ESTABLISHMENT LABS HOLDINGS INC

Previous wording

The main manufacturing activities are conducted attwo manufacturing facilities in Costa Rica. The Company completed construction of its third facility in Costa Rica. In 2010, the Company began operating under the Costa Rica free zone regime (Régimen de Zona Franca), which provides for reduced income tax and other tax obligations pursuant to an agreement with the Costa Rican authorities.

Current wording

The main manufacturing activities are conducted at manufacturing facilities in Costa Rica. In 2024, the Company completed construction of its newest facility. In 2010, the Company began operating under the Costa Rica free zone regime (Régimen de Zona Franca), which provides for reduced income tax and other tax obligations pursuant to an agreement with the Costa Rican authorities.

Previous wording

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2024 as compared to the significant accounting policies described in Note 2 of the “Notes to Consolidated Financial Statements” in the Company’s audited consolidated financial statements as of December 31, 2023 and 2022 and for the years ended 2023, 2022 and 2021 presented in the Company’s Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 4, 2024. Below are those policies with current period updates.

Current wording

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2024 as compared to the significant accounting policies described in Note 2 of the “Notes to Consolidated Financial Statements” in the Company’s audited consolidated financial statements as of December 31, 2023 and 2022 and for the years ended 2023, 2022 and 2021 presented in the Company’s Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 4, 2024. Below are those policies with current period updates.

Previous wording

The accompanying interim condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023, and the related interim information contained within the notes to the condensed consolidated financial statements, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP and on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to state fairly the Company’s financial position as of June 30, 2024, and the results of its operations and cash flows for the six months ended June 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year 2024, or for any future period.

Current wording

The accompanying interim condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023, and the related interim information contained within the notes to the condensed consolidated financial statements, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP and on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to state fairly the Company’s financial position as of September 30, 2024, and the results of its operations and cash flows for the nine months ended September 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year 2024, or for any future period.

Previous wording

The Company derives substantially all its revenues from sales to customers in Europe, the Middle East, Latin

Current wording

The Company derives substantially all its revenues from sales to customers in Europe, the Middle East, Latin America, and Asia. The Company received approval to sell its Motiva Implants in the United States in September 2024 and Motiva Flora Tissue Expanded in October 2023. The revenue derived in the United States prior to the FDA approvals consisted of microtransponder sales.

Previous wording

For the six months ended June 30, 2024 and 2023, Brazil accounted for 8.2% and 13.5%, respectively, of consolidated revenue and no other individual country exceeded 10% of consolidated revenue, on a ship-to destination basis.

Current wording

For the nine months ended September 30, 2024 and 2023, no single country accounted for more than 10% of consolidated revenue, on a ship-to destination basis. For the nine months ended September 30, 2023, Brazil accounted for 14.0% of consolidated revenue and no other individual country exceeded 10% of consolidated revenue, on a ship-to destination basis.

Previous wording

The majority of the Company’s consolidated total assets, including cash and tangible assets, is held in the United States. The Company’s long-lived assets, which primarily consist of property and equipment and intangible assets located in Costa Rica, represented 83% and 80%of the total long-lived assets as of June 30, 2024 and December 31, 2023, respectively.

Current wording

The majority of the Company’s consolidated total assets, including cash and tangible assets, is held in the United States. The Company’s long-lived assets, which primarily consist of property and equipment and intangible assets located in Costa Rica, represented 82% and 80%of the total long-lived assets as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

Substantially all of the Company’s revenues were derived from the sale of Motiva Implants. During the six months ended June 30, 2024 and 2023, no customer accounted for more than 10% of the Company’s revenue. One customer accounted for approximately 10.6% of the Company’s trade accounts receivable balance as of June 30, 2024. Two customers accounted for approximately 12.7% and 11.6% of the Company’s trade accounts receivable balance as of December 31, 2023.

Current wording

Substantially all of the Company’s revenues were derived from the sale of Motiva Implants. During the nine months ended September 30, 2024 and 2023, no customer accounted for more than 10% of the Company’s revenue. One customer accounted for approximately 17.1% of the Company’s trade accounts receivable balance as of September 30, 2024. Two customers accounted for approximately 12.7% and 11.6% of the Company’s trade accounts receivable balance as of December 31, 2023.

