You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed financial statements and
the related notes and other financial information included elsewhere in this
Quarterly Report on Form 10-Q. This discussion and other parts of this report
contain forward-looking statements that involve risks and uncertainties, such as
statements of our plans, objectives, expectations and intentions, which are
based on the beliefs of our management, as well as assumptions made by, and
information currently available to, our management. Our actual results could
differ materially from those discussed in these forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in the section of this report entitled "Risk
Factors," under Part II, Item 1A of this report and those discussed in our other
disclosures and filings.

Overview

We are a commercial-stage medical device company focused on transforming the
lives of people living with epilepsy by reducing or eliminating the occurrence
of debilitating seizures. Our novel and differentiated RNS System is the first
and only commercially available, brain-responsive neuromodulation system that
delivers personalized, real-time treatment at the seizure source. By
continuously monitoring the brain's electrical activity, recognizing
patient-specific abnormal electrical patterns, and responding in real time with
imperceptible electrical pulses to prevent seizures, our RNS System delivers the
precise amount of therapy when and where it is needed and provides exceptional
clinical outcomes with approximately three minutes of stimulation on average per
day. Our RNS System is also the only commercially available device that records
continuous brain activity data and allows clinicians to monitor patients not
only in person, but also remotely, in order to make more informed treatment
decisions, thus optimizing patient care. We believe the therapeutic advantages
of our RNS System, combined with the insights obtained from our extensive brain
data set, offer a significant leap forward in epilepsy treatment.

Our RNS System is currently indicated in the United States for use in adult
epilepsy patients, meaning patients who are 18 years of age or older, with
drug-resistant focal epilepsy. As of March 31, 2023, over 4,000 epilepsy
patients have received our RNS System. We believe our compelling body of
long-term clinical data, demonstrating continuous improvement in outcomes over
time, will support the continued adoption of our RNS System among the
approximately 575,000 adults in the United States with drug-resistant focal
epilepsy. We continue seeking indication expansion to, over time, more broadly
reach the entire approximately 1.2 million drug-resistant epilepsy patients in
the United States and have begun enrollment in clinical studies to broaden our
indication including into generalized epilepsy. We may additionally seek to
expand our operations to reach the approximately 16.5 million drug-resistant
epilepsy patients globally.

Our commercial efforts are focused on the comprehensive epilepsy centers, or
CECs, including Level 4 CECs, that facilitate appropriate care for
drug-resistant epilepsy patients. This may include implantation of epilepsy
neuromodulation devices such as our RNS System or the ongoing treatment of
patients with neuromodulation devices. While most drug-resistant epilepsy
patients begin their care at physician offices or community hospitals, we
estimate that approximately 24,000 adult drug-resistant focal epilepsy patients
are treated in CECs in the United States each year. We estimate that this
patient pool represents an annual core market opportunity of approximately $1.1
billion for initial RNS System implants, and we expect that it will continue to
grow as the number of CECs and the number of epileptologists increase, as more
patients are referred to these CECs, and as more care for RNS-implanted patients
can happen outside of the CECs. In addition, the sale of replacement
neuromodulation devices when the battery in our RNS neurostimulator approaches
end of service provides a recurring revenue stream that is additive to our
current $1.1 billion annual market opportunity for initial implants.

We received Premarket Approval, or PMA, from the FDA for our RNS System in late
2013 and began the commercial rollout of our RNS System in early 2014. We market
our RNS System in the United States through a direct sales organization
primarily to the epileptologists and neurosurgeons who respectively prescribe
and implant neuromodulation devices in the approximately 250 CECs in the United
States. We have established a significant account base at these CECs. Given the
concentrated and underpenetrated nature of our target market, we believe that
through our sales force, there is a significant opportunity to efficiently drive
higher utilization within these centers,

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grow our account base, and expand our referral channel to increase the number of drug-resistant patients referred to the CECs.



