2019 Q2 Form 10-Q Financial Statement

#000145983919000026 Filed on May 09, 2019

View on sec.gov

Income Statement

Concept 2019 Q2 2019 Q1 2018 Q1
Revenue $16.32M $14.99M $12.71M
YoY Change 19.42% 17.93% 11.22%
Cost Of Revenue $1.588M $1.526M $1.048M
YoY Change 34.35% 45.61% -26.71%
Gross Profit $14.73M $13.47M $11.66M
YoY Change 18.01% 15.44% 16.76%
Gross Profit Margin 90.27% 89.82% 91.76%
Selling, General & Admin $20.92M $20.58M $13.38M
YoY Change 62.4% 53.88% -5.34%
% of Gross Profit 142.04% 152.85% 114.67%
Research & Development $1.946M $1.683M $1.206M
YoY Change 50.15% 39.55% -15.07%
% of Gross Profit 13.21% 12.5% 10.34%
Depreciation & Amortization $200.0K $193.0K $168.0K
YoY Change 0.0% 14.88% -40.0%
% of Gross Profit 1.36% 1.43% 1.44%
Operating Expenses $22.87M $22.26M $14.58M
YoY Change 61.29% 52.69% -6.23%
Operating Profit -$8.138M -$8.799M -$2.917M
YoY Change 379.55% 201.65% -47.54%
Interest Expense $1.233M $1.230M $1.275M
YoY Change -2.84% -3.53% -240.11%
% of Operating Profit
Other Income/Expense, Net $22.00K -$60.00K -$71.00K
YoY Change -108.84% -15.49% -40.83%
Pretax Income -$8.650M -$9.350M -$4.200M
YoY Change 174.6% 122.62% -36.27%
Income Tax
% Of Pretax Income
Net Earnings -$8.654M -$9.345M -$4.201M
YoY Change 174.99% 122.45% -36.25%
Net Earnings / Revenue -53.04% -62.34% -33.05%
Basic Earnings Per Share
Diluted Earnings Per Share -$351.9K -$383.4K -$1.170M
COMMON SHARES
Basic Shares Outstanding 24.56M shares 24.46M shares
Diluted Shares Outstanding

Balance Sheet

Concept 2019 Q2 2019 Q1 2018 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $103.3M $115.3M
YoY Change
Cash & Equivalents $11.50M $12.56M $17.79M
Short-Term Investments $91.78M $102.7M
Other Short-Term Assets $1.900M $2.200M
YoY Change
Inventory $4.436M $3.516M
Prepaid Expenses
Receivables $9.404M $8.411M
Other Receivables $0.00 $0.00
Total Short-Term Assets $119.0M $129.4M
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment $2.532M $2.336M
YoY Change
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $5.300M
YoY Change
Other Assets $310.0K $321.0K
YoY Change
Total Long-Term Assets $8.104M $2.657M
YoY Change
TOTAL ASSETS
Total Short-Term Assets $119.0M $129.4M
Total Long-Term Assets $8.104M $2.657M
Total Assets $127.1M $132.1M
YoY Change
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $2.450M $2.811M
YoY Change
Accrued Expenses $7.469M $7.097M
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $9.919M $9.908M
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt $39.09M $39.03M
YoY Change
Other Long-Term Liabilities $363.0K $363.0K
YoY Change
Total Long-Term Liabilities $39.46M $39.39M
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities $9.919M $9.908M
Total Long-Term Liabilities $39.46M $39.39M
Total Liabilities $49.38M $49.30M
YoY Change
SHAREHOLDERS EQUITY
Retained Earnings -$175.2M -$166.5M
YoY Change
Common Stock $3.000K $3.000K
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $77.75M $82.76M -$133.2M
YoY Change
Total Liabilities & Shareholders Equity $127.1M $132.1M
YoY Change

Cashflow Statement

Concept 2019 Q2 2019 Q1 2018 Q1
OPERATING ACTIVITIES
Net Income -$8.654M -$9.345M -$4.201M
YoY Change 174.99% 122.45% -36.25%
Depreciation, Depletion And Amortization $200.0K $193.0K $168.0K
YoY Change 0.0% 14.88% -40.0%
Cash From Operating Activities -$8.390M -$7.078M -$4.411M
YoY Change 565.87% 60.46% -5.55%
INVESTING ACTIVITIES
Capital Expenditures -$480.0K $412.0K $218.0K
YoY Change -4.0% 88.99% -645.0%
Acquisitions
YoY Change
Other Investing Activities $6.220M -$5.140M $0.00
YoY Change
Cash From Investing Activities $5.740M -$5.553M -$218.0K
YoY Change -1248.0% 2447.25% 445.0%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $0.00
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 1.530M $125.0K $20.00K
YoY Change 705.26% 525.0% -99.64%
NET CHANGE
Cash From Operating Activities -8.390M -$7.078M -$4.411M
Cash From Investing Activities 5.740M -$5.553M -$218.0K
Cash From Financing Activities 1.530M $125.0K $20.00K
Net Change In Cash -1.120M -$12.56M -$4.616M
YoY Change -28.66% 172.08% -662.93%
FREE CASH FLOW
Cash From Operating Activities -$8.390M -$7.078M -$4.411M
Capital Expenditures -$480.0K $412.0K $218.0K
Free Cash Flow -$7.910M -$7.490M -$4.629M
YoY Change 940.79% 61.81% -0.02%

