foreign 49 45 40

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Year Ended December 31,

2020 2019 2018

Deferred tax assets:

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Deferred tax liabilities:

Depreciation ( 59 ) —

Lease liability ( 1,980 ) ( 1,424 )

Other comprehensive income — ( 7 )

Other — ( 50 ) ( 101 )

Total deferred tax liabilities ( 2,039 ) ( 1,431 )

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As of December 31, 2021, our gross federal net operating loss carryforwards of $ 286.3 million will expire at various dates beginning in 2028.

In addition, net operating loss carryforwards for state income tax purposes of $ 145.6 million that include net operating losses that will begin to expire in 2028.

We also have gross R&D credit carryforwards of $ 4.0 million as of December 31, 2020 of which will expire at various dates beginning in 2033.

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

In addition, net operating loss carryforwards for state income tax purposes of $ 198.2 million will begin to expire in 2023.

We also have gross R&D credit carryforwards of $ 6.7 million as of December 31, 2021 which will expire at various dates beginning in 2033.

Utilization of the net operating loss carryforwards and R&D credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Internal Revenue Code of 1986 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 net operating losses and could be triggered by subsequent sales of securities by us or our stockholders.

Such a change of ownership would limit our utilization of the net operating losses and R&D credits and could be triggered by subsequent sales of securities by us or our stockholders.

Realization of the deferred tax assets is dependent upon the generation of future taxable income, if any, the amount and timing of which are uncertain.

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Accordingly, the net deferred tax assets have been fully offset by a valuation allowance.

The valuation allowance increased by $ 19.5 million, $ 9.8 million, and $ 5.8 million during the years ended December 31, 2020, 2019 and 2018, respectively.

The valuation allowance increased by $ 19.8 million and $ 19.5 million during the years ended December 31, 2021 and 2020, respectively.

INSPIRE MEDICAL SYSTEMS, INC.

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We sell our Inspire system to hospitals and ambulatory surgery centers in the U.S.

and in select countries in Europe through a direct sales organization.

and in select countries in Europe through a direct sales organization, and in Japan through a distributor.

Revenue by geographic region is as follows:

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United States $ 220,976 $ 106,108 $ 73,660

Europe 9,273 8,390 6,215

All other countries 12,418 9,273 8,390

Total revenue $ 233,394 $ 115,381 $ 82,050

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Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period.

Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of convertible common stock warrants and common stock options were antidilutive in those periods.

The following potentially dilutive securities outstanding at the end of the periods presented have been excluded from the computations of diluted shares outstanding because such securities have an antidilutive impact due to losses reported:

Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all of the following potentially dilutive shares were antidilutive in those periods.

INSPIRE MEDICAL SYSTEMS, INC.

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

The following common stock-based awards were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been anti-dilutive:

Year Ended December 31,

2021 2020 2019

Convertible common stock warrants — — 6,595

Common stock options outstanding 2,646,235 2,857,564 2,844,164

Unvested restricted stock units 2,275 — —

Total 2,648,510 2,857,564 2,844,164

Quarterly Financial Information (Unaudited)

The following table provides selected quarterly financial data for the years ended December 31, 2020 and 2019.

Three Months Ended

2020 2020 2020 2020 2019 2019 2019 2019

Revenue $ 21,347 $ 12,183 $ 35,842 $ 46,009 $ 16,250 $ 18,032 $ 20,862 $ 26,906

Gross profit 18,050 10,229 30,631 38,848 13,396 14,938 17,406 22,667

Net loss ( 16,245 ) ( 23,089 ) ( 10,385 ) ( 7,484 ) ( 8,266 ) ( 7,650 ) ( 8,247 ) ( 9,080 )

Net loss per share, basic and diluted (1)

$ ( 0.67 ) $ ( 0.88 ) $ ( 0.39 ) $ ( 0.28 ) $ ( 0.35 ) $ ( 0.32 ) $ ( 0.34 ) $ ( 0.38 )

(1) The summation of quarterly per share amounts may not equal the calculation for the full year, as each quarterly calculation is performed discretely.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data