What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-27 · 185 added, 206 removed, 839 unchanged (32% of the section changed)

114 unchanged sentences

Net loss ( 56,394 ) ( 60,843 )

Other comprehensive income (loss)

Other comprehensive (loss) income

Currency translation adjustment ( 466 ) 671

Change in unrealized gain (losses) on marketable securities 394 ( 287 )

Total other comprehensive income (loss) 1,065 ( 137 )

Change in unrealized (losses) gains on marketable securities ( 61 ) 394

Total other comprehensive (loss) income ( 527 ) 1,065

Comprehensive loss $ ( 56,921 ) $ ( 59,778 )

21 unchanged sentences

Currency translation adjustment — — — 671 — 671

Change in unrealized losses on marketable securities — — — ( 287 ) — ( 287 )

Change in unrealized gains on marketable securities — — — 394 — 394

Net loss — — — — ( 60,843 ) ( 60,843 )

3 unchanged sentences

Issuance of shares pursuant to employee stock purchase plan 173,941 — 1,240 — — 1,240

Repurchase of early exercised common stock options ( 106 ) — — — — —

Change in shares subject to repurchase — — 144 — — 144

Stock-based compensation expense — — 22,957 — — 22,957

Currency translation adjustment — — — ( 466 ) — ( 466 )

Change in unrealized gains on marketable securities — — — 394 — 394

Change in unrealized losses on marketable securities — — — ( 61 ) — ( 61 )

Net loss — — — — ( 56,394 ) ( 56,394 )

9 unchanged sentences

Stock-based compensation expense 22,955 22,101

(Gain) loss on disposal of fixed assets ( 15 ) 7

Gain on disposal of fixed assets — ( 15 )

Impairment of capitalized software development costs 1,717 —

Change in allowance for credit losses 40 ( 59 )

20 unchanged sentences

Purchases of property and equipment ( 1,447 ) ( 807 )

Net cash used in investing activities ( 2,007 ) ( 4,225 )

Net cash provided by (used in) investing activities 17,476 ( 2,007 )

Cash flows from financing activities

1 unchanged sentence

Repayment of credit agreement ( 95 ) ( 94 )

Payments of debt issuance cost — ( 53 )

Proceeds from exercise of common stock options 218 310

Proceeds from issuance of common stock under the employee stock purchase plan 1,240 1,184

Payments for the repurchase of early exercised common stock options — ( 27 )

Net cash provided by financing activities 1,363 21,400

20 unchanged sentences

The Company is a commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease (“COPD”).

The Company’s solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the StratX Lung Analysis Platform (“StratX Platform”), is designed to treat a broad pool of patients for whom medical management has reached its limits and either do not want or are ineligible for surgical approaches.

The Company’s solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the LungTraX Platform, is designed to treat a broad pool of patients for whom medical management has reached its limits and either do not want or are ineligible for surgical approaches.

The Company has subsidiaries in Germany, Switzerland, Australia, the United Kingdom, Italy, France, Hong Kong and Japan.

1 unchanged sentence

The Company has incurred operating losses and negative cash flows from operations to date and has an accumulated deficit of $ 467.6 million as of December 31, 2024.

During the years ended December 31, 2023 and 2022, the Company used $ 37.6 million and $ 45.1 million of cash in its operating activities, respectively.

During the years ended December 31, 2024 and December 31, 2023, the Company used $ 31.5 million and $ 37.6 million of cash in its operating activities, respectively.

As of December 31, 2024, the Company had cash, cash equivalents and marketable securities of $ 101.5 million.

5 unchanged sentences

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S.

GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Principles of Consolidation

5 unchanged sentences

Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Significant estimates and assumptions include reserves and write-downs related to inventories, classification of short-term and long-term inventories, the recoverability of long term assets, stock-based compensation, intangible assets, goodwill, deferred tax assets and related valuation allowances, and impact of contingencies.

Significant estimates and assumptions include reserves and write-downs related to inventories, classification of short-term and long-term inventories, the recoverability of long term assets, stock-based compensation, goodwill, deferred tax assets and related valuation allowances, and impact of contingencies.

Pulmonx Corporation

15 unchanged sentences

These securities are carried at fair value as determined based upon quoted market prices or pricing models for similar securities.

Unrealized gains and losses on available for sale marketable securities, which consist of debt securities, if any, are excluded from earnings and are reported as a component of other comprehensive income (loss).

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations and comprehensive loss.

5 unchanged sentences

If either of these criteria are met, the amortized cost basis is written down to fair value through earnings.

Upon the adoption of ASU 2016-13, Financial Instruments – Credit Losses , on January 1, 2023, if the criteria above are not met, the Company evaluates whether the decline resulted from credit losses or other factors by considering the extent to which fair value is less than amortized cost, any changes to the rating of the marketable security by a rating agency, and any adverse conditions specifically related to the marketable security, among other factors.

If the criteria above are not met, the Company evaluates whether the decline resulted from credit losses or other factors by considering the extent to which fair value is less than amortized cost, any changes to the rating of the marketable security by a rating agency, and any adverse conditions specifically related to the marketable security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the marketable security is compared to the amortized cost basis of the marketable security.

1 unchanged sentence

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive loss.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of risk consist principally of cash, cash equivalents and accounts receivable.

The Company maintains its cash and cash equivalents balances with established financial institutions and, at times, such balances with any one financial institution may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits.

The Company maintains its cash and cash equivalents balances with established

Pulmonx Corporation

Notes to Consolidated Financial Statements

financial institutions and, at times, such balances with any one financial institution may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits.

As of December 31, 2024 and December 31, 2023, the Company also had cash on deposit with foreign banks of approximately $ 5.8 million and $ 4.7 million, respectively, that was not federally insured.

13 unchanged sentences

Accounts receivable are written-off and charged against an allowance for credit losses when the Company has exhausted collection efforts without success.

As of December 31, 2023 and December 31, 2022, accounts receivable is presented net of an allowance for credit losses of $ 0 and $ 0.1 million, respectively.

As of December 31, 2024 and December 31, 2023, accounts receivable is presented net of an allowance for credit losses of less than $ 0.1 million and $ 0 , respectively.

