Company Quick10K Filing
Quick10K
Intersect Ent
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$27.73 31 $866
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
8-K 2019-08-01 Earnings, Exhibits
8-K 2019-07-22 Officers
8-K 2019-06-24 Officers
8-K 2019-06-04 Shareholder Vote
8-K 2019-05-07 Officers
8-K 2019-05-06 Earnings, Officers, Exhibits
8-K 2019-02-25 Earnings, Exhibits
8-K 2019-02-01 Enter Agreement
8-K 2019-01-16 Officers, Exhibits
8-K 2019-01-07 Earnings, Regulation FD, Exhibits
8-K 2018-11-05 Earnings, Exhibits
8-K 2018-10-26 Officers
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-06-05 Shareholder Vote
8-K 2018-05-01 Earnings, Officers, Exhibits
8-K 2018-02-27 Earnings, Exhibits
8-K 2018-01-17 Officers, Exhibits
8-K 2018-01-08 Regulation FD, Exhibits
LOW Lowes Companies 84,600
KWR Quaker Chemical 2,730
FFG FBL Financial Group 1,600
ZUMZ Zumiez 636
LGC Legacy Acquisition 373
RNDB Randolph Bancorp 89
MARA Marathon Patent Group 18
ABWN Airborne Wireless Network 0
PUBC Purebase 0
USMN US Rare Earth Minerals 0
XENT 2019-06-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 1A. Risk Factors" of This Quarterly Report on Form
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 d764962dex101.htm
EX-31.1 d764962dex311.htm
EX-31.2 d764962dex312.htm
EX-32.1 d764962dex321.htm

Intersect Ent Earnings 2019-06-30

XENT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q
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Table of Contents
 
     
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM
10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2019
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number:
001-36545
 
INTERSECT ENT, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
20-0280837
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
1555 Adams Drive
Menlo Park
, California
 
94025
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
(650)
 
641-2100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:
 
Trading
symbol(s)
 
Name of Exchange
on Which registered:
Common Stock
, 0.001 par value
 
XENT
 
The Nasdaq Global Market
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes
  
    No  
Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    
Yes
  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, an emerging growth company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” “emerging growth company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated
filer
 
 
Smaller reporting company
 
             
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
 12b-2
of the Exchange Act).    Yes  
    
No
  
Shares of common stock outstanding as of July 31, 2019 were 31,472,755.
 
 
  
 
Table of Contents
 
INTERSECT ENT, INC.
Form 10-Q – QUARTERLY REPORT
For the Quarter Ended June 30, 2019
TABLE OF CONTENTS
 
Page
 
   
1
 
   
1
 
   
1
 
   
2
 
   
3
 
   
4
 
   
5
 
   
11
 
   
16
 
   
16
 
         
   
17
 
   
17
 
   
17
 
   
39
 
   
39
 
   
39
 
   
39
 
   
39
 
         
   
41
 
  
 
Table of Contents
 
PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
 
 
INTERSECT ENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
                 
 
June 30,
   
December 31,
 
 
2019
   
2018
 
 
(unaudited)
   
(1)
 
Assets
   
     
 
Current assets:
   
     
 
Cash and cash equivalents
  $
9,358
    $
9,464
 
Short-term investments,
available-for-sale
   
84,114
     
91,309
 
Accounts receivable, net
   
15,529
     
19,616
 
Inventory
   
15,689
     
11,586
 
Prepaid expenses and other current assets
   
1,998
     
2,695
 
                 
Total current assets
   
126,688
     
134,670
 
Property and equipment, net
   
6,113
     
5,878
 
Other
non-current
assets
   
1,264
     
413
 
                 
Total assets
  $
134,065
    $
140,961
 
                 
Liabilities and Stockholders’ Equity
   
     
 
Current liabilities:
   
     
 
Accounts payable
  $
3,786
    $
6,202
 
Accrued compensation
   
9,725
     
12,281
 
Other current liabilities
   
2,442
     
1,250
 
                 
Total current liabilities
   
15,953
     
19,733
 
Other
non-current
liabilities
   
44
     
234
 
                 
Total liabilities
   
15,997
     
19,967
 
Commitments and contingencies (note 9)
               
Stockholders’ equity:
   
     
 
Preferred stock, $0.001 par value;
   
     
 
Authorized shares: 10,000 at June 30, 2019 and December 31, 2018;
   
     
 
Issued and outstanding shares:
no
ne
   
  
     
  
 
Common stock, $0.001 par value;
   
     
 
Authorized shares: 150,000 at June 30, 2019 and December 31, 2018;
   