The implant procedure for our RNS System and the ongoing patient treatment
provided by clinicians, including monitoring and programming, are reimbursed
under well-established physician and hospital codes. In addition, we believe
that our RNS System is currently the only neuromodulation system for epilepsy
with reimbursement available for periodic in-person or remote review of brain
activity data. Given the relatively young average age of our patient population,
our payor mix has historically been more heavily weighted towards commercial
payors. As of March 31, 2023, commercial payors have written positive coverage
policies that address over 200 million covered lives in the United States.
Medicare and Medicaid also routinely provide coverage for implantation of our
RNS System and follow-up care. Based on our experience, less than 1% of
potential RNS System patients have been unable to undergo an implant procedure
with our RNS System due to lack of payor coverage. We believe the established,
differentiated, and favorable reimbursement paradigm for our RNS System will
continue to support its broad commercial adoption.

We currently manufacture our RNS System at and distribute our products from our
approximately 53,000 square foot facility in Mountain View, California. This
facility provides approximately 20,000 square feet of space for our production
and distribution operations, including manufacturing, quality control and
storage. We believe our existing facility will be sufficient to meet our current
and near-term manufacturing needs.

Since our inception, we have generated significant losses. To date, we have
financed our operations primarily through the sale of equity securities, debt
financing arrangements and sales of our products. As of March 31, 2023, we had
an accumulated deficit of $481.2 million, cash, cash equivalents and short-term
investments of $67.6 million, and $53.9 million of outstanding term loans, net
of debt discount and issuance costs.

We have invested heavily and expect to continue to invest in research and
development and commercial activities. Our research and development activities
include clinical studies to demonstrate the safety and efficacy of our RNS
System, including in expanded indications, and to obtain, as well as retain, FDA
approval. We intend to continue making significant investments in research and
development, clinical studies and regulatory affairs to support ongoing and
future regulatory submissions for retaining and expanding indications of our RNS
System, including to patients with drug-resistant generalized epilepsy and
adolescent patients, ages 12-17, support continuous improvements to our RNS
System, and develop future products that address neurological disorders. We have
also made significant investments in building our field commercial team and
intend to make significant investments in sales and marketing efforts in the
future, including initiatives to drive awareness and expand our referral channel
to increase the number of drug-resistant epilepsy patients referred to CECs.
Moreover, we expect to continue to incur expenses associated with operating as a
public company. We may in the future seek to acquire or invest in additional
businesses, products, or technologies that we believe could complement or
enhance our products, enhance our technical capabilities or otherwise offer
growth opportunities, although we currently have no agreements or understandings
with respect to any such acquisitions or investments. Because of these and other
factors, we expect to continue to incur net losses and negative cash flows for
the next several years. We may require additional funding to support operations
and pay our obligations or may opportunistically seek to raise additional
capital, which may include future equity or debt financings.

We believe our existing cash, cash equivalents and short-term investments will allow us to continue our operations for at least the next 12 months.

Recent Developments

COVID-19 Pandemic Update



Our business, financial condition and results of operations have been and may
continue to be significantly impacted by the COVID-19 pandemic. Beginning in
2020, our revenue was negatively impacted and experienced volatility as
hospitals delayed or canceled elective procedures in response to the pandemic,
including procedures to implant our RNS System. In addition, hospitals delayed
or canceled admissions for epilepsy diagnostic evaluations, which reduced and
may continue to reduce our patient pipeline. By the second half of 2022, the
impact of the COVID-19 pandemic on our revenue had diminished. However, the
future impact of the COVID-19 pandemic on

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our business, financial condition and results of operations is dependent on
future developments, including the potential emergence of new COVID-19 variants
and spikes in COVID-19 cases, which remain highly uncertain and cannot be
predicted. For further information, refer to "Risk Factors" in Part II, Item 1A
of this Quarterly Report on Form 10-Q.