Inventories are valued at the lower of cost to purchase or manufacture the inventory or net realizable value.

8 unchanged sentences

Amortization of such costs begins when the project is substantially complete and ready for its intended use.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Capitalized software development costs are classified as property and equipment, net on the consolidated balance sheets and are amortized using the straight-line method over the estimated useful life of the applicable software.

2 unchanged sentences

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, generally between three to five years .

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or useful economic life of the asset.

Leasehold improvements are amortized using the straight-line method over the shorter

Pulmonx Corporation

Notes to Consolidated Financial Statements

of the lease term or useful economic life of the asset.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in operations in the period realized.

2 unchanged sentences

Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or discounted estimates of future cash flows.

The Company has not identified any such impairment losses to date.

In the second quarter of 2024, the Company recorded a non-cash impairment charge of $ 1.7 million related to certain previously capitalized software development costs that reduced the carrying value of those assets to zero.

See Note 5, “Balance Sheet Components” in the accompanying notes to the consolidated financial statements for further information.

No other impairment losses were recognized for the years ended December 31, 2024 and December 31, 2023.

Goodwill represents the excess of the purchase price over the fair value of net tangible and identified intangible assets acquired in a business combination.

12 unchanged sentences

Intangible assets consist of developed technology and trademarks.

Intangible assets were recorded at their fair values at the date of acquisition and are amortized using the straight-line method over a 15-year useful life (Note 5).

Pulmonx Corporation

Notes to Consolidated Financial Statements

Intangible assets were recorded at their fair values at the date of acquisition and were amortized using the straight-line method over a 15-year useful life (Note 5).

The intangible assets were fully amortized as of December 31, 2024.

The Company leases facilities and vehicles and meets the requirements to account for these leases as operating leases.

The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term.

Where leases contain escalation clauses, rent abatements or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term.

The Company determined if an arrangement is a lease, or contains a lease, at inception.

The asset component of the Company’s operating leases is recorded as right-of-use assets, and the liability component is recorded as current lease liabilities and long-term lease liabilities in the Company’s consolidated balance sheets.

As of December 31, 2023 and 2022, the Company did not record any finance leases.

Where leases contain escalation clauses, rent abatements or concessions, such as rent holidays and landlord or tenant

Pulmonx Corporation

Notes to Consolidated Financial Statements

incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term.

The Company determines if an arrangement is a lease, or contains a lease, at inception.

The asset component of the Company’s operating leases is recorded as right-of-use (“ROU”) assets, and the liability component is recorded as current lease liabilities and long-term lease liabilities in the Company’s consolidated balance sheets.

As of December 31, 2024 and December 31, 2023, the Company did not record any finance leases.

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

3 unchanged sentences

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

For lease agreements entered into or reassessed after the adoption of ASC 842, the Company combines lease and non-lease components.

Variable lease payments are expenses as incurred.

5 unchanged sentences

The Company’s revenue is generated primarily from the sale of its products to hospitals and distributors in the United States and international markets.

Under ASC 606, revenue is recognized when the customer obtains controls of promised goods or services, in an amount that reflects consideration which the entity expects to receive in exchange for those goods or services.

Under ASC 606, Revenue from Contracts with Customer s, revenue is recognized when the customer obtains controls of promised goods or services, in an amount that reflects consideration which the entity expects to receive in exchange for those goods or services.

The Company determines revenue recognition by applying the following five steps as prescribed by ASC 606:

5 unchanged sentences

A contract with a customer exists when (i) the Company enters into a legally enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

The Company identifies performance obligations in

Pulmonx Corporation

Notes to Consolidated Financial Statements

contracts with customers, which may include its products and implied promises to provide free products and analysis services for patient scans.

The Company identifies performance obligations in contracts with customers, which may include its products and implied promises to provide free products and analysis services for patient scans.

The transaction price is determined based on the amount expected to be entitled to in exchange for transferring the promised services or product to the customer.

1 unchanged sentence

The Company’s payment terms to customers generally range from 30 to 60 days.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component.

24 unchanged sentences

Clinical trial costs are a significant component of the Company’s research and development expenses.

The Company has a history of contracting with third parties that perform various clinical trial activities on the Company’s behalf in

Pulmonx Corporation

Notes to Consolidated Financial Statements

the ongoing development of its product candidates.

The Company has a history of contracting with third parties that perform various clinical trial activities on the Company’s behalf in the ongoing development of its product candidates.

The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow.

The Company accrues and expenses costs for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements.

The Company determines these estimates through discussion with internal personnel and outside service providers as to progress or stage of completion of trials or services pursuant to contracts with clinical research organizations and other service providers and the agreed-upon fee to be paid for such services.

The Company determines these estimates through discussion with internal personnel

Pulmonx Corporation

Notes to Consolidated Financial Statements

and outside service providers as to progress or stage of completion of trials or services pursuant to contracts with clinical research organizations and other service providers and the agreed-upon fee to be paid for such services.

Advertising Costs

8 unchanged sentences

The revenues and expenses are translated using the average exchange rates in effect during the period, and gains and losses from foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the consolidated balance sheet.

Foreign currency translation adjustments are recorded in other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss and was $ 0.7 million and $ 0.2 million during the years ended December 31, 2023 and December 31, 2022, respectively.

Foreign currency translation adjustments are recorded in other comprehensive (loss) income in the consolidated statements of operations and comprehensive loss and was $( 0.5 ) million and $ 0.7 million during the years ended December 31, 2024 and December 31, 2023, respectively.

Foreign currency transaction gains and losses are included in other income (expense), net in the consolidated statements of operations and comprehensive loss and was $ 0.1 million and $( 0.8 ) million during the years ended December 31, 2024 and December 31, 2023, respectively.

11 unchanged sentences

Costs for such equity instruments are measured at the fair value of the equity instruments issued on the measurement date as the Company believes that the fair value of the equity instrument is more reliably measured than the fair value of the services received.

Pulmonx Corporation

Notes to Consolidated Financial Statements

The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

A valuation allowance is established when necessary to reduce deferred tax assets when management estimates, based on available objective evidence, that it is more likely than not that the benefit will not be realized for the deferred tax assets.

