Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 01, 2022 | Jun. 30, 2021 | |
Entity Listings [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity File Number | 001-39292 | ||
Entity Registrant Name | Butterfly Network, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 84-4618156 | ||
Entity Address, Address Line One | 530 Old Whitfield Street | ||
Entity Address, City or Town | Guilford | ||
Entity Address, State or Province | CT | ||
Entity Address, Postal Zip Code | 06437 | ||
City Area Code | 203 | ||
Local Phone Number | 689-5650 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.1 | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Firm ID | 34 | ||
Auditor Location | New York, New York | ||
Entity Central Index Key | 0001804176 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A Common Stock | |||
Entity Listings [Line Items] | |||
Title of 12(b) Security | Class A common stock, $0.0001 par value per share | ||
Trading Symbol | BFLY | ||
Security Exchange Name | NYSE | ||
Entity Common Stock, Shares Outstanding | 171,733,179 | ||
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share | |||
Entity Listings [Line Items] | |||
Title of 12(b) Security | Warrants to purchase one share of Class A common stock,each at an exercise price of $11.50 per share | ||
Trading Symbol | BFLY WS | ||
Security Exchange Name | NYSE | ||
Class B Common Stock | |||
Entity Listings [Line Items] | |||
Entity Common Stock, Shares Outstanding | 26,426,937 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 422,841 | $ 60,206 |
Accounts receivable, net | 11,936 | 5,752 |
Inventories | 36,243 | 25,805 |
Current portion of vendor advances | 27,500 | 2,571 |
Prepaid expenses and other current assets | 13,384 | 2,998 |
Total current assets | 511,904 | 97,332 |
Property and equipment, net | 14,703 | 6,870 |
Non-current portion of vendor advances | 12,782 | 37,390 |
Operating lease assets | 24,083 | |
Other non-current assets | 8,493 | 5,599 |
Total assets | 571,965 | 147,191 |
Current liabilities: | ||
Accounts payable | 5,798 | 16,400 |
Deferred revenue, current | 13,071 | 8,443 |
Accrued purchase commitments, current | 5,329 | 22,890 |
Accrued expenses and other current liabilities | 25,631 | 21,962 |
Total current liabilities | 49,829 | 69,695 |
Deferred revenue, non-current | 5,476 | 2,790 |
Convertible debt | 49,528 | |
Loan payable | 4,366 | |
Warrant liabilities | 26,229 | |
Accrued purchase commitments, non-current | 14,200 | 19,660 |
Operating lease liabilities | 27,690 | |
Other non-current liabilities | 850 | 2,146 |
Total liabilities | 124,274 | 148,185 |
Commitments and contingencies (Note 20) | ||
Convertible preferred stock: | ||
Convertible preferred stock (Series A, B, C and D) $.0001 par value with an aggregate liquidation preference of $0 and $383,829 at December 31, 2021 and 2020, respectively; 0 and 107,197,118 shares authorized, issued and outstanding at December 31, 2021 and 2020, respectively | 360,937 | |
Stockholders' equity (deficit): | ||
Additional paid-in capital | 874,886 | 32,874 |
Accumulated deficit | (427,215) | (394,806) |
Total stockholders' equity (deficit) | 447,691 | (361,931) |
Total liabilities, convertible preferred stock and stockholders' equity (deficit) | 571,965 | 147,191 |
Class A Common Stock | ||
Stockholders' equity (deficit): | ||
Common stock | 17 | $ 1 |
Class B Common Stock | ||
Stockholders' equity (deficit): | ||
Common stock | $ 3 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Convertible preferred stock, shares authorized | 107,197,118 | |
Convertible preferred stock | ||
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, liquidation preference | $ 0 | $ 383,829 |
Convertible preferred stock, shares authorized | 0 | 107,197,118 |
Convertible preferred stock, shares issued | 0 | 107,197,118 |
Convertible preferred stock, shares outstanding | 0 | 107,197,118 |
Class A Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 600,000,000 | 116,289,600 |
Common stock shares issued | 171,613,049 | 6,593,291 |
Common stock, shares outstanding (in shares) | 171,613,049 | 6,593,291 |
Class B Common Stock | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 27,000,000 | 26,946,089 |
Common stock shares issued | 26,426,937 | 0 |
Common stock, shares outstanding (in shares) | 26,426,937 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue: | |||
Total revenue | $ 62,565 | $ 46,252 | $ 27,583 |
Cost of revenue: | |||
Total cost of revenue | 45,511 | 107,475 | 48,478 |
Gross profit | 17,054 | (61,223) | (20,895) |
Operating expenses: | |||
Research and development | 74,461 | 49,738 | 48,934 |
Sales and marketing | 49,604 | 26,263 | 14,282 |
General and administrative | 85,717 | 24,395 | 18,185 |
Total operating expenses | 209,782 | 100,396 | 81,401 |
Loss from operations | (192,728) | (161,619) | (102,296) |
Interest income | 2,573 | 285 | 2,695 |
Interest expense | (651) | (1,141) | |
Change in fair value of warrant liabilities | 161,095 | ||
Other income (expense), net | (2,577) | (231) | (96) |
Loss before provision for income taxes | (32,288) | (162,706) | (99,697) |
Provision for income taxes | 121 | 39 | |
Net loss and comprehensive loss | $ (32,409) | $ (162,745) | $ (99,697) |
Net loss per common share - basic | $ (0.19) | $ (26.87) | $ (17.08) |
Net loss per common share - diluted | $ (0.19) | $ (26.87) | $ (17.08) |
Weighted-average common shares outstanding - basic | 173,810,053 | 6,056,574 | 5,838,103 |
Weighted-average common shares outstanding - diluted | 173,810,053 | 6,056,574 | 5,838,103 |
Product | |||
Revenue: | |||
Total revenue | $ 47,868 | $ 38,347 | $ 25,081 |
Cost of revenue: | |||
Total cost of revenue | 29,308 | 46,294 | 38,357 |
Subscription | |||
Revenue: | |||
Total revenue | 14,697 | 7,905 | 2,502 |
Cost of revenue: | |||
Total cost of revenue | 2,238 | 1,068 | 621 |
Loss on product purchase commitment | |||
Cost of revenue: | |||
Total cost of revenue | $ 13,965 | $ 60,113 | $ 9,500 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Convertible Preferred Stock | Common StockClass A Common Stock | Common StockClass B Common Stock | Additional Paid-In Capital | Accumulated Deficit | Class A Common Stock | Class B Common Stock | Total |
Convertible Preferred Stock, Balance at beginning of the period at Dec. 31, 2018 | $ 360,937 | |||||||
Convertible Preferred Stock, Balance at beginning of the period (in shares) at Dec. 31, 2018 | 107,197,118 | |||||||
Convertible Preferred Stock, Balance at end of the period at Dec. 31, 2019 | $ 360,937 | |||||||
Convertible Preferred Stock, Balance at end of the period (in shares) at Dec. 31, 2019 | 107,197,118 | |||||||
Balance at beginning of the period at Dec. 31, 2018 | $ 1 | $ 13,420 | $ (132,364) | $ (118,943) | ||||
Balance at beginning of the period (in shares) at Dec. 31, 2018 | 5,761,643 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net loss | (99,697) | (99,697) | ||||||
Common stock issued upon exercise of stock options | 324 | 324 | ||||||
Common stock issued upon exercise of stock options (in shares) | 178,307 | |||||||
Stock-based compensation expense | 6,038 | 6,038 | ||||||
Balance at end of the period at Dec. 31, 2019 | $ 1 | 19,782 | (232,061) | (212,278) | ||||
Balance at end of the period (in shares) at Dec. 31, 2019 | 5,939,950 | 0 | ||||||
Convertible Preferred Stock, Balance at end of the period at Dec. 31, 2020 | $ 360,937 | 360,937 | ||||||
Convertible Preferred Stock, Balance at end of the period (in shares) at Dec. 31, 2020 | 107,197,118 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net loss | (162,745) | (162,745) | ||||||
Common stock issued upon exercise of stock options | 2,009 | $ 2,009 | ||||||
Common stock issued upon exercise of stock options (in shares) | 653,341 | 653,341 | ||||||
Stock-based compensation expense | 11,083 | $ 11,083 | ||||||
Balance at end of the period at Dec. 31, 2020 | $ 1 | 32,874 | (394,806) | (361,931) | ||||
Balance at end of the period (in shares) at Dec. 31, 2020 | 6,593,291 | 6,593,291 | 0 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net loss | (32,409) | $ (32,409) | ||||||
Common stock issued upon exercise of stock options (in shares) | 8,911,435 | |||||||
Common stock issued upon exercise of stock options and warrants | $ 1 | 21,708 | $ 21,709 | |||||
Common stock issued upon exercise of stock options and warrants (in shares) | 8,886,801 | |||||||
Common stock issued upon vesting of restricted stock units (in shares) | 1,018,828 | |||||||
Conversion of convertible preferred stock | $ 360,937 | $ (8) | $ (3) | (360,926) | (360,937) | |||
Conversion of convertible preferred stock (in shares) | (107,197,118) | 80,770,178 | 26,426,937 | |||||
Conversion of convertible debt | $ 1 | 49,916 | 49,917 | |||||
Conversion of convertible debt (in shares) | 5,115,140 | |||||||
Net equity infusion from the Business Combination | $ 6 | 361,281 | 361,287 | |||||
Net equity infusion from the Business Combination (in shares) | 69,228,811 | |||||||
Stock-based compensation expense | 48,181 | 48,181 | ||||||
Balance at end of the period at Dec. 31, 2021 | $ 17 | $ 3 | $ 874,886 | $ (427,215) | $ 447,691 | |||
Balance at end of the period (in shares) at Dec. 31, 2021 | 171,613,049 | 26,426,937 | 171,613,049 | 26,426,937 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net loss | $ (32,409) | $ (162,745) | $ (99,697) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 2,090 | 1,316 | 758 |
Write-down of vendor advance | 2,300 | 10,560 | 9,500 |
Non-cash interest expense on convertible debt | 389 | 1,047 | |
Write-down of inventories | 889 | 7,123 | 2,711 |
Stock-based compensation expense | 47,798 | 11,004 | 6,038 |
Change in fair value of warrant liabilities | (161,095) | ||
Other | 1,900 | 1,966 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (6,127) | (4,377) | (1,195) |
Inventories | (11,285) | (23,487) | (1,390) |
Prepaid expenses and other assets | (10,669) | (20) | 931 |
Vendor advances | (2,621) | 1,658 | (48,488) |
Accounts payable | (10,521) | 11,175 | 2,549 |
Deferred revenue | 7,314 | 7,446 | 3,497 |
Accrued purchase commitments | (23,063) | 42,550 | |
Change in operating lease assets and liabilities | 1,901 | ||
Accrued expenses and other liabilities | 4,022 | 13,084 | 4,354 |
Net cash used in operating activities | (189,187) | (81,700) | (120,432) |
Cash flows from investing activities: | |||
Purchases of marketable securities | (1,019,003) | ||
Sales of marketable securities | 1,017,010 | ||
Purchases of property and equipment | (7,877) | (2,376) | (4,468) |
Net cash used in investing activities | (9,870) | (2,376) | (4,468) |
Cash flows from financing activities: | |||
Proceeds from exercise of stock options and warrants | 21,707 | 2,038 | 324 |
Net proceeds from equity infusion from the Business Combination | 548,403 | (657) | |
Proceeds from loan payable | 4,366 | ||
Proceeds from issuance of convertible debt | 50,000 | ||
Payment of loan payable | (4,366) | ||
Payments of debt issuance costs | (52) | (1,467) | |
Net cash provided by financing activities | 565,692 | 54,280 | 324 |
Net (decrease) increase in cash, cash equivalents and restricted cash | 366,635 | (29,796) | (124,576) |
Cash, cash equivalents and restricted cash, beginning of period | 60,206 | 90,002 | 214,578 |
Cash, cash equivalents and restricted cash, end of period | 426,841 | 60,206 | 90,002 |
Supplemental disclosure of non-cash investing and financing activities | |||
Purchase of property and equipment | $ 1,841 | 564 | $ 75 |
Deferred offering costs and debt issuance costs | $ 3,106 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | Dec. 31, 2021USD ($) |
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets | |
Cash and cash equivalents | $ 422,841 |
Restricted cash | 4,000 |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 426,841 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1. Organization and Description of Business Butterfly Network, Inc., formerly known as Longview Acquisition Corp. (the “Company” or “Butterfly”), was incorporated in Delaware on February 4, 2020. The Company’s legal name became Butterfly Network, Inc. following the closing of the business combination discussed in Note 3 “Business Combination”. The prior period financial information represents the financial results and condition of BFLY Operations, Inc. (formerly Butterfly Network, Inc.). The Company is an innovative digital health business transforming care with hand-held, whole body ultrasound. Powered by its proprietary Ultrasound-on-Chip™ technology, the solution enables the acquisition of imaging information from an affordable, powerful device that fits in a healthcare professional’s pocket with a combination of cloud-connected software and hardware technology. The Company operates wholly-owned subsidiaries in Australia, Germany, Netherlands, the United Kingdom and Taiwan. Although the Company has incurred recurring losses in each year since inception, the Company expects its cash and cash equivalents will be sufficient to fund operations for at least the next twelve months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of BFLY Operations, Inc. (formerly Butterfly Network, Inc.) and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany balances and transactions have been eliminated in consolidation. Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation reflected in the consolidated financial statements. The Company reclassified the loss on product purchase commitments that was recorded within cost of product revenue on the consolidated statement of operations and comprehensive loss to be presented separately. COVID-19 Outbreak The COVID-19 pandemic that began in 2020 has created significant global economic uncertainty and has impacted the Company’s operating results, financial condition and cash flows. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on The Company has not incurred any significant impairment losses in the carrying values of its assets as a result of the COVID-19 pandemic and is not aware of any specific related event or circumstance that would require the Company to revise the estimates reflected in its financial statements. Functional Currency The Company’s worldwide operations utilize the U.S. dollar (“USD”) as the functional currency considering the significant dependency of each subsidiary on the Company. Subsidiary operations are financed through the funding received from the Company in USD. For foreign entities where the USD is the functional currency, all foreign currency-denominated monetary assets and liabilities are remeasured at end-of-period exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the Company’s operating results in the consolidated statements of operations and comprehensive loss. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. At December 31, 2021 and 2020, a majority of the Company’s cash and cash equivalents were invested in money market accounts at one financial institution. The Company also maintains balances in various operating accounts above federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. As of December 31, 2021, one customer accounted for approximately 15% of the Company’s accounts receivable. As of December 31, 2020, no customer accounted for more than 10% of the Company’s accounts receivable. For the years end December 31, 2021, 2020 and 2019, no customer accounted for more than 10% of the total revenues. Segment Information The Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment. Substantially, all of the Company’s long-lived assets are located in the United States. Since the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions about future events that affect the amounts reported in its consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates and assumptions. Significant estimates and assumptions include: ● revenue recognition, including determination of the timing and pattern of satisfaction of performance obligations, determination of the standalone selling price (“SSP”) of performance obligations; ● assumptions underlying the warranty liability calculation; ● assumptions underlying the measurement of the purchase commitment loss; ● measurement and allocation of capitalized costs, the net realizable value (the selling price as well as estimated costs of completion, disposal and transportation) of inventory, and demand and future use of inventory; ● assumptions underlying the incremental borrowing rate calculation; ● assumptions underlying the warrant liability calculation; ● valuation allowances with respect to deferred tax assets; and ● assumptions underlying the fair value used in calculation of the stock-based compensation. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s consolidated financial statements. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to in exchange for these goods and services. To achieve this core principle, the Company applies the following 5 steps: ● Step 1: Identify Contracts with Customers: The Company’s contracts with customers typically occur either through direct sales or through eCommerce. The Company executes signed contracts with direct sales customers. Direct sales typically have 30-day payment terms, and multi-year software subscriptions typically require advance payment for each annual subscription period. The Company’s contracts with eCommerce customers are executed when the customer indicates that it has read and agrees to the terms and conditions of the purchase prior to purchasing the specific goods and services. The goods and services sold through the Company’s eCommerce platform require upfront payment for the goods and the services upon check-out. ● Step 2: Identify Performance Obligations: The Company’s contracts with customers often include multiple performance obligations. The Company has identified the following performance obligations in its contracts with customers: ● Hardware devices ● Hardware accessories ● Maintenance and support for the software that is used in connection with the hardware devices, including the right to an unspecified number of software updates as and when available ● Cloud-based software subscriptions, which represent an obligation to provide the customer with ongoing access to the Company’s hosted software applications on a continuous basis throughout the subscription period ● Implementation and integration services ● Extended warranties ● Step 3: Determine Transaction Price: The Company’s contracts with customers include variable consideration in the form of refunds and credits for product returns and price concessions. The Company estimates variable consideration using the expected value method based on a portfolio of data from similar contracts. ● Step 4: Allocate Transaction Price to Performance Obligations: The Company allocates transaction price to the performance obligations in a contract with a customer based on the relative standalone selling prices of the goods and services. For the cloud-based software subscriptions, which the Company sells to customers on a standalone basis (including renewals of subscriptions), the Company uses the observable standalone selling price, based on the price for which the Company sells these services to customers in standalone contracts, including contracts for renewals of subscriptions. The Company’s sales of hardware devices represent a bundled sale of a good and a service that includes two performance obligations, namely the unit of hardware device, and the support and maintenance of the software that is used in conjunction with the device, including a right for the customer to receive an unspecified number of software updates. The Company has an observable standalone selling price for the bundle and estimates the standalone selling price of the performance obligations within the bundle using estimation techniques that maximize the use of observable inputs. ● Step 5: Recognize Revenue as Performance Obligations are Satisfied: Each unit of hardware devices and accessories is a performance obligation satisfied at a point in time, when control of the good transfers from the Company to the customer. The Company’s services, including the cloud-based software subscriptions, extended warranties, and support and maintenance, are stand-ready obligations that are satisfied over time by providing the customer with ongoing access to the Company’s resources. The Company uses the time elapsed (straight-line) measure of progress to recognize revenue as these performance obligations are satisfied evenly over the respective service period. The implementation and integration services are performance obligations satisfied over time, and the Company uses the costs incurred as inputs in the measure of progress to recognize revenue as it satisfies these performance obligations. Deferred Revenue Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services described above and is reduced as the revenue recognition criteria are met. Deferred revenue is classified as current or non-current based on expected revenue recognition timing. Specifically, deferred revenue that will be recognized as revenue within the succeeding 12 month period is recorded as current, and the portion of deferred revenue where revenue is expected to be recognized beyond 12 months from the reporting date is recorded as non-current deferred revenue in the Company’s consolidated balance sheets. Warranties The Company offers a standard product warranty that its products will operate free of material defects and function in accordance with the standard specifications for a period of one year from when control is transferred to the customer. The Company evaluated the warranty liability under ASC Topic 606 and determined that it is an assurance type warranty. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenue and as a liability in accrued expenses. Factors that affect the warranty obligation include historical as well as current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies and business practices. Cash and Cash Equivalents All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. At December 31, 2021 and 2020, cash and cash equivalents consist principally of cash and money market accounts. Trade Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. The Company estimates its allowance for doubtful accounts based on historical loss patterns, the number of days that billings are past due, current market conditions, and reasonable and supportable forecasts of future economic conditions, in accordance with ASC 326 "Financial Instruments-Credit Losses." Accounts receivable are written off when deemed uncollectible and collection of the receivable is no longer being actively pursued. The following table summarizes the allowance for doubtful accounts activity: (in thousands) Fair Value Allowance for doubtful accounts as of December 31, 2019 $ — Additions (recoveries) 576 Deductions – write offs — Allowance for doubtful accounts as of December 31, 2020 $ 576 Additions (recoveries) (54) Deductions – write offs (82) Allowance for doubtful accounts as of December 31, 2021 $ 440 Inventories Inventories primarily consist of raw materials, work in progress and finished goods which are purchased and held by the Company’s third-party contract manufacturers. Inventories are stated at the lower of actual cost, determined using the average cost method, or net realizable value. Cost includes all direct and indirect production costs to convert materials into a finished product. Net realizable value is based upon an estimated average selling price reduced by the estimated costs of completion, disposal and transportation. The determination of net realizable value involves certain judgments including estimating average selling prices. The Company reduces the value of inventory for estimated obsolescence or lack of marketability by the difference between the cost of the affected inventory and the net realizable value. The valuation of inventory also requires the Company to estimate excess and obsolete inventory. The Company considers new product development schedules, the effect that new products might have on the sale of existing products, product obsolescence and product merchantability, including whether older products can be re-manufactured into new products among other factors. Losses expected to arise from firm, non-cancelable and unhedged commitments for the future purchase of inventory items are recognized unless the losses are recoverable through firm sales contracts or other means. Restricted Cash Restricted cash includes deposits in financial institutions used to secure a lease agreement. The Company classified the amounts within other non-current assets as the deposits are used to secure a long-term lease. The amount shown as restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the consolidated statement of cash flows. Security Deposits Security deposits represent amounts paid to third parties in relation to non-cancelable leases. Vendor Advances Vendor advances represent amounts paid to third party vendors for future services to be received related to production of the Company’s inventory. The amounts are presented net of writeoffs. The classification current or non-current is based on the estimated timing of inventory delivery. Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of related improvements. Useful lives for property and equipment are as follows: Property and Equipment Estimated Useful Life Software 3 Machinery and equipment 3 – 5 years Furnitures and fixtures 5 7 Leasehold improvements Lesser of estimated useful life or remaining lease term Expenditures for major renewals and improvements are capitalized. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation is eliminated from the balance sheet, and any resulting gains or losses are included in the statements of operations and comprehensive loss in the period of disposal. Capitalized Software Development Costs Costs to develop software internally for internal use are capitalized and recorded as capitalized software development costs on the consolidated balance sheets as a component of property and equipment, net. The Company capitalizes qualifying costs associated with internally-developed software incurred during the application development stage so long as management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the preliminary project and post-implementation stages, including training and maintenance, are expensed as incurred. Capitalized costs are amortized on a project-by-project basis using the straight-line method over the estimated economic life of the application, which is three years, beginning when the asset is substantially ready for use. Amortization expense is classified in the consolidated statement of operations based upon the nature of the project. Deferred Offering Costs Offering costs, consisting of legal, accounting, printer and filing fees related to the Company’s business combination, were deferred and were offset against proceeds from the transaction upon the consummation of the business combination. In the event the transaction was terminated, all deferred offering costs would be expensed. Deferred offering costs capitalized as of December 31, 2021 and 2020 were $0.0 million and $3.7 million, respectively. Leases The Company primarily enters into leases for office space that are classified as operating leases. The Company determines if an arrangement is or contains a lease at inception. may terminate its leases with the notice required under the lease and upon the payment of a termination fee, if required. The Company’s leases do not include substantial variable payments based on index or rate. The Company’s lease agreements do not contain any significant residual value guarantees or material restrictive covenants. The Company’s leases do not provide a readily determinable implicit discount rate. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease payments related to the next 12 months are included in other current liabilities in the accompanying consolidated balance sheets. The Company recognizes a single lease cost on a straight-line basis over the term of the lease, and the Company classifies all cash payments within operating activities in the statement of cash flows. The Company evaluates right-of-use assets for impairment consistent with its property, plant and equipment policy. There were no impairments of right-of-use assets in 2021. The Company does not have any finance or capital leases as of December 31, 2021 or 2020. Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Each impairment test is based on a comparison of the undiscounted cash flow to the recorded value of the asset. If the recorded value of the asset is less than the undiscounted cash flow, the asset is written down to its estimated fair value. The Company recorded an impairment charge of $1.4 million during the year ended December 31, 2020 related to the historical prepayments to a related party for the acquisition of capital assets. No impairments were recorded for the year ended December 31, 2021 and 2019. Convertible Debt The Company evaluated its convertible debt for embedded derivatives. Embedded provisions (like conversion options) are assessed under ASC Topic 815, Derivatives and Hedging To the extent that any embedded conversion option in the convertible debt is not bifurcated as an embedded derivative, that conversion option was also evaluated under ASC Topic 470, Debt Debt issuance costs were recorded as a reduction to the carrying amount of the convertible debt and are amortized to interest expense using the effective interest method. The convertible debt was classified as short-term or long-term based on the debt’s payment schedule. Warrant Liability The Company’s outstanding warrants include publicly-traded warrants (the “Public Warrants”) which were issued as one Derivatives and Hedging—Contracts in Entity’s Own Equity Cost of Revenue Product: Cost of revenue consists of product costs including manufacturing costs, personnel costs and benefits, duties and other applicable importing costs, packaging, warranty replacement costs, depreciation expense, fulfillment costs, payment processing fees and inventory obsolescence and write-offs. Subscription: Cost of revenue consists of personnel costs, cloud hosting costs, amortization of internal use software and payment processing fees. Research and Development Research and development expenses primarily consist of personnel costs and benefits, facilities-related expenses, consulting and professional fees, fabrication services, software and other outsourcing expenses. Substantially all of the Company’s research and development expenses are related to developing new products and services and improving existing products and services. Research and development expenses are expensed as incurred. Sales and Marketing Sales and marketing costs primarily consist of personnel costs and benefits, third party logistics, fulfillment and outbound shipping costs, facilities-related expenses, advertising, promotional, as well as conferences, meetings and other events. Advertising expenses are expensed as incurred. For the years ended December 31, 2021, 2020 and 2019, advertising expenses were $8.3 million, $4.7 million and $0.9 million, respectively. General and Administrative General and administrative expenses primarily consist of personnel costs and benefits, patent and filing fees, facilities costs, office expenses and outside services. Outside services consist of professional services, legal and other professional fees. Net Loss per Common Share We compute net loss per share of Class A and Class B common stock using the two-class method. Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of each class of the Company’s common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of the Company’s common stock, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of the Company’s common stock outstanding would have been anti-dilutive. Since the Company was in a net loss position for all periods presented, the basic earnings per share (“EPS”) calculation excludes preferred stock as it does not participate in net losses of the Company. Refer to Note 13 “Net Loss Per Share” for further discussion. Convertible Preferred Stock The Company applied the guidance in ASC Topic 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities Stock-Based Compensation The measurement of share-based compensation expense for all stock-based payment awards, including stock options and restricted stock units granted to employees, directors, and nonemployees, is based on the estimated fair value of the awards on the date of grant. The Company recognizes stock-based compensation expense for its’ awards on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date fair values. Generally, awards fully vest three Prior to the adoption of Accounting Standards Update (“ASU”) 2018-07, stock options granted to non-employees were accounted for based on their fair value on the measurement date. Stock options granted to non-employees were subject to periodic revaluation over their vesting terms. As a result, the charge to statements of operations and comprehensive loss for non-employee options with vesting requirements was affected in each reporting period by a change in the fair value of the option calculated under the Black-Scholes option-pricing model. The Company during the year ended December 31, 2021 and 2020 granted performance based restricted stock units. The Company accounted for these awards according to the relevant provisions of ASC 718 - Stock Compensation. For performance awards, the Company recognizes expense using the accelerated attribution method. Refer to Note 12 “Equity Incentive Plan” for further discussion about the nature of the transactions. Common Stock Valuations Prior to the Closing of the Business Combination, Valuation of Privately Held Company Equity Securities Issued as Compensation Closing of the Business Combination t Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. Recent Accounting Pronouncements Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that Is a Service Contract (Topic 350-40) , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As a result, eligible implementation costs incurred in a cloud computing arrangement that is a service contract are capitalized as prepaid expenses and other current assets on the balance sheet, recognized on a straight-line basis over its life in the statement of operations and comprehensive loss in the same line item as the fees for the associated arrangement, and the related activity is generally classified as an operating activity in the statement of cash flows. The Company prospectively adopted such guidance on January 1, 2021 and there was no material effect of adoption on the consolidated financial statements as of and for the year ended December 31, 2021. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) The Company elected to use the package of practical expedients permitted under the transition guidance. The Company did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For each asset class and the related lease agreements in which the Company is the lessee that include lease and non-lease components, the Company made an election about the use of the practical expedient on all leases entered into or modified after January 1, 2021 to combine lease and non-lease components. Additionally, the Company elected to not record on the balance sheet leases with a term of twelve months or less. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination | |
Business Combination | Note 3. Business Combination On February 12, 2021 (the “Closing Date”), the Company consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement, dated as of November 19, 2020 (the “Business Combination Agreement”), by and among Longview, Clay Merger Sub, Inc., a Delaware corporation incorporated on November 12, 2020 (“Merger Sub”), and Butterfly Network, Inc., a Delaware corporation (“Legacy Butterfly”). Immediately upon the consummation of the Business Combination and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”, and such completion, the “Closing”), Merger Sub merged with and into Legacy Butterfly, with Legacy Butterfly surviving the Business Combination as a wholly-owned subsidiary of Longview (the “Merger”). In connection with the Transactions, Longview changed its name to “Butterfly Network, Inc.” and Legacy Butterfly changed its name to “BFLY Operations, Inc.” The Merger is accounted for as a reverse recapitalization in accordance with U.S. GAAP primarily due to the fact that Legacy Butterfly stockholders continue to control the Company following the closing of the Business Combination. Reported shares and earnings per share available to holders of the Company’s capital stock and equity awards prior to the Business Combination have been retroactively restated reflecting the exchange ratio established pursuant to the Business Combination Pursuant to the Merger, at the Effective Time of the Merger (the “Effective Time”): • each share of Legacy Butterfly capital stock (other than the Legacy Butterfly Series A preferred stock) that was issued and outstanding immediately prior to the Effective Time was automatically canceled and converted into the right to receive 1.0383 shares of the Company’s Class A common stock, rounded down to the nearest whole number of shares; • each share of Legacy Butterfly Series A preferred stock that was issued and outstanding immediately prior to the Effective Time was automatically canceled and converted into the right to receive 1.0383 shares of the Company’s Class B common stock, rounded down to the nearest whole number of shares; • each option to purchase shares of Legacy Butterfly common stock, whether vested or unvested, that was outstanding and unexercised as of immediately prior to the Effective Time was assumed by the Company and became an option (vested or unvested, as applicable) to purchase a number of shares of the Company’s Class A common stock equal to the number of shares of Legacy Butterfly common stock subject to such option immediately prior to the Effective Time multiplied by 1.0383, rounded down to the nearest whole number of shares, at an exercise price per share equal to the exercise price per share of such option immediately prior to the Effective Time divided by 1.0383 and rounded up to the nearest whole cent; • each Legacy Butterfly restricted stock unit outstanding immediately prior to the Effective Time was assumed by the Company and became a restricted stock unit with respect to a number of shares of the Company’s Class A common stock, rounded to the nearest whole share, equal to the number of shares of Legacy Butterfly common stock subject to such Legacy Butterfly restricted stock unit immediately prior to the Effective Time multiplied by 1.0383; and • the principal amount plus accrued but unpaid interest, if any, on the Legacy Butterfly convertible notes outstanding as of immediately prior to the Effective Time was automatically canceled and converted into the right to receive shares of the Company’s Class A common stock, with such shares of the Company’s Class A common stock calculated by dividing the outstanding principal plus accrued interest, if any, of each Legacy Butterfly convertible note by $10.00, rounded down to the nearest whole number of shares. In addition, on February 12, 2021, Longview filed the Second Amended and Restated Certificate