What changed in this filing

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Item 1. Financial Statements

2022-08-01 compared with 2022-05-02 · 122 added, 86 removed, 481 unchanged (30% of the section changed)

39 unchanged sentences

Preferred stock, $ 0.001 par value, 50,000,000 shares authorized;

none issued and outstanding as of March 31, 2022 and December 31,

none issued and outstanding as of June 30, 2022 and December 31,

Common stock, $ 0.001 par value, 300,000,000 shares authorized;

19,939,843 shares issued and outstanding as of March 31, 2022;

20,132,145 shares issued and outstanding as of June 30, 2022;

19,877,786 shares issued and outstanding as of December 31, 2021

7 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except share and per share data)

17 unchanged sentences

Loss before income taxes

Income tax expense (benefit)

Net loss per common share

Weighted-average common shares used to compute net loss per common share

Income tax (benefit) expense

Net (loss) income

Net (loss) income per common share

Weighted-average common shares used to compute net (loss) income per common share

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

2 unchanged sentences

(In thousands, except share data)

Balances, March 31, 2022

Stock-based compensation

Exercise of common stock options and vesting of performance and restricted stock units

Common shares issued for employee stock purchase plan

Net loss for the period

Balances, June 30, 2022

Balances, December 31, 2021

1 unchanged sentence

Exercise of common stock options and vesting of performance and restricted stock units

Comprehensive loss for the period

Common shares issued for employee stock purchase plan

Net loss for the period

Balances, June 30, 2022

Balances, March 31, 2021

Stock-based compensation

Exercise of common stock options and vesting of performance and restricted stock units

Common shares issued for employee stock purchase plan

Net income for the period

Balances, June 30, 2021

Balances, December 31, 2020

2 unchanged sentences

Taxes paid for net share settlement of performance and restricted stock units

Comprehensive loss for the period

Balances, March 31, 2021

Common shares issued for employee stock purchase plan

Net loss for the period

Balances, June 30, 2021

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

10 unchanged sentences

Right of use operating lease assets

Medicare accounts receivable, non-current

Accounts receivable, non-current

Accounts payable

11 unchanged sentences

Proceeds from exercise of common stock options

Proceeds from the issuance of common stock from the employee stock purchase plan

Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents – beginning of period

13 unchanged sentences

AffloVest is a portable, wearable vest that treats patients with chronic respiratory conditions.

We sell this device through home medical equipment and durable medical equipment providers throughout the United States.

We sell this device through home medical equipment and durable medical equipment (“DME”) providers throughout the United States.

We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc.

12 unchanged sentences

In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included.

The results for the three months ended March 31, 2022, are not necessarily indicative of results to be expected for the year ending December 31, 2022, or for any other interim period or for any future year.

The results for the six months ended June 30, 2022, are not necessarily indicative of results to be expected for the year ending December 31, 2022, or for any other interim period or for any future year.

The condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

6 unchanged sentences

The United States economy in general and our business specifically have been negatively affected by the COVID-19 pandemic.

In the first quarter of 2022, the continued prolonged recovery from COVID-19 and increased Omicron variant cases resulted in restricted access to clinics and hospitals and disrupted the recovery in patient visits versus the pre-COVID environment.

The adverse impacts in the first quarter of 2022 were similar to those we experienced during the first quarter of 2021.

At this time, there are no reliable estimates of how long the pandemic will last, whether any recovery will be sustained or will reverse course, the severity of any resurgence of COVID-19 or variant strains of the virus, the effectiveness of vaccines and attitudes towards receiving them, or what ultimate effects the pandemic will have.

We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols, particularly during most of 2021 and during the first quarter of 2022.

We have also seen staffing challenges, both in our organization and at the clinics we serve, as another consequence of the COVID-19 pandemic.

While we saw some level of recovery in the second quarter of 2022, there are no reliable estimates of how long the pandemic will last, whether any recovery will be sustained or will reverse course, the severity of any resurgence of COVID-19 or variant strains of the virus, the effectiveness of vaccines and attitudes towards receiving them, or what ultimate effects the pandemic will have.