5 unchanged sentences

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common stock outstanding during the period, without consideration of potentially dilutive securities.

For purposes of the diluted net loss per share calculation, stock options and common stock subject to repurchase related to early exercise of stock options are considered to be potentially dilutive securities.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities.

The Company considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of the shares issued upon early exercise of stock options subject to repurchase do not have a contractual obligation to share in the Company’s losses.

As such, the net loss was attributed entirely to common stockholders.

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities assuming the dilutive effect of outstanding stock options, unvested restricted stock units, and shares issuable related to the ESPP.

Because the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

2 unchanged sentences

Comprehensive gain or loss is defined as a change in equity of a business enterprise during a period, resulting from transactions and other events and circumstances from non-owner sources.

The Company’s currency translation adjustment and unrealized gains and losses from marketable securities are the components of other comprehensive income (loss) that are excluded from the reported net loss for all periods presented.

The Company’s currency translation adjustment and unrealized gains and losses from marketable securities are the components of other comprehensive (loss) income that are excluded from the reported net loss for all periods presented.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses .

This new guidance will require financial instruments to be measured at amortized cost, and trade accounts receivable to be presented at the net amount expected to be collected.

The new model requires an entity to estimate credit losses based on historical information, current information and reasonable and supportable forecasts, including estimates of prepayments.

In November 2019, the FASB issued ASU 2019-10, according to which, the new standard is effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies (“SRC”) as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

For all other entities, including the Company, the new standard is effective for fiscal years beginning after December 15, 2022, and interim periods within that fiscal year.

The Company adopted

Pulmonx Corporation

Notes to Consolidated Financial Statements

ASU 2016-13 as of January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

4 unchanged sentences

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.

The Company adopted ASU 2023-07 effective December 31, 2024 on a retrospective basis.

See Note 12, “Segment Information” in the accompanying notes to the consolidated financial statements for further information.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

3 unchanged sentences

The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the disclosure requirements related to the new standard.

Pulmonx Corporation

Notes to Consolidated Financial Statements

adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company's consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses.

The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU, or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures.

All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

7 unchanged sentences

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis —Financial assets and liabilities held by the Company measured at fair value on a recurring basis include money market funds and marketable securities.

Assets and Liabilities Measured and Recorded at Fair Value on a Nonrecurring Basis —The Company determines the fair value of long-lived assets held and used, such as intangible assets, by reference to independent appraisals, quoted market prices (e.g.

Assets and Liabilities Measured and Recorded at Fair Value on a Nonrecurring Basis —The Company determines the fair value of long-lived assets held and used by reference to independent appraisals, quoted market prices (e.g.

an offer to purchase) and other factors.

An impairment charge is recorded when the carrying value of the asset exceeds its fair value.

As noted above, there have been no impairment charges recorded

Pulmonx Corporation

Notes to Consolidated Financial Statements

There have been no impairment charges recorded to date.

Based on the borrowing rates currently available to the Company for debt with similar terms and consideration of default and credit risk, the carrying value of the term loan approximates the fair value.

3 unchanged sentences

The following tables summarizes the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Pulmonx Corporation

Notes to Consolidated Financial Statements

December 31, 2024

20 unchanged sentences

There were no liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2024 and December 31, 2023.

Pulmonx Corporation

Notes to Consolidated Financial Statements

The following table summarizes the cost, unrealized gains and losses and fair value of marketable securities (in thousands):

9 unchanged sentences

Total $ 47,861 $ ( 27 ) $ 111 $ 47,945

Pulmonx Corporation

Notes to Consolidated Financial Statements

The following table summarizes the marketable securities with unrealized losses as of December 31, 2024 and December 31, 2023, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in thousands):

2 unchanged sentences

Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses

Government agency bonds $ 11,888 $ ( 23 ) $ 1,745 $ ( 3 ) $ 13,633 $ ( 26 )

Commercial paper $ 5,659 $ ( 8 ) $ — $ — $ 5,659 $ ( 8 )

10 unchanged sentences

At December 31, 2024 and December 31, 2023, accrued interest receivable on marketable securities of $ 0.1 million and $ 0.4 million was included in prepaid expenses and other current assets on the consolidated balance sheets, respectively.

The Company elected to exclude accrued interest receivable from the estimation of expected credit losses on its marketable securities and reverse accrued interest receivable through interest income (expense) when

Pulmonx Corporation

Notes to Consolidated Financial Statements

amounts are determined to be uncollectible.

The Company did no t write off any accrued interest receivable during the years ended December 31, 2024 and December 31, 2023.

The following table summarizes the contractual maturities of the Company’s marketable securities (in thousands):

December 31, 2023

Amortized Cost Fair Value

Due within one year

$ 33,551 $ 33,555

Due in one year to five years

$ 14,310 $ 14,390

Total $ 47,861 $ 47,945

The Company’s securities classified as short-term marketable securities mature within one year or less of the balance sheet date.

Marketable securities that mature greater than one year from the balance sheet date are classified as long-term.

As of December 31, 2024, the Company did not hold any marketable securities with maturity dates greater than one year.

Balance Sheet Components

5 unchanged sentences

Total cash and cash equivalents $ 70,905 $ 83,547

Pulmonx Corporation

Notes to Consolidated Financial Statements

Inventory consists of the following (in thousands):

6 unchanged sentences

Total inventory $ 18,596 $ 19,323

Pulmonx Corporation

Notes to Consolidated Financial Statements

Prepaid Expenses and Other Current Assets

11 unchanged sentences

As of December 31, 2024 and December 31, 2023, the Company has capitalized approximately $ 0.5 million and $ 0.1 million in implementation costs, net of amortization, respectively.

The capitalized costs are amortized on a straight-line basis over the non-cancelable contract terms, which are generally three years .

As of December 31, 2023, the capitalized costs of $ 0.1 million were included in prepaid expenses and other current assets.

The capitalized costs are amortized on a straight-line basis over the non-cancelable contract terms, which are generally three to five years .

