The following discussion and analysis of our financial condition and results of
operations should be read together with our consolidated financial statements
and the related notes included in Part II, Item 8 of this Annual Report on Form
10-K.

This Annual Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Exchange Act of 1933, as amended, or
the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended ("the Exchange Act"). Forward-looking statements are identified by words
such as "believe," "will," "may," "estimate," "continue," "anticipate,"
"intend," "should," "plan," "expect," "predict," "could," "potentially" or the
negative of these terms or similar expressions. You should read these statements
carefully because they discuss future expectations, contain projections of
future results of operations or financial condition, or state other
"forward-looking" information. These statements relate to our future plans,
objectives, expectations, intentions and financial performance and the
assumptions that underlie these statements. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this report in Part I, Item 1A - "Risk Factors," and
elsewhere in this report. Forward-looking statements are based on our
management's beliefs and assumptions and on information currently available to
our management. These statements, like all statements in this report, speak only
as of their date, and we undertake no obligation to update or revise these
statements in light of future developments. We caution investors that our
business and financial performance are subject to substantial risks and
uncertainties.

Overview



We are a medical device company with a mission to treat and transform the lives
of patients suffering from venous and other diseases. Our current product
offerings consists of two minimally-invasive, novel catheter-based mechanical
thrombectomy systems, which are purpose-built for the specific characteristics
of the venous system and the treatment of the two distinct manifestations of
venous thromboembolism, or VTE - deep vein thrombosis, or DVT, and pulmonary
embolism, or PE. Our ClotTriever product is FDA-cleared for the treatment of
DVT. Our FlowTriever product is the first thrombectomy system FDA-cleared for
the treatment of pulmonary embolism, or PE, and is also FDA-cleared for clot in
transit in the right atrium.

We believe the best way to treat VTE and improve the quality of life of patients
suffering from this disease is to safely and effectively remove the blood clot.
With that in mind, we designed and purpose-built our ClotTriever and FlowTriever
systems. The ClotTriever is a mechanical thrombectomy system designed to core,
capture and remove large clots from large vessels and is used to treat DVT. The
FlowTriever is a large bore catheter-based aspiration and mechanical
thrombectomy system designed to remove large clots from large vessels to treat
PE. Both products are designed to eliminate the need for thrombolytic drugs.

We believe our mission-focused and highly-trained commercial organization
provides a significant competitive advantage. Our most important relationships
are between our sales representatives and our treating physicians, which include
interventional cardiologists, interventional radiologists and vascular surgeons.
We recruit sales representatives who have substantial and applicable medical
device and/or sales experience. Our front-line sales representatives typically
attend procedures, which puts us at the intersection of the patient, product and
physician. We have developed systems and processes to harness the information
gained from these relationships and we leverage this information to rapidly
iterate products, introduce and execute physician education and training
programs and scale our sales organization. We market and sell our products to
hospitals, which are reimbursed by various third-party payors.

On May 27, 2020, we completed our IPO, which resulted in the issuance and sale
of 9,432,949 shares of common stock, including 1,230,384 shares sold pursuant to
the exercise of the underwriters' over-allotment option, at the IPO price of
$19.00 per share. We received net proceeds of approximately $163.0 million from
the IPO, after deducting underwriters' discounts and commissions of $12.6
million and offering costs of $3.7 million.

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Prior to our IPO, our primary sources of capital were private placements of preferred stock, debt financing arrangements and revenue from sales of our products. Since inception, we had raised a total of approximately $54.2 million in net proceeds from private placements of preferred stock.

As of December 31, 2021, we had cash, cash equivalents and investments of $180.1 million, no long-term debt outstanding and an accumulated deficit of $17.6 million.



For the year ended December 31, 2021, we generated revenue of $277.0 million,
with a gross margin of 91.1% and net income of $9.8 million, compared to revenue
of $139.7 million, with a gross margin of 90.6% and net income of $13.8 million
for the year ended December 31, 2020.