of Incorporation (the “Restated Certificate”) with the Secretary of State of the State of Delaware, which became effective simultaneously with the Effective Time. As a consequence of filing the Restated Certificate, the Company adopted a dual class structure, comprised of the Company’s Class A common stock, which is entitled to one vote per share, and the Company’s Class B common stock, which is entitled to 20 votes per share. The Company’s Class B common stock is subject to a “sunset” provision if Jonathan M. Rothberg, Ph.D., the founder of Legacy Butterfly and Chairman of the Company (“Dr. Rothberg”), and other permitted holders of the Company’s Class B common stock collectively cease to beneficially own at least twenty percent (20%) of the number of shares of the Company’s Class B common stock (as such number of shares is equitably adjusted in respect of any reclassification, stock dividend, subdivision, combination or recapitalization of the Company’s Class B common stock) collectively held by Dr. Rothberg and permitted transferees of the Company’s Class B common stock as of the Effective Time. In addition, concurrently with the execution of the Business Combination Agreement, on November 19, 2020, Longview entered into subscription agreements (the “Subscription Agreements”) with certain institutional investors (the “PIPE Investors”), pursuant to which the PIPE Investors purchased, immediately prior to the Closing, an aggregate of 17,500,000 shares of Longview Class A common stock at a purchase price of $10.00 per share (the “PIPE Financing”). The total number of shares of the Company’s Class A common stock outstanding immediately following the Closing was approximately 164,862,470, comprising: 59 • 95,633,659 shares of the Company’s Class A common stock issued to Legacy Butterfly stockholders (other than certain holders of Legacy Butterfly Series A preferred stock) and holders of Legacy Butterfly convertible notes in the Merger; • 17,500,000 shares of the Company’s Class A common stock issued in connection with the Closing to the PIPE Investors pursuant to the PIPE Financing; • 10,350,000 shares of the Company’s Class A common stock issued to holders of shares of Longview Class B common stock outstanding at the Effective Time; and • 41,378,811 shares of the Company’s Class A common stock held by holders of Longview Class A common stock outstanding at the Effective Time. The total number of shares of the Company’s Class B common stock issued at the Closing was approximately 26,426,937. Immediately following the Closing, Dr. Rothberg held approximately 76.2% of the combined voting power of the Company. Accordingly, Dr. Rothberg and his permitted transferees control the Company and the Company is a controlled company within the meaning of the corporate governance standards of the New York Stock Exchange (the “NYSE”). The most significant change in the post-combination Company’s reported financial position and results was an increase in cash of $ 589.5 million. The Company as the accounting acquirer incurred $11.4 million in transaction costs relating to the Business Combination, which has been offset against the gross proceeds recorded in additional paid-in capital in the consolidated statements of changes in convertible preferred stock and stockholders’ equity (deficit). The Company on the date of Closing used proceeds of the Transactions to pay off $30.9 million, representing all significant liabilities of the acquiree excluding the warrant liability. As of the date of the Closing, the Company recorded net liabilities of $186.5 million with a corresponding offset to additional paid-in capital. The net liabilities include warrant liabilities of $187.3 million and other insignificant assets and liabilities. The Company received proceeds of $0.6 million related to other transactions that occurred at the same time as the Business Combination. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Revenue Recognition | Note 4. Revenue Recognition Disaggregation of Revenue The Company disaggregates revenue from contracts with customers by product type and by geographical market. The Company believes that these categories aggregate the payor types by nature, amount, timing and uncertainty of its revenue streams. The following table summarizes the Company’s disaggregated revenues (in thousands) for the year ended December 31: Pattern of Recognition 2021 2020 2019 By Product Type: Devices and accessories Point-in-time $ 47,868 $ 38,347 $ 25,081 Subscription services and other services Over time 14,697 7,905 2,502 Total revenue $ 62,565 $ 46,252 $ 27,583 By Geographical Market: United States $ 42,993 $ 33,237 $ 23,997 International 19,572 13,015 3,586 Total revenue $ 62,565 $ 46,252 $ 27,583 Contract Balances Contract balances represent amounts presented in the consolidated balance sheets when either the Company has transferred goods or services to the customer, or the customer has paid consideration to the Company under the contract. These contract balances include trade accounts receivable and deferred revenue. Deferred revenue represents cash consideration received from customers for services that are transferred to the customer over the respective subscription period. The accounts receivable balances represent amounts billed to customers for goods and services for which the Company has an unconditional right to payment of the amount billed. The following table provides information about receivables and deferred revenue from contracts with customers (in thousands): December 31, December 31, 2021 2020 Accounts receivable, net $ 11,936 $ 5,752 Deferred revenue, current 13,071 8,443 Deferred revenue, non-current 5,476 2,790 The Company recognizes a receivable when it has an unconditional right to payment, and payment terms are typically 30 days for product and service sales on credit. The amount of revenue recognized during the years ended December 31, 2021 and 2020 that was included in the deferred revenue balance at the beginning of the period was $8.4 million and $3.2 million, respectively. Transaction Price Allocated to Remaining Performance Obligations On December 31, 2021, the Company had $21.2 million of remaining performance obligations. The Company expects to recognize 64% of its remaining performance obligations as revenue in fiscal year 2022 2023 Significant Judgments The Company makes significant judgments applying the guidance related to the determination of the timing and pattern of satisfaction of performance obligations and determination of the SSP of performance obligations. See Note 2 “Summary of Significant Accounting Policies” for details. Costs of Obtaining or Fulfilling Contracts The Company incurs incremental costs of obtaining contracts and costs of fulfilling contracts with customers. Incremental costs of obtaining contracts, which include commissions and referral fees paid to third parties as a result of obtaining contracts with customers, are capitalized to the extent that the Company expects to recover such costs. Costs of fulfilling contracts that relate specifically to a contract with a customer, and result from activities that generate the Company’s resources and enable it to satisfy its performance obligations in the contract with the customer, are capitalized to the extent that the Company expects to recover such costs. Capitalized costs are amortized in a pattern that is consistent with the Company’s transfer to the customer of the related goods and services. Such costs were not material during the years ended December 31, 2021 and 2020. Practical Expedients and Accounting Policy Elections In determining the transaction price of its contracts with customers, the Company estimates variable consideration using a portfolio of data from similar contracts. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component in contracts in which the period between when the Company transfers the promised good or service to the customer and when the customer pays for that good or service is a year or less. The Company has made an accounting policy election to exclude all sales taxes from the transaction price of its contracts with customers. Accordingly, sales taxes collected from customers and remitted to government authorities are not included in revenue and are accounted for as a liability until they have been remitted to the respective government authority. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 5. Fair Value of Financial Instruments Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: ● Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. ● Level 2 — Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. ● Level 3 — Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities valued with Level 3 inputs. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates their fair values due to the short-term or on demand nature of these instruments. The fair value of the loan payable and the convertible debt using Level 2 inputs was deemed to approximate carrying value as of December 31, 2020, due to the recency of the issuance dates. There were no transfers between fair value measurement levels during the years ended December 31, 2021 and 2020. The Company determined the fair value of its Public Warrants as Level 1 financial instruments, as they are traded in active markets. Because any transfer of Private Warrants from the initial holder of the Private Warrants would result in the Private Warrants having substantially the same terms as the Public Warrants, management determined that the fair value of each Private Warrant is the same as that of a Public Warrant. Accordingly, the Private Warrants are classified as Level 2 financial instruments. The following table summarizes the Company’s liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy (in thousands): Fair Value Measurement Level Total Level 1 Level 2 Level 3 December 31, 2021: Warrants: Public Warrants $ 17,525 $ 17,525 $ — $ — Private Warrants 8,704 — 8,704 — Total liabilities at fair value on a recurring basis $ 26,229 $ 17,525 $ 8,704 $ — The Company did not have any assets or liabilities similar to those above requiring fair value measurement at December 31, 2020. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Inventories | Note 6. Inventories A summary of inventories is as follows at December 31 (in thousands): 2021 2020 Raw materials $ 19,853 7,688 Work-in-progress 1,122 865 Finished goods 15,268 17,252 Total inventories $ 36,243 $ 25,805 Work-in-progress represents inventory items in intermediate stages of production by third party manufacturers. For the years ended December 31, 2021, 2020 and 2019, net realizable value inventory adjustments and excess and obsolete inventory charges were $0.9 million, $7.1 million and $2.7 million, respectively, and were recognized in cost of revenues. |
Other Non-Current Assets
Other Non-Current Assets | 12 Months Ended |
Dec. 31, 2021 | |
Other Non-Current Assets | |
Other Non-Current Assets | Note 7. Other Non-Current Assets Other non-current assets consist of the following at December 31 (in thousands): 2021 2020 Security deposits $ 1,883 $ 1,888 Restricted cash 4,000 — Deferred offering costs — 3,711 Other long-term assets 2,610 — Total other non-current assets $ 8,493 $ 5,599 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 8. Property and Equipment, Net Property and equipment, net, are recorded at historical cost and consist of the following at December 31 (in thousands): 2021 2020 Machinery and equipment $ 6,861 $ 5,102 Leasehold improvements 4,212 4,166 Software 3,831 888 Construction in progress 5,086 70 Other 89 42 20,079 10,268 Less: accumulated depreciation and amortization (5,376) (3,398) Property and equipment, net $ 14,703 $ 6,870 Depreciation and amortization expense amounted to $2.1 million, $1.3 million and $0.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following at December 31 (in thousands): 2021 2020 Employee compensation $ 12,746 $ 5,968 Customer deposits 1,850 1,177 Accrued warranty liability 266 646 Non-income tax 2,477 3,695 Professional fees 2,797 5,432 Vendor settlements — 2,975 Current portion of operating lease liabilities 1,391 — Other 4,104 2,069 Total accrued expenses and other current liabilities $ 25,631 $ 21,962 Warranty expense activity for the years ended December 31 is as follows (in thousands): 2021 2020 2019 Balance, beginning of period $ 1,826 $ 876 $ 133 Warranty provision charged to operations 58 2,498 2,203 Warranty claims (768) (1,548) (1,460) Balance, end of period $ 1,116 $ 1,826 $ 876 The Company classifies its accrued warranty liability based on the timing of expected warranty activity. The future costs of expected activity greater than one year is recorded within other non-current liabilities on the consolidated balance sheet. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity (Deficit) | |
Stockholders' Equity (Deficit) | Note 10. Stockholders’ Equity (Deficit) Common stock Dividends Holders of the Company’s Class A and Class B common stock are not entitled to receive dividends unless declared by the Board. Any such dividends would be subject to the preferential dividend rights of the holders of the then outstanding preferred stock or any other series stock having preferential rights. Holders of the Class A and Class B common stock will share ratably, if and when any dividend is declared, out of funds legally available. There have been no dividends declared to date. Voting rights The holders of shares of the Class A common stock are entitled to 1 vote per share on all matters on which the shares shall be entitled to vote. The holders of shares of the Class B common stock are entitled to 20 votes per share on all matters on which the shares shall be entitled to vote. Generally, holders of all classes of common stock vote together as a single class. Liquidation Rights On the liquidation, dissolution, distribution of assets or winding up of the Company, each holder of Class B common stock, together with each holder of Class A common stock, will be entitled, pro rata on a per share basis, to all assets of the Company of whatever kind available for distribution to the holders of common stock, subject to the designations, preferences, limitations, restrictions and relative rights of any other class or series of preferred stock of the Company then outstanding and unless disparate or different treatment of the shares of Class A common stock and Class B common stock is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class. Other Matters Holders of shares of Class A common stock do not have subscription, redemption or conversion rights. Holders of Class B common stock have the right to convert shares of their Class B common stock into fully paid and non-assessable shares of Class A common stock, on a one-to-one basis, at the option of the holder at any time upon written notice to the Company. Holders of Class B common stock will have their Class B common stock automatically converted into Class A common stock, on a one-to-one basis, upon the occurrence of any of the events described below: (1) Any sale, assignment, transfer, conveyance, hypothecation, or other transfer or disposition, directly or indirectly, of any Class B common stock or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law (including by merger, consolidation, or otherwise), including, without limitation the transfer of a share of Class B common stock to a broker or other nominee or the transfer of, or entering into a binding agreement with respect to, voting control over such share by proxy or otherwise, other than a permitted transfer. (2) Upon the first date on which Dr. Rothberg, together with all other qualified stockholders, collectively cease to beneficially own at least 20% of the number of Class B common stock (as such number of shares is equitably adjusted in respect of any reclassification, stock dividend, subdivision, combination, or recapitalization of the Class B common stock) collectively beneficially owned by Dr. Rothberg and permitted transferees of Class B common stock as of the effective time of the Merger. (3) Upon the date specified by the affirmative vote of the holders of at least two -thirds (2/3) of the outstanding shares of Class B common stock, voting as a separate class. |
Convertible Preferred Stock
Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2021 | |
Convertible Preferred Stock. | |
Convertible Preferred Stock | Note 11. Convertible Preferred Stock The Company has issued four series of Convertible Preferred Stock, Series A through Series D. Prior to the completion of the Business Combination there were no significant changes to the terms of the Convertible Preferred Stock. Upon the Closing of the Business Combination, the Convertible Preferred Stock converted into the right to receive Class A and Class B common stock based on the Business Combination’s conversion ratio of 1.0383 of the Company’s shares for each Legacy Butterfly share. The Company recorded the conversion at the carrying value of the Convertible Preferred Stock at the time of Closing. There are no shares of Convertible Preferred Stock outstanding as of December 31 The following table summarizes the authorized, issued and outstanding Convertible Preferred Stock of the Company as of immediately prior to the Business Combination and December 31, 2020 (in thousands, except share and per share information): Issuance Shares Total Initial Price Authorized, Proceeds or Net Liquidation Year of Per Issued and Exchange Issuance Carrying Price Per Class Issuance Share Outstanding Value Costs Value Share Series A 2012 $ 0.04 26,946,090 $ 1,038 $ 11 $ 1,027 $ 0.77 Series B 2014 0.77 25,957,500 20,000 99 19,901 0.77 Series C 2014 – 2015 3.21 29,018,455 93,067 246 92,821 3.21 Series D 2018 9.89 25,275,073 250,000 2,812 247,188 9.89 107,197,118 |
Equity Incentive Plan
Equity Incentive Plan | 12 Months Ended |
Dec. 31, 2021 | |
Equity Incentive Plan | |