     
 
Issued and outstanding shares:
31,469
at June 30, 2019 and
30,745
at December 31, 2018
   
31
     
31
 
Additional
paid-in
capital
   
327,891
     
308,766
 
Accumulated other comprehensive income (loss)
   
97
     
(41
)
Accumulated deficit
   
(209,951
)    
(187,762
)
                 
Total stockholders’ equity
   
118,068
     
120,994
 
                 
Total liabilities and stockholders’ equity
  $
134,065
    $
140,961
 
                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Amounts have been derived from the December 31, 2018 audited consolidated financial statements included in the Company’s Annual Report on Form
10-K
filed with the Securities and Exchange Commission.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
1
 
 
 
Table of Contents
 
INTERSECT ENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
(unaudited)
                                 
 
Three Months Ended
   
Six Months Ended
 
 
June 30,
   
June 30,
 
 
2019
   
2018
   
2019
   
2018
 
Revenue
  $
26,659
    $
26,300
    $
53,332
    $
51,023
 
Cost of sales
   
5,046
     
5,558
     
9,691
     
11,040
 
                                 
Gross profit
   
21,613
     
20,742
     
43,641
     
39,983
 
                                 
Operating expenses:
   
     
     
     
 
Selling, general and administrative
   
27,611
     
21,005
     
54,818
     
42,521
 
Research and development
   
6,041
     
4,374
     
12,307
     
8,647
 
                                 
Total operating expenses
   
33,652
     
25,379
     
67,125
     
51,168
 
                                 
Loss from operations
   
(12,039
)    
(4,637
)    
(23,484
)    
(11,185
)
Interest income and other, net
   
655
     
477
     
1,295
     
889
 
                                 
Net loss
   
(11,384
)    
(4,160
)    
(22,189
)    
(10,296
)
Other comprehensive income:
   
     
     
     
 
Unrealized gain on short-term investments, net
   
61
     
70
     
138
     
5
 
                                 
Comprehensive loss
  $
(11,323
)   $
(4,090
)   $
(22,051
)   $
(10,291
)
                                 
Net loss per share, basic and diluted
  $
(0.36
)   $
(0.14
)   $
(0.71
)   $
(0.34
)
                                 
Weighted average common shares used to compute net loss per share, basic and diluted
   
31,362
     
30,264
     
31,141
     
30,072
 
                                 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
2
 
 
 
Table of Contents
 
INTERSECT ENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
                                                 
 
   
   
   
Accumulated
   
   
 
 
   
   
Additional
   
Other
   
   
Total
 
 
Common Stock
   
Paid-in
   
Comprehensive
   
Accumulated
   
Stockholders’
   
 
Shares
   
Amount
   
Capital
   
Income (Loss)
   
Deficit
   
Equity
 
Balance at December 31, 2018
   
30,745
    $
31
    $
308,766
    $
(41
)   $
(187,762
)   $
120,994
 
Issuance of common stock and exercise of stock options
   
417
     
—  
     
4,467
     
—  
     
—  
     
4,467
 
Stock-based compensation expense
   
—  
     
—  
     
4,014
     
—  
     
—  
     
4,014
 
Unrealized gain on short-term investments
   
—  
     
—  
     
—  
     
77
     
—  
     
77
 
Net loss
   
—  
     
—  
     
—  
     
—  
     
(10,805
)    
(10,805
)
                                                 
Balance at March 31, 2019
   
31,162
     
31
     
317,247
     
36
     
(198,567
)    
118,747
 
Issuance of common stock and exercise of stock options
   
307
     
—  
     
4,964
     
—  
     
—  
     
4,964
 
Stock-based compensation expense
   
     
—  
     
5,680
     
—  
     
—  
     
5,680
 
Unrealized gain on short-term investments
   
     
—  
     
—  
     
61
     
—  
     
61
 
Net loss
   
     
—  
     
—  
     
—  
     
(11,384
)    
(11,384
)
                                                 
Balance at June 30, 2019
   
31,469
    $
31
    $
327,891
    $
97
    $
(209,951
)   $
118,068
 
                                                 
Balance at December 31, 2017
   
29,678
    $
30
    $
282,121
    $
(92
)   $
(164,840
)   $
117,219
 
Issuance of common stock and exercise of stock options
   
421
     
—  
     
4,224
     
—  
     
—  
     
4,224
 
Stock-based compensation expense
   
—  
     
—  
     
3,138
     
—  
     
—  
     
3,138
 
Unrealized loss on short-term investments
   
—  
     
—  
     
—  
     
(65
)    
—  
     
(65
)
Net loss
   
—  
     
—  
     
—  
     
—  
     
(6,136
)    
(6,136
)
                                                 