COVID-19



Since December 2019, a novel strain of coronavirus, SARS-CoV-2, and the
resulting disease, COVID-19, has spread to most countries, including all 50
states in the United States. The global healthcare system continues to face an
unprecedented challenge as a result of the COVID-19 situation and its impact.
COVID-19 has had and may continue to have an adverse impact on aspects of our
business, including the demand for our products, operations, and ability to
research and develop and bring new products and services to market.

In response to the pandemic, in March 2020, many governmental authorities
suspended or canceled elective, specialty and other procedures and appointments,
and some states and countries issued "stay at home" orders limiting
non-essential activities, travel and business operations. These orders
significantly decreased the number of procedures performed using our products
during March and April 2020 and otherwise negatively impacted our operations. In
response to the impact of COVID-19, we implemented a variety of measures to help
manage through the impact and position us to resume operations quickly and
efficiently. The results of 2021 reflect some recovery from the declines we
experienced in 2020 as a result of COVID-19. However, with disease variants,
cases continuing to resurge in certain areas, and hospitals at capacity in some
instances due to non-COVID-19 treatments, or staff or other resource
constraints, to the extent individuals and hospital systems de-prioritize, delay
or cancel deferrable medical procedures, our business, cash flows, financial
condition and results of operations may continue to be negatively affected.

While we are encouraged by our results for the year ended December 31, 2021, we
are aware that the actual and perceived impact of COVID-19 is changing and
cannot be predicted. As a result, we cannot assure that our recent procedure
volumes are indicative of future results or that we will not experience
additional negative impacts associated with COVID-19, which could be
significant. We continue to focus our efforts on the health and safety of
patients, healthcare providers and employees, while executing our mission of
transforming the lives of patients. While we expect the COVID-19 pandemic may
continue to negatively impact performance in 2022, we believe the long-term
fundamentals remain strong and we will continue to effectively manage through
these challenges.

Procedure Volume

We regularly review various operating and financial metrics to evaluate our
business, measure our performance, identify trends affecting our business,
formulate our business plan and make strategic decisions. We believe the number
of procedures performed to treat DVT and PE using our products is an indicator
of our ability to drive adoption and generate revenue. We believe this is an
important metric for our business; however, we anticipate that additional
metrics may become important as our business grows. The following table lists
the number of procedures performed in each of the three-month periods as
indicated:


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                                                                       Three Months Ended
Procedures(1)                     Dec 31, 2021       Sept 30, 2021       June 30, 2021       March 31, 2021      Dec 31, 2020
DVT                                       3,600               3,400               3,000                2,800             2,400
PE                                        4,100               3,300               2,800                2,700             2,200
                                          7,700               6,700               5,800                5,500             4,600




(1)
We define a procedure as any instance in which a physician treats DVT or PE
using our products. We estimate the number of procedures performed based on
records created by our sales representatives. This metric has limitations as we
only have records for the procedures where our sales representatives have notice
that a procedure has been performed. Revenue is recognized based on hospital
purchase orders, not based on the procedure records created by our sales
representatives. Numbers are rounded to the nearest hundred.

Components of our Results of Operations

Revenue



We currently derive substantially all our revenue from the sale of our
ClotTriever and FlowTriever products directly to hospitals primarily located in
the United States. Our customers typically purchase an initial stocking order of
our products and then reorder replenishment products as procedures are
performed. No single customer accounted for 10% or more of our revenue during
the years ended December 31, 2021, 2020 and 2019. We expect our revenue to
increase in absolute dollars as we expand our sales organization and sales
territories, add customers, expand the base of physicians that are trained to
use our products, expand awareness of our products with new and existing
customers and as physicians perform more procedures using our products. Revenue
for ClotTriever and FlowTriever products as a percentage of total revenue is as
follows:

                    Years Ended December 31,
                 2021          2020         2019

ClotTriever          32 %          37 %        38 %
FlowTriever          68 %          63 %        62 %

Cost of Goods Sold and Gross Margin



We manufacture and/or assemble all our products at our facility in Irvine,
California. Cost of goods sold consists primarily of the cost of raw materials,
components, direct labor and manufacturing overhead. Overhead costs include the
cost of quality assurance, material procurement, inventory control, facilities,
equipment and operations supervision and management, including stock-based
compensation. Cost of goods sold also includes depreciation expense for
production equipment and certain direct costs such as shipping costs and royalty
expense. We expect cost of goods sold to continue to increase in absolute
dollars as our revenue grows, we introduce new products, and more of our
products are sold; however, we also expect to realize opportunities to increase
operating leverage in our expanded manufacturing operations.