As of December 31, 2024, the capitalized costs of $ 0.5 million were included in other long-term assets.

Amortization expense, which was included in selling, general and administrative expenses, was $ 0.1 million and $ 0.4 million for the years ended December 31, 2024 and December 31, 2023, respectively.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Property and Equipment, Net

8 unchanged sentences

Property and equipment, net $ 2,907 $ 4,028

Depreciation expense for both the years ended December 31, 2023 and December 31, 2022 was $ 1.4 million.

The impairment charge was recorded in research and development expenses on the Company’s consolidated statements of operations and comprehensive loss.

This impairment charge was primarily driven by the Company’s strategic decision to adopt a more cost-efficient solution in place of completing the development of the internally developed software.

Depreciation expense for the years ended December 31, 2024 and December 31, 2023 was $ 1.1 million and $ 1.4 million, respectively.

Goodwill was $ 2.3 million as of December 31, 2024 and December 31, 2023.

1 unchanged sentence

There were no acquisitions or dispositions of goodwill for the years ended December 31, 2024 or December 31, 2023.

The Company performed an annual test for goodwill impairment in the

Pulmonx Corporation

Notes to Consolidated Financial Statements

fourth quarter of the fiscal years ended December 31, 2023 and December 31, 2022 and determined that goodwill was no t impaired.

The Company performed an annual test for goodwill impairment in the fourth quarter of the fiscal years ended December 31, 2024 and December 31, 2023 and determined that goodwill was no t impaired.

Intangible Assets

Intangible assets consist of the following (in thousands):

December 31, 2023

Gross Carrying Value Accumulated Amortization Net Carrying Value

Developed technology $ 1,658 $ ( 1,630 ) $ 28

Trademarks 191 ( 188 ) 3

Total intangible assets $ 1,849 $ ( 1,818 ) $ 31

Amortization expense relating to the intangibles was less than $ 0.1 million and $ 0.1 million during the years ended December 31, 2024 and December 31, 2023, respectively.

The intangible assets were fully amortized as of December 31, 2024.

Intangible assets as of December 31, 2023 consist of the following (in thousands):

December 31, 2023

3 unchanged sentences

Total intangible assets $ 1,849 $ ( 1,818 ) $ 31

Amortization expense relating to the intangibles totaled $ 0.1 million during each of the years ended on December 31, 2023 and December 31, 2022.

Future amortization expense is as follows as of December 31, 2023 (in thousands):

Fiscal Year Ending December 31, Amortization

Total amortization expense

Pulmonx Corporation

Notes to Consolidated Financial Statements

Accrued Liabilities

5 unchanged sentences

Sales taxes, franchise tax and VAT 827 763

Liability for early exercise of stock options 37 145

Accrued inventory purchases 170 167

Other 1,014 632

Total accrued liabilities $ 16,472 $ 16,234

Pulmonx Corporation

Notes to Consolidated Financial Statements

Long Term Debt

On February 20, 2020, the Company executed a Loan and Security Agreement with Canadian Imperial Bank of Commerce (“CIBC”), which the Company subsequently amended on April 17, 2020 and December 28, 2020 (as amended, the “CIBC Agreement”).

In February 2020, the Company executed a Loan and Security Agreement with Canadian Imperial Bank of Commerce (“CIBC”), which the Company subsequently amended in April 2020 and December 2020 (as amended, the “CIBC Agreement”).

The CIBC Agreement originally provided the Company with the ability to borrow up to $ 32.0 million in debt financing (“CIBC Loan”) consisting of $ 17.0 million advanced at the closing of the agreement (“Tranche A”), with the option to draw up to an additional $ 8.0 million (“Tranche B”) and an additional financing tranche (“Tranche C”) of up to $ 7.0 million on or prior to February 20, 2022.

1 unchanged sentence

The CIBC Loan originally had a five-year term maturing on February 20, 2025, which included 24 months of interest only payments followed by 36 months of equal payments of principal and interest.

In April 2020, the Company entered into a First Amendment to CIBC Agreement that changed the maturity date to March 15, 2022, which would be automatically extended to February 20, 2025 if the maturity of all outstanding convertible notes was extended to a date no earlier than May 21, 2025 or all convertible notes converted into convertible preferred stock of the Company.

An amendment fee of $ 0.2 million was paid.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

In December 2020, to address certain post-close covenants for which the Company was not in compliance, the Company entered into a Second Amendment to the CIBC Agreement that extended the compliance of such covenants to June 30, 2021.

In April 2020, the Company entered into a First Amendment to CIBC Agreement that changed the maturity date to March 15, 2022.

In March 2021, the Company entered into an Amended and Restated Loan and Security Agreement with CIBC (as amended, the “Amended and Restated CIBC Agreement”) which, among other things, extended the loan maturity date of the CIBC Loan from March 15, 2022 to February 20, 2025, and modified certain financial covenants.

Per the amended terms, 36 equal payments of principal plus accrued interest would be due beginning March 31, 2022.

In connection with the Amended and Restated CIBC Agreement, the Company paid fees to CIBC of less than $ 0.1 million which were recorded as a discount on the CIBC Loan and are being accreted over the life of the term loan using the effective interest method.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

In June 2021, the Company entered into a First Amendment to the Amended and Restated CIBC Agreement that extended the compliance of certain post-close covenants to March 31, 2022.

In October 2021, the Company entered into a Second Amendment to the Amended and Restated CIBC Agreement, which extended the interest only period of the loan from 24 months to 36 months.

Under the amended terms, principal repayment will begin in February 2023.

There was no change to the loan interest rate or maturity date.

In October 2022, the Company entered into a Third Amendment to the Amended and Restated CIBC Agreement (the “Third Amendment”) with CIBC, which amended certain provisions of the CIBC Loan.

2 unchanged sentences

The Third Amendment extended the maturity date of the CIBC Loan from February 20, 2025 to October 31, 2027 and provided for a new interest only period of 24 months from the signing date of the Third Amendment, with the possibility of an additional extension of such interest only period of up to 12 months, subject to satisfaction of certain conditions set forth in the Third Amendment.

The Company paid a commitment fee of less than $ 0.1 million in connection with the Third Amendment.