Balance at March 31, 2018
   
30,099
     
30
     
289,483
     
(157
)    
(170,976
)    
118,380
 
Issuance of common stock and exercise of stock options
   
336
     
—  
     
4,484
     
—  
     
—  
     
4,484
 
Stock-based compensation expense
   
—  
     
—  
     
3,605
     
—  
     
—  
     
3,605
 
Unrealized gain on short-term investments
   
—  
     
—  
     
—  
     
70
     
—  
     
70
 
Net loss
   
—  
     
—  
     
—  
     
—  
     
(4,160
)    
(4,160
)
                                                 
Balance at June 30, 2018
   
30,435
    $
30
    $
297,572
    $
(87
)   $
(175,136
)   $
122,379
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
3
 
 
 
Table of Contents
 
INTERSECT ENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                 
 
Six Months Ended
 
 
June 30,
 
 
2019
   
2018
 
Operating activities:
   
     
 
Net loss
  $
(22,189
)   $
(10,296
)
Adjustments to reconcile net loss to cash used in operating activities:
   
     
 
Depreciation and amortization
   
1,269
     
837
 
Amortization of
right-of-use
assets
   
555
     
—  
 
Stock-based compensation expense
   
9,366
     
6,743
 
Amortization of net investment discount
   
(790
)    
(254
)
Changes in operating assets and liabilities:
   
     
 
Accounts receivable, net
   
4,087
     
1,949
 
Inventory
   
(3,774
)    
(659
)
Prepaid expenses and other assets
   
713
     
375
 
Accounts payable
   
(1,842
)    
(470
)
Accrued compensation
   
(2,556
)    
(4,454
)
Other liabilities
   
(707
)    
(260
)
                 
Net cash used in operating activities
   
(15,868
)    
(6,489
)
                 
Investing activities:
   
     
 
Purchases of short-term investments
   
(69,342
)    
(68,583
)
Maturities of short-term investments
   
77,465
     
58,232
 
Purchases of property and equipment
   
(1,792
)    
(549
)
                 
Net cash provided by (used in) investing activities
   
6,331
     
(10,900
)
                 
Financing activities:
   
     
 
Proceeds from issuance of common stock and exercise of stock options
   
9,431
     
9,355
 
                 
Net cash provided by financing activities
   
9,431
     
9,355
 
                 
Net decrease in cash and cash equivalents
   
(106
)    
(8,034
)
Cash and cash equivalents:
   
     
 
Beginning of the period
   
9,464
     
19,837
 
                 
End of the period
  $
9,358
    $
11,803
 
                 
Non-cash
investing activities:
   
     
 
Right-of-use
asset obtained in exchange for lease obligations
  $
117
    $
—  
 
Property and equipment included in accounts payable
   
440
     
183
 
Lessor funded building improvements
   
152
     
—  
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
4
 
 
 
Table of Contents
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
Organization
 
 
 
 
 
 
 
 
 
Description of Business
Intersect ENT, Inc. (the “Company”) is incorporated in the state of Delaware and its facilities are located in Menlo Park, California. The Company is a commercial drug delivery company committed to improving the quality of life for patients with ear, nose and throat conditions. The Company’s U.S. Food and Drug Administration (“FDA”) approved products are steroid releasing implants designed to treat patients suffering from chronic sinusitis who are managed by ear, nose and throat (“ENT”) physicians. These products include the PROPEL
®
family of products (PROPEL
®
, PROPEL
®
Mini and PROPEL
®
Contour) and the SINUVA
®
(mometasone furoate) Sinus Implant. The PROPEL family of products are used in conjunction with sinus surgery primarily in hospitals and ambulatory surgery centers and SINUVA is designed to be used in the physician’s office setting of care to treat patients who have had ethmoid sinus surgery yet suffer from recurrent sinus obstruction due to polyps. In addition, the Company received FDA approval to market the new PROPEL Mini Straight Delivery System in July 2019, designed to facilitate implant placement in the ethmoid sinus. The PROPEL family of products are devices approved under the Premarket Approval (“PMA”) and SINUVA is a drug that was approved under a New Drug Application (“NDA”). In addition, Intersect ENT continues to invest in research and development of new products and product improvements.
 