We calculate gross margin as gross profit divided by revenue. Our gross margin
has been and will continue to be affected by a variety of factors, including
average selling prices, product sales mix, production and ordering volumes,
manufacturing costs, product yields, headcount and cost-reduction strategies.
Our gross margin could fluctuate from year to year as we introduce new products,
adopt new manufacturing processes and technologies, and as we expand
internationally.

Treatments using the FlowTriever may involve one or more Triever aspiration
catheters and one or more FlowTriever catheters. We charge customers the same
price for each FlowTriever procedure, regardless of the number of components
used. As a result, changes in the number of components used, the cost of these
components and the introduction of additional components can impact our gross
margin.

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Research and Development Expenses



Research and development, or R&D, expenses consist primarily of engineering,
product development, clinical studies to develop and support our products,
regulatory expenses, and other costs associated with products that are in
development. These expenses include employee compensation, including stock-based
compensation, supplies, consulting, prototyping, testing, materials, travel
expenses, depreciation and an allocation of facility overhead expenses.
Additionally, R&D expenses include costs associated with our clinical trials and
registries, including clinical study design, clinical study site initiation and
study costs, data management, and internal and external costs associated with
our regulatory compliance, including the costs of outside consultants and
contractors that assist in the process of submitting and maintaining regulatory
filings. We expense R&D costs as incurred. We expect R&D to increase as a
percentage of revenue in the near term and generally expect R&D expenses as a
percentage of revenue to vary over time depending on the level and timing of our
new product development efforts, as well as our clinical evidence development,
clinical trials and registries and other related activities.

Selling, General and Administrative Expenses



Selling, general and administrative, or SG&A, expenses consist primarily of
compensation for personnel, including stock-based compensation, related to
selling and marketing functions, physician education programs, commercial
operations and analytics, finance, information technology and human resource
functions. Other SG&A expenses include sales commissions, travel expenses,
promotional activities, marketing initiatives, market research and analysis,
conferences and trade shows, physician training, professional services fees
(including legal, audit and tax fees), insurance costs, general corporate
expenses and facilities-related expenses. We expect SG&A expenses to continue to
increase in absolute dollars as we expand our sales and marketing organization
and infrastructure to both drive and support the anticipated growth in revenue.

Interest Income

Interest income consists primarily of interest income earned on our cash, cash equivalents and investments.



Interest Expense

Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the amortization of debt discount and issuance costs associated with our indebtedness.

Change in Fair Value of Warrant Liabilities



Change in fair value of warrant liabilities consists of gains and losses
resulting from the remeasurement of the fair value of our preferred stock
warrant liabilities at each balance sheet date. Upon the closing of our IPO, our
outstanding preferred stock warrants automatically converted into warrants to
purchase shares of our common stock. At such time, the final fair value of the
warrant liabilities was reclassified to stockholders' equity (deficit) and we
will no longer record any related periodic fair value adjustments.

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Results of Operations

Comparison of the years ended December 31, 2021 and 2020

The following table sets forth our results of operations in dollars and as percentage of revenue for the periods presented (dollars in thousands):