For that reason, we are unable to reasonably estimate the long-term impact of the pandemic on our business at this time.

5 unchanged sentences

Actual results could differ from those estimates.

Comprehensive (Loss) Income

Comprehensive (loss) income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Summary of Significant Accounting Policies

Significant Accounting Policies

There were no material changes in our significant accounting policies during the three months ended March 31, 2022, except as set forth below.

There were no material changes in our significant accounting policies during the six months ended June 30, 2022.

See Note 3 – “Summary of Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, for information regarding our significant accounting policies.

46 unchanged sentences

(In thousands)

At March 31, 2022

At June 30, 2022

At December 31, 2021

7 unchanged sentences

Our patents and other intangible assets are summarized as follows:

At March 31, 2022

At June 30, 2022

(In thousands)

17 unchanged sentences

Total intangible assets

Amortization expense was $ 1.0 million and $ 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

Amortization expense was $ 1.0 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, and $ 1.9 million and $ 0.1 million for the six months ended June 30, 2022 and 2021, respectively.

Future amortization expenses are expected as follows:

(In thousands)

2022 (April 1 - December 31)

2022 (July 1 - December 31)

Accrued Expenses

1 unchanged sentence

(In thousands)

At March 31, 2022

At June 30, 2022

At December 31, 2021

6 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

18 unchanged sentences

Pursuant to the Second Amendment, we made a mandatory principal prepayment of the term loan of $ 3.0 million on February 22, 2022.

As of March 31, 2022, the outstanding balance of the term loan was $ 26.3 million and the outstanding balance under the revolving credit facility was $ 25.0 million.

As of March 31, 2022, there was no availability under our Credit Agreement.

As of June 30, 2022, the outstanding balance of the term loan was $ 25.5 million and the outstanding balance under the revolving credit facility was $ 25.0 million.

As of June 30, 2022, there was no availability under our Credit Agreement.

The term loan and amounts drawn under the revolving credit facility bear interest, at our option, at a rate equal to (a) the highest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) LIBOR for an interest period of one month plus 1 % (the “Base Rate”) plus an applicable margin or (b) LIBOR for an interest period of one, three or six months, at our option, plus the applicable margin.

1 unchanged sentence

except that, pursuant to the Second Amendment, during the period commencing on February 22, 2022 and ending on the last day of the fiscal quarter ending June 30, 2023, the applicable margin for LIBOR rate loans is 3.50 % .

At March 31, 2022, all outstanding borrowings were subject to interest at a rate calculated at LIBOR plus an applicable margin, for an interest rate of 3.70 % .

At June 30, 2022, all outstanding borrowings were subject to interest at a rate calculated at LIBOR plus an applicable margin, for an interest rate of 4.49 % .

Undrawn portions of the revolving credit facility are subject to an unused line fee at a rate per annum from 0.300 % to 0.375 % , depending on our consolidated total leverage ratio.

Maturities of the term loan for the next three years as of March 31, 2022, are as follows:

Maturities of the term loan for the next three years as of June 30, 2022, are as follows:

(In thousands)

2022 (April 1 - December 31)

2022 (July 1 - December 31)

Our obligations under the Credit Agreement are secured by a security interest in substantially all of our and our subsidiaries’ assets and are also guaranteed by our subsidiaries.

The Credit Agreement contains a number of restrictions and covenants, including that we maintain compliance with a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum consolidated EBITDA covenant, and a minimum liquidity covenant.

As of March 31, 2022, we were in compliance with all financial covenants under the Credit Agreement.

As of June 30, 2022, we were in compliance with all financial covenants under the Credit Agreement.

Commitments and Contingencies

14 unchanged sentences

These leases are typically greater than one year with fixed, escalating rents over the noncancelable terms and, therefore, ROU operating lease assets and operating lease liabilities are recorded on the Condensed Consolidated Balance Sheets, with rent expense to be recognized on a straight-line basis over the term of the lease.

The remaining lease terms vary from approximately one to eight years as of March 31, 2022.