Equity Incentive Plan | Note 12. Equity Incentive Plan The Company’s 2012 Employee, Director and Consultant Equity Incentive Plan (the "2012 Plan") was adopted by its Board of Directors and stockholders in March 2012. The Butterfly Network, Inc. Amended and Restated 2020 Equity Incentive Plan (the “2020 Plan”, and together with the 2012 Plan, the “Plans”) was approved by the Board in the fourth quarter of 2020 and by the stockholders in the first quarter of 2021. Grants under the 2012 Plan and the 2020 Plan are included in the tables below. As of December 31, 2021, the number of shares of common stock reserved for issuance under the 2020 Plan was 25.6 million. The 2020 Plan is administered by the Board. The Board may grant stock-based awards, restricted stock and options to purchase shares either as incentive stock options or non-qualified stock options. The restricted stock and option grants are subject to certain terms and conditions, option periods and conditions, exercise rights and privileges and are fully discussed in the 2020 Plan. As of December 31, 2021, 17.0 million common shares remain available for issuance under the 2020 Plan. In connection with the Closing of the Business Combination, the Company has not granted and will not grant any additional awards under the 2012 Plan. However, the 2012 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. As of December 31, 2021, the number of shares of common stock reserved for issuance under the 2012 Plan was 13.1 million. In connection with the Closing of the Business Combination, the Company adjusted the equity awards as described in Note 3 “Business Combination”. The adjustments to the awards did not result in incremental expense as the equitable adjustments were made pursuant to a preexisting, nondiscretionary anti-dilution provision in the 2012 Plan, and the fair-value, vesting conditions and classification of the awards are the same immediately before and after the modification. Stock option activity Each stock option grant carries varying vesting schedules whereby the options may be exercised at the participant’s sole discretion provided they are an employee, director or consultant of the Company on the applicable vesting date. Each option shall terminate not more than ten years from the date of the grant. A summary of the stock option activity under the 2020 Plan is presented in the table below: Weighted Weighted Average Aggregate Average Remaining Intrinsic Number of Exercise Contractual Value Options Price Term (in thousands) Outstanding at December 31, 2019 15,254,566 2.26 6.94 47,820 Granted 14,492,505 5.56 Exercised (653,341) 3.07 Forfeited (2,385,401) 2.50 Outstanding at December 31, 2020 26,708,329 4.03 7.06 143,338 Granted 8,101,866 12.98 Exercised (8,911,435) 2.46 Forfeited (9,655,228) 6.12 Outstanding at December 31, 2021 16,243,532 8.11 7.63 24,398 Options exercisable at December 31, 2020 11,553,081 2.29 6.01 82,033 Options exercisable at December 31, 2021 7,399,460 4.34 5.88 21,300 Vested and expected to vest at December 31, 2020 23,175,751 3.82 6.94 129,047 Vested and expected to vest at December 31, 2021 12,943,351 7.30 7.26 23,242 The total intrinsic value excludes those options whereby the stock price does not exceed the exercise price of the option. Additional information about the Company’s stock option activity during the years ended December 31, 2021, 2020 and 2019 is presented in the table below: 2021 2020 2019 Cash proceeds from the exercise of stock options (in millions) $ 21.7 $ 2.0 $ 0.3 Total intrinsic value of stock options exercised (in millions) 80.9 3.6 0.5 Weighted average grant date fair value of options granted 6.47 3.27 2.31 The intrinsic value of a stock option that’s been exercised is the amount by which the stock price exceeds the exercise price of the option on the date of exercise. During 2020, in connection with employee terminations, the Company extended the post-employment exercise period with regards to 733,000 options. The incremental expense resulting from the modifications was not significant to the consolidated statement of operations and comprehensive loss. On January 23, 2021, the former Chief Executive Officer and member of the Board of Directors of Legacy Butterfly resigned from his position as Chief Executive Officer. Pursuant to the separation agreement between the former Chief Executive Officer and Legacy Butterfly, the former officer received equity-based compensation. The equity compensation includes the acceleration of vesting of the officer’s service-based options. The acceleration of 1.6 million options was pursuant to the original option award agreement. The Company recognized $2.6 million of expense related to the acceleration of this option award during the year ended December 31, 2021. In accordance with ASC Topic 718, the Company estimates and records the compensation cost associated with the grants described above with an offsetting entry to paid-in capital. As described in Note 2 “Summary of Significant Accounting Policies”, the Company selected the Black-Scholes option pricing model for determining the estimated fair value for service. The Black-Scholes model requires the use of subjective assumptions which determine the fair value of stock-based awards. The assumptions used to value option grants to employees were as follows: 2021 2020 2019 Risk free interest rate 0.6% – 1.4% 0.4% – 1.7% 2.3% – 2.5% Expected dividend yield 0% 0% 0% Expected term 5.5 years – 6.2 years 5.9 years – 6.3 years 6 years – 6.1 years Expected volatility 51% – 63% 50% 50% The assumptions used to value option grants to non-employees were as follows: 2020 2019 Risk free interest rate 0.4% – 1.7% 1.5% – 2.7% Expected dividend yield 0% 0% Expected term 1.1 years – 6.1 years 8.1 years – 10 years Expected volatility 50% 50% The Company did not grant any options to non-employees during the year ended December 31, 2021. Risk free interest rate The risk-free interest rate for periods within the expected term of the awards is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected dividend yield The Company has never declared or paid any cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected term For employee awards, the Company calculates the expected term using the “simplified” method, which is the simple average of the vesting period and the contractual term. The simplified method is applied as the Company does not have sufficient historical data to provide a reasonable basis for an estimate of the expected term. The Company calculates the expected term for employee awards that take into account the effects of employee’s expected exercise and post-vesting employment termination behavior. For non-employee awards, the expected term is determined on an award by award basis. Prior to the adoption of ASU 2018-07, the contractual term was used. Expected volatility Prior to the Closing of the Business Combination, as the Company was privately held from inception until the Closing of the Business Combination in 2021, there was no specific historical or implied volatility information available. Accordingly, the Company estimates the expected volatility on the historical stock volatility of a group of similar companies that are publicly traded over a period equivalent to the expected term of the stock-based awards. Subsequent to the Closing of the Business Combination, the Company considered the historical stock volatilities of its’ peer companies, the historical volatility of the Company's stock price, and the implied stock price volatility derived from the price of exchange traded options on the Company's stock. Due to the lack of historical and implied volatility data of the Company’s common stock for a significant portion of fiscal 2021, the Company primarily estimated the expected volatility using the historical stock volatility of a group of similar companies that are publicly traded over a period equivalent to the expected term of the stock-based awards. Exercise price The exercise price is taken directly from the grant notice issued to employees and non-employees. Restricted stock unit activity A summary of the restricted stock unit activity under the 2020 Plan is presented in the table below: Weighted Number of Average Restricted Grant Date Stock Units Fair Value Outstanding at December 31, 2020 1,894,897 9.40 Granted 3,375,079 14.77 Vested and converted to shares (1,018,828) 9.40 Forfeited (292,323) 12.77 Outstanding at December 31, 2021 3,958,825 13.73 The total fair value of the restricted stock units vested during the year ended December 31, 2021 was $10.4 million. Included in the table above are performance-based restricted stock units that include certain service conditions in the award. In January 2021, the Company granted 1.0 million restricted stock units to certain executives. In 2020, the Company granted 1.9 million restricted stock units to certain employees and consultants, including a grant of 1.0 million restricted stock units to the Chairman of the Board and significant stockholder of Butterfly. The service condition for these awards is satisfied by providing service to the Company based on the defined service period per the award agreement. The performance-based condition is satisfied upon the occurrence of a business combination event as defined in the award agreement. The achievement of the performance condition was deemed satisfied in the first quarter of 2021, when the completion of the Business Combination occurred. During the year ended December 31, 2021, the Company recognized the full grant date fair value of the awards granted to the Chairman of the Board and one other consultant as service to the Company was no longer required since the Business Combination closed in the first quarter of 2021. For the remaining awards, continued service is still required for the awards to continue to vest per the award agreements. The achievement of the performance condition was not deemed satisfied and the Company did not recognize any expense for these awards for the period ended December 31, 2020. In the third quarter of 2021 and excluded from the table above, the Company approved 0.1 million performance-based restricted stock units for certain executives. The service condition for these awards is satisfied by providing service to the Company based on the defined service period per the award agreement. The performance-based conditions are objective and subjective performance metrics defined in the award agreement. Each award agreement provides that the Compensation Committee of the Board of Directors (the “Compensation Committee”) has discretion over the number of shares that will vest pursuant to the performance metrics. During the first quarter of the year ending December 31, 2023, the Compensation Committee will certify the number of shares vested under the performance-based restricted stock unit awards. The Company concluded a grant date has not occurred and that the service inception date precedes the grant date. For awards that management estimates will vest, the expense is recognized using the accelerated attribution method over the requisite service period as defined in the award agreement. The fair value of these awards is remeasured at the close of each reporting period until a grant date occurs. An insignificant amount of expense for these awards was recognized during the year ended December 31, 2021. The Company’s stock-based compensation expense for the periods presented was as follows (in thousands): 2021 2020 2019 Cost of revenue – subscription $ 21 $ 15 $ 15 Research and development 9,060 4,551 3,693 Sales and marketing 8,074 2,591 1,041 General and administrative 30,643 3,847 1,289 Total stock-based compensation expense $ 47,798 $ 11,004 $ 6,038 No related tax benefits of the stock-based compensation expense have been recognized and no related tax benefits have been realized from the exercise of stock options due to the Company’s net operating loss carryforwards. Total unrecognized stock-based compensation expense for service based awards as of December 31, 2021 and 2020 was $78.8 million and $33.1 million, respectively, which will be recognized over the remaining weighted average vesting period of 2.8 years and 3.5 years, respectively. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Net Loss Per Share | |
Net Loss Per Share | Note 13. Net Loss Per Share We compute net loss per share of Class A and Class B common stock using the two-class method. Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of each class of the Company’s common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of the Company’s common stock, including those presented in the table below, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of the Company’s common stock outstanding would have been anti-dilutive. Since the Company was in a net loss position for all periods presented, the basic earnings per share (“EPS”) calculation excludes preferred stock as it does not participate in net losses of the Company. As the Company uses the two-class method required for companies with multiple classes of common stock, the following table presents the calculation of basic and diluted net loss per share for each class of the Company’s common stock outstanding (in thousands, except share and per share amounts): Year ended December 31, 2021 Total Class A Class B Common Stock Numerator: Allocation of undistributed earnings $ (28,048) $ (4,361) $ (32,409) Numerator for basic and diluted EPS – loss available to common stockholders $ (28,048) $ (4,361) $ (32,409) Denominator: Weighted-average common shares outstanding 150,424,024 23,386,029 173,810,053 Denominator for basic and diluted EPS – weighted-average common stock 150,424,024 23,386,029 173,810,053 Basic and diluted loss per share $ (0.19) $ (0.19) $ (0.19) Year ended December 31, 2020 2019 Numerator: Allocation of undistributed earnings $ (162,745) $ (99,697) Numerator for basic and diluted EPS – loss available to common stockholders $ (162,745) $ (99,697) Denominator: Weighted-average common shares outstanding 6,056,574 5,838,103 Denominator for basic and diluted EPS – weighted-average common stock 6,056,574 5,838,103 Basic and diluted loss per share $ (26.87) $ (17.08) For the periods presented above, the net loss per share amounts are the same for Class A and Class B common stock because the holders of each class are entitled to equal per share dividends or distributions in liquidation in accordance with the Company’s Restated Certificate. The undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. For the years ended December 31, 2020 and 2019, the undistributed earnings are only allocated to Class A common stock as there were no shares of Class B common stock outstanding. Anti-dilutive common equivalent shares were as follows: 2021 2020 2019 Outstanding options to purchase common stock 16,243,532 26,708,329 15,254,566 Outstanding restricted stock units 3,577,894 1,894,897 — Outstanding warrants 20,652,837 — — Outstanding convertible preferred stock (Series A through D) — 107,197,118 107,197,118 Total anti-dilutive common equivalent shares 40,474,263 135,800,344 122,451,684 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 14. Income Taxes Income (loss) before provision for income taxes consisted of the following (in thousands): Year ended December 31, 2021 2020 2019 Federal $ (32,706) $ (162,876) $ (98,833) Foreign 418 170 (864) Loss before provision for income taxes $ (32,288) $ (162,706) $ (99,697) The Company recorded a tax provision of $0.12 million and $0.04 million for the years ended December 31, 2021 and 2020, respectively, due to foreign income and return to provision adjustments. Due to the Company’s loss position domestically, the Company has not recorded a significant federal tax provision for the years ended December 31, 2021 and 2020. Due to the Company’s overall loss position, the Company has not recorded a tax provision for the year ended December 31, 2019. A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows: Year ended December 31, (In Thousands) 2021 2020 2019 Income at US statutory rate 21.00 % 21.00 % 21.00 % State taxes, net of federal benefit 15.42 % 3.18 % 3.30 % Permanent differences (0.94) % (0.70) % (0.44) % Stock compensation (10.10) % 0.00 % 0.00 % Change in fair value of warrants 104.78 % 0.00 % 0.00 % Tax credits 12.51 % 0.86 % 1.32 % Foreign rate differential 0.01 % 0.00 % (0.01) % Valuation allowance (142.86) % (24.35) % (25.04) % Other (0.20) % (0.01) % (0.13) % (0.38) % (0.02) % (0.00) % Net deferred tax assets as of December 31, 2021 and 2020 consisted of the following (in thousands): Year ended December 31, (In Thousands) 2021 2020 Deferred tax assets Net operating loss carryforwards $ 122,279 $ 83,058 Tax credits 10,620 6,582 Stock compensation 4,752 4,088 Accruals and reserves 7,929 7,293 Lease liability 7,063 — Depreciation 102 — Other 1,889 853 Total deferred tax assets $ 154,634 $ 101,874 Valuation allowance (148,785) (101,773) Total deferred tax assets $ 5,849 $ 101 Deferred tax liabilities Right-of-use asset (5,849) — Depreciation — (101) Net deferred tax assets $ — $ — As of December 31, 2021 and 2020, the Company has federal net operating loss (“NOL”) carryforwards of approximately $494.8 million and $330.2 million, respectively. As of December 31, 2021 and 2020, the Company has state NOL carryforwards of approximately $323.8 million and $232.1 million, respectively. Of the $494.8 million of federal NOL carryforwards, $73.7 million will begin to expire at various dates in 2031 and $421.1 million may be carried forward indefinitely. The state NOL carryforwards begin to expire in 2031. As of December 31, 2021, the Company also had federal and state tax credits of $9.2 million and $1.8 million, which begin to expire in 2032 and 2022, respectively. Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2021 and 2020, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2021 and 2020. The utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, (“IRC”), a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has completed a formal study through September 30, 2021 to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred. As a result of the study, it was determined the Company experienced an ownership change on February 12, 2021; however, the limitation from the ownership change will not result in any of the NOLs or tax credits expiring unutilized. The Company’s valuation allowance increased by $47.0 million and $39.6 million for the years ended December 31, 2021 and 2020, respectively, due primarily to the generation of net operating losses. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which the Company operates or does business. ASC 740-10 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company records uncertain tax positions as liabilities in accordance with ASC 740-10 and adjusts these liabilities when the Company’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2021 and 2020, the Company has not recorded any uncertain tax positions in its financial statements. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations and comprehensive loss as required. As of December 31, 2021 and 2020, there were no significant accrued interest or penalties. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and foreign jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from December 31, 2017 to the present. Federal and state net operating losses are subject to review by taxing authorities in the year utilized. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | Note 15. Related Party Transactions Prior to the Closing of the Business Combination, there were no significant changes in the nature of the Company’s related party transactions since December 31, 2020. Pursuant to a First Addendum dated November 19, 2020 to the Amended and Restated Technology Services Agreement dated November 11, 2020 by and between the Company, 4Catalyzer Corporation (“4Catalyzer”), and other participant companies controlled by Dr. Rothberg (the “ARTSA”), Butterfly terminated its participation under the ARTSA immediately prior to the Closing of the Business Combination. Prior to the Closing of the Business Combination, the Company subleased office and laboratory spaces from 4Catalyzer. Additionally, under the ARTSA, the Company and the other participant companies agreed to share certain non-core technologies and also provided for 4Catalyzer to perform certain services for the Company and each other participant company. The ARTSA also provides for the participant companies to provide other services to each other. These expenditures are recorded within the accompanying consolidated statements of operations and comprehensive loss and allocated to the proper operating expense caption based on the nature of the service. A summary of related-party transactions and balances with 4Catalyzer are as follows (in thousands): Year ended December 31, 2021 2020 2019 Total incurred for operating expenses $ 583 $ 5,571 $ 7,721 December 31, 2021 2020 Due from related parties $ — $ 38 Due to related parties 88 154 |
Loan Payable
Loan Payable | 12 Months Ended |
Dec. 31, 2021 | |
Loan Payable | |
