QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: Our cash is held on deposit in demand accounts at high credit quality financial institutions in amounts in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category.
+Added: Our cash is held on deposit in demand accounts at high credit quality financial institutions in amounts in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category.
We have reviewed the consolidated financial statements of these institutions and believe they have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us.
−Removed: Financial instruments that potentially subject us to concentrations of credit risk principally consist of cash equivalents, short-term investments and accounts receivable.
−Removed: We limit our credit risk associated with cash equivalents by placing investments in highly-rated money market funds, corporate debt securities and agency securities.
−Removed: Our short-term investments are classified as available-for sale-securities and are reported at fair value in the accompanying consolidated balance sheet.
+Added: Financial instruments that potentially subject us to concentrations of credit risk principally consist of cash equivalents and accounts receivable.
+Added: We limit our credit risk associated with cash equivalents by placing investments in highly-rated money market funds.
We limit our credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary, but we do not require collateral to secure amounts owed to us by our customers.
−Removed: As discussed above in the section of this Annual Report entitled “Liquidity and Capital Resources —
−Removed: Indebtedness,”
−Removed: The OrbiMed Credit Facility bears interest at a floating rate of interest, which resets monthly and is equal to 7.75% plus the greater of one-month LIBOR or 2.0%.
−Removed: As a result, we are exposed to risks from changes in interest rates.
−Removed: A 1.0% increase in interest rates would have resulted in a $0.3 million increase to our interest expense for the year ended December 31, 2019.
+Added: As discussed above in the section of this Annual Report entitled “Liquidity and Capital Resources — Indebtedness,” the OrbiMed Credit Facility bears interest at a floating rate of interest, which resets monthly and is equal to 7.75% plus the greater of one-month LIBOR or 2.0%.
+Added: As of December 31, 2020, LIBOR was below 1.0%.
+Added: Therefore, a 1.0% increase in LIBOR would not increase the annual interest payments.
Inflationary factors, such as increases in our cost of revenue and operating expenses, may adversely affect our operating results.
−Removed: Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain and
−Removed: increase our gross margin or decrease our operating expenses as a percentage of our revenue if our selling prices of our products do not increase as much or more than our costs increase.
+Added: Although we do not believe inflation has had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain and increase our gross margin or decrease our operating expenses as a percentage of our revenue if our selling prices of our products do not increase as much or more than our costs increase.
We do not currently have any material exposure to foreign currency fluctuations and do not engage in any hedging activities as part of our normal course of business.
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Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S.
−Removed: (“GAAP”).
The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the reporting period.
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Revenue Recognition
−Removed: We account for revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”) which was adopted on January 1, 2019 using the modified retrospective method.
+Added: We account for revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”) which was adopted on January 1, 2019 using the modified retrospective method.
The adoption of this guidance had no cumulative adjustment to our consolidated financial statements.
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As a result, we may be required to take additional charges for excess and obsolete inventory in the future if the purchased units do not align with sales.
−Removed: Stock-Based Compensation
−Removed: The following table summarizes stock-based compensation expense resulting from stock options:
−Removed: Year Ended December 31,
−Removed: (in thousands)
−Removed: Sales and marketing
−Removed: General and administrative
−Removed: Research and development
−Removed: Total stock-based compensation
−Removed: We measure stock options and other stock-based awards based on their estimated fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award, while awards containing a performance condition are recognized when the achievement of the performance criteria is considered probable.
−Removed: We apply the straight-line method of expense recognition to all awards with service-based vesting conditions.
−Removed: We estimate the fair value of stock options using the Black-Scholes option-pricing model, which requires assumptions, including the fair value of our common stock, volatility, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options, and our expected dividend yield.
−Removed: Certain assumptions used in our Black-Scholes option-pricing model represent management’s best estimates and involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective.
−Removed: If any assumptions change, our stock-based compensation expense could be materially different in the future.
−Removed: These subjective assumptions are estimated as follows:
−Removed: Expected volatility.
−Removed: The expected volatility was based on the historical stock volatility of several of our comparable publicly traded companies over a period of time equal to the expected term of the options, as we do not have any trading history to use the volatility of our own common stock.
−Removed: Fair value of common stock.
−Removed: On November 13, 2019, we closed our IPO.
−Removed: Following the closing, the fair value of common stock was the closing price of our common stock on the Nasdaq Global Market as reported on the date of the grant.
−Removed: Prior to that, our common stock had not historically been publicly traded and we had to periodically estimate the fair value of common stock.
−Removed: Estimating the Fair Value of Common Stock
−Removed: Prior to the closing of our IPO, there was no public market for our common stock and the estimated fair value of our common stock was determined by our board of directors as of the date of each option grant, with input from management, considering the most recently available third-party valuation of common stock, and our board of directors’
−Removed: assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant.
−Removed: These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’
−Removed: Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .
−Removed: In addition to considering the results of these third-party valuations, our board of directors considered various objective and subjective factors to determine the fair value of our common stock as of each grant date, including:
−Removed: the prices at which we sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to our common stock at the time of each grant;
−Removed: the progress of our commercialization efforts;
−Removed: the progress of our research and development programs, including the status and results of preclinical studies for our product candidates;
−Removed: our stage of development and our business strategy;
−Removed: external market conditions affecting the medical device industry and trends within the medical device industry;
−Removed: our financial position, including cash on hand, and our historical and forecasted performance and operating results;
−Removed: the lack of an active public market for our common stock and our preferred stock;
−Removed: the likelihood of achieving a liquidity event, such as an IPO, or sale of our company in light of prevailing market conditions;
−Removed: the analysis of IPOs and the market performance of similar companies in the medical device industry.
−Removed: In determining the estimated fair value of common stock, our board of directors considered the subjective factors discussed above in conjunction with the most recent valuations of our common stock that were prepared by an independent third-party.
Off-Balance Sheet Arrangements
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JOBS Act Accounting Election
−Removed: We are an “emerging growth company,”
−Removed: as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.
+Added: We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
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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.