The amendment was accounted for as a debt modification and no gain or loss was recognized.

In February 2023, the Company drew $ 20.0 million of the Amended Tranche B of the CIBC Loan.

The Amended Tranche B bears interest at a floating rate equal to 1.0 % above the Wall Street Journal Prime Rate and has the same repayment terms as the Tranche A.

In February 2023, the Company drew $ 20.0 million of the Amended Tranche B which has the same interest rate and repayment terms as Tranche A of the CIBC Loan.

Pulmonx Corporation

Notes to Consolidated Financial Statements

In May 2024, as a result of satisfying certain conditions set forth in the Third Amendment, the Company extended the interest-only period of the CIBC Loan from 24 months to 36 months.

Principal repayment will begin in November 2025.

There was no change to the loan interest rate, maturity date, or other terms of the loan.

Upon draw of the Amended Tranche B, the financial covenants in the Amended and Restated CIBC Agreement require that, when the cash and cash equivalents of the Company as defined in the Amended and Restated CIBC Agreement is less than $ 100.0 million, the Company have revenue for the trailing three-month period ending on the last day of each fiscal quarter of not less than 80.0 % of the revenue for the trailing three-month period, as set forth in the annual projections delivered to the CIBC.

14 unchanged sentences

The Company paid $ 0.5 million fees to the lender and third parties, which is reflected as a discount on the CIBC Loan and is being accreted over the life of the term loan using the effective interest method.

During the years ended December 31, 2023 and December 31, 2022, the Company recorded interest expense related to debt discount and debt issuance costs of CIBC Loan of less than $ 0.1 million and $ 0.1 million, respectively.

During the years ended December 31, 2024 and December 31, 2023, the Company recorded interest expense related to debt discount and debt issuance costs of CIBC Loan of $ 0.1 million and less than $ 0.1 million, respectively.

Interest expense on the CIBC Loan amounted to $ 3.5 million and $ 3.2 million during the years ended December 31, 2024 and December 31, 2023, respectively.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Credit Agreement

In May 2020, Pulmonx International Sàrl, a wholly owned subsidiary of the Company, received 0.5 million Swiss Francs ($ 0.5 million U.S.

dollar equivalent) from a COVID-19 Credit Agreement under a Swiss Federal Government program designed to mitigate the economic impact of the spread of the coronavirus.

The COVID-19 Credit Agreement initially bore no interest through March 31, 2023.

Beginning April 1, 2023, the COVID-19 Credit Agreement bears interest at a rate of 1.5 % per year, payable at the end of each calendar quarter.

dollar equivalent) from a COVID-19 Credit Agreement under a Swiss Federal Government program.

The COVID-19 Credit Agreement currently bears interest at a rate of 1.5 % per year, payable at the end of each calendar quarter.

The loan principal is being repaid in twelve equal installments, paid semi-annually, which began in March of 2022.

Interest expense was immaterial during the year ended December 31, 2023.

Interest expense was immaterial during the years ended December 31, 2024 and December 31, 2023.

Pulmonx International Sàrl repaid $ 0.1 million and $ 0.1 million to the lender during the years ended December 31, 2024 and December 31, 2023, respectively.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Contractual Maturities of Financing Obligations

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Revenue Recognition

The Company’s contract liabilities consist of deferred revenue for remaining performance obligations by the Company to the customer after delivery, which was $ 0.1 million as of December 31, 2023, which is expected to be recognized as revenue in fiscal year 2024.

The deferred revenue as of December 31, 2022 was $ 0.1 million, which was recognized as revenue during the year ended December 31, 2023.

The Company’s contract liabilities consist of deferred revenue for remaining performance obligations to customers after delivery, which was $ 0.1 million as of December 31, 2024.

This amount is expected to be recognized as revenue in fiscal year 2025.

The deferred revenue as of December 31, 2023 was $ 0.1 million, which was recognized as revenue during the year ended December 31, 2024.

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Leases, Lease Commitments and Contingencies

The Company has a lease for its headquarters location in Redwood City, California.

In October 2019, the Company renewed its lease for the headquarters location in Redwood City, California for an additional five years commencing in August 2020 and expiring in July 2025.

The monthly base rent during the renewed term is $ 0.1 million and is subject to an annual increase of 3.5 %.

The Company is responsible for its share of real estate taxes, common area maintenance and management fees.

During 2013, the Company entered into a five-year lease for office facilities in Switzerland.

The Company had an option to extend the lease through January 2022, which was not exercised by the Company.

Per the lease terms, in the event the option to extend is not exercised, the lease remains in force and can be terminated with 12-month s’ notice.

In April 2020, the Company executed a sublease for another office facility in Redwood City, California for a three-year term commencing on June 1, 2020 (the “Sublease Agreement”).

The Sublease Agreement provides for early termination if the Company or Sublandlord elects to terminate the lease by providing the other party at least 180 days prior written notice.

The early termination may only occur on or after the expiration of the 18 th full calendar month of the sublease term.

The monthly base rent during the term is less than $ 0.1 million and is subject to an annual increase of 3.5 %.

The Company is responsible for its share of real estate taxes, common area maintenance and management fees.

In September 2020, the Company amended the Sublease Agreement to include additional facility space in Redwood City, California for a four-year term (the “First Amendment to Sublease Agreement”).

The First Amendment to Sublease Agreement was accounted as a separate sublease agreement.

The First Amendment to Sublease Agreement contained a rent-free period through February 14, 2021, after which rent is approximately $ 0.1 million per month

The Company has a lease for its headquarters location in Redwood City, California, which consists of approximately 24,591 square feet of office space (the “existing premises”) and was scheduled to expire on July 31, 2025 (the “Office Lease”).

The Company leases additional facilities in Redwood City, California, under a sublease agreement, which consist of approximately 25,254 square feet of office space (the “expansion premises”) and was scheduled to expire on September 30, 2024 (the “Sublease”).

In May 2024, the Company entered into a third amendment to Sublease (the “Third Amendment to Sublease”) to extend the lease term of the expansion premises through May 31, 2028.