Loan Payable | Note 16. Loan Payable In May 2020, the Company received loan proceeds of $4.4 million under the Paycheck Protection Program (“PPP”). The PPP loan was evidenced by a promissory note dated May 1, 2020. The Company used the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities. The term of the Company’s PPP loan was two years. The interest rate on the PPP loan was 1% per annum and no payments of principal or interest were due during fiscal 2020. The loan provider did not provide for a payment schedule. The PPP loan was unsecured and guaranteed by the Small Business Administration and was subject to any new guidance and new requirements released by the Department of the Treasury. Following the Closing of the Business Combination, the Company repaid the loan in full in February 2021. For the years ended December 31, 2021 and 2020, the Company recognized an insignificant amount of interest expense in the consolidated statement of operations and comprehensive loss related to the loan. |
Convertible Debt
Convertible Debt | 12 Months Ended |
Dec. 31, 2021 | |
Convertible Debt. | |
Convertible Debt | Note 17. Convertible Debt In 2020, the Company issued convertible debt for total gross proceeds of $50.0 million. Prior to the Closing of the Business Combination, there were no significant changes to the terms of the debt agreement. Pursuant to the terms of the debt, at the Closing of the Business Combination, the convertible debt was automatically canceled and converted into the right to receive shares of the Company’s Class A common stock. The debt was converted with $49.9 million, the net carrying value of the debt as of the Closing of the Business Combination, in stockholders’ equity with a corresponding decrease to the convertible debt for the principal, accrued interest and unamortized debt issuance costs in the consolidated balance sheet. The Company recorded interest expense and amortization expense for the issuance costs of $0.6 million and $1.0 million for the years ended December 31, 2021 and 2020, respectively. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2021 | |
Warrants | |
Warrants | Note 18. Warrants Public Warrants The Company issued Public Warrants and Private Warrants in connection with its IPO during the year ended December 31, 2020. As of December 31, 2021, there were an aggregate of 13,799,504 outstanding Public Warrants, which entitle the holder to acquire Class A common stock. During the year ended December 31, 2021, the amount of exercises of Public Warrants was not significant. The amount reclassified into equity upon the exercise of the Public Warrants was not significant. Each whole warrant entitles the registered holder to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment as discussed below, beginning on May 26, 2021. The warrants will expire on February 12, 2026 or earlier upon redemption or liquidation. Redemptions At any time while the warrants are exercisable, the Company may redeem not less than all of the outstanding Public Warrants: ● at a price of $0.01 per warrant; ● upon a minimum of 30 days ’ prior written notice of redemption (the “ 30-day redemption period”) to each warrant holder; ● provided that the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities) for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders; and ● provided that there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, and a current prospectus relating thereto, available through the 30 -day redemption period or the Company has elected to require the exercise of the warrants on a “cashless basis” (as described below). If the foregoing conditions are satisfied and the Company issues a notice of redemption of the Public Warrants at $0.01 per warrant, each holder of Public Warrants will be entitled to exercise his, her or its Public Warrants prior to the scheduled redemption date. If the Company calls the Public Warrants for redemption for $0.01 as described above, the Board may elect to require any holder that wishes to exercise his, her or its Public Warrant to do so on a “cashless basis.” If the Board makes such election, all holders of Public Warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” over the exercise price of the warrants by (y) the “fair market value.” For purposes of the redemption provisions of the warrants, the “fair market value” means the average last reported sale price of the Class A common stock for the 10 Commencing 90 days after the warrants become exercisable, the Company may redeem not less than all of the outstanding Public Warrants and Private Warrants: ● at $0.10 per warrant; ● upon a minimum of 30 days ’ prior written notice of redemption; ● provided that the last reported sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted per stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; ● provided that the Private Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding Public Warrants; and ● provided that there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day redemption period. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants at $0.10 per warrant, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date on a cashless basis and receive that number of shares based on the redemption date and the “fair market value” of the Class A common stock, in accordance with a table set forth in the warrant agreement. The Company evaluated the Public Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) Private Warrants As of December 31, 2021, there were 6,853,333 Private Warrants outstanding. There have been no exercises of the Private Warrants. The Private Warrants are identical to the Public Warrants, except that so long as they are held by Longview Investors LLC (the “Sponsor”) or any of its permitted transferees, (i) the Private Warrants and the shares of Class A common stock issuable upon the exercise of the Private Warrants are not transferable, assignable or saleable until 30 days after the completion of the Business Combination, (ii) the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and (iii) the Private Warrants are not subject to the Company’s redemption option at the price of $0.01 per warrant. The Private Warrants are subject to the Company’s redemption option at the price of $0.10 per warrant, provided that the other conditions of such redemption are met, as described above. If the Private Warrants are held by a holder other than the Sponsor or any of its permitted transferees, the Private Warrants will be redeemable by the Company in all redemption scenarios applicable to the Public Warrants and exercisable by such holders on the same basis as the Public Warrants. The Company evaluated the Private Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, in conjunction with the SEC Division of Corporation Finance’s April 12, 2021 Public Statement, Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”), and concluded that they do not meet the criteria to be classified in stockholders’ equity. Specifically, the terms of the warrants provide for potential changes to the settlement amounts dependent upon the characteristics of the warrant holder, and, because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such provision would preclude the warrant from being classified in equity and thus the warrants should be classified as a liability. The Company recognized a gain of $161.1 million as a change in fair value of warrant liabilities in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Leases | Note 19. Leases Operating leases (ASC 842): The Company has operating leases primarily for office space. Most leases are not cancelable prior to their expiration. The Company accounts for leases in accordance with ASC 842 by recording right-of-use assets and lease liabilities. In May 2021, the Company entered into a lease arrangement for office space in Burlington, MA which expires in December 2032 and includes approximately $27.3 million of legally binding minimum lease payments. As stated in the agreement, the Company and the landlord agreed to a payment schedule that includes escalating rent payments beginning on the lease commencement date. The lease contains a tenant improvement allowance of $5.2 million, which is recognized as a reduction of minimum lease payments and recognized on a straight-line basis over the term of the lease. The Company utilized $2.1 million of the allowance during fiscal 2021 for purchases of property and equipment. The lease also includes termination and renewal options to be exercised at the discretion of the Company. These options are not reflected in the lease term as it is not reasonably certain that they will be exercised. The Company gained access to the office space and began recognizing expense for the lease in the third quarter of 2021. The rent expense is included below in the operating lease cost table. In the second quarter of 2021, the Company delivered a $4.0 million letter of credit for the Burlington, MA lease, secured by a deposit of the same amount with a financial institution that issued the letter of credit. The deposit is classified as restricted cash and included in other non-current assets on the consolidated balance sheets. The following table presents the components of operating lease cost: Year ended December 31, 2021 Operating lease cost $ 2,927 Short-term lease cost 287 Variable lease cost 100 Total operating lease cost $ 3,314 The expected maturities related to the Company’s leases with initial non-cancellable lease terms in excess of one year at December 31, 2021 are as follows: Year ended December 31, Operating Lease Payments 2022 $ 2,042 2023 3,633 2024 4,513 2025 4,657 2026 4,768 2027 and thereafter 22,986 Total gross operating lease payments 42,599 Less: tenant allowances (3,233) Total net operating lease payments 39,366 Less: imputed interest (10,285) Total operating lease liabilities, reflecting the present value of net lease payments $ 29,081 Additional information related to operating leases is presented as follows: December 31, 2021 Weighted average remaining lease term (in years) 9.4 Weighted average discount rate 5.5 % Year ended December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating lease payments, included in cash flows from operating activities $ 1,012 Non-cash additions to operating lease assets $ 13,929 Operating leases (ASC 840): The Company leases office space under operating leases. Minimum rental payments under operating leases are recognized on a straight-line basis over the term of the lease. Rent expense under the operating lease was $2.1 million and $1.9 million in 2020 and 2019, respectively. The following is a schedule of future minimum rental payments under non-cancelable operating leases with initial terms in excess of one year as of December 31, 2020 (in thousands): Years ending December 31: 2021 $ 1,044 2022 2,043 2023 1,934 2024 1,904 2025 1,987 Thereafter 7,354 Total future minimum rental payments $ 16,266 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 20. Commitments and Contingencies Commitments Purchase commitments: The Company enters into inventory purchase commitments with third-party manufacturers in the ordinary course of business. These commitments are generally non-cancellable and are based on sales forecasts. These agreements range from one During 2019, the Company entered into an inventory supply agreement with a certain third-party manufacturing vendor which was subsequently amended in November 2020. The amended agreement included provisions to increase the aggregate purchase commitments to $169.3 million and extend its time frame to December 2022. The provisions of the agreement also allow the Company, once the defined cumulative purchase threshold per the agreement is reached, to pay for a portion of the subsequent inventory purchases using an advance previously paid to the vendor. In the fourth quarter of fiscal year 2021, the Company reached the defined threshold and utilized a portion of the vendor advance to pay for inventory purchases. During the year ended December 31, 2021 the Company recognized an additional loss on product purchase commitments of $14.0 million. The loss consisted of $2.3 million, recorded as a write-down of vendor advances and $11.7 million, recorded as an accrued purchase commitment liability. During the year ended December 31, 2021, the Company utilized $35.0 million of the accrued purchase commitment liability to reduce the value of inventory purchased under its minimum commitment in the supply arrangement. During the year ended December 31, 2020 the Company recognized a loss on product purchase commitments of $53.2 million. The net loss was comprised of $10.6 million, recorded as a write-down of the vendor advance and $42.6 million, recorded as an accrued purchase commitment liability. During the year ended December 31, 2019 the Company recognized a loss on product purchase commitments of $9.5 million, recorded as a write-down of vendor advances. The Company applied the guidance in Topic 330, Inventory, to assess the purchase commitment and related loss. The Company considered a variety of factors and data points when determining the existence and scope of a loss for the minimum purchase commitment. The factors and data points included Company-specific forecasts which are reliant on the Company’s limited sales history, agreement-specific provisions, macroeconomic factors and market and industry trends. Determining the loss is subjective and requires significant management judgment and estimates. Future events may differ from those assumed in the Company’s assessment, and therefore the loss may change in the future. As of December 31, 2021, the Company has a prepaid advance of $31.9 million, net of write-downs and an accrual of $19.5 million related to the agreement with this vendor. The portion of the balances that is expected to be utilized in the next 12 months is included in current assets and current liabilities in the accompanying consolidated balance sheets. Other Purchase Commitments: In September 2020, the Company has renegotiated certain inventory purchase commitments with other third party manufacturing vendors and as a result certain inventory purchase commitments have been canceled. As a result of the renegotiations, the Company recorded the expected losses on those commitments of $6.9 million as a loss on product purchase commitments in the consolidated statement of operations for the year ended December 31, 2020. Other commitments: The Company sponsors a 401(k) defined contribution plan covering all eligible US employees. Contributions to the 401(k) plan are discretionary. The Company did not make any matching contributions to the 401(k) plan for the years ended December 31, 2021, 2020 and 2019. Contingencies The Company is involved in litigation and legal matters which have arisen in the normal course of business, including but not limited to medical malpractice matters. Although the ultimate results of these matters are not currently determinable, management does not expect that they will have a material effect on the Company’s consolidated balance sheet, statements of operations and comprehensive loss, or cash flows. On December 14, 2020, a stockholder of Longview filed a lawsuit in the Supreme Court of the State of New York, County of New York against Longview and the members of the Longview Board, styled Nair v. Longview Acquisition Corp. et al. (the “Nair Complaint”). On December 16, 2020, a second stockholder of Longview filed a lawsuit in the Supreme Court of the State of New York, County of New York against Longview, the members of its board of directors, and Butterfly, styled Lau v. Longview Acquisition Corp., et al. (the “Lau Complaint”). Both the Nair Complaint and the Lau Complaint alleged, among other things, that (i) defendants engaged in an unfair sales process and agreed to inadequate consideration in connection with the proposed transaction, and (ii) that the Registration Statement filed with the SEC on November 27, 2020 in connection with the proposed transaction is materially misleading, and sought, among other things, to enjoin the proposed transaction, rescind the transaction or award rescissory damages to the extent it is consummated, and an award of attorneys’ fees and expenses. The Nair Complaint was voluntarily dismissed on February 21, 2021, and the Lau Complaint was voluntarily dismissed on March 2, 2021. During fiscal 2021, the Company paid an insignificant amount to resolve plaintiffs’ requests for an attorney fee award. The Company enters into indemnification provisions under some agreements with other parties in the ordinary course of business, including business partners, investors, contractors, customers, and the Company’s officers, directors and certain employees. The Company has agreed to indemnify and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party claim because of the Company’s activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, losses recorded in the Company’s consolidated statements of operations and comprehensive loss in connection with the indemnification provisions have not been material. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | Note 21. Subsequent Events On February 16, 2022, a putative class action lawsuit, styled Rose v. Butterfly Network, Inc., |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of BFLY Operations, Inc. (formerly Butterfly Network, Inc.) and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany balances and transactions have been eliminated in consolidation. Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation reflected in the consolidated financial statements. The Company reclassified the loss on product purchase commitments that was recorded within cost of product revenue on the consolidated statement of operations and comprehensive loss to be presented separately. |
COVID-19 Outbreak | COVID-19 Outbreak The COVID-19 pandemic that began in 2020 has created significant global economic uncertainty and has impacted the Company’s operating results, financial condition and cash flows. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on The Company has not incurred any significant impairment losses in the carrying values of its assets as a result of the COVID-19 pandemic and is not aware of any specific related event or circumstance that would require the Company to revise the estimates reflected in its financial statements. |
Functional Currency | Functional Currency The Company’s worldwide operations utilize the U.S. dollar (“USD”) as the functional currency considering the significant dependency of each subsidiary on the Company. Subsidiary operations are financed through the funding received from the Company in USD. For foreign entities where the USD is the functional currency, all foreign currency-denominated monetary assets and liabilities are remeasured at end-of-period exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the Company’s operating results in the consolidated statements of operations and comprehensive loss. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. At December 31, 2021 and 2020, a majority of the Company’s cash and cash equivalents were invested in money market accounts at one financial institution. The Company also maintains balances in various operating accounts above federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. As of December 31, 2021, one customer accounted for approximately 15% of the Company’s accounts receivable. As of December 31, 2020, no customer accounted for more than 10% of the Company’s accounts receivable. For the years end December 31, 2021, 2020 and 2019, no customer accounted for more than 10% of the total revenues. |