2.
Summary of Significant Accounting Policies
 
 
 
 
Basis of Preparation
The condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiary. All intercompany balances and transactions have been eliminated in consolidation.
The functional currency of the Company’s wholly-owned subsidiary Intersect ENT GmbH, which the Company established in June 2018, is the U.S. dollar. Transaction gains and losses are included in interest income and other, net, on the Company’s condensed consolidated statements of operations.
The interim financial data as of June 30, 2019, is unaudited and is not necessarily indicative of the results for the full year. In the opinion of the Company’s management, the interim data includes only normal and recurring adjustments necessary for a fair presentation of the Company’s financial results for the three and six months ended June 30, 2019 and 2018. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to SEC rules and regulations relating to interim financial statements.
The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form
10-K
(“Annual Report”) for the year ended December 31, 2018 filed with the SEC on February 28, 2019.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to its revenue related allowances, common stock valuation and related stock-based compensation, as well as certain accrued liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Significant Accounting Policies
There have been no significant changes to the accounting policies during the six months ended June 30, 2019, 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 included in its Annual Report, except as described below.
Leases
The Company adopted Accounting Standards Codification, or ASC, Topic 842,
Leases,
on January 1, 2019 using the modified retrospective transition method. In addition, the Company elected certain practical expedients permitted under the transition guidance, which allowed it to carryforward its historical long-term lease classification, its assessment on whether a contract is or contains a lease and the treatment of its initial direct costs for any leases that existed prior to the adoption of Topic 842. In determining the lease term at commencement date, any renewal or termination options are considered if they are reasonably assured of exercise. The Company has elected to exclude from its condensed consolidated balance sheet any leases having a term of 12 months or less. The Company
 
 5
 
 
Table of Contents
recorded a
right-of-use
leased asset of approximately $1.6 million and a corresponding lease liability of $2.2 million in its adoption of Topic 842. In addition, as of the adoption date, the Company derecognized a deferred rent obligation of approximately $0.6 million. There was
no
cumulative effect adjustment upon the adoption of Topic 842.
The results for the three and six months ended June 30, 2019 are presented under Topic 842. The results for the three and six months ended June 30, 2018 and other prior period amounts were not adjusted and continue to be reported in accordance with our historical accounting under prior lease guidance, ASC Topic 840:
Leases
(“Topic 840”).
For agreements with a term of more than twelve months, the Company determines if an agreement is a lease at inception. Operating lease liabilities represent an obligation to make lease payments arising from the lease agreement. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the remaining lease term. In determining the present value of lease payments, the Company estimates its incremental borrowing rate as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, of an amount equal to the lease payments in a similar economic environment. Operating lease liabilities are included in other current and
non-current
liabilities in our condensed consolidated balance sheet.
Right-of-use
assets represent our right to use an underlying asset for the lease term and are classified as other
non-current
assets. Lease expense is recognized on a straight-line basis over the expected lease term.
Recent Accounting Pronouncements
There have been no significant changes to the disclosures in the recent accounting pronouncements during the six months ended June 30, 2019, as compared to the recent accounting pronouncements described in Note 2 of the “Notes to Consolidated Financial Statements” in the Company’s audited consolidated financial statements included in its Annual Report.
3.
Composition of Certain Financial Statement Items
Accounts Receivable (in thousands):
                 
 
June 30,
   
December 31,
 
 
2019
   
2018
 
Accounts receivable
  $
15,626
    $
19,696
 
Allowance for doubtful accounts
   
(97
)    
(80
)
                 
  $
15,529
    $
19,616
 
                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inventory (in thousands):
                 
 
June 30,
   
December 31,
 
 
2019
   
2018
 
Raw materials
  $
2,407
    $
1,872
 
Work-in-process
   
283
     
368
 
Finished goods
   
12,999
     
9,346
 
                 
  $
15,689
    $
11,586
 
                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capitalized stock-based compensation expense of $0.9 million and $0.6 million were included in inventory as of June 30, 2019 and December 31, 2018, respectively.
Revenue (in thousands):
                                 
 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
 
2019
   
2018
   
2019
   
2018
 
PROPEL family of products
  $
25,563
    $
25,788
    $
51,295
    $
50,251
 
SINUVA
   
1,096
     
512
     
2,037
     
772
 
                                 
  $
26,659
    $
26,300
    $
53,332
    $
51,023
 
                                 
 
 
 
 
 
 
 
6
 
 
 
Table of Contents
 
4.
Cash, Cash Equivalents and Short-term Investments
The following is a summary of cash, cash equivalents and short-term investments,
available-for-sale,
by type of instrument (in thousands):
                                                                 