The Third Amendment to Sublease contains a rent-free period between November 1, 2024 and February 28, 2025, after which rent is approximately $ 0.1 million per month and is subject to an annual increase of approximately 3 %.

The Company also entered into a third amendment to Office Lease (the “Third Amendment to Office Lease”) to extend the lease term of the existing premises through July 31, 2035.

The Third Amendment to Office Lease contains a rent-free period between August 1, 2025 and November 30, 2025, after which rent is approximately $ 0.1 million per month and is subject to an annual increase of approximately 3.5 %.

Additionally, under the Third

Pulmonx Corporation

Notes to Consolidated Financial Statements

and is subject to an annual increase of 3.5 %.

The Company is responsible for its share of real estate taxes, common area maintenance and management fees.

The Company is eligible to receive a tenant improvement allowance of $ 0.7 million to fund facility enhancements.

The First Amendment to Sublease Agreement can be extended for an additional twelve-month period, at the Company’s option.

For accounting purposes, the lease term is 4 years as it is not reasonably certain that the Company will exercise the renewal option.

The First Amendment to Sublease Agreement also changed the lease term entered into in April 2020, which was extended until May 31, 2024, but left the early termination clause unchanged.

In September 2021, the Company became reasonably certain that the early termination clause would not be exercised as capital expenditures on the facility build-out created sufficient disincentive to terminate the lease early.

The lease term was reevaluated and extended from November 30, 2021 to May 31, 2024.

In April 2023, the Company entered into a Second Amendment to Sublease Agreement (the “Second Amendment to Sublease Agreement”) to remove the early termination clause and extend the lease term by four months to expire contemporaneously with the expiration date as defined in Sublease Agreement.

Amendment to Office Lease, the Company and the landlord have agreed to expand the existing premises to include the expansion premises, effective as of June 1, 2028, through July 31, 2035 (conterminous with the existing premises as referenced above).

Commencing on June 1, 2028, the monthly base rent for the expansion premises will be $ 0.1 million per month and is subject to an annual increase of approximately 3.5 %.

Under the Third Amendment to Office Lease, the Company has two options to extend the lease term on the leased premises for a period of five years , respectively.

The Company did not include the renewal options in the lease terms for calculating lease liability, as it was not reasonably certain that the Company will exercise these renewal options.

The amendments were accounted for as modifications that resulted in additional right of use assets in exchange for lease liabilities of $ 16.3 million.

In the fourth quarter of 2024, the Company entered into an amendment to the Third Amendment to Office Lease, which modified the rent-free period from the original dates of August 1, 2025 through November 30, 2025, to a new period from October 1, 2024 through December 31, 2024.

There was no change to the other terms of the lease agreement that would materially impact the consolidated financial statements.

The amendment was accounted for as a modification that resulted in additional right of use assets in exchange for lease liabilities of $ 0.4 million.

In 2013, the Company entered into a five-year lease for office facilities in Switzerland.

The Company had an option to extend the lease through January 2022, which was not exercised by the Company.

Per the lease terms, in the event the option to extend is not exercised, the lease remains in force and can be terminated with 12-months ’ notice.

In June 2024, with the intention of seeking other premises, the Company provided notice to the landlord to terminate the lease, effective June 30, 2025.

In October 2024, the Company entered into a five-year lease for a new office facility.

The new lease will commence in the first quarter of 2025, with future total minimum rent payments of approximately $ 0.5 million.

As of December 31, 2024, the Company has leases on 20 vehicles with an average lease term of 3.0 years.

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The following table summarizes a maturity analysis of the Company’s lease liabilities showing the aggregate lease payments as of December 31, 2024 (in thousands):

Pulmonx Corporation

Notes to Consolidated Financial Statements

Fiscal Year Ending December 31, Amount

4 unchanged sentences

Long-term lease liabilities

Total lease liabilities $ 19,293

The following table summarizes additional information related to the Company’s operating leases (in thousands, except weighted average data):

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Weighted average discount rate 9.9 % 6.7 %

Pulmonx Corporation

Notes to Consolidated Financial Statements

The following table summarizes other supplemental information related to the Company’s operating leases (in thousands):

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Right-of-use assets obtained in exchange for lease liabilities

$ 17,016 $ 284

Service Agreement

In April 2022, the Company entered into an agreement with a service provider, which requires total minimum purchases of $ 0.6 million, $ 0.4 million, and $ 0.4 million over a three-year period.

From inception of the agreement through December 31, 2023, the Company recorded $ 0.9 million of expense for services related to this agreement in cost of goods sold.

In April 2022, the Company entered into an agreement with a service provider which required total minimum purchases of $ 0.6 million, $ 0.4 million, and $ 0.4 million over a three-year period.

In June 2024, the Company amended the agreement with the service provider, which eliminated the minimum purchase obligations.

From April 2022 through June 2024, the Company fulfilled the minimum purchase obligations and recorded $ 1.2 million of expense for services related to this agreement in cost of goods sold.

Contingencies

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Accrual estimates are recorded when and if it is determinable that such a liability for litigation and contingencies are both probable and reasonably estimable.

Pulmonx Corporation

Notes to Consolidated Financial Statements

In December 2022, the Company received a civil investigative demand (“CID”) from the U.S.

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Notes to Consolidated Financial Statements

Income before the provision for income taxes consists of the following (in thousands):

Loss before the provision for income taxes consists of the following (in thousands):

Years Ended December 31,

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Federal $ 7 $ 7

Foreign ( 39 ) 9

Total deferred expense ( 24 ) 26

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Change in valuation allowance ( 16.8 ) % ( 16.4 ) %

Other rate impacts ( 0.5 ) % — %

Effective tax rate ( 0.9 ) % ( 0.9 ) %

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Other 4,467 3,371

Gross deferred tax assets 80,532 69,982

Total deferred tax assets 95,458 80,532

valuation allowance ( 90,598 ) ( 79,362 )

Deferred tax assets $ 1,170 $ 1,555

Total deferred tax assets, net of valuation allowance $ 4,860 $ 1,170

Deferred tax liabilities:

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Goodwill ( 589 ) ( 545 )

Total deferred tax liabilities $ ( 4,947 ) $ ( 1,284 )

Net deferred tax liabilities $ ( 87 ) $ ( 114 )

6 unchanged sentences

As of December 31, 2024, the Company had a total net operating loss carryforwards for federal income tax purposes of approximately $ 280.4 million.