The remaining lease terms vary from approximately one to eight years as of June 30, 2022.

We entered into a lease (“initial lease”) in October 2018, for approximately 80,000 square feet of office space for our new corporate headquarters in Minneapolis, Minnesota.

8 unchanged sentences

Subsequent to the initial term, the lease becomes a month-to-month, cancelable lease.

As of March 31, 2022, we had approximately 32 vehicles with agreements within the initial, noncancelable lease term that are recorded as ROU operating lease assets and operating lease liabilities.

As of June 30, 2022, we had approximately 16 vehicles with agreements within the initial, noncancelable lease term that are recorded as ROU operating lease assets and operating lease liabilities.

In addition to monthly rental fees specific to the vehicle, there are fixed monthly nonlease components that have been included in the ROU operating lease assets and operating lease liabilities.

2 unchanged sentences

We also have operating lease agreements for certain computer and office equipment.

The remaining lease terms as of March 31, 2022, ranged from less than one year to approximately four years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities.

The remaining lease terms as of June 30, 2022, ranged from less than one year to approximately four years with fixed monthly payments that are included in the ROU operating lease assets and operating lease liabilities.

The leases provide an option to purchase the related equipment at fair market value at the end of the lease.

3 unchanged sentences

(In thousands)

At March 31, 2022

At June 30, 2022

At December 31, 2021

4 unchanged sentences

Weighted average discount rate

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental cash flow information for our operating leases:

1 unchanged sentence

Non-cash right of use assets obtained in exchange for new operating lease obligations

The table below reconciles the undiscounted cash flows for the periods presented to the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet as of March 31, 2022:

The table below reconciles the undiscounted cash flows for the periods presented to the operating lease liabilities recorded on the Condensed Consolidated Balance Sheet for the periods presented:

(In thousands)

2022 (April 1 - December 31)

2022 (July 1 - December 31)

Total minimum lease payments

3 unchanged sentences

Non-current obligations under operating lease liabilities

Operating lease costs were $ 1.0 million and $ 0.8 million for the three months ended March 31, 2022 and 2021, respectively.

Operating lease costs were $ 1.0 million and $ 0.8 million for the three months ended June 30, 2022 and 2021, respectively.

Operating lease costs were $ 1.9 million and $ 1.7 million for the six months ended June 30, 2022 and 2021, respectively.

Major Vendors

We had purchases from two vendors that accounted for 29 % of our total purchases for the three months ended March 31, 2022, and from two vendors that accounted for 33 % of our total purchases for the three months ended March 31, 2021.

We had purchases from two vendors that accounted for 31 % and 26 % of our total purchases for the three and six months ended June 30, 2022, respectively.

We had purchases from two vendors that accounted for 33 % of our total purchases for each of the three and six months ended June 30, 2021.

Purchase Commitments

We issued purchase orders prior to March 31, 2022, totaling $ 38.8 million for goods that we expect to receive within the next year.

We issued purchase orders prior to June 30, 2022, totaling $ 41.5 million for goods that we expect to receive within the next year.

Retirement Plan

We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation.

We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.4 million and $ 0.3 million for the three months ended March 31, 2022 and 2021, respectively.

We recorded an expense related to our discretionary contributions to the 401(k) plan of $ 0.3 million for each of the three months ended June 30, 2022 and 2021, and $ 0.7 million and $ 0.6 million for the six months ended June 30, 2022 and 2021, respectively.

Legal Proceedings

3 unchanged sentences

Tactile Systems Technology, Inc., et al ., File No.

0:20-cv-02074-NEB-BRT.

0:20-cv-02074-NEB-BRT (the “Mart lawsuit”).

On April 19, 2021, the plaintiff filed an Amended Complaint against us and eight of our present and former officers and directors.

10 unchanged sentences

We are defending the action as it proceeds.

On May 24, 2022, a stockholder derivative lawsuit was filed in the United States District Court for the District of Minnesota, purportedly on behalf of the Company against certain present and former officers and directors and the Company (as a nominal defendant), captioned Jack Weaver v.