Segment Information | Segment Information The Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates in a single reportable segment. Substantially, all of the Company’s long-lived assets are located in the United States. Since the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions about future events that affect the amounts reported in its consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates and assumptions. Significant estimates and assumptions include: ● revenue recognition, including determination of the timing and pattern of satisfaction of performance obligations, determination of the standalone selling price (“SSP”) of performance obligations; ● assumptions underlying the warranty liability calculation; ● assumptions underlying the measurement of the purchase commitment loss; ● measurement and allocation of capitalized costs, the net realizable value (the selling price as well as estimated costs of completion, disposal and transportation) of inventory, and demand and future use of inventory; ● assumptions underlying the incremental borrowing rate calculation; ● assumptions underlying the warrant liability calculation; ● valuation allowances with respect to deferred tax assets; and ● assumptions underlying the fair value used in calculation of the stock-based compensation. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s consolidated financial statements. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to in exchange for these goods and services. To achieve this core principle, the Company applies the following 5 steps: ● Step 1: Identify Contracts with Customers: The Company’s contracts with customers typically occur either through direct sales or through eCommerce. The Company executes signed contracts with direct sales customers. Direct sales typically have 30-day payment terms, and multi-year software subscriptions typically require advance payment for each annual subscription period. The Company’s contracts with eCommerce customers are executed when the customer indicates that it has read and agrees to the terms and conditions of the purchase prior to purchasing the specific goods and services. The goods and services sold through the Company’s eCommerce platform require upfront payment for the goods and the services upon check-out. ● Step 2: Identify Performance Obligations: The Company’s contracts with customers often include multiple performance obligations. The Company has identified the following performance obligations in its contracts with customers: ● Hardware devices ● Hardware accessories ● Maintenance and support for the software that is used in connection with the hardware devices, including the right to an unspecified number of software updates as and when available ● Cloud-based software subscriptions, which represent an obligation to provide the customer with ongoing access to the Company’s hosted software applications on a continuous basis throughout the subscription period ● Implementation and integration services ● Extended warranties ● Step 3: Determine Transaction Price: The Company’s contracts with customers include variable consideration in the form of refunds and credits for product returns and price concessions. The Company estimates variable consideration using the expected value method based on a portfolio of data from similar contracts. ● Step 4: Allocate Transaction Price to Performance Obligations: The Company allocates transaction price to the performance obligations in a contract with a customer based on the relative standalone selling prices of the goods and services. For the cloud-based software subscriptions, which the Company sells to customers on a standalone basis (including renewals of subscriptions), the Company uses the observable standalone selling price, based on the price for which the Company sells these services to customers in standalone contracts, including contracts for renewals of subscriptions. The Company’s sales of hardware devices represent a bundled sale of a good and a service that includes two performance obligations, namely the unit of hardware device, and the support and maintenance of the software that is used in conjunction with the device, including a right for the customer to receive an unspecified number of software updates. The Company has an observable standalone selling price for the bundle and estimates the standalone selling price of the performance obligations within the bundle using estimation techniques that maximize the use of observable inputs. ● Step 5: Recognize Revenue as Performance Obligations are Satisfied: Each unit of hardware devices and accessories is a performance obligation satisfied at a point in time, when control of the good transfers from the Company to the customer. The Company’s services, including the cloud-based software subscriptions, extended warranties, and support and maintenance, are stand-ready obligations that are satisfied over time by providing the customer with ongoing access to the Company’s resources. The Company uses the time elapsed (straight-line) measure of progress to recognize revenue as these performance obligations are satisfied evenly over the respective service period. The implementation and integration services are performance obligations satisfied over time, and the Company uses the costs incurred as inputs in the measure of progress to recognize revenue as it satisfies these performance obligations. Deferred Revenue Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from subscription services described above and is reduced as the revenue recognition criteria are met. Deferred revenue is classified as current or non-current based on expected revenue recognition timing. Specifically, deferred revenue that will be recognized as revenue within the succeeding 12 month period is recorded as current, and the portion of deferred revenue where revenue is expected to be recognized beyond 12 months from the reporting date is recorded as non-current deferred revenue in the Company’s consolidated balance sheets. Warranties The Company offers a standard product warranty that its products will operate free of material defects and function in accordance with the standard specifications for a period of one year from when control is transferred to the customer. The Company evaluated the warranty liability under ASC Topic 606 and determined that it is an assurance type warranty. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenue and as a liability in accrued expenses. Factors that affect the warranty obligation include historical as well as current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies and business practices. |
Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. At December 31, 2021 and 2020, cash and cash equivalents consist principally of cash and money market accounts. |
Trade Accounts Receivable and Allowance for Doubtful Accounts | Trade Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. The Company estimates its allowance for doubtful accounts based on historical loss patterns, the number of days that billings are past due, current market conditions, and reasonable and supportable forecasts of future economic conditions, in accordance with ASC 326 "Financial Instruments-Credit Losses." Accounts receivable are written off when deemed uncollectible and collection of the receivable is no longer being actively pursued. The following table summarizes the allowance for doubtful accounts activity: (in thousands) Fair Value Allowance for doubtful accounts as of December 31, 2019 $ — Additions (recoveries) 576 Deductions – write offs — Allowance for doubtful accounts as of December 31, 2020 $ 576 Additions (recoveries) (54) Deductions – write offs (82) Allowance for doubtful accounts as of December 31, 2021 $ 440 |
Inventories | Inventories Inventories primarily consist of raw materials, work in progress and finished goods which are purchased and held by the Company’s third-party contract manufacturers. Inventories are stated at the lower of actual cost, determined using the average cost method, or net realizable value. Cost includes all direct and indirect production costs to convert materials into a finished product. Net realizable value is based upon an estimated average selling price reduced by the estimated costs of completion, disposal and transportation. The determination of net realizable value involves certain judgments including estimating average selling prices. The Company reduces the value of inventory for estimated obsolescence or lack of marketability by the difference between the cost of the affected inventory and the net realizable value. The valuation of inventory also requires the Company to estimate excess and obsolete inventory. The Company considers new product development schedules, the effect that new products might have on the sale of existing products, product obsolescence and product merchantability, including whether older products can be re-manufactured into new products among other factors. Losses expected to arise from firm, non-cancelable and unhedged commitments for the future purchase of inventory items are recognized unless the losses are recoverable through firm sales contracts or other means. |
Restricted Cash | Restricted Cash Restricted cash includes deposits in financial institutions used to secure a lease agreement. The Company classified the amounts within other non-current assets as the deposits are used to secure a long-term lease. The amount shown as restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the consolidated statement of cash flows. |
Security Deposits | Security Deposits Security deposits represent amounts paid to third parties in relation to non-cancelable leases. |
Vendor Advances | Vendor Advances Vendor advances represent amounts paid to third party vendors for future services to be received related to production of the Company’s inventory. The amounts are presented net of writeoffs. The classification current or non-current is based on the estimated timing of inventory delivery. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation expense is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of related improvements. Useful lives for property and equipment are as follows: Property and Equipment Estimated Useful Life Software 3 Machinery and equipment 3 – 5 years Furnitures and fixtures 5 7 Leasehold improvements Lesser of estimated useful life or remaining lease term Expenditures for major renewals and improvements are capitalized. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation is eliminated from the balance sheet, and any resulting gains or losses are included in the statements of operations and comprehensive loss in the period of disposal. |
Capitalized Software Development Costs | Capitalized Software Development Costs Costs to develop software internally for internal use are capitalized and recorded as capitalized software development costs on the consolidated balance sheets as a component of property and equipment, net. The Company capitalizes qualifying costs associated with internally-developed software incurred during the application development stage so long as management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Costs incurred during the preliminary project and post-implementation stages, including training and maintenance, are expensed as incurred. Capitalized costs are amortized on a project-by-project basis using the straight-line method over the estimated economic life of the application, which is three years, beginning when the asset is substantially ready for use. Amortization expense is classified in the consolidated statement of operations based upon the nature of the project. |
Deferred Offering Costs | Deferred Offering Costs Offering costs, consisting of legal, accounting, printer and filing fees related to the Company’s business combination, were deferred and were offset against proceeds from the transaction upon the consummation of the business combination. In the event the transaction was terminated, all deferred offering costs would be expensed. Deferred offering costs capitalized as of December 31, 2021 and 2020 were $0.0 million and $3.7 million, respectively. |
Leases | Leases The Company primarily enters into leases for office space that are classified as operating leases. The Company determines if an arrangement is or contains a lease at inception. may terminate its leases with the notice required under the lease and upon the payment of a termination fee, if required. The Company’s leases do not include substantial variable payments based on index or rate. The Company’s lease agreements do not contain any significant residual value guarantees or material restrictive covenants. The Company’s leases do not provide a readily determinable implicit discount rate. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The lease payments related to the next 12 months are included in other current liabilities in the accompanying consolidated balance sheets. The Company recognizes a single lease cost on a straight-line basis over the term of the lease, and the Company classifies all cash payments within operating activities in the statement of cash flows. The Company evaluates right-of-use assets for impairment consistent with its property, plant and equipment policy. There were no impairments of right-of-use assets in 2021. The Company does not have any finance or capital leases as of December 31, 2021 or 2020. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Each impairment test is based on a comparison of the undiscounted cash flow to the recorded value of the asset. If the recorded value of the asset is less than the undiscounted cash flow, the asset is written down to its estimated fair value. The Company recorded an impairment charge of $1.4 million during the year ended December 31, 2020 related to the historical prepayments to a related party for the acquisition of capital assets. No impairments were recorded for the year ended December 31, 2021 and 2019. |
Convertible Debt | Convertible Debt The Company evaluated its convertible debt for embedded derivatives. Embedded provisions (like conversion options) are assessed under ASC Topic 815, Derivatives and Hedging To the extent that any embedded conversion option in the convertible debt is not bifurcated as an embedded derivative, that conversion option was also evaluated under ASC Topic 470, Debt Debt issuance costs were recorded as a reduction to the carrying amount of the convertible debt and are amortized to interest expense using the effective interest method. The convertible debt was classified as short-term or long-term based on the debt’s payment schedule. |
Warrant Liability | Warrant Liability The Company’s outstanding warrants include publicly-traded warrants (the “Public Warrants”) which were issued as one Derivatives and Hedging—Contracts in Entity’s Own Equity |
Cost of Revenue | Cost of Revenue Product: Cost of revenue consists of product costs including manufacturing costs, personnel costs and benefits, duties and other applicable importing costs, packaging, warranty replacement costs, depreciation expense, fulfillment costs, payment processing fees and inventory obsolescence and write-offs. Subscription: Cost of revenue consists of personnel costs, cloud hosting costs, amortization of internal use software and payment processing fees. |
Research and Development | Research and Development Research and development expenses primarily consist of personnel costs and benefits, facilities-related expenses, consulting and professional fees, fabrication services, software and other outsourcing expenses. Substantially all of the Company’s research and development expenses are related to developing new products and services and improving existing products and services. Research and development expenses are expensed as incurred. |
Sales and Marketing | Sales and Marketing Sales and marketing costs primarily consist of personnel costs and benefits, third party logistics, fulfillment and outbound shipping costs, facilities-related expenses, advertising, promotional, as well as conferences, meetings and other events. Advertising expenses are expensed as incurred. For the years ended December 31, 2021, 2020 and 2019, advertising expenses were $8.3 million, $4.7 million and $0.9 million, respectively. |
General and Administrative | General and Administrative General and administrative expenses primarily consist of personnel costs and benefits, patent and filing fees, facilities costs, office expenses and outside services. Outside services consist of professional services, legal and other professional fees. |
Net Loss per Common Share | Net Loss per Common Share We compute net loss per share of Class A and Class B common stock using the two-class method. Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of each class of the Company’s common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of the Company’s common stock, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of the Company’s common stock outstanding would have been anti-dilutive. Since the Company was in a net loss position for all periods presented, the basic earnings per share (“EPS”) calculation excludes preferred stock as it does not participate in net losses of the Company. Refer to Note 13 “Net Loss Per Share” for further discussion. |
Convertible Preferred Stock | Convertible Preferred Stock The Company applied the guidance in ASC Topic 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities |
Stock-Based Compensation | Stock-Based Compensation The measurement of share-based compensation expense for all stock-based payment awards, including stock options and restricted stock units granted to employees, directors, and nonemployees, is based on the estimated fair value of the awards on the date of grant. The Company recognizes stock-based compensation expense for its’ awards on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date fair values. Generally, awards fully vest three Prior to the adoption of Accounting Standards Update (“ASU”) 2018-07, stock options granted to non-employees were accounted for based on their fair value on the measurement date. Stock options granted to non-employees were subject to periodic revaluation over their vesting terms. As a result, the charge to statements of operations and comprehensive loss for non-employee options with vesting requirements was affected in each reporting period by a change in the fair value of the option calculated under the Black-Scholes option-pricing model. The Company during the year ended December 31, 2021 and 2020 granted performance based restricted stock units. The Company accounted for these awards according to the relevant provisions of ASC 718 - Stock Compensation. For performance awards, the Company recognizes expense using the accelerated attribution method. Refer to Note 12 “Equity Incentive Plan” for further discussion about the nature of the transactions. |
Common Stock Valuations | Common Stock Valuations Prior to the Closing of the Business Combination, Valuation of Privately Held Company Equity Securities Issued as Compensation Closing of the Business Combination t |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that Is a Service Contract (Topic 350-40) , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As a result, eligible implementation costs incurred in a cloud computing arrangement that is a service contract are capitalized as prepaid expenses and other current assets on the balance sheet, recognized on a straight-line basis over its life in the statement of operations and comprehensive loss in the same line item as the fees for the associated arrangement, and the related activity is generally classified as an operating activity in the statement of cash flows. The Company prospectively adopted such guidance on January 1, 2021 and there was no material effect of adoption on the consolidated financial statements as of and for the year ended December 31, 2021. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) The Company elected to use the package of practical expedients permitted under the transition guidance. The Company did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. For each asset class and the related lease agreements in which the Company is the lessee that include lease and non-lease components, the Company made an election about the use of the practical expedient on all leases entered into or modified after January 1, 2021 to combine lease and non-lease components. Additionally, the Company elected to not record on the balance sheet leases with a term of twelve months or less. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of allowance for doubtful accounts | (in thousands) Fair Value Allowance for doubtful accounts as of December 31, 2019 $ — Additions (recoveries) 576 Deductions – write offs — Allowance for doubtful accounts as of December 31, 2020 $ 576 Additions (recoveries) (54) Deductions – write offs (82) Allowance for doubtful accounts as of December 31, 2021 $ 440 |