                                              Years Ended December 31,
                                    2021           %           2020           %         Change $
Revenue                           $ 276,984       100.0 %    $ 139,670       100.0 %    $ 137,314
Cost of goods sold                   24,757         8.9 %       13,106         9.4 %       11,651
Gross profit                        252,227        91.1 %      126,564        90.6 %      125,663
Operating expenses:
Research and development             51,018        18.4 %       18,399        13.2 %       32,619
Selling, general and
administrative                      190,365        68.7 %       89,746        64.3 %      100,619
Total operating expenses            241,383        87.1 %      108,145        77.5 %      133,238
Income from operations               10,844         4.0 %       18,419        13.1 %       (7,575 )
Other income (expense)
Interest income                         154         0.1 %          484         0.3 %         (330 )
Interest expense                       (295 )      (0.1 %)      (1,135 )      (0.8 %)         840
Change in fair value of warrant
liabilities                               -         0.0 %       (3,317 )      (2.4 %)       3,317
Other expenses                          (18 )       0.0 %         (662 )      (0.5 %)         644
Total other expenses, net              (159 )       0.0 %       (4,630 )      (3.4 %)       4,471
Income before income taxes        $  10,685         4.0 %    $  13,789         9.7 %    $  (3,104 )




Revenue. Revenue increased $137.3 million, or 98.3%, to $277.0 million during
the year ended December 31, 2021, compared to $139.7 million during the year
ended December 31, 2020. The increase in revenue was due primarily to an
increase in the number of products sold as we expanded our sales territories,
opened new accounts and achieved deeper penetration of our products into
existing accounts, and introduced new products. Revenue for the year ended
December 31, 2020 was also negatively impacted by a rapid deceleration in the
number of products sold due to the COVID-19 pandemic.

Cost of Goods Sold and Gross Margin. Cost of goods sold increased $11.7 million,
or 88.9%, to $24.8 million during the year ended December 31, 2021, compared to
$13.1 million during the year ended December 31, 2020. This increase was due to
the increase in the number of products sold and additional manufacturing
overhead costs incurred as we invested significantly in our operational
infrastructure to support anticipated future growth. Gross margin for the year
ended December 31, 2021 increased to 91.1%, compared to 90.6% for the year ended
December 31, 2020, due primarily to improved operating leverage and a change in
product mix.

Research and Development Expenses. R&D expenses increased $32.6 million, or
177.3%, to $51.0 million during the year ended December 31, 2021, compared to
$18.4 million during the year ended December 31, 2020 to develop our new product
pipeline and build our clinical evidence base. The increase in R&D expenses was
primarily due to increases of $16.1 million of personnel-related expenses as a
result of a significant increase in headcount, $5.7 million of product related
material and supplies, $4.2 million in licensed technology fees, $2.9 million of
clinical study and registry expenses due to increased patient enrollment, and
$1.8 million in professional services fees.

Selling, General and Administrative Expenses. SG&A expenses increased $100.6
million, or 112.1%, to $190.4 million during the year ended December 31, 2021,
compared to $89.7 million during the year ended December 31, 2020. The increase
in SG&A costs was primarily due to an increase of $77.3 million in
personnel-related expenses as a result of increased headcount across our
organization, increased commissions due to higher revenue and increased
stock-based compensation expenses, including an $9.2 million in stock-based
compensation expense as a result of accelerated vesting of RSUs and stock
options, an increase of $5.7 million in professional fees, an increase of $5.6
million in travel and related expenses, an increase of $3.1 million in marketing
expenses, an increase of $2.5 million in depreciation and software license fees,
an increase of $2.2 million in insurance costs, and an increase of $1.7 million
in facility related costs, particularly related to our new facility.

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Interest Income. Interest income decreased by $0.3 million or 68.2% to $0.2
million for the year ended December 31, 2021, compared to $0.5 million for the
year ended December 31, 2020. The decrease in interest income was primarily due
to lower interest rates during the year ended December 31, 2021, compared to the
year ended December 31, 2020.

Interest Expense. Interest expense decreased by $0.8 million or 74.0% to $0.3
million for the year ended December 31, 2021, compared to $1.1 million for the
year ended December 31, 2020. This decrease was primarily due to lower average
borrowings under our credit facilities during the year ended December 31, 2021.

Change in Fair Value of Warrant Liabilities. We recorded no change in fair value
of warrant liabilities for the year ended December 31, 2021 as no warrants were
outstanding during the current year, compared to $3.3 million for the year ended
December 31, 2020.

Other expenses. Other expenses of $18,000 for the year ended December 31, 2021
consisted primarily of foreign currency losses. While other expenses for the
year ended December 31, 2020 consisted primarily of a $0.7 million loss on
extinguishment of debt related to the payoff of our debt facility with Signature
Bank.