DIXI Distribution Agreement



In August 2022, we entered into an exclusive distribution agreement, or the
Distribution Agreement, with DIXI Medical USA Corp., or DIXI Medical, pursuant
to which we became the exclusive U.S. distributor of DIXI Medical's product line
beginning in October 2022. DIXI Medical is a subsidiary of a European company
that pioneered the development of stereo electroencephalography, or Stereo EEG,
electrodes and related products. These products are used in the epilepsy
monitoring units, or EMUs, of comprehensive epilepsy centers to determine where
epileptic seizures originate. In addition to providing us with an incremental
revenue stream, the DIXI Medical partnership provides us with improved
visibility of patients moving through the EMUs, many of whom may be candidates
for our RNS System. This synergistic partnership leverages our field
organization that is already calling on the same customers and supports our
objective to engage earlier in the diagnostic and therapy selection process.
DIXI Medical provides us with ongoing commercial support and supplies the DIXI
Medical products we order.

In consideration for DIXI Medical's ongoing commercial support, we paid DIXI
Medical $2.0 million in the fourth quarter of 2022 and will pay $1.25 million in
each of the fourth quarters of 2023 and 2024, for a total of $4.5 million.

Factors Affecting Our Performance



We believe there are several important factors that have impacted and that we
expect will continue to impact our business and results of operations. These
factors include:

Clinician, Hospital and Patient Awareness and Acceptance of Our RNS System



Our goal is to establish our RNS System as a standard of care for drug-resistant
epilepsy. We intend to continue to promote awareness of our RNS System within
existing and new accounts through additional investments in training and
education of clinicians, epilepsy centers, hospitals and patients on the
clinical benefits of our RNS System for the treatment of drug-resistant
epilepsy. In addition, we intend to publish additional clinical data in
scientific journals and to continue presenting at medical conferences. We plan
to continue building patient awareness through direct-to-patient marketing
initiatives, which include advertising, social media and online education. We
also intend to continue supporting patient and referring clinician outreach
efforts to help increase the number of appropriate patients with drug-resistant
epilepsy being treated at CECs. These efforts require significant investment by
our marketing and sales organization.

Our Ability to Retain Our Experienced Commercial Team and Increase its Productivity



We have made significant investments in, and will continue to invest in,
recruiting, training and retaining our experienced and specialized direct sales
team, which includes Therapy Consultants and Field Clinical Engineers.
Significant education and training is required for our team to achieve the level
of technical competency with our products that is expected by clinicians and to
gain experience building demand for our RNS System. Upon completion of initial
training, our personnel typically require time in the field to grow their
network of accounts, build relationships with clinicians and increase their
productivity to the levels we expect. We believe successfully training,
developing and retaining our Therapy Consultants and Field Clinical Engineers
will be required to achieve growth. In addition, the loss of any productive
sales personnel would have a negative impact on our ability to grow our
business.

Competition



Our industry is highly competitive and subject to rapid change from the
introduction of new products and technologies and the marketing activities of
industry participants. There are two primary treatment alternatives for adults
with drug-resistant epilepsy: (i) an ablative or resective surgery; and (ii)
implantation of a neuromodulation

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device. Within neuromodulation, we currently compete with two manufacturers of
neuromodulation devices. These companies have longer operating histories,
significantly greater resources and name recognition, and established
relationships with physicians and hospitals that treat patients with epilepsy.
In addition to competing for market share, we also compete against these
companies for personnel, including qualified sales and other personnel that are
necessary to grow our business.

Leveraging Our Manufacturing Capacity to Further Improve Our Gross Margin



With our current operating model and infrastructure, we believe that we have the
capacity to significantly increase our manufacturing production. If we grow our
revenue and sell more RNS Systems, our fixed manufacturing costs will be spread
over more units, which we believe will reduce our manufacturing costs on a
per-unit basis and in turn improve our gross margin. In addition, we intend to
continue investing in manufacturing efficiencies in order to reduce our overall
manufacturing costs. However, other factors will continue to impact our gross
margin such as the cost of materials, components and subassemblies, pricing,
procedure mix, and geographic sales mix to the extent that we commercialize our
RNS System outside of the United States.