Schedule of useful life for property and equipment | Property and Equipment Estimated Useful Life Software 3 Machinery and equipment 3 – 5 years Furnitures and fixtures 5 7 Leasehold improvements Lesser of estimated useful life or remaining lease term |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Schedule of disaggregated revenue | Pattern of Recognition 2021 2020 2019 By Product Type: Devices and accessories Point-in-time $ 47,868 $ 38,347 $ 25,081 Subscription services and other services Over time 14,697 7,905 2,502 Total revenue $ 62,565 $ 46,252 $ 27,583 By Geographical Market: United States $ 42,993 $ 33,237 $ 23,997 International 19,572 13,015 3,586 Total revenue $ 62,565 $ 46,252 $ 27,583 |
Schedule of receivables and deferred revenue from contracts with customers | The following table provides information about receivables and deferred revenue from contracts with customers (in thousands): December 31, December 31, 2021 2020 Accounts receivable, net $ 11,936 $ 5,752 Deferred revenue, current 13,071 8,443 Deferred revenue, non-current 5,476 2,790 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value of Financial Instruments | |
Schedule of liabilities measured at fair value on a recurring basis | Fair Value Measurement Level Total Level 1 Level 2 Level 3 December 31, 2021: Warrants: Public Warrants $ 17,525 $ 17,525 $ — $ — Private Warrants 8,704 — 8,704 — Total liabilities at fair value on a recurring basis $ 26,229 $ 17,525 $ 8,704 $ — |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Summary of inventories | A summary of inventories is as follows at December 31 (in thousands): 2021 2020 Raw materials $ 19,853 7,688 Work-in-progress 1,122 865 Finished goods 15,268 17,252 Total inventories $ 36,243 $ 25,805 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Non-Current Assets | |
Schedule of other non-current assets | Other non-current assets consist of the following at December 31 (in thousands): 2021 2020 Security deposits $ 1,883 $ 1,888 Restricted cash 4,000 — Deferred offering costs — 3,711 Other long-term assets 2,610 — Total other non-current assets $ 8,493 $ 5,599 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | Property and equipment, net, are recorded at historical cost and consist of the following at December 31 (in thousands): 2021 2020 Machinery and equipment $ 6,861 $ 5,102 Leasehold improvements 4,212 4,166 Software 3,831 888 Construction in progress 5,086 70 Other 89 42 20,079 10,268 Less: accumulated depreciation and amortization (5,376) (3,398) Property and equipment, net $ 14,703 $ 6,870 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following at December 31 (in thousands): 2021 2020 Employee compensation $ 12,746 $ 5,968 Customer deposits 1,850 1,177 Accrued warranty liability 266 646 Non-income tax 2,477 3,695 Professional fees 2,797 5,432 Vendor settlements — 2,975 Current portion of operating lease liabilities 1,391 — Other 4,104 2,069 Total accrued expenses and other current liabilities $ 25,631 $ 21,962 |
Schedule of warranty expense activity | Warranty expense activity for the years ended December 31 is as follows (in thousands): 2021 2020 2019 Balance, beginning of period $ 1,826 $ 876 $ 133 Warranty provision charged to operations 58 2,498 2,203 Warranty claims (768) (1,548) (1,460) Balance, end of period $ 1,116 $ 1,826 $ 876 |
Convertible Preferred Stock (Ta
Convertible Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Convertible Preferred Stock. | |
Schedule of authorized, issued and outstanding Convertible Preferred Stock | The following table summarizes the authorized, issued and outstanding Convertible Preferred Stock of the Company as of immediately prior to the Business Combination and December 31, 2020 (in thousands, except share and per share information): Issuance Shares Total Initial Price Authorized, Proceeds or Net Liquidation Year of Per Issued and Exchange Issuance Carrying Price Per Class Issuance Share Outstanding Value Costs Value Share Series A 2012 $ 0.04 26,946,090 $ 1,038 $ 11 $ 1,027 $ 0.77 Series B 2014 0.77 25,957,500 20,000 99 19,901 0.77 Series C 2014 – 2015 3.21 29,018,455 93,067 246 92,821 3.21 Series D 2018 9.89 25,275,073 250,000 2,812 247,188 9.89 107,197,118 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity Incentive Plan | |
Summary of the stock option activity | Weighted Weighted Average Aggregate Average Remaining Intrinsic Number of Exercise Contractual Value Options Price Term (in thousands) Outstanding at December 31, 2019 15,254,566 2.26 6.94 47,820 Granted 14,492,505 5.56 Exercised (653,341) 3.07 Forfeited (2,385,401) 2.50 Outstanding at December 31, 2020 26,708,329 4.03 7.06 143,338 Granted 8,101,866 12.98 Exercised (8,911,435) 2.46 Forfeited (9,655,228) 6.12 Outstanding at December 31, 2021 16,243,532 8.11 7.63 24,398 Options exercisable at December 31, 2020 11,553,081 2.29 6.01 82,033 Options exercisable at December 31, 2021 7,399,460 4.34 5.88 21,300 Vested and expected to vest at December 31, 2020 23,175,751 3.82 6.94 129,047 Vested and expected to vest at December 31, 2021 12,943,351 7.30 7.26 23,242 |
Summary of additional information about stock option activity | 2021 2020 2019 Cash proceeds from the exercise of stock options (in millions) $ 21.7 $ 2.0 $ 0.3 Total intrinsic value of stock options exercised (in millions) 80.9 3.6 0.5 Weighted average grant date fair value of options granted 6.47 3.27 2.31 |
Schedule of assumptions used to value option grants to employees and non-employees | 2021 2020 2019 Risk free interest rate 0.6% – 1.4% 0.4% – 1.7% 2.3% – 2.5% Expected dividend yield 0% 0% 0% Expected term 5.5 years – 6.2 years 5.9 years – 6.3 years 6 years – 6.1 years Expected volatility 51% – 63% 50% 50% 2020 2019 Risk free interest rate 0.4% – 1.7% 1.5% – 2.7% Expected dividend yield 0% 0% Expected term 1.1 years – 6.1 years 8.1 years – 10 years Expected volatility 50% 50% |
Summary of the restricted stock unit activity | Weighted Number of Average Restricted Grant Date Stock Units Fair Value Outstanding at December 31, 2020 1,894,897 9.40 Granted 3,375,079 14.77 Vested and converted to shares (1,018,828) 9.40 Forfeited (292,323) 12.77 Outstanding at December 31, 2021 3,958,825 13.73 |
Schedule of stock-based compensation expense | 2021 2020 2019 Cost of revenue – subscription $ 21 $ 15 $ 15 Research and development 9,060 4,551 3,693 Sales and marketing 8,074 2,591 1,041 General and administrative 30,643 3,847 1,289 Total stock-based compensation expense $ 47,798 $ 11,004 $ 6,038 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net Loss Per Share | |
Schedule of calculation of basic and diluted net loss per share | Year ended December 31, 2021 Total Class A Class B Common Stock Numerator: Allocation of undistributed earnings $ (28,048) $ (4,361) $ (32,409) Numerator for basic and diluted EPS – loss available to common stockholders $ (28,048) $ (4,361) $ (32,409) Denominator: Weighted-average common shares outstanding 150,424,024 23,386,029 173,810,053 Denominator for basic and diluted EPS – weighted-average common stock 150,424,024 23,386,029 173,810,053 Basic and diluted loss per share $ (0.19) $ (0.19) $ (0.19) Year ended December 31, 2020 2019 Numerator: Allocation of undistributed earnings $ (162,745) $ (99,697) Numerator for basic and diluted EPS – loss available to common stockholders $ (162,745) $ (99,697) Denominator: Weighted-average common shares outstanding 6,056,574 5,838,103 Denominator for basic and diluted EPS – weighted-average common stock 6,056,574 5,838,103 Basic and diluted loss per share $ (26.87) $ (17.08) |
Schedule of anti-dilutive common equivalent shares | 2021 2020 2019 Outstanding options to purchase common stock 16,243,532 26,708,329 15,254,566 Outstanding restricted stock units 3,577,894 1,894,897 — Outstanding warrants 20,652,837 — — Outstanding convertible preferred stock (Series A through D) — 107,197,118 107,197,118 Total anti-dilutive common equivalent shares 40,474,263 135,800,344 122,451,684 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Schedule of income (loss) before provision for income taxes | Income (loss) before provision for income taxes consisted of the following (in thousands): Year ended December 31, 2021 2020 2019 Federal $ (32,706) $ (162,876) $ (98,833) Foreign 418 170 (864) Loss before provision for income taxes $ (32,288) $ (162,706) $ (99,697) |
Schedule of reconciliation of the statutory income tax rate to the effective income tax rate | Year ended December 31, (In Thousands) 2021 2020 2019 Income at US statutory rate 21.00 % 21.00 % 21.00 % State taxes, net of federal benefit 15.42 % 3.18 % 3.30 % Permanent differences (0.94) % (0.70) % (0.44) % Stock compensation (10.10) % 0.00 % 0.00 % Change in fair value of warrants 104.78 % 0.00 % 0.00 % Tax credits 12.51 % 0.86 % 1.32 % Foreign rate differential 0.01 % 0.00 % (0.01) % Valuation allowance (142.86) % (24.35) % (25.04) % Other (0.20) % (0.01) % (0.13) % (0.38) % (0.02) % (0.00) % |
Schedule of net deferred tax assets | Net deferred tax assets as of December 31, 2021 and 2020 consisted of the following (in thousands): Year ended December 31, (In Thousands) 2021 2020 Deferred tax assets Net operating loss carryforwards $ 122,279 $ 83,058 Tax credits 10,620 6,582 Stock compensation 4,752 4,088 Accruals and reserves 7,929 7,293 Lease liability 7,063 — Depreciation 102 — Other 1,889 853 Total deferred tax assets $ 154,634 $ 101,874 Valuation allowance (148,785) (101,773) Total deferred tax assets $ 5,849 $ 101 Deferred tax liabilities Right-of-use asset (5,849) — Depreciation — (101) Net deferred tax assets $ — $ — |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Summary of related-party transactions and balances | A summary of related-party transactions and balances with 4Catalyzer are as follows (in thousands): Year ended December 31, 2021 2020 2019 Total incurred for operating expenses $ 583 $ 5,571 $ 7,721 December 31, 2021 2020 Due from related parties $ — $ 38 Due to related parties 88 154 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Schedule of operating lease cost | Year ended December 31, 2021 Operating lease cost $ 2,927 Short-term lease cost 287 Variable lease cost 100 Total operating lease cost $ 3,314 |
Schedule of operating lease expected future payments | Year ended December 31, Operating Lease Payments 2022 $ 2,042 2023 3,633 2024 4,513 2025 4,657 2026 4,768 2027 and thereafter 22,986 Total gross operating lease payments 42,599 Less: tenant allowances (3,233) Total net operating lease payments 39,366 Less: imputed interest (10,285) Total operating lease liabilities, reflecting the present value of net lease payments $ 29,081 The following is a schedule of future minimum rental payments under non-cancelable operating leases with initial terms in excess of one year as of December 31, 2020 (in thousands): Years ending December 31: 2021 $ 1,044 2022 2,043 2023 1,934 2024 1,904 2025 1,987 Thereafter 7,354 Total future minimum rental payments $ 16,266 |
Schedule of lease term, discount rate and cash flows from operating lease | December 31, 2021 Weighted average remaining lease term (in years) 9.4 Weighted average discount rate 5.5 % Year ended December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating lease payments, included in cash flows from operating activities $ 1,012 Non-cash additions to operating lease assets $ 13,929 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Customer Concentration Risk - customer | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounts receivable | |||
Number of customers | 1 | 0 | |
Revenues | |||
Number of customers | 0 | 0 | 0 |
Major Customer | Accounts receivable | |||
Concentration risk (as a percentage) | 15.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Allowance for doubtful accounts as of beginning balance | $ 576 | |
Additions (recoveries) | 54 | $ (576) |
Deductions - write offs | (82) | |
Allowance for doubtful accounts as of ending balance | $ 440 | $ 576 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Software | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 3 years |
Minimum | Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 3 years |
Minimum | Furnitures and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 5 years |
Maximum | Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 5 years |
Maximum | Furnitures and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (in years) | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Additional information (Details) $ in Millions | May 26, 2020 | Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Number of operating segments | segment | 1 | |||
Warranty period | 1 year | |||
Value of public warrants per warrant issued during IPO (as a percent) | 33.00% | |||
Deferred offering costs | $ 0 | $ 3.7 | ||
Impairments of right-of-use assets | 0 | |||
Impairment charges | 0 | 1.4 | $ 0 | |
Advertising expense | $ 8.3 | $ 4.7 | $ 0.9 | |
Term of stock options | 10 years | |||
Minimum | ||||
Vesting period of stock options | 3 years | |||
Maximum | ||||
Vesting period of stock options | 4 years |
Business Combination (Details)
Business Combination (Details) $ / shares in Units, $ in Millions | Feb. 12, 2021USD ($)Vote$ / sharesshares | Nov. 19, 2020$ / sharesshares |
Business Combination | ||
Conversion ratio to receive shares upon merger | 1.0383 | |
Increase in cash | $ | $ 589.5 | |
Transaction costs | $ | 11.4 | |
Significant liabilities incurred and paid off, excluding warrant liabilities | $ | 30.9 | |
Amount of liabilities assumed | $ | 186.5 | |
Warrant liabilities | $ | 187.3 | |
Additional proceeds | $ | $ 0.6 | |
Class A Common Stock | ||
Business Combination | ||
Conversion price | $ / shares | $ 10 | |
Number of votes | Vote | 1 | |
Shares outstanding following the business combination | 164,862,470 | |
Class B Common Stock | ||
Business Combination | ||
Number of votes | Vote | 20 | |
Percentage of shares cease to own upon recapitalization | 20.00% | |
Shares issued upon closing of business combination | 26,426,937 | |
Dr. Rothberg | Class B Common Stock | ||
Business Combination | ||
Voting interests after the Closing (as a percent) | 76.20% | |
Legacy Butterfly Stockholders | Class A Common Stock | ||
Business Combination | ||
Shares outstanding following the business combination | 95,633,659 | |
Longview Class A Stockholders | Class A Common Stock | ||
Business Combination | ||
Shares outstanding following the business combination | 41,378,811 | |
Legacy Longview Acquisition Corp | Longview Class B Stockholders | Class A Common Stock | ||
Business Combination | ||
Shares outstanding following the business combination | 10,350,000 | |
Legacy Butterfly Network Inc | Class A Common Stock | ||
Business Combination | ||
Conversion ratio to receive shares upon merger | 1.0383 | |
Legacy Butterfly Network Inc | Class B Common Stock | ||
Business Combination | ||
Conversion ratio to receive shares upon merger | 1.0383 | |
Restricted stock units | ||
Business Combination | ||
Conversion ratio to receive shares upon merger | 1.0383 | |
Stock options | ||
Business Combination | ||
Conversion ratio to receive shares upon merger | 1.0383 | |
Conversion ratio to receive shares upon exercise of option | 1.0383 | |
PIPE Investment | Class A Common Stock | ||
Business Combination | ||
Share price (in dollars per share) | $ / shares | $ 10 | |
Shares outstanding following the business combination | 17,500,000 | |
Subscription agreement, shares issued to PIPE investors | 17,500,000 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue Recognition | |||
Total revenue | $ 62,565 | $ 46,252 | $ 27,583 |
United States | |||
Revenue Recognition | |||
Total revenue | 42,993 | 33,237 | 23,997 |
International | |||
Revenue Recognition | |||
Total revenue | 19,572 | 13,015 | 3,586 |
Product | |||
Revenue Recognition | |||
Total revenue | 47,868 | 38,347 | 25,081 |
Subscription | |||
Revenue Recognition | |||
Total revenue | $ 14,697 | $ 7,905 | $ 2,502 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Recognition | ||
Accounts receivable, net | $ 11,936 | $ 5,752 |
Deferred revenue, current | 13,071 | 8,443 |
Deferred revenue, non-current | $ 5,476 | $ 2,790 |
Payment terms | 30 days |
Revenue Recognition - Performan
Revenue Recognition - Performance Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Recognition | ||
Amount of revenue recognized | $ 8.4 | $ 3.2 |
Remaining performance obligations | $ 21.2 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | ||
Revenue Recognition | ||
Percentage of remaining performance obligations as revenue | 64.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||
Revenue Recognition | ||
Percentage of remaining performance obligations as revenue | 36.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Fair Value, Recurring $ in Thousands | Dec. 31, 2021USD ($) |
Liabilities | |
Total liabilities at fair value on a recurring basis | $ 26,229 |
Public Warrants | |
Liabilities | |
Warrants | 17,525 |
Private Warrants | |
Liabilities | |
Warrants | 8,704 |
Level 1 | |
Liabilities | |
Total liabilities at fair value on a recurring basis | 17,525 |
Level 1 | Public Warrants | |
Liabilities | |
Warrants | 17,525 |
Level 2 | |
Liabilities | |
Total liabilities at fair value on a recurring basis | 8,704 |
Level 2 | Private Warrants | |
Liabilities | |
Warrants | $ 8,704 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Inventories | |||
Raw materials | $ 19,853 | $ 7,688 | |
Work-in-progress | 1,122 | 865 | |
Finished goods | 15,268 | 17,252 | |
Total inventories | 36,243 | 25,805 | |
Net realizable value inventory adjustments and excess and obsolete inventory charges | $ 889 | $ 7,123 | $ 2,711 |
Other Non-Current Assets (Detai
Other Non-Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other Non-Current Assets | ||
Security deposits | $ 1,883 | $ 1,888 |
Restricted cash | 4,000 | |
Deferred offering costs | 3,711 | |
Other long-term assets | 2,610 | |
Total other non-current assets | $ 8,493 | $ 5,599 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property and Equipment, Net | |||
Property and equipment, gross | $ 20,079 | $ 10,268 | |
Less: accumulated depreciation and amortization | (5,376) | (3,398) | |
Property and equipment, net | 14,703 | 6,870 | |
Depreciation and amortization expense | 2,090 | 1,316 | $ 758 |
Machinery and equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | 6,861 | 5,102 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Property and equipment, gross | 4,212 | 4,166 | |
Software | |||
Property and Equipment, Net | |||
Property and equipment, gross | 3,831 | 888 | |
Construction in progress | |||
Property and Equipment, Net | |||
Property and equipment, gross | 5,086 | 70 | |