Comparison of the years ended December 31, 2020 and 2019



For a comparison of our results of operations and cash flows for the years ended
December 31, 2020 and 2019, see "Part II, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" of our annual report
on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 9,
2021, which comparative information is incorporated by reference in this Report.

Liquidity and Capital Resources



To date, our primary sources of capital have been the net proceeds we received
through private placements of preferred stock, debt financing agreements, the
sale of common stock in our IPO, and revenue from the sale of our products. On
May 27, 2020, we completed our IPO, including the underwriters full exercise of
their over-allotment option, selling 9,432,949 shares of our common stock at
$19.00 per share. Upon completion of our IPO, we received net proceeds of
approximately $163.0 million, after deducting underwriting discounts and
commissions and offering expenses. In August 2020, we repaid in full the $30.0
million of principal owed under the credit facility with Signature Bank. As of
December 31, 2021, we had cash and cash equivalents of $92.8 million,
investments in debt securities of $87.3 million and an accumulated deficit of
$17.6 million. In September 2020, we entered into a new revolving Credit
Agreement with Bank of America which provides for loans up to a maximum of $30
million. As of December 31, 2021, we had no principal outstanding under the
Credit Agreement and the amount available to borrow was approximately $28.2
million.

Based on our current planned operations, we expect that our cash and cash equivalents, short-term investments and available borrowings will enable us to fund our operating expenses for at least 12 months from the date hereof.


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If our available cash balances and anticipated cash flow from operations are
insufficient to satisfy our liquidity requirements including because of lower
demand for our products as a result of the risks described in this Annual
Report, we may seek to sell additional common or preferred equity or convertible
debt securities, enter into an additional credit facility or another form of
third-party funding or seek other debt financing. The sale of equity and
convertible debt securities may result in dilution to our stockholders and, in
the case of preferred equity securities or convertible debt, those securities
could provide for rights, preferences or privileges senior to those of our
common stock. The terms of debt securities issued or borrowings pursuant to a
credit agreement could impose significant restrictions on our operations. If we
raise funds through collaborations and licensing arrangements, we might be
required to relinquish significant rights to our platform technologies or
products or grant licenses on terms that are not favorable to us. Additional
capital may not be available on reasonable terms, or at all.

Cash Flows



The following table summarizes our cash flows for each of periods indicated (in
thousands):

                                                         Years Ended December 31,
                                                           2021              2020
Net cash provided by (used in):
Operating activities                                   $      25,486       $   1,912
Investing activities                                         (51,022 )       (55,437 )
Financing activities                                           4,073         144,115

Effect of foreign exchange rate on


  cash and cash equivalents                                     (402 )

-

Net increase (decrease) in cash and cash equivalents $ (21,865 ) $ 90,590

Net Cash Provided by (Used in) Operating Activities



Net cash provided by operating activities for the year ended December 31, 2021
was $25.5 million, consisting primarily of net income of $9.8 million and
non-cash charges of $30.0 million, offset by an increase in net operating assets
of $14.3 million. The increase in net operating assets was primarily due to
increases in accounts receivable of $14.3 million and inventories of $10.5
million to support the growth of our operations, an increase in prepaid and
other assets of $3.4 million primarily from prepaid insurance, which were
partially offset by increases in accounts payable of $3.5 million and accrued
liabilities of $26.0 million due to timing of payments, increased headcount and
growth of our operations, lease prepayments for lessor's owned leasehold
improvements of $14.8 million and a decrease in operating lease liabilities of
$0.8 million. The non-cash charges primarily consisted of $25.4 million in
stock-based compensation expense, $3.0 million in depreciation, and $1.3 million
in amortization of the right-of-use assets.