If not utilized, these net federal operating loss carryforwards will begin to expire in 2024.

The Company also had a state net operating loss carryforward of approximately $ 155.4 million which will begin to expire in 2024.

For tax years in January 1, 2018 onwards, any federal net operating losses generated will be allowable for carry forward indefinitely, as opposed to the original expiration of 20 years.

For net operating loss carryforwards generated prior to 2018, if not utilized, these net federal operating loss carryforwards will begin to expire in 2025.

The Company also had a state and city net operating loss carryforward of approximately $ 179.0 million which will begin to expire in 2025.

For tax years beginning on January 1, 2018 onwards, any federal net operating losses generated will be allowable for carry forward indefinitely, as opposed to the original expiration of 20 years.

As of December 31, 2024, the Company had $ 210.0 million of federal net operating losses that can be carryforward indefinitely.

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The federal tax R&D credit carryforwards will expire beginning in the year 2025 while the state tax credit carryforwards have no expiration date.

Utilization of the net operating loss carryforwards and R&D tax credit carryforwards may be subject to annual limitations due to the ownership change limitations provided by the Internal Revenue Code, as defined in Section 382, and other similar state provisions.

The annual limitation may result in the expiration of net operating losses and credits before utilization.

During the year ended December 31, 2018, the Company completed a section 382 study for which the Company wrote off deferred tax assets for net operating losses and credits of $ 3.1 million and $ 1.2

Pulmonx Corporation

Notes to Consolidated Financial Statements

million, respectively.

Since the Company had a full valuation allowance on these assets, there was no material impact to the tax provision.

The Company completed another section 382 study for the year ended December 31, 2020 for which the Company had a change in ownership.

No additional net operating losses or credits will expire unused due to the 2020 annual limitation.

The Company completed another section 382 study for the year ended December 31, 2022 for which the Company had no change in ownership.

The annual limitation may result in the expiration of net operating losses and credits before utilization.

The Company completed a section 382 study for the year ended December 31, 2022 for which the Company had no change in ownership.

Additionally, based on the Company’s analysis, no further material net operating losses or credits have expired unused due to the section 382 limitations as of December 31, 2024.

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Additions for tax positions related to prior year 170

Decreases for tax positions related to prior year ( 162 )

Additions for tax positions related to current year 40

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The Company’s major tax jurisdictions are the United States and California, and Switzerland and Neuchâtel.

All of the Company’s tax years will remain open for examination by the federal and state tax authorities for three and four years, respectively, from the date of utilization of the net operating losses or R&D Credits.

The Company’s tax years will remain open for examination by the federal and state tax authorities from 2005 for federal and 1999 for states because of the net operating losses and R&D credit carryover.

The Company does not have any tax audits or other issues pending.

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The holder of each share of common stock is entitled to one vote.

In March and May 2024, the Company granted stock-based awards outside of the existing stock plans to its new Chief Executive Officer and new Chief Financial Officer, respectively.

These awards were granted as a material inducement for accepting employment with the Company.

The inducement awards consisted of a total of 997,681 shares of the Company’s common stock, which includes an aggregate of 331,156 shares of common stock issuable

Pulmonx Corporation

Notes to Consolidated Financial Statements

upon the vesting of restricted stock unit awards and 666,525 shares of common stock issuable upon the exercise of nonqualified stock option grants generally subject to the same terms and conditions as grants that are made under the 2020 Equity Incentive Plan.

Shares Reserved for Future Issuance

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Total 11,011,024 9,366,145

Stock Option Plan

Stock Options

As of December 31, 2024, the Company reserved 15,790,049 shares of its common stock under its 2000 Stock Plan (the “2000 Stock Plan”), the 2010 Stock Plan (the “2010 Stock Plan”), the 2020 Stock Plan (the “2020 Stock Plan”), and the 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan” and, together with the 2000 Stock Plan, the 2010 Stock Plan and the 2020 Stock Plan, the “Stock Plans”).

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Nonqualified stock options (“NSO”) may be granted to the Company employees and consultants.

As of December 31, 2023 and December 31, 2022, no shares of common stock remain available for issuance to officers, directors, employees and consultants pursuant to the 2000 Stock Plan.

In January 2025, the number of shares of common stock available for issuance under the 2020 Equity Incentive Plan was increased by 1,591,438 shares as a result of the automatic increase provision in the 2020 Equity Incentive Plan.

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Options expire but not more than ten years after the date of grant.

Activity under the Stock Plans is set forth below:

Pulmonx Corporation

Notes to Consolidated Financial Statements

Activity with respect to stock options was as follows:

Outstanding Options

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Options granted

835,400 11.48

Options exercised

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Balance, December 31, 2024 3,627,606 $ 14.42

Pulmonx Corporation

Notes to Consolidated Financial Statements

The aggregate intrinsic value of options exercised during the years ended December 31, 2024 and December 31, 2023 was $ 0.7 million and $ 1.3 million, respectively.

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The aggregate intrinsic value of options exercisable as of December 31, 2024 and December 31, 2023 was $ 3.7 million and $ 8.6 million, respectively.

Early Exercise of Stock Options

Under the terms of the individual option grants, options granted from the 2000 Stock Plan, the 2010 Stock Plan and the 2020 Stock Plan are fully exercisable on the grant date, subject to the Company’s repurchase right at the original exercise price.

Accordingly, options granted under these plans may be exercised prior to vesting.

The shares are subject to the Company’s lapsing repurchase right upon termination of employment or over the options’ vesting period of generally four years at the original purchase price.

The proceeds initially are recorded in other liabilities from the early exercise of stock options and are reclassified to additional paid-in capital as the Company’s repurchase right lapses.

During the years ended December 31, 2023 and December 31, 2022, the Company repurchased 106 and 14,459 shares of common stock for less than $ 0.1 million and less than $ 0.1 million, respectively.