Investing in Research and Development, Including Clinical Studies, to Expand Our Addressable Market



We intend to continue investing in clinical studies and existing and next
generation technologies to further improve our RNS System and clinical outcomes,
enhance the patient and provider experience and broaden the patient population
that can be treated with our RNS System. In addition, we are continuing to
leverage our extensive database of intracranial electroencephalogram, or iEEG,
data and our advanced data analysis capabilities to equip clinicians with the
data they need to establish optimal program settings for each patient.

While research and development and clinical studies are time consuming and
costly, we believe that a pipeline of product enhancements and new products that
improve efficacy, safety and ease of use is important for supporting increased
adoption of our RNS System.

Change in Product Mix

We derive revenue from sales of our RNS System to hospital facilities both for
initial RNS System implant procedures and for replacement procedures when our
implanted devices reach end of service. We launched our current neurostimulator
model in 2018. This device has an average battery life of nearly eleven years,
an increase from the previous model of the device. We expect that our revenue
from replacement procedures will decrease over the next few years as a result of
the extended replacement cycle of the newer device. In addition, a change in
procedure mix between initial and replacement procedures may have a negative
impact on our gross margin. Beginning in the fourth quarter of 2022, we also
began to derive revenue from sales of DIXI Medical products. A change in product
mix between sales of our RNS System and DIXI Medical products may have a
negative impact on our gross margin.

Components of Our Results of Operations

Revenue



We derive most of our revenue from sales of our RNS System to hospital
facilities (primarily Level 4 CECs) that implant our RNS System. We typically
deliver our RNS System to a hospital on the date of the scheduled procedure.
There is no commitment to purchase our RNS System until the delivery of the
product, as the procedure may be canceled at any time.

Our revenue fluctuates primarily based on the volume of procedures performed and
the procedure mix between initial and replacement implants. Our revenue also
fluctuates and in the future will continue to fluctuate from quarter-to-quarter
due to a variety of factors, including the success of our sales force in
expanding adoption of our RNS System in new accounts and the number of
physicians who are aware of and prescribe our RNS System.

Beginning in the fourth quarter of 2022, we also derive revenue from sales of
DIXI Medical products, primarily to our current customer base. Our revenue from
the sale of DIXI Medical products will fluctuate in the future due to a variety
of factors, including our ability to take market share from competitive Stereo
EEG products.

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Cost of Goods Sold and Gross Margin



Cost of goods sold consists primarily of costs related to materials, components
and subassemblies, personnel-related expenses for our manufacturing and quality
assurance employees, including stock-based compensation, manufacturing overhead
and charges for excess, obsolete and non-sellable inventories. Overhead costs
include the cost of quality assurance, testing, material procurement, inventory
control, operations supervision and management personnel, an allocation of
facilities and information technology expenses, including rent and utilities,
and equipment depreciation. Cost of goods sold also includes certain direct
costs such as those incurred for shipping our RNS System. We record adjustments
to our inventory valuation for estimated excess, obsolete and non-sellable
inventories based on assumptions about future demand, past usage, changes to
manufacturing processes and overall market conditions. Beginning in the fourth
quarter of 2022, cost of goods sold also includes costs of procuring DIXI
Medical products. We expect cost of goods sold to increase in absolute dollars
as more of our RNS Systems and DIXI Medical products are sold.

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, primarily by
our manufacturing costs, pricing and product mix. Our gross margin may increase
over the long term to the extent our production volume increases as our fixed
manufacturing costs would be spread over a larger number of units, thereby
reducing our per-unit manufacturing costs. We expect our gross margin to
fluctuate from period to period, however, based upon the factors described
above.

Operating Expenses

Our operating expenses consist of research and development costs and selling, general and administrative costs.