Moen , et al., File No.

0:22-cv-01403-NEB-BRT.

This complaint generally arises out of the same subject matter as the Mart lawsuit and alleges the following claims under the Exchange Act and common law:

(1) that the director defendants made materially false or misleading public statements in proxy statements in violation of Section 14(a) of the Exchange Act;

(2) that the director defendants’ stock and option awards should be rescinded under Section 29(b) of the Exchange Act;

(3) that the officer defendants’ employment contract compensation should be rescinded under Section 29(b) of the Exchange Act;

(4) that certain officer defendants are liable for contribution arising out of any liability incurred in the Mart lawsuit, under Sections 10(b) and 21D of the Exchange Act;

(5) that the individual defendants breached their fiduciary duties;

and (6) that the individual defendants were unjustly enriched.

The lawsuit seeks unspecified damages.

We are defending the action as it proceeds.

Stockholders' Equity

3 unchanged sentences

The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase annually on January 1 of each calendar year, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the lesser of:

(a) 5 % of the number of common shares of stock outstanding as of December 31 of the immediately preceding calendar year, or (b) 2,500,000 shares;

(a) 5 % of the number of common shares of stock outstanding as of December 31 of the immediately

preceding calendar year, or (b) 2,500,000 shares;

provided, however, that our Board of Directors may determine that any annual increase be a lesser number.

2 unchanged sentences

Our Board of Directors exercised its prerogative to forego the automatic increase on January 1, 2022.

As of March 31, 2022, 5,919,092 shares were available for future grant pursuant to the 2016 Plan.

As of June 30, 2022, 5,879,162 shares were available for future grant pursuant to the 2016 Plan.

Upon adoption and approval of the 2016 Plan, all of our previous equity incentive compensation plans were terminated.

However, existing awards under those plans continue to vest in accordance with the original vesting schedules and will expire at the end of their original terms.

We recorded stock-based compensation expense of $ 2.2 million and $ 2.5 million for the three months ended March 31, 2022 and 2021, respectively.

We recorded stock-based compensation expense of $ 2.9 million and $ 2.7 million for the three months ended June 30, 2022 and 2021, respectively, and $ 5.1 million for each of the six months ended June 30, 2022 and 2021.

This expense was allocated as follows:

Three Months Ended

Six Months Ended

(In thousands)

6 unchanged sentences

Stock options issued to participants other than non-employees typically vest over three or four years and typically have a contractual term of seven or ten years .

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ 0.7 million and $ 1.2 million for the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, there was approximately $ 4.0 million of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 1.6 years.

Our stock option activity for the three months ended March 31, 2022, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for stock options was $ 0.6 million and $ 1.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1.4 million and $ 2.3 million for the six months ended June 30, 2022 and 2021, respectively.

At June 30, 2022, there was approximately $ 1.7 million of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 1.7 years.

Our stock option activity for the six months ended June 30, 2022, was as follows:

Exercise Price

4 unchanged sentences

Cancelled/Expired

Balance at March 31, 2022

Options exercisable at March 31, 2022

Balance at June 30, 2022

Options exercisable at June 30, 2022

(1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant.

1 unchanged sentence

The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period.

Options exercisable of 546,067 as of March 31, 2021, had a weighted-average exercise price of $ 30.27 per share.

Options exercisable of 509,575 as of June 30, 2021, had a weighted-average exercise price of $ 31.20 per share.

Time-Based Restricted Stock Units

1 unchanged sentence

Time-based restricted stock units granted under the 2016 Plan vest over one to three years .

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $ 1.4 million and $ 1.3 million for the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, there was approximately $ 11.2 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.3 years.

Our time-based restricted stock unit activity for the three months ended March 31, 2022, was as follows:

Stock-based compensation expense included in the Condensed Consolidated Statements of Operations for time-based restricted stock units was $ 1.6 million and $ 1.2 million for the three months ended June 30, 2022 and 2021, respectively, and $ 3.0 million and $ 2.5 million for the six months ended June 30, 2022 and 2021, respectively.