As of December 31, 2023 and December 31, 2022, 109 and 77,782 shares were subject to repurchase, with an aggregate exercise price of less than $ 0.1 million and $ 0.1 million, respectively, and were recorded in accrued liabilities on the consolidated balance sheets.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Restricted Stock Units

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Unvested, December 31, 2024 2,728,599 $ 11.11

The fair value as of the respective vesting dates of restricted stock units that vested during the years ended December 31, 2023 and December 31, 2022 was $ 7.5 million and $ 3.9 million, respectively.

The aggregate intrinsic

Pulmonx Corporation

Notes to Consolidated Financial Statements

value of restricted stock units outstanding as of December 31, 2023 and December 31, 2022 was $ 28.6 million and $ 8.4 million, respectively.

The fair value as of the respective vesting dates of restricted stock units that vested for both the years ended December 31, 2024 and December 31, 2023 was $ 7.5 million.

The aggregate intrinsic value of restricted stock units outstanding as of December 31, 2024 and December 31, 2023 was $ 18.5 million and $ 28.6 million, respectively.

Stock-Based Compensation for Employees and Non-Employees

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Volatility 71.3 % - 72.8 %

44.5 % - 44.8 %

Risk-free interest rate 4.1 % - 4.5 %

1.6 % - 3.6 %

Dividend yield — —

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For awards with multiple vesting-tranches, the periods from grant until the mid-point for each of the tranches are averaged to provide an overall expected term.

Pulmonx Corporation

Notes to Consolidated Financial Statements

The expected stock price volatility assumptions for the Company’s stock options for the years ended December 31, 2024 and December 31, 2023 were determined using the Company’s historical volatility and the historical volatilities of industry peers, referred to as “guideline” companies, as the Company had limited trading history for the Company’s common stock.

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Fair Value of Common Stock

Pulmonx Corporation

Notes to Consolidated Financial Statements

The fair value of the Company’s common stock is determined based on its closing market price on the date of grant.

2020 Employee Share Purchase Plan

In September 2020, the Company adopted the ESPP, which became effective on the business day prior to the effectiveness of the registration statement relating to the IPO.

A total of 720,000 shares of common stock were initially reserved for issuance under the ESPP.

The Company adopted the ESPP in September 2020, with a total of 720,000 shares of common stock initially reserved for issuance.

The ESPP permits eligible employees to acquire shares of the Company’s common stock through periodic payroll deductions of up to 15 % of base compensation.

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Dividend yield — —

Pulmonx Corporation

Notes to Consolidated Financial Statements

Total Stock-Based Compensation

9 unchanged sentences

Total $ 22,955 $ 22,101

Pulmonx Corporation

Notes to Consolidated Financial Statements

Stock-based compensation of $ 1.6 million and $ 1.2 million was capitalized into inventory for the years ended December 31, 2023 and 2022, respectively.

Stock-based compensation capitalized in prior periods of $ 1.3 million and $ 0.7 million was recognized as cost of sales in the years ended December 31, 2023 and 2022, respectively.

Stock-based compensation of $ 1.7 million and $ 1.6 million was capitalized into inventory for the years ended December 31, 2024 and December 31, 2023, respectively.

Stock-based compensation capitalized in prior periods of $ 1.8 million and $ 1.3 million was recognized as cost of sales in the years ended December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024, there was $ 37.9 million of unrecognized compensation costs related to non-vested common stock options and restricted stock units, expected to be recognized over a weighted-average period of 2.4 years.

1 unchanged sentence

As of December 31, 2024, the Company had unrecognized employee stock-based compensation relating to ESPP awards of approximately $ 0.1 million, which is expected to be recognized over a weighted-average period of 0.1 years.

Stock Modification

In February 2024, the Company’s former Chief Executive Officer, Glendon French, resigned as President and Chief Executive Officer, effective as of March 15, 2024.

Following this date, Mr.

French continued as a full-time employee of the Company in the capacity of Senior Advisor to the new President and Chief Executive Officer until May 1, 2024, when his employment ceased.

Thereafter, Mr.

French has continued to serve as a member of the Company’s board of directors, and his outstanding equity awards have continued to vest in accordance with their terms, subject to his continued service to the Company as a member of the board of directors .

The Company evaluated the change in status in accordance with ASC 718 and determined that there was a modification to the unvested awards expected to vest after March 15, 2024.

The total stock-based compensation expense related to the modification, evaluated as of the modification date, was $ 6.3 million, to be recognized over the remaining vesting periods.

The Company recorded $ 2.3 million in stock-based compensation expenses related to the modification for the year ended December 31, 2024.

Pulmonx Corporation

Notes to Consolidated Financial Statements

Net Loss per Share Attributable to Common Stockholders

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Unvested restricted stock units 2,728,599 2,244,903

Unvested early exercised common stock options 109 77,782

Shares committed under ESPP 80,791 55,714

Unvested early exercised common stock options — 109

Total Shares 6,436,996 5,443,707

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

Accordingly, the Company has

Pulmonx Corporation

Notes to Consolidated Financial Statements

determined that it has a single reportable and operating segment structure.

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

The Company’s Chief Executive Officer evaluates performance based primarily on revenue in the geographic locations in which the Company operates.

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The following table sets forth our revenue by geographic area (in thousands):

Pulmonx Corporation

Notes to Consolidated Financial Statements

Years Ended December 31,

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Total $ 83,789 $ 68,675

Revenue from Germany represented 8 % and 11 % of total revenue for the years ended December 31, 2023 and 2022, respectively.

The CODM also utilizes the Company’s long-range plan as a key input for resource allocation.

The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using consolidated net loss.

Significant expenses within consolidated net loss include cost of goods sold, research and development, and selling, general and administrative expenses, which are each separately presented on the Company’s Consolidated Statements of Operations and Comprehensive Loss.

In addition, the CODM is provided with the stock-based compensation expense included in research and development expenses and selling, general and administrative expenses.

See FN 10, “Stockholders’ Equity” for more information.

Other segment items included in consolidated net loss are interest income, interest expense, and other income (expense), net, and income tax expense.

Long-lived assets by geographic area are based on physical location of those assets.

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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