Research and Development Expenses



Our research and development activities primarily consist of engineering and
research programs associated with our products under development and clinical
studies. Research and development expenses include personnel-related costs for
our research and development employees, including stock-based compensation, and
expenses related to consulting services, clinical trials, regulatory activities,
prototyping, testing, materials and supplies, and allocated overhead including
facilities and information technology expenses. Our clinical trial expenses
include costs associated with clinical trial design, clinical trial site
development and study costs, data management costs, related travel expenses, the
cost of products used for clinical activities, and costs associated with our
regulatory compliance. We expense research and development costs as they are
incurred. We expect our research and development expenses to increase in
absolute dollars as we continue to develop new product offerings and product
enhancements and conduct studies for expanded indications for use.

Selling, General and Administrative Expenses



Our selling, general and administrative expenses consist primarily of
personnel-related costs for our sales and marketing employees, including
stock-based compensation and sales-based variable compensation, travel expenses,
consulting, public relations costs, direct marketing, customer training, trade
show and promotional expenses and allocated facility and information technology
expenses, and for administrative personnel that support our general operations
such as executive management and information technology, finance, accounting,
customer services, human resources and legal personnel. We expense sales
variable compensation when revenue related to the underlying sale is recognized.
Selling, general and administrative expenses also include costs attributable to
professional fees for legal, accounting and tax services, insurance and
recruiting fees.

We intend to continue to increase our sales and marketing spending to support
increased adoption of our RNS System. We expect our sales and marketing expenses
will increase in absolute dollars as we hire additional personnel and add
programs in order to more fully penetrate the market opportunity. We expect our
administrative expenses, including stock-based compensation expense, will
increase as we increase our headcount to support our growth. Additionally, we
may incur increased expenses related to audit, legal, regulatory and tax-related
services, compliance with exchange listing and Securities and Exchange
Commission, or SEC, requirements, and director and officer insurance premiums.
Our selling, general and administrative expenses may fluctuate from period to
period as we continue to grow.

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Interest Expense and Income



Interest expense consists primarily of interest expense related to our term loan
facility, including amortization of debt discount and issuance costs. Interest
income is predominantly derived from investing surplus cash in money market
funds and short-term marketable securities.

Other Income (Expense), Net

Other income (expense), net primarily consists of gain and loss from short-term investments.



Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022



The following table summarizes our results of operations for the periods
indicated (in thousands):

                                             Three Months Ended March 31,
                                               2023                  2022               Change                % Change
Revenue                                 $        14,472          $   11,374          $    3,098                        27  %
Cost of goods sold                                   4,100               3,115                 985                     32  %
Gross profit                                        10,372               8,259               2,113                     26  %
Operating expenses
Research and development                             5,263               5,577               (314)                     (6) %
Selling, general and administrative                 13,428              12,444                 984                      8  %
Total operating expenses                            18,691              18,021                 670                      4  %
Loss from operations                               (8,319)             (9,762)               1,443                    (15) %
Interest income                                        726                 134                 592                    442  %
Interest expense                                   (1,965)             (1,830)               (135)                      7  %
Other income (expense), net                          (817)                 (3)               (814)                        NM
Net loss                                $       (10,375)         $  (11,461)         $    1,086                        (9) %


NM = Not meaningful

Revenue

Revenue increased by $3.1 million, or 27%, to $14.5 million during the three
months ended March 31, 2023, compared to $11.4 million during the three months
ended March 31, 2022. The increase in revenue was primarily due to an increase
in the number of units sold for initial implant procedures as well as an
increase in pricing, and the addition of sales of DIXI Medical products which
began in the fourth quarter of 2022, partially offset by a decrease in units
sold for replacement implant procedures in the three months ended March 31, 2023
as compared to the three months ended March 31, 2022. Revenue from sales of our
RNS System for replacement procedures represented less than 10% of our total
revenue for the three months ended March 31, 2023 as compared to approximately
23% for the three months ended March 31, 2022. All of our revenue was generated
from sales in the United States.

Cost of Goods Sold and Gross Margin



Cost of goods sold increased by $1.0 million, or 32%, to $4.1 million during the
three months ended March 31, 2023, compared to $3.1 million during the three
months ended March 31, 2022. The increase was primarily due to costs associated
with distribution of DIXI Medical products. Our gross margin decreased from
72.6% for the three months ended March 31, 2022 to 71.7% for the three months
ended March 31, 2023 primarily due to lower gross margin for distribution of
DIXI Medical products as compared to the gross margin for sales of our RNS
System.