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CY2019Q1 us-gaap Operating Leases Future Minimum Payments Due In Two Years
OperatingLeasesFutureMinimumPaymentsDueInTwoYears
1040000 USD
CY2019Q1 us-gaap Operating Leases Future Minimum Payments Due Thereafter
OperatingLeasesFutureMinimumPaymentsDueThereafter
1183000 USD
CY2019Q1 us-gaap Operating Leases Future Minimum Payments Remainder Of Fiscal Year
OperatingLeasesFutureMinimumPaymentsRemainderOfFiscalYear
800000 USD
CY2018Q1 us-gaap Operating Leases Rent Expense Net
OperatingLeasesRentExpenseNet
300000 USD
CY2019Q1 us-gaap Operating Leases Rent Expense Net
OperatingLeasesRentExpenseNet
300000 USD
CY2018Q4 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
133000 USD
CY2019Q1 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
240000 USD
CY2018Q4 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
325000 USD
CY2019Q1 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
321000 USD
CY2018Q1 us-gaap Other Comprehensive Income Availableforsale Securities Adjustment Net Of Tax Portion Attributable To Parent
OtherComprehensiveIncomeAvailableforsaleSecuritiesAdjustmentNetOfTaxPortionAttributableToParent
0 USD
CY2019Q1 us-gaap Other Comprehensive Income Availableforsale Securities Adjustment Net Of Tax Portion Attributable To Parent
OtherComprehensiveIncomeAvailableforsaleSecuritiesAdjustmentNetOfTaxPortionAttributableToParent
25000 USD
CY2018Q1 us-gaap Other Comprehensive Income Foreign Currency Transaction And Translation Adjustment Net Of Tax Portion Attributable To Parent
OtherComprehensiveIncomeForeignCurrencyTransactionAndTranslationAdjustmentNetOfTaxPortionAttributableToParent
-21000 USD
CY2019Q1 us-gaap Other Comprehensive Income Foreign Currency Transaction And Translation Adjustment Net Of Tax Portion Attributable To Parent
OtherComprehensiveIncomeForeignCurrencyTransactionAndTranslationAdjustmentNetOfTaxPortionAttributableToParent
-19000 USD
CY2018Q4 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
360000 USD
CY2019Q1 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
363000 USD
CY2018Q1 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
-71000 USD
CY2019Q1 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
-60000 USD
CY2018Q1 us-gaap Payments To Acquire Marketable Securities
PaymentsToAcquireMarketableSecurities
0 USD
CY2019Q1 us-gaap Payments To Acquire Marketable Securities
PaymentsToAcquireMarketableSecurities
22741000 USD
CY2018Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
218000 USD
CY2019Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
412000 USD
CY2018Q4 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.0001
CY2019Q1 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.0001
CY2018Q4 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
5000000 shares
CY2019Q1 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
5000000 shares
CY2018Q4 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0 shares
CY2019Q1 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0 shares
CY2018Q4 us-gaap Preferred Stock Shares Outstanding
PreferredStockSharesOutstanding
0 shares
CY2019Q1 us-gaap Preferred Stock Shares Outstanding
PreferredStockSharesOutstanding
0 shares
CY2018Q4 us-gaap Preferred Stock Value
PreferredStockValue
0 USD
CY2019Q1 us-gaap Preferred Stock Value
PreferredStockValue
0 USD
CY2018Q4 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
1990000 USD
CY2019Q1 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
2161000 USD
CY2018Q1 us-gaap Proceeds From Sale And Maturity Of Marketable Securities
ProceedsFromSaleAndMaturityOfMarketableSecurities
0 USD
CY2019Q1 us-gaap Proceeds From Sale And Maturity Of Marketable Securities
ProceedsFromSaleAndMaturityOfMarketableSecurities
17600000 USD
CY2018Q1 us-gaap Proceeds From Stock Options Exercised
ProceedsFromStockOptionsExercised
20000 USD
CY2019Q1 us-gaap Proceeds From Stock Options Exercised
ProceedsFromStockOptionsExercised
125000 USD
CY2018Q4 us-gaap Property Plant And Equipment Gross
PropertyPlantAndEquipmentGross
5518000 USD
CY2019Q1 us-gaap Property Plant And Equipment Gross
PropertyPlantAndEquipmentGross
5881000 USD
CY2018Q4 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
2154000 USD
CY2019Q1 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
2336000 USD
CY2018Q4 us-gaap Purchase Obligation
PurchaseObligation
200000 USD
CY2019Q1 us-gaap Purchase Obligation
PurchaseObligation
300000 USD
CY2018Q1 us-gaap Research And Development Expense
ResearchAndDevelopmentExpense
1206000 USD
CY2019Q1 us-gaap Research And Development Expense
ResearchAndDevelopmentExpense
1683000 USD
CY2018Q4 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-157177000 USD
CY2019Q1 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-166522000 USD
CY2018Q1 us-gaap Revenues
Revenues
12712000 USD
CY2019Q1 us-gaap Revenues
Revenues
14991000 USD
CY2018Q4 us-gaap Sales And Excise Tax Payable Current
SalesAndExciseTaxPayableCurrent
388000 USD
CY2019Q1 us-gaap Sales And Excise Tax Payable Current
SalesAndExciseTaxPayableCurrent
436000 USD
CY2018Q1 us-gaap Selling And Marketing Expense
SellingAndMarketingExpense
10967000 USD
CY2019Q1 us-gaap Selling And Marketing Expense
SellingAndMarketingExpense
15815000 USD
CY2018Q1 us-gaap Share Based Compensation
ShareBasedCompensation
392000 USD
CY2019Q1 us-gaap Share Based Compensation
ShareBasedCompensation
1871000 USD
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Expirations In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExpirationsInPeriod
15723 shares
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Gross
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross
468600 shares
CY2018Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Weighted Average Grant Date Fair Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageGrantDateFairValue
2.13
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Weighted Average Grant Date Fair Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageGrantDateFairValue
10.40
CY2018Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
2641198 shares
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
3047130 shares
CY2018Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice
4.27
CY2019Q1 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice
6.99
CY2019Q1 us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Exercises In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice
2.73
CY2019Q1 us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Expirations In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExpirationsInPeriodWeightedAverageExercisePrice
9.32
CY2019Q1 us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Grants In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice
22.00
CY2018Q4 us-gaap Stock Issued During Period Shares Conversion Of Convertible Securities
StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities
12066654 shares
CY2019Q1 us-gaap Stock Issued During Period Shares Stock Options Exercised
StockIssuedDuringPeriodSharesStockOptionsExercised
46945 shares
CY2018Q1 us-gaap Stock Issued During Period Value Stock Options Exercised
StockIssuedDuringPeriodValueStockOptionsExercised
18000 USD
CY2019Q1 us-gaap Stock Issued During Period Value Stock Options Exercised
StockIssuedDuringPeriodValueStockOptionsExercised
125000 USD
CY2017Q4 us-gaap Stockholders Equity
StockholdersEquity
-129378000 USD
CY2019Q1 us-gaap Temporary Equity Carrying Amount Attributable To Parent
TemporaryEquityCarryingAmountAttributableToParent
0 USD
CY2017Q4 us-gaap Temporary Equity Shares Outstanding
TemporaryEquitySharesOutstanding
11871578 shares
CY2018Q1 us-gaap Temporary Equity Shares Outstanding
TemporaryEquitySharesOutstanding
11871578 shares
CY2018Q4 us-gaap Temporary Equity Shares Outstanding
TemporaryEquitySharesOutstanding
0 shares
CY2019Q1 us-gaap Temporary Equity Shares Outstanding
TemporaryEquitySharesOutstanding
0 shares
CY2018Q1 us-gaap Stockholders Equity
StockholdersEquity
-133171000 USD
CY2018Q4 us-gaap Stockholders Equity
StockholdersEquity
90192000 USD
CY2019Q1 us-gaap Stockholders Equity
StockholdersEquity
82755000 USD
CY2018Q4 us-gaap Stockholders Equity Note Stock Split Conversion Ratio1
StockholdersEquityNoteStockSplitConversionRatio1
0.0556
CY2017Q4 us-gaap Temporary Equity Carrying Amount Attributable To Parent
TemporaryEquityCarryingAmountAttributableToParent
118548000 USD
CY2018Q1 us-gaap Temporary Equity Carrying Amount Attributable To Parent
TemporaryEquityCarryingAmountAttributableToParent
118548000 USD
CY2018Q4 us-gaap Temporary Equity Carrying Amount Attributable To Parent
TemporaryEquityCarryingAmountAttributableToParent
0 USD
CY2018Q1 us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
WeightedAverageNumberOfShareOutstandingBasicAndDiluted
3593658 shares
CY2019Q1 us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
WeightedAverageNumberOfShareOutstandingBasicAndDiluted
24390648 shares
CY2019Q1 us-gaap Concentration Risk Credit Risk
ConcentrationRiskCreditRisk
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:174%;padding-top:12px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Concentration of Credit Risk</font></div><div style="line-height:120%;padding-top:16px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The Company&#8217;s cash and cash equivalents are deposited with financial institutions in the United States and in Europe; the majority of the Company&#8217;s cash and cash equivalents are deposited with a single financial institution in the United States. Deposits in this institution exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents.</font></div><div style="line-height:120%;padding-top:16px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company&#8217;s revenue and accounts receivable are spread across a large number of customers, primarily in the United States, and no one customer accounts for more than 10% of total revenue or gross accounts receivable in any period presented.</font></div></div>