Net cash provided by operating activities for the year ended December 31, 2020
was $1.9 million, consisting primarily of net income of $13.8 million and
non-cash charges of $9.3 million, offset by an increase in net operating assets
of $21.2 million. The increase in net operating assets was primarily due to
increases in accounts receivable of $16.7 million and inventories of $6.6
million to support the growth of our operations, an increase in prepaid and
other assets of $2.5 million primarily from prepaid insurance, which were
partially offset by increases in accounts payable of $0.5 million and accrued
liabilities of $4.1 million due to timing of payments and growth of our
operations. The non-cash charges primarily consisted of $3.3 million in change
in fair value of the preferred stock warrant liabilities, stock-based
compensation of $3.5 million, $1.4 million in depreciation, and $0.6 million in
loss on extinguishment of debt.

Net Cash Used in Investing Activities



Net cash used in investing activities for the year ended December 31, 2021 was
$51.0 million, consisting of $134.4 million of purchases of short-term
investments coupled with $13.6 million of purchases of property and equipment,
offset by $97.0 million in maturities of short-term investments.

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Net cash used in investing activities for the year ended December 31, 2020 was
$55.4 million, consisting of purchases of short-term securities of $50.0 million
and purchases of property and equipment of $5.4 million.

Net Cash Provided by Financing Activities



Net cash provided by financing activities for the year ended December 31, 2021
was $4.1 million, consisting of $5.6 million of proceeds from the issuance of
common stock under our employee stock purchase plan and $0.9 million of proceeds
from exercise of stock options, offset by $2.4 million of tax payments related
to vested RSUs.

Net cash provided by financing activities for the year ended December 31, 2020
was $144.1 million primarily consisting of net IPO proceeds of $164.4 million
and net proceeds of $10.0 million received from additional borrowings under the
credit facility with Signature Bank, partially offset by the $30.3 million
repayment of the amount outstanding under the credit facility.

Critical Accounting Policies and Estimates



Management's discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements, which have been
prepared in accordance with U.S. GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions for the
reported amounts of assets, liabilities, revenue, expenses and related
disclosures. Our estimates are based on our historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions and any such differences may be material.

While our significant accounting policies are more fully described in Note 2 to
our audited consolidated financial statements appearing elsewhere in this Annual
Report on Form 10-K, we believe the following discussion addresses our most
critical accounting policies, which are those that are most important to our
financial condition and results of operations and require our most difficult,
subjective and complex judgments.

Revenue Recognition



The Company recognizes revenue in accordance with ASC 606, Revenue from
Contracts with Customers. Under ASC 606, revenue is recognized when a customer
obtains control of promised goods or services, in an amount that reflects the
consideration which the Company expects to receive in exchange for those goods
or services. To determine revenue recognition for arrangements that are within
the scope of ASC 606, the Company performs the following five steps: (i)
identify the contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv)
allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) the entity satisfies a performance
obligation.

The Company sells its products primarily to hospitals in the United States
utilizing the Company's direct sales force. The Company recognizes revenue for
arrangements where the Company has satisfied its performance obligation of
shipping or delivering the product. For sales where the Company's sales
representative hand-deliver products directly to the hospitals, control of the
products transfers to the customers upon such hand delivery. For sales where
products are shipped, control of the products transfers either upon shipment or
delivery of the products to the customer, depending on the shipping terms and
conditions. Revenue from product sales is comprised of product revenue, net of
product returns, administrative fees and sales rebates.

The Company sells to a diversified base of customers and, therefore, believes there is no material concentration of credit risk.

Performance Obligation-The Company has revenue arrangements that consist of a single performance obligation, the shipping or delivery of the Company's products. The satisfaction of this performance obligation


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occurs with the transfer of control of the Company's product to its customers, either upon shipment or delivery of the product.



Revenue is measured as the amount of consideration the Company expects to
receive in exchange for transferring goods. The amount of revenue recognized is
based on the transaction price, which represents the invoiced amount, net of
administrative fees and sales rebates, where applicable. The Company provides a
standard 30-day unconditional right of return period. The Company establishes
estimated provisions for returns at the time of sale based on historical
experience. Historically, the actual product returns have been immaterial to the
Company's consolidated financial statements.

As of December 31, 2021 and 2020, the Company recorded $448,000 and $498,000, respectively, of unbilled receivables, which are included in accounts receivable, net, in the accompanying consolidated balance sheets.