At June 30, 2022, there was approximately $ 10.5 million of total unrecognized pre-tax compensation expense related to outstanding time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.1 years.

Our time-based restricted stock unit activity for the six months ended June 30, 2022, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2021

Balance at March 31, 2022

Deferred and unissued at March 31, 2022 (2)

Balance at June 30, 2022

(1) The aggregate intrinsic value of restricted stock units outstanding was based on our closing stock price on the last trading day of the period.

(2) For the three months ended March 31, 2022, there were no restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments.

As of March 31, 2022, there were 6,469 outstanding restricted stock units that had been previously granted to non-employee directors in lieu of their quarterly cash retainer payments.

Performance-Based Restricted Stock Units

4 unchanged sentences

The PSUs granted in 2022 will be earned if and to the extent performance goals based on revenue change and adjusted EBITDA margin are achieved in 2023.

The number of PSUs earned will depend on the level at which the performance targets are achieved and can range from 50 % of target if the minimum performance threshold is achieved and up to 150 % of target if maximum performance is achieved.

The number of PSUs earned will depend on the level at which the performance targets

are achieved and can range from 50 % of target if the minimum performance threshold is achieved and up to 150 % of target if maximum performance is achieved.

One-third of the earned PSUs will vest on the date the Compensation and Organization Committee certifies the number of PSUs earned, and the remaining two-thirds of the earned PSUs will vest on the first anniversary of that certification date.

All earned and vested PSUs will be settled in shares of common stock.

Stock-based compensation expense recognized for PSUs was a benefit of $ 0.1 million and $ 0.3 million for the three months ended March 31, 2022 and 2021, respectively.

The stock-based compensation benefit for the three months ended March 31, 2022 reflected a $ 0.2 million benefit due to a change in the estimated payout associated with PSUs granted in 2021 being below the performance target threshold level, as defined, partially offset by an expense of $ 0.1 million related to the PSUs granted in 2022.

The stock-based compensation benefit for the three months ended March 31, 2021 reflected a $ 0.5 million benefit due to a change in the estimated payout associated with PSUs granted in 2020 being below the minimum performance target threshold level, as defined, partially offset by an expense of $ 0.2 million related to the PSUs granted in 2018 and 2021.

At March 31, 2022, there was approximately $ 2.8 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.7 years.

Our performance-based restricted stock unit activity for the three months ended March 31, 2022, was as follows:

Stock-based compensation expense recognized for PSUs was $ 0.3 million and $ 0.2 million for the three months ended June 30, 2022 and 2021, respectively, and an expense of $ 0.1 million and a benefit of $ 0.1 million for the six months ended June 30, 2022 and 2021, respectively.

At June 30, 2022, there was approximately $ 2.5 million of total unrecognized pre-tax compensation expense related to outstanding PSUs that is expected to be recognized over a weighted average period of 2.5 years.

Our performance-based restricted stock unit activity for the six months ended June 30, 2022, was as follows:

Average Grant

2 unchanged sentences

Balance at December 31, 2021

Balance at March 31, 2022

Balance at June 30, 2022

(1) The aggregate intrinsic value of performance-based restricted stock units outstanding was based on our closing stock price on the last trading day of the period.

8 unchanged sentences

Our Board of Directors exercised its prerogative to forego the automatic increase on January 1, 2022.

As of March 31, 2022, 1,708,760 shares were available for future issuance under the ESPP.

We recognized stock-based compensation expense associated with the ESPP of $ 0.2 million and $ 0.3 million for the three months ended March 31, 2022 and 2021, respectively.

As of June 30, 2022, 1,623,486 shares were available for future issuance under the ESPP.

We recognized stock-based compensation expense associated with the ESPP of $ 0.4 million and $ 0.2 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.6 million and $ 0.4 million for the six months ended June 30, 2022 and 2021, respectively.

We derive our revenue from the sale and rental of our products to our customers in the United States.