Previous wording

The Company relies on Avantor, Inc. (formerly NuSil Technology, LLC), or Avantor, as the sole supplier of medical-grade silicone used in Motiva Implants. During the six months ended June 30, 2024 and 2023, the Company had purchases of $4.9 million, or 26.4% of total purchases, and $26.8 million, or 56.2% of total purchases, respectively, from Avantor. As of June 30, 2024 and December 31, 2023, the Company had an outstanding balance owed to this vendor of $0.9 million and $5.3 million, respectively.

Current wording

The Company relies on Avantor, Inc. (formerly NuSil Technology, LLC), or Avantor, as the sole supplier of medical-grade silicone used in Motiva Implants. During the nine months ended September 30, 2024 and 2023, the Company had purchases of $8.2 million, or 29.9% of total purchases, and $45.2 million, or 69.5% of total purchases, respectively, from Avantor. As of September 30, 2024 and December 31, 2023, the Company had an outstanding balance owed to this vendor of $7.4 million and $5.3 million, respectively.

Previous wording

The Company’s cash consists of cash maintained in checking and interest-bearing accounts. The majority of the Company’s cash is held attwo financial institutions in the United States, with balances in excess of FDIC insurance limits. The Company accounts for financial instruments with original maturities of three months or less at the date of purchase as cash equivalents. The Company held $1.5 million and $2.8 million in cash equivalents as of June 30, 2024 and December 31, 2023, respectively.

Current wording

The Company’s cash consists of cash maintained in checking and interest-bearing accounts. The majority of the Company’s cash is held attwo financial institutions in the United States, with balances in excess of FDIC insurance limits. The Company accounts for financial instruments with original maturities of three months or less at the date of purchase as cash equivalents. The Company held $1.8 million and $2.8 million in cash equivalents as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

Inventory is stated at the lower of cost to purchase or manufacture the inventory or the net realizable value of such inventory. Cost is determined using the standard cost method which approximates actual costs using the first-in, first-out basis. The Company regularly reviews inventory quantities, actual losses, projected future demand, and remaining shelf life to record a provision for obsolete and/or damaged inventory. Provision for inventory obsolescence of $3.5 million and $3.9 million has been recorded as of June 30, 2024 and December 31, 2023, respectively.

Current wording

Inventory is stated at the lower of cost to purchase or manufacture the inventory or the net realizable value of such inventory. Cost is determined using the standard cost method which approximates actual costs using the first-in, first-out basis. The Company regularly reviews inventory quantities, actual losses, projected future demand, and remaining shelf life to record a provision for obsolete and/or damaged inventory. Provision for inventory obsolescence of $3.7 million and $3.9 million has been recorded as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

Shipping and handling costs are expensed as incurred and are included in selling, general and administrative, or SG&A, expenses. For the three months ended June 30, 2024 and 2023, shipping and handling costs were $1.4 million and $3.6 million, respectively. For thesix months ended June 30, 2024 and 2023, shipping and handling costs were $3.1 million and $6.4 million, respectively.

Current wording

Shipping and handling costs are expensed as incurred and are included in selling, general and administrative, or SG&A, expenses. For the three months ended September 30, 2024 and 2023, shipping and handling costs were $1.8 million and $2.8 million, respectively. For thenine months ended September 30, 2024 and 2023, shipping and handling costs were $4.9 million and $9.2 million, respectively.

Previous wording

The Company recognizes revenue when title to the product and risk of loss transfer to customers, provided there are no remaining performance obligations required of the Company or any written matters requiring customer acceptance. The Company allows for the return of products from direct customers in certain regions in limited instances within fifteen days after the original sale and records estimated sales returns as a reduction of sales in the same period revenue is recognized. Appropriate reserves are established for anticipated sales returns based on historical experience, recent gross sales and any notification of pending returns. Actual sales returns in any future period are inherently uncertain and thus may differ from the estimates. If actual sales returns differ significantly from the estimates, an adjustment to revenue in the current or subsequent period is recorded. An allowance of $1.6 million and $0.3 million was recorded for product returns as of June 30, 2024 and December 31, 2023, respectively. Taxes collected from customers for remittance to governmental authorities are excluded from net sales.