Revenue for ClotTriever and FlowTriever products as a percentage of total revenue was derived as follows:



                    Years Ended December 31,
                 2021          2020         2019

ClotTriever          32 %          37 %        38 %
FlowTriever          68 %          63 %        62 %

The Company offers payment terms to its customers of less than three months and these terms do not include a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.



The Company offers its standard warranty to all customers. The Company does not
sell any warranties on a standalone basis. The Company's warranty provides that
its products are free of material defects and conform to specifications, and
includes an offer to repair, replace or refund the purchase price of defective
products. This assurance does not constitute a service and is not considered a
separate performance obligation. The Company estimates warranty liabilities at
the time of revenue recognition and records it as a charge to cost of goods
sold. The warranty liability as of December 31, 2021 and 2020 and warranty cost
recognized for the years ended December 31, 2021, 2020 and 2019 were not
significant.

Costs associated with product sales including commissions are recorded in SG&A
expenses. The Company applies the practical expedient and recognizes commissions
as expense when incurred because the amortization period is less than one year.

Cash, Cash Equivalents and Short-Term Investments



The Company considers cash on hand, cash in demand deposit accounts including
money market funds, and instruments with a maturity date of 90 days or less at
date of purchase to be cash and cash equivalents. The Company maintains cash,
cash equivalent and restricted cash balances with banks. At times, the cash and
cash equivalent balances may exceed federally insured limits. The Company does
not believe that this results in any significant credit risk as the Company's
policy is to place its cash and cash equivalents in highly-rated financial
institutions.

Investments have been classified as available-for-sale and are carried at
estimated fair value as determined based upon quoted market prices or pricing
models for similar securities. The Company determines the appropriate
classification of its investments in available-for-sales debt securities at the
time of purchase. Available-for-sale debt securities with maturities greater
than 12 months from the balance sheet date are classified as long-term
investments on the consolidated balance sheets.

Unrealized gains and losses are excluded from earnings and reported as a
component of comprehensive income (loss). The Company periodically evaluates
whether declines in fair values of its marketable securities below their book
value are other-than-temporary. This evaluation consists of several qualitative
and quantitative factors regarding the severity and duration of the unrealized
loss as well as the Company's ability and intent to hold the marketable security
until a forecasted recovery occurs. Additionally, the Company assesses whether
it has plans to

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sell the security or it is more likely than not it will be required to sell any
marketable securities before recovery of its amortized cost basis. Realized
gains and losses and declines in fair value judged to be other than temporary,
if any, on marketable securities are included in other income (expenses), net on
the condensed consolidated statements of operations. The cost of investments
sold is based on the specific-identification method. Interest on marketable
securities is included in interest income.

Accounts Receivable, net



Trade accounts receivable are recorded at the invoiced amount, net of any
allowance for credit losses. The Company evaluates the expected credit losses of
accounts receivable, considering historical credit losses, current
customer-specific information and other relevant factors when determining the
allowance. An increase to the allowance for credit losses results in a
corresponding increase in selling, general and administrative expenses. The
Company charges off uncollectible receivables against the allowance when all
attempts to collect the receivable have failed.

Despite the Company's efforts to minimize credit risk exposure, customers could
be adversely affected if future economic and industry trends, including those
related to COVID-19, change in such a manner as to negatively impact their cash
flows. The full effects of COVID-19 on the Company's customers are highly
uncertain and cannot be predicted. As a result, the Company's future collection
experience can differ significantly from historical collection trends. If the
Company's clients experience a negative impact on their cash flows, it could
have a material adverse effect on the Company's results of operations and
financial condition.

Upon adoption of Accounting Standard Update ("ASU") 2016-13, the Company did not recognize an adjustment to the beginning balance of retained earnings as of January 1, 2021, as the impact from the adoption was not material.