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Research and Development Expenses



Research and development expenses decreased by $0.3 million, or 6%, to $5.3
million during the three months ended March 31, 2023, compared to $5.6 million
during the three months ended March 31, 2022. The decrease in research and
development expenses was primarily due to a decrease of $0.1 million in
personnel-related expenses associated with a reduction in personnel to support
product development efforts and clinical studies, a decrease of $0.1 million in
clinical study expenses, and a decrease of $0.1 million in regulatory affairs
and quality assurance expenses.

Selling, General and Administrative Expenses



Selling, general and administrative expenses increased by $1.0 million, or 8%,
to $13.4 million during the three months ended March 31, 2023, compared to $12.4
million during the three months ended March 31, 2022. The increase in selling,
general and administrative expenses was primarily due to an increase of $1.2
million in personnel-related expenses primarily due to sales-based variable
compensation as a result of the increase in revenue during the three months
ended March 31, 2023 compared to the three months ended March 31, 2022 and
stock-based compensation, and an increase of $0.5 million in expenses for
ongoing commercial support provided by DIXI Medical in connection with
distributing their products. The increases were offset in part by a decrease of
$0.8 million in general and administrative costs, primarily outside services.

Interest Expense and Income



Interest expense increased to $2.0 million for the three months ended March 31,
2023, compared to $1.8 million for the three months ended March 31, 2022, due to
an increase in average balances of our Term Loan as a result of using the
paid-in-kind option for interest whereby we added part of the interest due to
the Term Loan's principal balance instead of paying it in cash for the payment
dates from April 2022 through March 2023. Interest income increased by $0.6
million for the three months ended March 31, 2023 compared to the three months
ended March 31, 2022, primarily due to higher interest yields in the three
months ended March 31, 2023, partly offset by a decrease in average balances of
our money market funds and short-term marketable securities.

Other Income (Expense), net



Other income (expense), net decreased by $0.8 million to ($0.8) million during
the three months ended March 31, 2023, compared to less than ($0.1) million
during the three months ended March 31, 2022, primarily due to unrealized loss,
net on short-term investments in the three months ended March 31, 2023.

Liquidity and Capital Resources



Prior to our IPO, we financed our operations primarily through the sale of
equity securities, debt financing arrangements and sales of our RNS System. As
of March 31, 2023, we had cash, cash equivalents and short-term investments of
$67.6 million, compared to $77.4 million at December 31, 2022, and $53.9 million
outstanding under the Term Loan, net of debt discount and issuance costs,
compared to $52.9 million at December 31, 2022. In September 2020, we entered
into the Term Loan for total borrowings of up to $60.0 million and borrowed
$50.0 million. In April 2021, we completed our IPO and received $105.5 million
in net proceeds after deducting underwriting discounts and commissions and
offering costs.

Term Loan



In September 2020, we entered into the Term Loan with CRG Partners IV L.P. and
its affiliates for total borrowings of up to $60 million and borrowed $50
million. The remaining $10.0 million was available to us for borrowing until
March 31, 2022 if we achieved a revenue-based milestone in 2021. The
revenue-based milestone was not met, and the remaining $10.0 million of the Term
Loan expired without being drawn. The borrowings under the Term Loan are secured
by substantially all of our properties, rights and assets, including
intellectual property.

The Term Loan bears interest at a rate of 13.5% per year. Payments under the
loan are made quarterly with payment dates fixed at the end of each calendar
quarter. Through December 2020, we had the option to pay the entire interest
paid-in-kind, or PIK, by increasing the principal of the Term Loan. From January
2021 through

                                       23


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December 2022, we had the option to pay interest as follows: 7.5% per annum paid
in cash and 5.0% per annum PIK by increasing the principal of the Term Loan.
From January 2023 through June 2025, we have the option to pay interest as
follows: 8.5% per annum paid in cash and 5.0% per annum PIK by increasing the
principal of the Term Loan. For each payment date from April 2022 through March
2023, we elected the PIK option, increasing the principal of the Term Loan by
$2.6 million.