Current wording

The Company recognizes revenue when title to the product and risk of loss transfer to customers, provided there are no remaining performance obligations required of the Company or any written matters requiring customer acceptance. The Company allows for the return of products from direct customers in certain regions in limited instances within fifteen days after the original sale and records estimated sales returns as a reduction of sales in the same period revenue is recognized. Appropriate reserves are established for anticipated sales returns based on historical experience, recent gross sales and any notification of pending returns. Actual sales returns in any future period are inherently uncertain and thus may differ from the estimates. If actual sales returns differ significantly from the estimates, an adjustment to revenue in the current or subsequent period is recorded. An allowance of $0.1 million and $0.3 million was recorded for product returns as of September 30, 2024 and December 31, 2023, respectively. Taxes collected from customers for remittance to governmental authorities are excluded from net sales.

Previous wording

There were no material uncertain tax positions in fiscal year 2023 or for the six months ended June 30, 2024.

Current wording

There were no material uncertain tax positions in fiscal year 2023 or for the nine months ended September 30, 2024.

Previous wording

The financial statements of the Company’s foreign subsidiaries whose functional currencies are the local currencies are translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, stockholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the period. Translation adjustments resulting from the translation of the subsidiaries’ accounts are included in “Accumulated other comprehensive income” as equity in the condensed consolidated balance sheet. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. At period end, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Gains and losses resulting from foreign currency transactions are included within “Other income (expense), net” in the condensed consolidated statements of operations. For the three months ended June 30, 2024, foreign currency transaction loss amounted to $2.8 million as compared to a foreign currency transaction gain of $1.5 million for the three months ended June 30, 2023. For the six months ended June 30, 2024, foreign currency transaction loss amounted to $5.8 million as compared to a foreign currency transaction gain of $2.4 million for the six months ended June 30, 2023.

Current wording

The financial statements of the Company’s foreign subsidiaries whose functional currencies are the local currencies are translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, stockholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the period. Translation adjustments resulting from the translation of the subsidiaries’ accounts are included in “Accumulated other comprehensive income” as equity in the condensed consolidated balance sheet. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. At period end, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Gains and losses resulting from foreign currency transactions are included within “Other income (expense), net” in the condensed consolidated statements of operations. For the three months ended September 30, 2024, foreign currency transaction gain amounted to $2.2 million as compared to a foreign currency transaction loss of $3.8 million for the three months ended September 30, 2023. For the nine months ended September 30, 2024, foreign currency transaction loss amounted to $3.6 million as compared to a foreign currency transaction loss of $1.4 million for the nine months ended September 30, 2023.

Previous wording

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. These reclassifications had no material impact on the Company’s financial position as of June 30, 2024 or results of operations for the three and six months ended June 30, 2024.

Current wording

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. These reclassifications had no material impact on the Company’s financial position as of September 30, 2024 or results of operations for the three and nine months ended September 30, 2024.

Previous wording

As of June 30, 2024 and December 31, 2023, $10.4 million and $7.1 million of inventory was on consignment, respectively.

Current wording

As of September 30, 2024 and December 31, 2023, $9.6 million and $7.1 million of inventory was on consignment, respectively.

Previous wording

For each of the three months ended June 30, 2024 and 2023, depreciation and amortization expense related to property and equipment was $0.9 million and $0.6 million, respectively. For thesix months ended June 30, 2024 and 2023, depreciation and amortization expense related to property and equipment was $1.8 million and $1.2 million, respectively.

Current wording

For each of the three months ended September 30, 2024 and 2023, depreciation and amortization expense related to property and equipment was $1.3 million and $0.7 million, respectively. For thenine months ended September 30, 2024 and 2023, depreciation and amortization expense related to property and equipment was $3.2 million and $2.0 million, respectively.

Previous wording

In August 2021, the Company entered into a contract with the Zona Franca Coyol, S.A., or ZFC, to begin construction of a new manufacturing facility in the Coyol Free Zone in Costa Rica. The costs for improvement of the land and construction of a cold shell building were being paid for by ZFC while the Company paid for internal improvements and customization. In 2022, the Company exercised its option to purchase the title to the land and cold shell building for approximately $12.6 million. The construction for this third facility was completed in June 2024. The Company also has the option to buy an adjacent lot of land for approximately $2.8 million and engage ZFC to construct an additional manufacturing facility.

Current wording

In August 2021, the Company entered into a contract with the Zona Franca Coyol, S.A., or ZFC, to begin construction of a new manufacturing facility in the Coyol Free Zone, or the CFZ, in Costa Rica. The costs for improvement of the land and construction of a cold shell building were being paid for by ZFC while the Company paid for internal improvements and customization. In 2022, the Company exercised its option to purchase the title to the land and cold shell building for approximately $12.6 million. The construction for this third facility was completed in June 2024. The Company also has the option to buy an adjacent lot of land for approximately $2.8 million and engage ZFC to construct an additional manufacturing facility.

Previous wording

There wereno changes in the carrying amount of goodwill during the six months ended June 30, 2024:

Current wording

There wereno changes in the carrying amount of goodwill during the nine months ended September 30, 2024:

Previous wording

For each of the three months ended June 30, 2024 and 2023, amortization expense related to intangible assets was $0.5 million and $0.3 million, respectively. The amortization expense associated with intangible assets was $0.8 million and $0.6 million for each of thesix months ended June 30, 2024 and 2023, respectively. Non-product related amortization is recorded in SG&A while product related amortization is recorded in cost of revenue.

Current wording

For each of the three months ended September 30, 2024 and 2023, amortization expense related to intangible assets was $0.6 million and $0.3 million, respectively. The amortization expense associated with intangible assets was $1.4 million and $0.9 million for each of thenine months ended September 30, 2024 and 2023, respectively.

Previous wording

•The third tranche, or the Tranche C Term Loan, of $25 million will be advanced at the Company’s election prior to December 31, 2024, subject to the Administrative Agent having received evidence that FDA approval of Motiva Implants for augmentation use in the United States has been issued (or the Tranche A Milestone) and subject to the other terms and conditions of the Credit Agreement and the Amendment.

Current wording

•The third tranche, or the Tranche C Term Loan, of $25 million was advanced in October 2024 at the Company’s election following the Administrative Agent’s receipt of evidence that the FDA’s approval of Motiva Implants for augmentation use in the United States had been issued, subject to the other terms and conditions of the Credit Agreement and the Amendment.

Previous wording

•The fourth tranche, or the Tranche D Term Loan, of $25 million will be advanced at the Company’s election prior to June 30, 2025, subject to the Administrative Agent having received both (a) evidence that a specified gross sales threshold has been met, and (b) the Tranche C Term Loan having been funded, and subject to the other terms and conditions of the Credit Agreement. The Amendment reduced the applicable gross sales threshold from trailing twelve-month gross sales of $225 million to $195 million.

Current wording

Administrative Agent having received both (a) evidence that a specified gross sales threshold has been met, and (b) the Tranche C Term Loan having been funded, and subject to the other terms and conditions of the Credit Agreement. The Second Amendment reduced the applicable gross sales threshold from trailing twelve-month gross sales of $225 million to $195 million. As described in Note 14 “Subsequent Events”, the funding terms for the Tranche D Term Loan were amended pursuant to a Third Amendment to Credit Agreement entered into on November 7, 2024.

Previous wording

The Credit Agreement contains customary affirmative and restrictive covenants and representations and warranties. The Company and its subsidiaries are bound by certain affirmative covenants setting forth actions that are required during the term of the Credit Agreement, including, without limitation, certain information delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, the Company and its subsidiaries are bound by certain restrictive covenants setting forth actions that are not permitted to be taken during the term of the Credit Agreement without prior written consent, including, without limitation, incurring certain additional indebtedness, consummating certain mergers, acquisitions or other business combination transactions, or incurring any non- permitted lien or other encumbrance on the assets of the Company or any of its subsidiaries. The Credit Agreement also contains other customary provisions, such as confidentiality obligations and indemnification rights for the benefit of Lenders. The Credit Agreement contains financial covenants requiring (a) the Company to maintain minimum liquidity of at least $20 million from and after the Closing Date or $25 million from and after the funding of the Tranche B Term Loans, and (b) for each fiscal quarter until gross sales of the Company and its subsidiaries for any 12-consecutive month period are no less than $200 million, minimum gross sales of the Company and its subsidiaries for each consecutive 12-month period ending on the last day of each fiscal quarter in excess of 50% of specified target gross sales for such period. The Credit Agreement provides for a customary equity cure right in the event the Company fails to comply with the minimum gross sales covenant.

Current wording

Company or any of its subsidiaries. The Credit Agreement also contains other customary provisions, such as confidentiality obligations and indemnification rights for the benefit of Lenders. The Credit Agreement contains financial covenants requiring (a) the Company to maintain minimum liquidity of at least $20 million from and after the Closing Date or $25 million from and after the funding of the Tranche B Term Loans, and (b) for each fiscal quarter until gross sales of the Company and its subsidiaries for any 12-consecutive month period are no less than $200 million, minimum gross sales of the Company and its subsidiaries for each consecutive 12-month period ending on the last day of each fiscal quarter in excess of 50% of specified target gross sales for such period. The Credit Agreement provides for a customary equity cure right in the event the Company fails to comply with the minimum gross sales covenant.

Previous wording

The effective interest rate under the Credit Agreement is 10.4%, and the weighted average interest rate is 9.0%. The Company elected to pay interest in kind on up to two-thirds of cash interest payments prior to the second anniversary of the Closing Date, resulting in a minimum initial cash interest rate of 3.00%. In connection with the Credit Agreement, the Company incurred $5.2 million and $4.2 million in interest expense during the three months ended June 30, 2024 and 2023, respectively, and $10.1 million and $8.3 million in interest expense during the six months ended June 30, 2024 and 2023, respectively. No principal payments are due on the Term Loans until the final maturity date on April 26, 2027.

Current wording

As of September 30, 2024, the effective interest rate under the Credit Agreement is 10.4%, and the weighted average interest rate is 9.0%. The Company elected to pay interest in kind on up to two-thirds of cash interest payments prior to the second anniversary of the Closing Date, resulting in a minimum initial cash interest rate of 3.00%. In connection with the Credit Agreement, the Company incurred $5.2 million and $4.3 million in interest expense during the three months ended September 30, 2024 and 2023, respectively, and $15.2 million and $12.6 million in interest expense during the nine months ended September 30, 2024 and 2023, respectively. No principal payments are due on the Term Loans until the final maturity date on April 26, 2027.

Previous wording

The Company has operating leases for facilities and office spaces. Operating lease assets and the related lease liabilities are included within the ROU operating lease assets on the condensed consolidated balance sheets. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. The Company has operating leases for certain facilities, and office spaces to be used in its operations, with remaining lease terms ranging from monthly to 6 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for additional years. These optional periods have not been considered in the determination of the ROU or lease liabilities associated with these leases as management did not consider it reasonably certain it would exercise the options.

Current wording

The Company has operating leases for facilities and office spaces. Operating lease assets and the related lease liabilities are included within the ROU operating lease assets on the condensed consolidated balance sheets. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. The Company has operating leases for certain facilities, and office spaces to be used in its operations, with remaining lease terms ranging from monthly to 7 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for additional years. These optional periods have not been considered in the determination of the ROU or lease liabilities associated with these leases as management did not consider it reasonably certain it would exercise the options.

Previous wording

During the six months ended June 30, 2024, the Company earned income from subleasing a warehouse facility for the remaining life of an existing master lease. The sublease agreement did not release the Company from its obligations under the master lease, and no modifications were made to the lease agreement. Income from the sublease is recognized on a straight-line basis over the term of the agreement.