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands)

4 unchanged sentences

Airway clearance products

Our revenue by channel, inclusive of sales and rental revenue, for the three months ended March 31, 2022 and 2021, are summarized in the following table:

Our revenue by channel, inclusive of sales and rental revenue, for the three and six months ended June 30, 2022 and 2021, are summarized in the following table:

Three Months Ended

Six Months Ended

(In thousands)

14 unchanged sentences

Completion of these payments represents the fair market value of the equipment, and as such, interest income is not applicable.

Rental revenue for the three months ended March 31, 2022 and 2021, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three months ended March 31, 2022 and 2021, was:

Three Months Ended March 31,

Rental revenue for the three and six months ended June 30, 2022 and 2021, was primarily from private insurers.

Sales-type lease revenue and the associated cost of revenue for the three and six months ended June 30, 2022 and 2021, was:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

5 unchanged sentences

Our provision for income taxes included current federal and state income tax expense, as well as deferred federal and state income tax expense.

The effective tax rate for the three months ended March 31, 2022, was an expense of 1.4 % , compared to a benefit of 44.6 % for the three months ended March 31, 2021.

The primary driver of the change in our effective tax rate is primarily attributable to a full valuation allowance being recorded for net deferred tax assets for the current year period, whereas no valuation allowance was recorded for the same period in 2021.

We recorded an income tax expense of $ 0.2 million and a benefit of $ 1.8 million for the three months ended March 31, 2022 and 2021, respectively.

The effective tax rate for the three months ended June 30, 2022, was a benefit of 0.4 % , compared to a benefit of 1,405 % for the three months ended June 30, 2021.

The primary driver of the change in our effective tax rate is attributable to recording a benefit in the three months ended June 30, 2021, to recognize a tax credit for a research and development credit study conducted for tax years 2017-2020.

We recorded an income tax benefit of $ 20 thousand and $ 1.4 million for the three months ended June 30, 2022 and 2021, respectively.

The effective tax rate for the six months ended June 30, 2022, was an expense of 1.0 % , compared to a benefit of 77.1 % for the six months ended June 30, 2021.

The primary driver of the change in our effective tax rate is attributable to recording a benefit in the six months ended June 30, 2021, to recognize a tax credit for a research and development credit study conducted for tax years 2017-2020.

We recorded an income tax expense of $ 0.2 million and a benefit of $ 3.2 million for the six months ended June 30, 2022 and 2021, respectively.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely-than-not to sustain the position following an audit.

4 unchanged sentences

The Company is not under examination in any other jurisdictions.

Net Loss Per Share

The following table sets forth the computation of our basic and diluted net loss per share:

Net (Loss) Income Per Share

The following table sets forth the computation of our basic and diluted net (loss) income per share:

Three Months Ended

Six Months Ended

(In thousands, except share and per share data)

Net (loss) income

Weighted-average shares outstanding

Dilutive effect of stock-based awards

Weighted-average shares used to compute diluted net loss per share

Net loss per share - Basic

Net loss per share - Diluted

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

Weighted-average shares used to compute diluted net (loss) income per share

Net (loss) income per share - Basic

Net (loss) income per share - Diluted

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

Three Months Ended

Six Months Ended

Restricted stock units

7 unchanged sentences

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1).

The next highest

priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2).

The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2).

The lowest priority is given to unobservable inputs (Level 3).

12 unchanged sentences

Fair value adjustments

Earn-out liability at March 31, 2022

As of March 31, 2022, the fair value of the earn-out liability totaled $ 12.7 million, of which $ 3.5 million was non-current.

The following provides information regarding fair value measurements for our earn-out liability as of March 31, 2022, and December 31, 2021, according to the three-level fair value hierarchy:

At March 31, 2022

Earn-out liability at June 30, 2022

As of June 30, 2022, the fair value of the earn-out liability totaled $ 13.8 million, of which $ 4.0 million was non-current.

The following provides information regarding fair value measurements for our earn-out liability as of June 30, 2022, and December 31, 2021, according to the three-level fair value hierarchy:

At June 30, 2022

Quoted Prices

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements