LENSAR Inc

Previous wording

We are a commercial-stage medical device company focused on designing, developing and marketing an advanced femtosecond laser system for the treatment of cataracts and the management of pre-existing or surgically induced corneal astigmatism. Our systems incorporate a range of proprietary technologies designed to assist the surgeon in obtaining better visual outcomes, efficiency and reproducibility by providing advanced imaging, simplified procedure planning, efficient design and precision. We believe the cumulative effect of these technologies results in a laser system that can be quickly and efficiently integrated into a surgeon’s existing practice, is easy to use and provides surgeons the ability to deliver improved visual outcomes more efficiently.

Current wording

We are a commercial-stage medical device company focused on designing, developing and marketing an advanced laser system for the treatment of cataracts and the management of pre-existing or surgically induced corneal astigmatism. Our systems incorporate a range of proprietary technologies designed to assist the surgeon in obtaining better visual outcomes, efficiency and reproducibility by providing advanced imaging, simplified procedure planning, efficient design and precision. We believe the cumulative effect of these technologies results in a laser system that can be quickly and efficiently integrated into a surgeon’s existing practice, is easy to use and provides surgeons the ability to deliver improved visual outcomes more efficiently.

Previous wording

Our current product portfolio includes the LENSAR Laser System and ALLY® Adaptive Cataract Treatment System, or ALLY System, and its associated consumable components. The consumable portion of the system consists of a disposable patient interface device kit, or PID kit, and the system also requires a procedure license. Each procedure on each system requires the use of a PID kit. The PID kit includes a suction ring, vacuum filter and fluidic connection that are designed to facilitate placement of the laser while minimizing a patient’s discomfort, intraocular pressure and trauma to the retina and maintaining corneal integrity. The procedure license is downloaded onto the system as required or as purchased by the customer. The system will not perform a procedure without a valid license. We sell licenses individually and also offer licenses in a subscription package with minimum monthly obligations and the ability to increase procedure numbers as the practice grows to address occasional increases in demand. We believe this structure allows the surgeon to implement a budget while also providing us with a predictable revenue stream.

Current wording

Our current product portfolio includes the LENSAR Laser System, or LLS, and ALLY® Adaptive Cataract Treatment System, or ALLY System (collectively, the Systems) and its associated consumable components. The consumable portion of the system consists of a disposable patient interface device kit, or PID kit, and the system also requires a procedure license. Each procedure on each system requires the use of a PID kit. The PID kit includes a suction ring, vacuum filter and fluidic connection that are designed to facilitate placement of the laser while minimizing a patient’s discomfort, intraocular pressure and trauma to the retina and maintaining corneal integrity. The procedure license is downloaded onto the system as required or as purchased by the customer. The system will not perform a procedure without a valid license. We sell licenses individually and also offer licenses in a subscription package with minimum monthly obligations and the ability to increase procedure numbers as the practice grows to address occasional increases in demand. We believe this structure allows the surgeon to implement a budget while also providing us with a predictable revenue stream.

Previous wording

We are focused on continuous innovation and have launched our proprietary next generation ALLY System. The ALLY System enables cataract surgeons to complete the femtosecond-laser-assisted cataract surgery, or FLACS, procedure seamlessly in a single, sterile environment. Our ALLY System received clearance from the FDA in June 2022, and we executed a controlled and targeted initial launch of the ALLY System beginning in August 2022. The ALLY System is available to all U.S. cataract surgeons and has also received regulatory clearance in India and the Philippines. In 2022, we transitioned from manufacturing and selling our LENSAR Laser System to focus on our ALLY System. In September 2022, we submitted the ALLY System for certification in the European Union, or EU, and, in 2023, submitted documentation to distributors in South Korea, Taiwan, and China for additional marketing or certification applications. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives regulatory clearance in other regions outside the United States and the timing of these clearances or certifications, among other factors. In addition, based on inventory of our LENSAR Laser System, our future revenue and cash flows will depend on, among other factors, our installed base of systems and the timing of and applicable clearances for our ALLY System.

Current wording

We are focused on continuous innovation and have launched our proprietary next generation ALLY System. The ALLY System enables cataract surgeons to complete the laser-assisted cataract surgery seamlessly in a single, sterile environment. Our ALLY System received clearance from the U.S. Food and Drug Administration (“FDA”) in June 2022, and we executed a controlled and targeted initial launch of the ALLY System beginning in August 2022. The ALLY System is available to all U.S. and European Union, or EU, cataract surgeons and has also received regulatory clearance in India, Taiwan, as well as certain other countries. In 2022, we transitioned from manufacturing and selling our LLS to focus on our ALLY System. In addition, we have submitted the ALLY System for certification through distributors in South Korea and China for additional marketing or certification applications. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives regulatory clearance in other regions outside the United States and the timing of these clearances or certifications, among other factors. Our future revenue and cash flows will depend on, among other factors, our installed base of Systems and the timing of and applicable clearances for our ALLY System.

Previous wording

Our revenues and operating expenses are also difficult to predict and depend on several factors, including the level of ongoing research and development requirements necessary to further develop and/or obtain further regulatory clearance or certification of our ALLY System, the number of laser systems we manufacture, sell, and lease on an annual basis, the availability of capital and direction from regulatory agencies or notified bodies, which are difficult to predict. We may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and payments.

Current wording

Our revenues and operating expenses are also difficult to predict and depend on several factors, including the level of ongoing research and development requirements necessary to further develop and/or obtain further regulatory clearance or certification of our ALLY System, the number of Systems we manufacture, sell, and lease on an annual basis, the availability of capital and direction from regulatory agencies or notified bodies, which are difficult to predict. We may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and payments.

Previous wording

Total revenue comprises product revenue, service revenue and lease revenue. We derive product revenue from the sale of our laser systems and sales of our PIDs and procedure licenses to our surgeon customers and to our distributors outside the United States. A PID and procedure license, which may also be referred to as an application license, is required to perform each procedure using our laser system. A procedure license represents a one-time right to utilize the system surgical application in connection with a surgery procedure. Service revenue is derived from the sale of extended warranties for our laser systems that provide additional maintenance and service beyond our standard limited warranty. In some situations, we lease our laser systems to surgeons, primarily through non-cancellable leases with a fixed lease payment. We consider all components of our revenue to be recurring source revenue, with the exception of sales of our systems. For the three months ended March 31, 2024, approximately 90% of our revenue was attributable to recurring sources compared to 92% for the three months ended March 31, 2023.

Current wording

Total revenue comprises product revenue, service revenue and lease revenue. We derive product revenue from the sale of our Systems and sales of our PIDs and procedure licenses to our surgeon customers and to our distributors outside the United States. A PID and procedure license, which may also be referred to as an application license, is required to perform each procedure using our laser system. A procedure license represents a one-time right to utilize the system surgical application in connection with a surgery procedure. Service revenue is derived from the sale of extended warranties for our Systems that provide additional maintenance and service beyond our standard limited warranty. In some situations, we lease our Systems to surgeons, primarily through non-cancellable leases with a fixed lease payment. We consider all components of our revenue to be recurring source revenue, with the exception of sales of our Systems. For the three and six months ended June 30, 2024, approximately 79% and 84% of our revenue was attributable to recurring sources, respectively, compared to 70% and 79% for the three and six months ended June 30, 2023, respectively.

Previous wording

Our research and development expenses consist primarily of engineering, product development, clinical studies to develop and support our products, personnel costs, such as salaries and wages, including stock-based compensation and benefits, regulatory expenses, and other costs associated with products and technologies that are in development. Currently, our research and development expense primarily consists of costs associated with the continued development of our next generation system, the ALLY System, which combines all of the features from our LENSAR Laser System with a dual-pulse laser, integrated in a small, compact cataract treatment system that is designed to allow surgeons to perform a sterile femtosecond laser assisted cataract procedure in a single operating room or in-office surgical suite. Among other initiatives, further development of the ALLY System is designed to combine our existing femtosecond laser technology with phacoemulsification systems to provide an integrated cataract treatment system. The Company recognized pre-launch inventory costs as research and development expenses through April 30, 2022, when future commercialization of our ALLY System was considered probable and the future economic benefit was expected to be realized.

Current wording

Our research and development expenses consist primarily of engineering, product development, clinical studies to develop and support our products, personnel costs, such as salaries and wages, including stock-based compensation and benefits, regulatory expenses, and other costs associated with products and technologies that are in development. Currently, our research and development expense primarily consists of costs associated with the continued development of our next generation system, the ALLY System, which combines all of the features from our LLS with a dual-pulse laser, integrated in a small, compact cataract treatment system that is designed to allow surgeons to perform a sterile laser-assisted cataract surgery in a single operating room or in-office surgical suite.

Previous wording

Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition. Beginning in 2022, the Tax Cuts and Jobs Act eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years for expenditures in the United States and over fifteen years for foreign-based expenditures, pursuant to Section 174 of the Code, or Section 174. On September 8, 2023, the Internal Revenue Service, or the IRS, issued Notice 2023-63 providing interim guidance regarding the capitalization and amortization of research and experimental expenditures for U.S. tax purposes that became effective in 2022. On December 22, 2023, the Treasury Department, or Treasury, and the IRS issued Rev. Proc. 2024-9, which provides procedural guidance for taxpayers to make accounting method changes to apply the provisions of Notice 2023-63. IRS and Treasury concurrently released Notice 2024-12, which modifies certain provisions of Notice 2023-63. However, recently proposed tax legislation, if enacted, would restore the ability to deduct currently domestic research and development expenditures through 2025 and would retroactively restore this benefit for 2022 and 2023. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred. The Company will continue to review the applicability of new notices to its operations and will review the proposed regulations and adjust the estimates as necessary.

Current wording

Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition. Beginning in 2022, the Tax Cuts and Jobs Act eliminated the option of expensing all research and development expenditures in the current year, instead requiring amortization over five years for expenditures in the United States and over fifteen years for foreign-based expenditures, pursuant to Section 174 of the Code, or Section 174. On September 8, 2023, the Internal Revenue Service, or the IRS, issued Notice 2023-63 providing non-binding guidance regarding the capitalization and amortization of research and experimental expenditures for U.S. tax purposes that became effective in 2022. On December 22, 2023, the Treasury Department, or Treasury, and the IRS issued Rev. Proc. 2024-9, which provides procedural guidance for taxpayers to make accounting method changes to apply the provisions of Notice 2023-63. IRS and Treasury concurrently released Notice 2024-12, which modifies certain provisions of Notice 2023-63. The impact of Section 174 on the Company’s cash from operations depends primarily on the amount of research and development expenditures incurred, however, Section 174 has not had a material impact to the Company since its effective date. The Company will continue to review the applicability of new notices to its operations and will review any proposed legislation and regulations and adjust the estimates as necessary.

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Product revenue for the three months ended March 31, 2024 increased by $1.8 million, or 31%, compared to the three months ended March 31, 2023. The increase was primarily attributable to increased procedure volume of $1.3 million and increased system revenue of $0.5 million.

Current wording

Product revenue for the three months ended June 30, 2024 increased by $0.2 million, or 2%, compared to the three months ended June 30, 2023. The increase was primarily attributable to increased procedure volume of $1.2 million offset by decreased Systems revenue of $1.0 million due to decreased LLS sales somewhat offset by increased ALLY System sales.

Previous wording

Service revenue for the three months ended March 31, 2024 increased by $0.2 million, or 25%, compared to the three months ended March 31, 2023. Our U.S. sales represented 70% and 64% of product and service revenue for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Service revenue for the three months ended June 30, 2024 increased by $0.2 million, or 22%, compared to the three months ended June 30, 2023. Our U.S. sales represented 72% and 69% of product and service revenue for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Lease revenue for the three months ended March 31, 2024 increased by $0.3 million, or 20%, compared to the three months ended March 31, 2023.

Current wording

Lease revenue for the three months ended June 30, 2024 increased by $0.3 million, or 15%, compared to the three months ended June 30, 2023.

Previous wording

Cost of product revenue for the three months ended March 31, 2024 increased by $0.3 million, or 13%, compared to the three months ended March 31, 2023. The increased cost of product revenue was attributable to increased system sales, which have a lower gross margin than procedure licenses, as well as the full costing of raw materials for ALLY Systems as all raw materials previously charged to research and development expenses have been utilized in production.

Current wording

Cost of product revenue for the three months ended June 30, 2024 increased by $0.2 million, or 5%, compared to the three months ended June 30, 2023. The increased cost of product revenue was attributable to increased Systems sales, which have a lower gross margin than procedure licenses, as well as the full costing of raw materials for ALLY Systems as all raw materials previously charged to research and development expenses have been utilized in production.

Previous wording

Cost of service revenue for the three months ended March 31, 2024 increased by $0.6 million, or 52%, compared to the three months ended March 31, 2023 primarily due to the increased number of system placements.

Current wording

Cost of service revenue for the three months ended June 30, 2024 increased by $0.2 million, or 20%, compared to the three months ended June 30, 2023, primarily due to the increased number of Systems placements.

Previous wording

Cost of lease revenue for the three months ended March 31, 2024 increased by $0.1 million, or 22%, compared to three months ended March 31, 2023.

Current wording

Cost of lease revenue for the three months ended June 30, 2024 increased by $0.2 million, or 34%, compared to three months ended June 30, 2023.

Previous wording

Total revenue for the three months ended March 31, 2024 increased by $2.3 million, or 28%, compared to the three months ended March 31, 2023.

Current wording

Cost of lease revenue for the six months ended June 30, 2024 increased by $0.3 million, or 28%, compared to the six months ended June 30, 2023.

Previous wording

Research and Development. Research and development expenses for the three months ended March 31, 2024 decreased by $0.2 million, or 12%, compared to three months ended March 31, 2023.

Current wording

Research and Development. Research and development expenses for the three months ended June 30, 2024 decreased by $0.2 million, or 10%, compared to three months ended June 30, 2023.

Previous wording

Amortization of Intangible Assets. Amortization of intangible assets was $0.3 million for the three months ended March 31, 2024, consistent with the three months ended March 31, 2023.

Current wording

Amortization of Intangible Assets. Amortization of intangible assets was $0.2 million for the three months ended June 30, 2024, consistent with the three months ended June 30, 2023.

Previous wording

Selling, General and Administrative. Selling, general and administrative expenses for each of the three months ended March 31, 2024 and 2023 were $6.8 million. We expect selling, general and administrative expense to increase from current levels as we continue to expand our commercial infrastructure and commercialize the ALLY System.

Current wording

Selling, General and Administrative. Selling, general and administrative expenses for the six months ended June 30, 2024 decreased by $1.0 million, or 7%, compared to the six months ended June 30, 2023. The decrease was primarily due to restricted stock awards associated with the spin-off becoming fully vested. We expect selling, general and administrative expense to increase from current levels as we continue to expand our commercial infrastructure and commercialize the ALLY System.

Previous wording

Non-operating income and expenses, net for the three months ended March 31, 2024 were $0.7 million of income and consisted primarily of the change in fair value of warrant liabilities. Non-operating expenses, net were immaterial for the three months ended March 31, 2023.

Current wording

Non-operating income and expenses, net for the three months ended June 30, 2024 were $3.8 million as compared to $5.9 million for the three months ended June 30, 2023. Non-operating income and expenses consisted primarily of the change in fair value of warrant liabilities in each period.

Previous wording

We prepare and analyze operating and financial data and non-GAAP measures to assess the performance of our business, make strategic and offering decisions and build our financial projections. The key non-GAAP measures we use, EBITDA and Adjusted EBITDA, are reconciled to net loss below for the three months ended March 31, 2024 and 2023.

Current wording

We prepare and analyze operating and financial data and non-GAAP measures to assess the performance of our business, make strategic and offering decisions and build our financial projections. The key non-GAAP measures we use, EBITDA and Adjusted EBITDA, are reconciled to net loss below for the three and six months ended June 30, 2024 and 2023.

Previous wording

EBITDA is defined as net loss before interest expense, interest income, income tax expense, depreciation and amortization expenses. EBITDA is a non-GAAP financial measure. EBITDA is included in this filing because we believe that EBITDA provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Adjusted EBITDA is also a non-GAAP financial measure. We believe Adjusted EBITDA, which is defined as EBITDA and further excluding stock-based compensation expense and change in fair value of warrant liabilities provides meaningful supplemental information for investors when evaluating our results and comparing us to peer companies as stock-based compensation expense and change in fair value of warrant liabilities are significant non-cash charges. We use these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance and, therefore, any non-GAAP measures we use may not be directly comparable to similarly titled measures of other companies. Investors should not consider our non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP.

Current wording

EBITDA is defined as net loss before interest expense, interest income, income tax expense, depreciation and amortization expenses. EBITDA is a non-GAAP financial measure. EBITDA is included in this filing because we believe that EBITDA provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Adjusted EBITDA is also a non-GAAP financial measure. We believe Adjusted EBITDA, which is defined as EBITDA and further excluding stock-based compensation expense, change in fair value of warrant liabilities and impairment of intangible assets, provides meaningful supplemental information for investors when evaluating our results and comparing us to peer companies as stock-based compensation expense and change in fair value of warrant liabilities are significant non-cash charges and impairment of intangible assets is a non-cash charge that is not indicative of our core operating results. We use these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance and, therefore, any non-GAAP measures we use may not be directly comparable to similarly titled measures of other companies. Investors should not consider our non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP.

Previous wording

For the three months ended March 31, 2024 and 2023, we had net losses of $2.2 million and $4.3 million, respectively, and as of March 31, 2024, we had an accumulated deficit of $114.0 million. The change in fair value of warrant liabilities decreased net loss by $0.5 million in the three months ended March 31, 2024, and it is difficult to predict how the fair value of warrant liabilities will impact our future results. We expect to continue to incur losses and operating cash outflows for the near-term future as we continue to build our commercial and clinical infrastructure and pursue further regulatory clearances of our ALLY System.

Current wording

For the six months ended June 30, 2024 and 2023, we had net losses of $11.2 million and $13.0 million, respectively, and as of June 30, 2024, we had an accumulated deficit of $123.1 million. The change in fair value of warrant liabilities decreased net loss by $3.4 million in the six months ended June 30, 2024, and it is difficult to predict how the fair value of warrant liabilities will impact our future results. We expect to continue to incur losses and operating cash outflows for the near-term future as we continue to build our commercial and clinical infrastructure and pursue further regulatory clearances of our ALLY System.

Previous wording

In 2022, we transitioned from manufacturing and selling our LENSAR Laser System to focus on our ALLY System. The ALLY System has received regulatory approval in the United States, India and the Philippines. In September 2022, we submitted the ALLY System for certification in the EU, and in 2023, submitted documentation to distributors in South Korea, Taiwan, and China for additional marketing or certification applications. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives regulatory clearance in other regions outside the United States and the timing of these clearance or certifications, among other factors. In addition, our future revenue and cash flows will depend on, among other factors, our installed base of systems and the timing of and applicable clearances for our ALLY System.

Current wording

In 2022, we transitioned from manufacturing and selling our LLS to focus on our ALLY System. The ALLY System has received regulatory approval in the United States, EU, India, Taiwan, as well as certain other countries. In addition, we have submitted the ALLY System for certification through distributors in South Korea and China for additional marketing or certification applications. Our growth, market presence and ability to sell the ALLY System will depend on whether the ALLY System receives regulatory clearance in other regions outside the United States and the timing of these clearance or certifications, among other factors. In addition, our future revenue and cash flows will depend on, among other factors, our installed base of Systems and the timing of and applicable clearances for our ALLY System.

Previous wording

We expect our revenue and expenses to increase in connection with our on-going activities, particularly as we continue to execute on our growth strategy, including expansion of our sales and customer support teams, as well as increasing our fleet of equipment under lease. The primary factors determining our cash needs are the funding of operations, which we expect to continue to expand as the business grows, and enhancing our product offerings through the commercialization of the ALLY System, our next generation cataract treatment system. Our future liquidity needs, and ability to address those needs, will largely be determined by the success of our commercial efforts and those of our distributors; the ongoing impact of global macroeconomic conditions and supply chain issues on our business; and the timing, scope and magnitude of our commercial and development activities.

Current wording

We expect our revenue and expenses to increase in connection with our on-going activities, particularly as we continue to execute on our growth strategy, including expansion of our sales and customer support teams, as well as increasing our fleet of equipment under lease. The primary factors determining our cash needs are the funding of operations, which we expect to continue to expand as the business grows, and enhancing our product offerings through the commercialization of the ALLY System. Our future liquidity needs, and ability to address those needs, will largely be determined by the success of our commercial efforts and those of our distributors; the ongoing impact of global macroeconomic conditions and supply chain issues on our business; and the timing, scope and magnitude of our commercial and development activities.

Previous wording

Our material contractual obligations and commercial commitments at March 31, 2024 primarily consist of $2.2 million in operating lease liabilities for our facility lease and $4.8 million in remaining minimum purchase obligations for inventory components for the manufacture and supply of certain components within the next nine months. Our contractual obligations have increased due to supply chain issues that have necessitated us to enter into longer-term and more expensive per unit contracts to build and source inventory to satisfy the expected commercial demand for the ALLY System, if approved by regulatory authorities or certified by notified bodies in the applicable regions. We expect to meet these requirements through cash and cash equivalents and cash provided by operations. Some of these amounts are based on management’s estimates and assumptions about these obligations, including their duration, timing, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the obligations we will actually pay in future periods may vary from those described. Furthermore, the Company acquired certain intellectual property, which would result in additional royalty payments at a rate of 3% of certain revenue upon the phacoemulsification features being cleared for commercialization and operational in the ALLY System.

Current wording

Our material contractual obligations and commercial commitments at June 30, 2024 primarily consist of $2.0 million in operating lease liabilities for our facility lease and $2.2 million in remaining minimum purchase obligations for inventory components for the manufacture and supply of certain components within the next nine months. Our contractual obligations have increased due to supply chain issues that have necessitated us to enter into longer-term and more expensive per unit contracts to build and source inventory to satisfy the expected commercial demand for the ALLY System, if approved by regulatory authorities or certified by notified bodies in the applicable regions. We expect to meet these requirements through cash and cash equivalents and cash provided by operations. Some of these amounts are based on management’s estimates and assumptions about these obligations, including their duration, timing, anticipated actions by third parties and other factors. Because these estimates and assumptions are necessarily subjective, the obligations we will actually pay in future periods may vary from those described.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $5.3 million, consisting primarily of a net loss of $2.2 million and a decrease in net operating assets of $4.5 million, partially offset by non-cash charges of $1.3 million. The decrease in net operating assets was primarily due to changes in inventories and accrued liabilities, offset by changes in accounts receivable. Non-cash charges primarily consisted of depreciation, amortization, stock-based compensation, and change in fair value of warrant liabilities.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was $9.1 million, consisting primarily of a net loss of $11.2 million and a decrease in net operating assets of $8.5 million, partially offset by non-cash charges of $10.6 million. The decrease in net operating assets was primarily due to changes in accounts receivable, inventories, and accrued liabilities. Non-cash charges primarily consisted of impairment of intangible assets, depreciation, amortization, stock-based compensation, and change in fair value of warrant liabilities.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2023 was $6.7 million, consisting primarily of a net loss of $4.3 million and a decrease in net operating assets of $5.1 million, partially offset by non-cash charges of $2.7 million. The decrease in net operating assets was primarily due to changes in inventories offset by changes in accounts receivable and accrued liabilities. Non-cash charges primarily consisted of depreciation, amortization, and stock-based compensation.

Current wording

Net cash used in operating activities for the six months ended June 30, 2023 was $8.8 million, consisting primarily of a net loss of $13.0 million and an increase in net operating assets of $7.3 million and non-cash charges of $11.5 million. The increase in net operating assets was primarily due to changes in notes receivables and inventories offset by changes in accounts receivable. Non-cash charges primarily consisted of depreciation, amortization, stock-based compensation, and change in fair value of warrant liabilities.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 was $1.2 million, consisting primarily of the purchase of investments, offset by investment maturities. Investing activities for the three months March 31, 2023 were immaterial.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 was $3.2 million, consisting primarily of the purchase of investments, offset by investment maturities. Investing activities for the six months ended June 30, 2023 were immaterial.

Previous wording

The 2020 Incentive Award Plan provides for the grant of stock options, restricted stock, restricted stock unit awards and other stock-based awards to recipients. During 2022, 2023 and the three months ended March 31, 2024, we granted stock options and restricted stock units to directors, employees and non-employees. We intend to grant stock options and restricted stock units as part of our overall compensation package to directors, employees, and non-employees.

Current wording

The 2020 Incentive Award Plan and 2024 Employment Inducement Incentive Award Plan provide for the grant of stock options, restricted stock, restricted stock unit awards, performance stock unit awards and other stock-based awards to recipients. During 2022, 2023 and the six months ended June 30, 2024, we granted stock options, restricted stock units and performance stock units to directors, employees and non-employees. We intend to grant stock options. restricted stock units and performance stock units as part of our overall compensation package to directors, employees, and non-employees.

Previous wording

At March 31, 2024, there was approximately $0.7 million and $2.0 million of total unrecognized compensation expense related to restricted stock units and stock options, respectively, which is expected to be recognized over a weighted-average period of 0.9 years and 2.0 years, respectively. Total unrecognized stock-based compensation expense is expected to be amortized as follows:

Current wording

At June 30, 2024, there was approximately $2.2 million and $1.6 million of total unrecognized compensation expense related to restricted stock units and performance stock units and stock options, respectively, which is expected to be recognized over a weighted-average period of 2.2 years and 1.9 years, respectively. Total unrecognized stock-based compensation expense is expected to be amortized as follows:

Previous wording

The amounts included in this table are based on restricted stock awards, restricted stock units, and stock options outstanding at March 31, 2024 and assumes the requisite service period is fulfilled for all awards outstanding. Actual stock-based compensation expense in future periods may vary from those reflected in the table.

Current wording

The amounts included in this table are based on restricted stock awards, restricted stock units, performance stock units and stock options outstanding at June 30, 2024 and assumes the requisite service period is fulfilled for all awards outstanding. Actual stock-based compensation expense in future periods may vary from those reflected in the table.