Current wording

During the nine months ended September 30, 2024, the Company earned income from subleasing a warehouse facility for the remaining life of an existing master lease. The sublease agreement did not release the Company from its obligations under the master lease, and no modifications were made to the lease agreement. Income from the sublease is recognized on a straight-line basis over the term of the agreement.

Previous wording

As of June 30, 2024 and December 31, 2023,28,349,936 and 26,495,250 common shares, respectively, were issued and 27,941,866 and 26,087,180 common shares, respectively, were outstanding.

Current wording

As of September 30, 2024 and December 31, 2023,28,372,099 and 26,495,250 common shares, respectively, were issued and 27,964,029 and 26,087,180 common shares, respectively, were outstanding.

Previous wording

During the six months ended June 30, 2024, the Company granted stock options and RSUs to employees and contractors (see Note 9).

Current wording

During the nine months ended September 30, 2024, the Company granted stock options and RSUs to employees and contractors (see Note 9).

Previous wording

During the three and six months ended June 30, 2024, warrants to purchase 376,978 and 600,000 shares were net exercised to obtain 376,972 and 599,991 shares, respectively. As of June 30, 2024, warrants to purchase 298,435 common shares were outstanding and exercisable, as set forth in the table below. As of December 31, 2023, no warrants were outstanding and exercisable.

Current wording

During the nine months ended September 30, 2024, warrants to purchase 600,000 shares were net exercised to obtain 599,991 shares. During the three months ended September 30, 2024, zero warrants were exercised. As of September 30, 2024, warrants to purchase 298,435 common shares were outstanding and exercisable, as set forth in the table below. As of December 31, 2023, no warrants were outstanding and exercisable.

Previous wording

As of June 30, 2024,954,685 options were vested and exercisable with a weighted-average exercise price of $42.59 per share and a total aggregate intrinsic value of $13.4 million.

Current wording

As of September 30, 2024,964,349 options were vested and exercisable with a weighted-average exercise price of $42.79 per share and a total aggregate intrinsic value of $12.1 million.

Previous wording

During the six months ended June 30, 2024,110,178 options were exercised at a weighted-average price of $18.18 per share. The intrinsic value of the options exercised during the six months ended June 30, 2024 and 2023 was $3.5 million and $3.2 million, respectively. Upon the exercise of stock options, the Company issued new shares from its authorized shares.

Current wording

During the nine months ended September 30, 2024,112,701 options were exercised at a weighted-average price of $18.30 per share. The intrinsic value of the options exercised during the nine months ended September 30, 2024 and 2023 was $3.5 million and $3.9 million, respectively. Upon the exercise of stock options, the Company issued new shares from its authorized shares.

Previous wording

At June 30, 2024, unrecognized compensation expense was $12.3 million related to stock options granted to employees and members of the Board of Directors and $1.3 million related to stock options granted to consultants. The weighted-average period over which such compensation expense will be recognized is 2.3 years.

Current wording

At September 30, 2024, unrecognized compensation expense was $11.3 million related to stock options granted to employees and members of the Board of Directors and $1.1 million related to stock options granted to consultants. The weighted-average period over which such compensation expense will be recognized is 2.2 years.

Previous wording

Share-based compensation expense for employees is based on the grant date fair value. The Company recognizes compensation expense for all share-based awards ratably on a straight-line basis over the requisite service period of the awards, which is generally the vesting term offour years. During the six months ended June 30, 2024 and 2023, the Company recognized $3.7 million and $4.3 million, respectively, of share-based compensation expense for stock options granted to employees.

Current wording

Share-based compensation expense for employees is based on the grant date fair value. The Company recognizes compensation expense for all share-based awards ratably on a straight-line basis over the requisite service period of the awards, which is generally the vesting term offour years. During the nine months ended September 30, 2024 and 2023, the Company recognized $5.6 million and $6.7 million, respectively, of share-based compensation expense for stock options granted to employees.

Previous wording

Share-based compensation expense related to stock options granted to non-employees is recognized as the stock options are earned using an accelerated attribution method. The Company believes that the estimated fair value of the stock options is more readily measurable than the fair value of the services rendered. For the six months ended June 30, 2024 and 2023, the Company recognized expense of $0.3 million and $0.7 million, respectively, for stock options granted to consultants.