Inventories, net



The Company values inventory at the lower of the actual cost to purchase or
manufacture the inventory or net realizable value for such inventory. Cost,
which includes material, labor and overhead costs, is determined on the
first-in, first out method, or FIFO. The Company regularly reviews inventory
quantities in process and on hand, and when appropriate, records a provision for
obsolete and excess inventory. The Company writes down inventory that has become
obsolete, inventory that has a cost basis in excess of its expected net
realizable value and inventory in excess of expected requirements based on
future demand and as compared to remaining shelf life. The estimate of excess
quantities is subjective and primarily dependent on the Company's estimates of
future demand for a particular product. If the estimate of future demand is
inaccurate based on actual sales, the Company may increase the write down for
excess inventory for that component and record a charge to inventory impairment
in the accompanying consolidated statement of operations and comprehensive
income (loss).

Right-of-use Assets and Lease Liabilities



The Company determines if an contractual arrangement contains a lease at its
inception and determines the classification of a lease, as either operating or
finance, at commencement.

Right-of-use assets and lease liabilities are recorded based on the present
value of future lease payments which factors in certain qualifying initial
direct costs incurred as well as any lease incentives received. If an implicit
rate is not readily determinable, the Company utilizes inputs from third-party
lenders to determine the appropriate discount rate. Lease expense for operating
lease payments are recognized on a straight-line basis over the lease term.
Lease terms may factor in options to extend or terminate the lease.

The Company adheres to the short-term lease recognition exemption for all
classes of assets (i.e. facilities and equipment). As a result, leases with an
initial term of twelve months or less are not recorded on the balance sheet and
are recognized on a straight-line basis over the lease term. In addition, for
certain equipment leases, the Company accounts for lease and non-lease
components, such as services, as a single lease component, as permitted.

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Stock-based Compensation



We maintain an equity incentive plan that permits the grant of share-based
awards, such as stock grants and incentives and non-qualified stock options to
employees, directors, consultants and advisors. We also offer an employee stock
purchase plan which allows participating employees to purchase shares of our
common stock at a discount through payroll deductions.

We recognize equity-based compensation expense for awards of equity instruments
to employees and directors based on the grant date fair value of those awards.
We estimate the fair value of our stock option awards made to employees and
non-employees based on the estimated fair values as of the grant date using the
Black-Scholes option-pricing model, net of estimated forfeitures. The fair value
of restricted stock unit ("RSU") awards is determined based on the number of
units granted and the closing price of the Company's common stock as of the
grant date. The fair value of each purchase under the employee stock purchase
plan ("ESPP") is estimated at the beginning of the offering period using the
Black-Scholes option pricing model.

The model requires us to make a number of assumptions including expected
volatility, expected term, risk-free interest rate and expected dividend yield.
We expense the fair value of our equity-based compensation awards on a
straight-line basis over the requisite service period, which is the period in
which the related services are received.

Income Taxes



The Company uses the asset and liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
the differences between the financial reporting and the tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Management assesses the
likelihood that the resulting deferred tax assets will be realized. A valuation
allowance is provided when it is more likely than not that some portion or all
of a deferred tax asset will not be realized. As of December 31, 2021 and 2020,
the net deferred tax assets have been fully offset by a valuation allowance.

The Company recognizes uncertain income tax positions at the largest amount that
is more likely than not to be sustained upon audit by the relevant taxing
authority. An uncertain income tax position will not be recognized if it has
less than a 50% likelihood of being sustained. Changes in recognition or
measurement are reflected in the period in which judgment occurs. The Company's
policy is to recognize interest and penalties related to the underpayment of
income taxes as a component of provision for income taxes.

Recent Accounting Pronouncements

Please refer to Note 2 to our audited consolidated financial statements appearing under Part 2, Item 8 for a discussion of new accounting standards updates that may impact us.

JOBS Act Accounting Election



The JOBS Act allows an emerging growth company to delay the adoption of new or
revised accounting standards that have different effective dates for public and
private companies until those standards apply to private companies. Effective
December 31, 2021, the Company was no longer an "emerging growth company" within
the meaning of the JOBS Act and can no longer take advantage of this extended
transition period. Prior to December 31, 2021, the Company had elected to use
this extended transition period and, as a result, our financial statements may
not have been comparable to companies that comply with public company effective
dates.



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