The Term Loan was interest-only through September 30, 2023, which could be
extended through September 30, 2025 at our option if we completed our IPO on or
prior September 30, 2023. In connection with closing the IPO, we extended the
interest-only period to September 30, 2025. Following the interest-only period,
principal payment is due in one installment on September 30, 2025. The Term Loan
includes a fee upon repayment of the loan equal to 10% of the aggregate
principal amount being prepaid or repaid.

The Term Loan is collateralized by substantially all of our assets. The loan
agreement contains customary representations and warranties, covenants, events
of default and termination provisions. The financial covenants require that we
achieve minimum annual revenue thresholds commencing in 2021 and maintain a
minimum balance of cash and cash equivalents. See Notes 1 and 6 to our unaudited
interim condensed financial statements included elsewhere in this Quarterly
Report on Form 10-Q for additional information.

We paid $1.0 million in fees to the lender and third parties which is reflected
as a discount on the loan and is being accreted over the life of the loan using
the effective interest method.

Future Funding Requirements



We expect to incur continued expenditures in the future in support of our
commercialization efforts in the United States. In addition, we intend to
continue to make investments in clinical studies, development of new products,
and other ongoing research and development programs. We may incur additional
expenses to expand our commercial organization to re-establish operations to
pre-pandemic levels, and to plan for continued growth. We may incur additional
expenses to further enhance our research and development efforts and to pursue
commercial opportunities outside of the United States. We lease our office and
manufacturing facilities in Mountain View, California under a non-cancelable
operating lease which expires in June 2030. Future minimum lease payments under
non-cancelable operating leases were $22.3 million as of March 31, 2023. See
"Facility Lease" in Note 5 to our condensed financial statements included
elsewhere in this Quarterly Report on Form 10-Q for additional information.

As of March 31, 2023, we had cash, cash equivalents and short-term investments
of $67.6 million. Based on our current planned operations, we expect that our
cash, cash equivalents and short-term investments will enable us to fund our
operating expenses for at least 12 months from the issuance of our condensed
financial statements as of and for the three months ended March 31, 2023. We
have based these estimates on assumptions that may prove to be wrong, and we
could utilize our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of medical devices, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on many factors, including:

•the costs of activities related to commercializing and marketing our RNS System in the United States and elsewhere, and manufacturing and distribution costs;

•the research and development activities we intend to undertake, including product enhancements and clinical studies for indication expansions that we intend to pursue;

•the impact of the COVID-19 pandemic on our business;

•the cost of obtaining, maintaining, defending, enforcing, and protecting any patents and other intellectual property rights;

•whether or not we pursue acquisitions or investments in businesses, products or technologies that are complementary to our current business;


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•the degree and rate of increased market acceptance of our RNS System in the United States and market acceptance elsewhere;

•our revenue and cost projections related to the DIXI Medical distribution agreement;

•our need to implement additional infrastructure and internal systems;

•our ability to hire additional personnel to support our operations as a public company; and

•the emergence of competing technologies or other adverse market developments.



If we do raise additional capital through public or private equity or
convertible debt offerings, the ownership interest of our existing stockholders
will be diluted, and the terms of these securities may adversely affect our
stockholders' rights. If we raise additional capital through debt financing, we
may be subject to covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or
declaring dividends. Our ability to raise additional capital may be adversely
impacted by global economic conditions and the recent disruptions to, and
volatility in, the financial markets in the United States and worldwide. If we
are unable to raise capital when needed, we will need to delay, limit, reduce or
terminate planned commercialization or product development activities in order
to reduce costs. In addition, COVID-19 has negatively impacted our business by
decreasing and delaying procedures performed to implant our RNS System, and the
pandemic may continue to negatively impact our business, which may negatively
impact our future liquidity.

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