Current wording

Share-based compensation expense related to stock options granted to non-employees is recognized as the stock options are earned using an accelerated attribution method. The Company believes that the estimated fair value of the stock options is more readily measurable than the fair value of the services rendered. For the nine months ended September 30, 2024 and 2023, the Company recognized expense of $0.5 million and $0.7 million, respectively, for stock options granted to consultants.

Previous wording

The fair value of RSUs is the grant date market value of common shares. The Company recognizes share-based compensation expense related to RSUs using a straight-line method over the vesting term of the awards. The share-based compensation expense for RSUs that vested during the six months ended June 30, 2024 and 2023, was $3.2 million and $2.0 million, respectively, which was calculated based on the market value of the Company’s common shares on the applicable grant date.

Current wording

The fair value of RSUs is the grant date market value of common shares. The Company recognizes share-based compensation expense related to RSUs using a straight-line method over the vesting term of the awards. The share-based compensation expense for RSUs that vested during the nine months ended September 30, 2024 and 2023, was $4.8 million and $3.5 million, respectively, which was calculated based on the market value of the Company’s common shares on the applicable grant date.

Previous wording

As of June 30, 2024, the Company had unrecognized share-based compensation cost of approximately $13.6 million associated with unvested awards of RSUs. This cost is expected to be recognized over a weighted-average period of approximately 2.7 years.

Current wording

As of September 30, 2024, the Company had unrecognized share-based compensation cost of approximately $12.7 million associated with unvested awards of RSUs. This cost is expected to be recognized over a weighted-average period of approximately 2.5 years.

Previous wording

During the six months ended June 30, 2024 and 2023, the Company recorded revenue of $0.4 million and $0.8 million, respectively, for product sales to Herramientas Medicas, S.A., a distribution company owned by a family member of the Chief Executive Officer of the Company. Accounts receivable owed to the Company from this distribution company amounted to approximately $0.4 million and $0.6 million as of June 30, 2024 and December 31, 2023, respectively.

Current wording

During the nine months ended September 30, 2024 and 2023, the Company recorded revenue of $1.0 million and $1.0 million each for product sales to Herramientas Medicas, S.A., a distribution company owned by a family member of the Chief Executive Officer of the Company. Accounts receivable owed to the Company from this distribution company amounted to approximately $0.5 million and $0.6 million as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

MotivaImagine Excellence Center and to host and train physicians in the use of the Company’s products in relevant procedures, among other services, in exchange for cash reimbursement of up to $4,500 per day that such services are rendered. In August 2022, the Company entered into a new agreement with Dr. Chacón Quirós, replacing the original agreement, to continue the training services in exchange for cash reimbursement of his hourly rate of $531 when such services are rendered. In December 2020, Dr. Chacón Quirós was granted options to purchase 22,068 common shares vesting over four years in equal annual installments, provided that he continues to provide these services at such times. During the six months ended June 30, 2024 and 2023, the Company paid Dr. Chacón Quirós approximately $99,000 and $129,000, respectively, for services rendered.

Current wording

MotivaImagine Excellence Center and to host and train physicians in the use of the Company’s products in relevant procedures, among other services, in exchange for cash reimbursement of up to $4,500 per day that such services are rendered. In August 2022, the Company entered into a new agreement with Dr. Chacón Quirós, replacing the original agreement, to continue the training services in exchange for cash reimbursement of his hourly rate of $531 when such services are rendered. In December 2020, Dr. Chacón Quirós was granted options to purchase 22,068 common shares vesting over four years in equal annual installments, provided that he continues to provide these services at such times. During the nine months ended September 30, 2024 and 2023, the Company paid Dr. Chacón Quirós approximately $0.2 million and $0.4 million, respectively, for services rendered.

Previous wording

As of June 30, 2024, the Company has 42 employees in Brazil and 4 employees in Argentina who are represented by a labor union.

Current wording

As of September 30, 2024, the Company has 43 employees in Brazil and 3 employees in Argentina who are represented by a labor union.