 
June 30,
   
December 31,
 
 
2019
   
2018
 
 
Amortized
   
Gross Unrealized
   
Estimated
   
Amortized
   
Gross Unrealized
   
Estimated
   
 
Cost
   
Gains
   
Losses
   
Fair Value
   
Cost
   
Gains
   
Losses
   
Fair Value
 
Cash
  $
5,532
    $
—  
    $
  
    $
5,532
    $
4,168
    $
 —  
    $
 —  
    $
4,168
 
Money market funds
   
3,826
     
—  
     
  
     
3,826
     
2,308
     
—  
     
—  
     
2,308
 
Corporate debt securities
   
47,250
     
53
     
(9
)    
47,294
     
45,177
     
5
     
(17
)    
45,165
 
Commercial paper
   
36,767
     
53
     
—  
     
36,820
     
49,161
     
—  
     
(29
)    
49,132
 
                                                                 
  $
93,375
    $
106
    $
(9
)   $
93,472
    $
100,814
    $
5
    $
(46
)   $
100,773
 
                                                                 
Reported as:
   
     
     
     
     
     
     
     
 
Cash and cash equivalents
                          $
9,358
     
     
     
    $
9,464
 
Short-term investments,
available-for-sale
                           
84,114
     
     
     
     
91,309
 
                                                           
                          $
93,472
     
     
     
    $
100,773
 
                                                                 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2019 and December 31, 2018, the Company had
no
investments with a contractual maturity of greater than one year.
Based on an evaluation of securities that have been in a loss position, the Company did not recognize any other-than-temporary impairment charges during the six months ended June 30, 2019 and year ended December 31, 2018. The Company considered various factors which included a credit and liquidity assessment of the underlying securities and the Company’s intent and ability to hold the underlying securities until the estimated date of recovery of its amortized cost.
5.
Fair Value of Financial Instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and short-term investments, available-for-sale. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
     
Level 1 –
 
Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.
     
Level 2 –
 
Other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data.
     
Level 3 –
 
Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.
 
 
 
 
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Cash, Cash Equivalents and Short-term Investments
The following is a summary of cash, cash equivalents and short-term investments,
available-for-sale,
by type of instrument measured at fair value on a recurring basis (in thousands):
                                                                 
 
June 30,
   
December 31,
 
 
2019
   
2018
 
 
Level 1
   
Level 2
   
Level 3
   
Total
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Cash
  $
5,532
    $
—  
    $
—  
    $
5,532
    $
4,168
    $
—  
    $
 —  
    $
4,168
 
Money market funds
   
3,826
     
—  
     
—  
     
3,826
     
2,308
     
—  
     
—  
     
2,308
 
Corporate debt securities
   
—  
     
47,294
     
—  
     
47,294
     
—  
     
45,165
     
—  
     
45,165
 
Commercial paper
   
—  
     
36,820
     
—  
     
36,820
     
—  
     
49,132
     
—  
     
49,132
 
                                                                 
  $
9,358
    $
84,114
    $
—  
    $
93,472
    $
6,476
    $
94,297
    $
 —  
    $
100,773
 
                                                                 
Reported as:
   
     
     
     
     
     
     
     
 
Cash and cash equivalents
   
 
     
 
     
 
    $
9,358
     
     
     
    $
9,464
 
Short-term investments,
available-for-sale
   
 
     
 
     
 
     
84,114
     
     
     
     
91,309
 
                                                                 
   
 
     
 
     
 
    $
93,472
     
     
     
    $
100,773
 
                                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
 
Table of Contents
 
There were
no
 
transfers
in and out of Level 1 and Level 2 during the six months ended June 30, 2019 and year ended December 31, 2018.
6.
Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company’s headquarters is leased under an operating lease agreement entered into in March 2012 and expires in
May 2020
.
This lease is for
50,400
square feet and includes a renewal provision allowing the Company to extend this lease for an additional three years at 95% of the then-current fair market rental rate.
Exercise of this extension option was not considered reasonably assured nor reasonably certain and has therefore been excluded from the estimated remaining lease term. In
March 2019
, the Company entered into an additional operating lease agreement for 10,000 square feet of warehouse space which also expires in May 2020. Both operating lease agreements require the Company to pay executory costs such as real estate taxes, insurance and repairs.
Right-of-use
assets (in thousands):
         
 
June 30,
 
 
2019
 
Upon the adoption of Topic 842
  $
1,572
 
Additional warehouse operating lease
   
117
 
Less: accumulated amortization
   
(555
)
         
  $
1,134
 
         
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating lease liabilities (in thousands):
         
 
June 30,
 
 
2019
 
Current portion included in other current liabilities
  $
1,512
 
Non-current
portion included in other
non-current
liabilities
   
—  
 
         
  $
1,512