Other | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 89 | $ 42 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Expenses and Other Current Liabilities | ||
Employee compensation | $ 12,746 | $ 5,968 |
Customer deposits | 1,850 | 1,177 |
Accrued warranty liability | 266 | 646 |
Non-income tax | 2,477 | 3,695 |
Professional fees | 2,797 | 5,432 |
Vendor settlements | $ 2,975 | |
Current portion of operating lease liabilities | $ 1,391 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total accrued expenses and other current liabilities | Total accrued expenses and other current liabilities |
Other | $ 4,104 | $ 2,069 |
Total accrued expenses and other current liabilities | $ 25,631 | $ 21,962 |
Accrued Expenses and Other Cu_4
Accrued Expenses and Other Current Liabilities - Warranty expense activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accrued Expenses and Other Current Liabilities | |||
Balance, beginning of period | $ 1,826 | $ 876 | $ 133 |
Warranty provision charged to operations | 58 | 2,498 | 2,203 |
Warranty claims | (768) | (1,548) | (1,460) |
Balance, end of period | $ 1,116 | $ 1,826 | $ 876 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Details) | 12 Months Ended |
Dec. 31, 2021Vote$ / shares | |
Stockholders' Equity (Deficit) | |
Dividends declared | $ / shares | $ 0 |
Common stock, conversion ratio | 1 |
Class A Common Stock | |
Stockholders' Equity (Deficit) | |
Votes per share | 1 |
Class B Common Stock | |
Stockholders' Equity (Deficit) | |
Votes per share | 20 |
Common stock, beneficial ownership | 20.00% |
Number of affirmative vote | 0.67% |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) | 12 Months Ended | |
Dec. 31, 2021itemshares | Dec. 31, 2020shares | |
Convertible preferred stock | ||
Convertible Preferred Stock | ||
Number of series | item | 4 | |
Shares Outstanding | shares | 0 | 107,197,118 |
Class A Common Stock | ||
Convertible Preferred Stock | ||
Business combination conversion ratio | 1.0383 | |
Class B Common Stock | ||
Convertible Preferred Stock | ||
Business combination conversion ratio | 1.0383 |
Convertible Preferred Stock - A
Convertible Preferred Stock - Authorized, issued and outstanding Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Convertible Preferred Stock | ||
Shares Authorized, Issued and Outstanding | 107,197,118 | |
Convertible preferred stock | ||
Convertible Preferred Stock | ||
Shares Authorized, Issued and Outstanding | 107,197,118 | 0 |
Series A convertible preferred stock | ||
Convertible Preferred Stock | ||
Issuance Price per share | $ 0.04 | |
Shares Authorized, Issued and Outstanding | 26,946,090 | |
Total Proceeds or Exchange Value | $ 1,038 | |
Issuance Costs | 11 | |
Net Carrying Value | $ 1,027 | |
Initial Liquidation Price per share | $ 0.77 | |
Series B convertible preferred stock | ||
Convertible Preferred Stock | ||
Issuance Price per share | $ 0.77 | |
Shares Authorized, Issued and Outstanding | 25,957,500 | |
Total Proceeds or Exchange Value | $ 20,000 | |
Issuance Costs | 99 | |
Net Carrying Value | $ 19,901 | |
Initial Liquidation Price per share | $ 0.77 | |
Series C convertible preferred stock | ||
Convertible Preferred Stock | ||
Issuance Price per share | $ 3.21 | |
Shares Authorized, Issued and Outstanding | 29,018,455 | |
Total Proceeds or Exchange Value | $ 93,067 | |
Issuance Costs | 246 | |
Net Carrying Value | $ 92,821 | |
Initial Liquidation Price per share | $ 3.21 | |
Series D convertible preferred stock | ||
Convertible Preferred Stock | ||
Issuance Price per share | $ 9.89 | |
Shares Authorized, Issued and Outstanding | 25,275,073 | |
Total Proceeds or Exchange Value | $ 250,000 | |
Issuance Costs | 2,812 | |
Net Carrying Value | $ 247,188 | |
Initial Liquidation Price per share | $ 9.89 |
Equity Incentive Plan (Details)
Equity Incentive Plan (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity Incentive Plan | ||||
Expiration period | 10 years | |||
Tax benefits of the stock-based compensation expense | $ 0 | |||
Tax benefits from the exercise of stock options | 0 | |||
Unrecognized stock-based compensation expense | $ 78,800,000 | $ 33,100,000 | ||
Remaining weighted average vesting period | 2 years 9 months 18 days | 3 years 6 months | ||
Stock options | ||||
Equity Incentive Plan | ||||
Post employment exercise options | 733,000 | |||
Acceleration | 1,600,000 | |||
Expense related to acceleration | $ 2,600,000 | |||
Stock options | Maximum | ||||
Equity Incentive Plan | ||||
Expiration period | 10 years | |||
Performance Based Restricted Stock Units | Employees | ||||
Equity Incentive Plan | ||||
Granted | 1,000,000 | 100,000 | 1,900,000 | |
Restricted stock units | ||||
Equity Incentive Plan | ||||
Total fair value | $ 10,400,000 | |||
Granted | 3,375,079 | |||
Board of Directors Chairman | Performance Based Restricted Stock Units | ||||
Equity Incentive Plan | ||||
Granted | 1,000,000 | |||
2012 Plan | ||||
Equity Incentive Plan | ||||
Common Stock reserved for issuance | 13,100,000 | |||
2020 Plan | ||||
Equity Incentive Plan | ||||
Common Stock reserved for issuance | 25,600,000 | |||
Common shares remain available for issuance | 17,000,000 |
Equity Incentive Plan - Stock o
Equity Incentive Plan - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | |||
Outstanding at beginning of year | 26,708,329 | 15,254,566 | |
Granted | 8,101,866 | 14,492,505 | |
Exercised | (8,911,435) | (653,341) | |
Forfeited | (9,655,228) | (2,385,401) | |
Outstanding at end of year | 16,243,532 | 26,708,329 | 15,254,566 |
Options exercisable | 7,399,460 | 11,553,081 | |
Vested and expected to vest | 12,943,351 | 23,175,751 | |
Weighted Average Exercise Price | |||
Outstanding at beginning of year | $ 4.03 | $ 2.26 | |
Granted | 12.98 | 5.56 | |
Exercised | 2.46 | 3.07 | |
Forfeited | 6.12 | 2.50 | |
Outstanding at end of year | 8.11 | 4.03 | $ 2.26 |
Options exercisable | 4.34 | 2.29 | |
Vested and expected to vest | $ 7.30 | $ 3.82 | |
Weighted Average Remaining Contractual Term | |||
Outstanding at the end of year | 7 years 7 months 17 days | 7 years 21 days | 6 years 11 months 8 days |
Options exercisable | 5 years 10 months 17 days | 6 years 3 days | |
Vested and expected to vest | 7 years 3 months 3 days | 6 years 11 months 8 days | |
Aggregate Intrinsic Value | |||
Outstanding at beginning of year | $ 143,338 | $ 47,820 | |
Outstanding at end of year | 24,398 | 143,338 | $ 47,820 |
Options exercisable | 21,300 | 82,033 | |
Vested and expected to vest | $ 23,242 | $ 129,047 |
Equity Incentive Plan - Additio
Equity Incentive Plan - Additional information about stock option activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity Incentive Plan | |||
Cash proceeds from the exercise of stock options | $ 21.7 | $ 2 | $ 0.3 |
Total intrinsic value of stock options exercised | $ 80.9 | $ 3.6 | $ 0.5 |
Weighted average grant date fair value of options granted (in dollars per share) | $ 6.47 | $ 3.27 | $ 2.31 |
Equity Incentive Plan - Option
Equity Incentive Plan - Option grants to employees and non-employees (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options granted | 8,101,866 | 14,492,505 | |
Non-employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options granted | 0 | ||
Stock options | Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free interest rate, minimum | 0.60% | 0.40% | 2.30% |
Risk free interest rate, maximum | 1.40% | 1.70% | 2.50% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 50.00% | 50.00% | |
Stock options | Employees | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 5 years 6 months | 5 years 10 months 24 days | 6 years |
Expected volatility | 51.00% | ||
Stock options | Employees | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 6 years 2 months 12 days | 6 years 3 months 18 days | 6 years 1 month 6 days |
Expected volatility | 63.00% | ||
Stock options | Non-employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk free interest rate, minimum | 0.40% | 1.50% | |
Risk free interest rate, maximum | 1.70% | 2.70% | |
Expected dividend yield | 0.00% | 0.00% | |
Expected volatility | 50.00% | 50.00% | |
Stock options | Non-employees | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 1 year 1 month 6 days | 8 years 1 month 6 days | |
Stock options | Non-employees | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 6 years 1 month 6 days | 10 years |
Equity Incentive Plan - Restric
Equity Incentive Plan - Restricted stock unit activity (Details) - Restricted stock units | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Number of RSUs | |
Outstanding at beginning of year | shares | 1,894,897 |
Granted | shares | 3,375,079 |
Vested and converted to shares | shares | (1,018,828) |
Forfeited | shares | (292,323) |
Outstanding at end of year | shares | 3,958,825 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of year | $ / shares | $ 9.40 |
Granted | $ / shares | 14.77 |
Vested and converted to shares | $ / shares | 9.40 |
Forfeited | $ / shares | 12.77 |
Outstanding at end of year | $ / shares | $ 13.73 |
Equity Incentive Plan - Stock-b
Equity Incentive Plan - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity Incentive Plan | |||
Total stock-based compensation expense | $ 47,798 | $ 11,004 | $ 6,038 |
Cost of revenue - subscription | |||
Equity Incentive Plan | |||
Total stock-based compensation expense | 21 | 15 | 15 |
Research and development | |||
Equity Incentive Plan | |||
Total stock-based compensation expense | 9,060 | 4,551 | 3,693 |
Sales and marketing | |||
Equity Incentive Plan | |||
Total stock-based compensation expense | 8,074 | 2,591 | 1,041 |
General and administrative | |||
Equity Incentive Plan | |||
Total stock-based compensation expense | $ 30,643 | $ 3,847 | $ 1,289 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | |||
Allocation of undistributed earnings | $ (32,409) | ||
Numerator for basic and diluted EPS - loss available to common stockholders | $ (32,409) | ||
Denominator: | |||
Weighted-average common shares outstanding - basic | 173,810,053 | 6,056,574 | 5,838,103 |
Weighted-average common shares outstanding - diluted | 173,810,053 | 6,056,574 | 5,838,103 |
Basic loss per share | $ (0.19) | $ (26.87) | $ (17.08) |
Diluted loss per share | $ (0.19) | $ (26.87) | $ (17.08) |
Class A Common Stock | |||
Numerator: | |||
Allocation of undistributed earnings | $ (28,048) | $ (162,745) | $ (99,697) |
Numerator for basic and diluted EPS - loss available to common stockholders | $ (28,048) | $ (162,745) | $ (99,697) |
Denominator: | |||
Weighted-average common shares outstanding - basic | 150,424,024 | 6,056,574 | 5,838,103 |
Weighted-average common shares outstanding - diluted | 150,424,024 | 6,056,574 | 5,838,103 |
Basic loss per share | $ (0.19) | $ (26.87) | $ (17.08) |
Diluted loss per share | $ (0.19) | $ (26.87) | $ (17.08) |
Common stock, shares outstanding (in shares) | 171,613,049 | 6,593,291 | |
Class B Common Stock | |||
Numerator: | |||
Allocation of undistributed earnings | $ (4,361) | ||
Numerator for basic and diluted EPS - loss available to common stockholders | $ (4,361) | ||
Denominator: | |||
Weighted-average common shares outstanding - basic | 23,386,029 | ||
Weighted-average common shares outstanding - diluted | 23,386,029 | ||
Basic loss per share | $ (0.19) | ||
Diluted loss per share | $ (0.19) | ||
Common stock, shares outstanding (in shares) | 26,426,937 | 0 | 0 |
Net Loss Per Share - Anti-dilut
Net Loss Per Share - Anti-dilutive common equivalent shares (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Loss Per Share | |||
Total anti-dilutive common equivalent shares | 40,474,263 | 135,800,344 | 122,451,684 |
Stock options | |||
Net Loss Per Share | |||
Total anti-dilutive common equivalent shares | 16,243,532 | 26,708,329 | 15,254,566 |
Restricted stock units | |||
Net Loss Per Share | |||
Total anti-dilutive common equivalent shares | 3,577,894 | 1,894,897 | |
Outstanding warrants | |||
Net Loss Per Share | |||
Total anti-dilutive common equivalent shares | 20,652,837 | ||
Convertible preferred stock | |||
Net Loss Per Share | |||
Total anti-dilutive common equivalent shares | 107,197,118 | 107,197,118 |
Income Taxes - Income (loss) be
Income Taxes - Income (loss) before provision for income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | |||
Federal | $ (32,706) | $ (162,876) | $ (98,833) |
Foreign | 418 | 170 | (864) |
Loss before provision for income taxes | $ (32,288) | $ (162,706) | $ (99,697) |
Income Taxes - Statutory income
Income Taxes - Statutory income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | |||
Income at US statutory rate | 21.00% | 21.00% | 21.00% |
State taxes, net of federal benefit | 15.42% | 3.18% | 3.30% |
Permanent differences | (0.94%) | (0.70%) | (0.44%) |
Stock compensation | (10.10%) | 0.00% | 0.00% |
Change in fair value of warrants | 104.78% | 0.00% | 0.00% |
Tax credits | 12.51% | 0.86% | 1.32% |
Foreign rate differential | 0.01% | 0.00% | (0.01%) |
Valuation allowance | (142.86%) | (24.35%) | (25.04%) |
Other | (0.20%) | (0.01%) | (0.13%) |
Total | (0.38%) | (0.02%) | 0.00% |
Income Taxes - Net deferred tax
Income Taxes - Net deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||
Net operating loss carryforwards | $ 122,279 | $ 83,058 |
Tax Credits | 10,620 | 6,582 |
Stock compensation | 4,752 | 4,088 |
Accruals and reserves | 7,929 | 7,293 |
Lease liability | 7,063 | |
Depreciation | 102 | |
Other | 1,889 | 853 |
Total deferred tax assets | 154,634 | 101,874 |
Valuation allowance | (148,785) | (101,773) |
Total Deferred tax assets | 5,849 | 101 |
Deferred tax liabilities | ||
Right-of-use asset | $ (5,849) | |
Depreciation | $ (101) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||
Tax provision | $ 120 | $ 40 |
Valuation allowance related to net operating losses | 47,000 | 39,600 |
Accrued interest or penalties | 0 | 0 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") carryforwards | 494,800 | 330,200 |
Net operating loss ("NOL") carryforwards, subject to expire | 73,700 | |
Net operating loss ("NOL") carryforwards, carried forward indefinitely | 421,100 | |
Federal and state tax credits | 9,200 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss ("NOL") carryforwards | 323,800 | $ 232,100 |
Federal and state tax credits | $ 1,800 |
Related Party Transactions (Det
Related Party Transactions (Details) - 4C - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions | |||
Total incurred for operating expenses | $ 583 | $ 5,571 | $ 7,721 |
Due from related parties | 38 | ||
Due to related parties | $ 88 | $ 154 |
Loan Payable (Details)
Loan Payable (Details) - PPP Loan - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
May 31, 2020 | Dec. 31, 2020 | |
Loan Payable | ||
Loan proceeds | $ 4.4 | |
Term of PPP Loan (in years) | 2 years | |
Interest rate (in percent) | 1.00% | |
Payments on principal and interest | $ 0 |
Convertible Debt (Details)
Convertible Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Convertible Debt. | ||
Gross proceeds | $ 50,000 | |
Conversion amount | $ 49,917 | |
Interest and amortization expense for the issuance costs | $ 600 | $ 1,000 |
Warrants (Details)
Warrants (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($)D$ / sharesshares | |
Warrants | |
Change in fair value of warrant liabilities | $ | $ (161,095) |
Public Warrants | |
Warrants | |
Shares called by warrants | shares | 13,799,504 |
Warrants settleable in cash shares held for tender offer percentage | 50.00% |
Private Warrants | |
Warrants | |
Shares called by warrants | shares | 6,853,333 |
Fair market value trading days | D | 30 |
Warrants exercised | shares | 0 |
Class A Common Stock | Public Warrants | |
Warrants | |
Shares called by warrants | shares | 1 |
Exercise price | $ 11.50 |
Warrant Redemption $0.01 | Public Warrants | |
Warrants | |
Warrants redemption price per warrant | $ 0.01 |
Warrants redemption period | 30 days |
Warrant Redemption $0.01 | Private Warrants | |
Warrants | |
Warrants redemption price per warrant | $ 0.01 |
Warrant Redemption $0.01 | Class A Common Stock | Public Warrants | |
Warrants | |
Trading day period | 30 days |
Trading day period for cashless basis redemption | 10 days |
Stock price trigger | $ 18 |
Threshold trading days | D | 20 |
Warrant Redemption $0.10 | Public Warrants | |
Warrants | |
Period of warrants become exercisable | 90 days |
Warrants redemption price per warrant | $ 0.10 |
Warrants redemption period | 30 days |
Warrant Redemption $0.10 | Private Warrants | |
Warrants | |
Warrants redemption price per warrant | $ 0.10 |
Warrant Redemption $0.10 | Class A Common Stock | Public Warrants | |
Warrants | |
Stock price trigger | $ 10 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Jun. 30, 2021 | May 31, 2021 | Dec. 31, 2020 | |
Leases | ||||
Operating lease payments | $ 39,366 | |||
Security deposits | 1,883 | $ 1,888 | ||
Office Space in Burlington | ||||
Leases | ||||
Operating lease payments | $ 27,300 | |||
Tenant improvement allowance | $ 5,200 | |||
Tenant improvement allowance utilized | $ 2,100 | |||
Option to terminate | true | |||
Option to extend | true | |||
Other Noncurrent Assets | Office Space in Burlington | ||||
Leases | ||||
Security deposits | $ 4,000 |
Leases - Lease cost (Details)
Leases - Lease cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Leases | |
Operating lease cost | $ 2,927 |
Short-term lease cost | 287 |
Variable lease cost | 100 |
Total operating lease cost | $ 3,314 |
Leases - Operating lease paymen
Leases - Operating lease payments (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Operating lese payments | |
2022 | $ 2,042 |
2023 | 3,633 |
2024 | 4,513 |
2025 | 4,657 |
2026 | 4,768 |
2027 and thereafter | 22,986 |
Total gross operating lease payments | 42,599 |
Less: tenant allowances | (3,233) |
Total net operating lease payments | 39,366 |
Less: imputed interest | (10,285) |
Total operating lease liabilities, reflecting the present value of net lease payments | $ 29,081 |
Leases - Lease term and discoun
Leases - Lease term and discount rate (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Leases | |
Weighted average remaining lease term (in years) | 9 years 4 months 24 days |
Weighted average discount rate (as a percent) | 5.50% |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating lease payments, included in cash flows from operating activities | $ 1,012 |
Non-cash additions to operating lease assets | $ 13,929 |
Leases - Future Minimum Annual
Leases - Future Minimum Annual Payments (Details) Prior to Adoption of Topic 842 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | ||
Rent expense | $ 2,100 | $ 1,900 |
Years ending December 31: | ||
2021 | 1,044 | |
2022 | 2,043 | |
2023 | 1,934 | |
2024 | 1,904 | |
2025 | 1,987 | |
Thereafter | 7,354 | |
Total future minimum rental payments | $ 16,266 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies | ||||
Write-down of vendor advance | $ 2,300 | $ 10,560 | $ 9,500 | |
Losses on commitments | (6,900) | |||
Inventory purchase commitments | ||||
Commitments and Contingencies | ||||
Minimum inventory purchase commitments | 116,100 | |||
Amount of increase to purchase commitment | $ 169,300 | |||
Net loss on vendor purchase commitment | (14,000) | (53,200) | $ (9,500) | |
Write-down of vendor advance | 2,300 | 10,600 | ||
Accrual of purchase commitment liability | 11,700 | $ 42,600 | ||
Utilization of accrual of purchase commitment liability | 35,000 | |||
Prepaid vendor advance, net of write-downs | 31,900 | |||
Accrued purchase commitments | $ 19,500 | |||
Minimum | Inventory purchase commitments | ||||
Commitments and Contingencies | ||||
Fixed or minimum annual commitments period (in years) | 1 year | |||
Maximum | Inventory purchase commitments | ||||
Commitments and Contingencies | ||||
Fixed or minimum annual commitments period (in years) | 5 years |