CY2019Q1 us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">The Company and Nature of Business</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">SI-BONE, Inc. (the &#8220;Company&#8221;) was incorporated in the state of Delaware on March&#160;18, 2008 and is headquartered in Santa Clara, California. The Company is a medical device company that has pioneered a proprietary minimally invasive surgical implant system to fuse the sacroiliac joint for treatment of the most common types of sacroiliac joint disorders that cause lower back pain. The Company introduced its iFuse Implant System, or iFuse, in 2009 in the United States, in 2010 in certain countries in the European Union, and in 2015 in certain countries in the rest of the world.</font></div><div style="line-height:120%;padding-top:12px;text-align:left;padding-left:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Reverse Stock Split</font></div><div style="line-height:120%;padding-top:12px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In October 2018, the Company's board of directors and stockholders approved a 1-for-18 reverse stock split of the Company's common stock and redeemable convertible preferred stock, which was effected on October&#160;4, 2018. The par value of the common stock and redeemable convertible preferred stock was not adjusted as a result of the reverse split. All issued and outstanding share and per share amounts of common stock, redeemable convertible preferred stock, stock options, and warrants included in the accompanying consolidated financial statements have been adjusted to reflect this reverse stock split for all periods presented.</font></div><div style="line-height:120%;padding-top:12px;text-align:left;padding-left:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Initial Public Offering </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On October&#160;16, 2018, the Company&#8217;s Registration Statement on Form S-1 (File No.&#160;333-227445) relating to the initial public offering (IPO) of its common stock was declared effective by the Securities and Exchange Commission (SEC). Pursuant to such Registration Statement, the Company sold </font><font style="font-family:inherit;font-size:10pt;">8,280,000</font><font style="font-family:inherit;font-size:10pt;"> shares at an initial public offering price of </font><font style="font-family:inherit;font-size:10pt;">$15.00</font><font style="font-family:inherit;font-size:10pt;"> per share for net proceeds of </font><font style="font-family:inherit;font-size:10pt;">$113.4 million</font><font style="font-family:inherit;font-size:10pt;"> to the Company, net of underwriting discounts and commissions and offering costs. Upon the closing of the IPO, the Company's outstanding shares of redeemable convertible preferred stock were automatically converted into an aggregate of </font><font style="font-family:inherit;font-size:10pt;">12,066,654</font><font style="font-family:inherit;font-size:10pt;"> shares of common stock and the Company's outstanding warrants to purchase </font><font style="font-family:inherit;font-size:10pt;">156,550</font><font style="font-family:inherit;font-size:10pt;"> shares of redeemable convertible preferred stock were automatically converted into warrants to purchase an aggregate of </font><font style="font-family:inherit;font-size:10pt;">160,657</font><font style="font-family:inherit;font-size:10pt;"> shares of common stock, resulting in reclassification of the related redeemable convertible preferred stock warrant liability of </font><font style="font-family:inherit;font-size:10pt;">$1.2 million</font><font style="font-family:inherit;font-size:10pt;"> in additional paid-in-capital.</font></div></div>
CY2019Q1 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:12px;text-align:left;padding-left:32px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Use of Estimates </font></div><div style="line-height:120%;padding-top:12px;text-align:justify;text-indent:33px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates and management judgments reflected in the consolidated financial statements include: fair value of assets and liabilities; analysis of the allowance for doubtful accounts; inventory valuation; valuation of deferred tax assets, including related valuation allowances; fair value of common stock and redeemable convertible preferred stock warrants; stock-based compensation; and useful lives of long lived assets. Estimates are based on historical experience, where applicable and other assumptions believed to be reasonable by the management. Actual results could differ from those estimates.</font></div></div>

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