The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this Annual Report. See “Cautionary Note Regarding Forward-Looking Statements.” Overview We are a commercial-stage medical technology company focused on saving teeth from tooth decay, the most prevalent chronic disease globally. We have developed and manufacture the GentleWave® System, an innovative technology platform designed to treat tooth decay by cleaning and disinfecting the microscopic spaces within teeth without the need to remove tooth structure. The GentleWave System employs a sterilized, single-use procedure instrument (“PI”), to transform root canal therapy (“RCT”), by addressing the limitations of conventional methods. The clinical benefits of our GentleWave System when compared to conventional methods of RCT include improved clinical outcomes, such as superior cleaning that is independent of root canal complexity and tooth anatomy, high and rapid rates of healing and minimal to no post- operative pain. In addition to the clinical benefits, the GentleWave System can improve the workflow and economics of dental practices. We began scaling commercialization of our current technology in 2017 and are focused on establishing the GentleWave Procedure as the standard of care for RCT. Our GentleWave System represents an innovative technology platform and approach to RCT. The GentleWave System is a Class II device and has received 510(k) clearance from the FDA for preparing, cleaning, and irrigating teeth indicated for RCT. The key components of our GentleWave System are a sophisticated and mobile console and a pre-packaged, sterilized, single-use PI. The GentleWave System utilizes a proprietary mechanism of action that is designed to combine procedure fluid optimization, broad-spectrum acoustic energy and advanced fluid dynamics to efficiently and effectively reach microscopic spaces within teeth and dissolve and remove tissue and bacteria with minimal or no removal of tooth structure. We have invested significant resources in establishing a broad intellectual property portfolio that protects the GentleWave Procedure and its unique mechanism of action, as well as future capabilities under development. We believe our GentleWave System transforms the patient and dental practitioner experience and addresses many of the limitations of conventional RCT. In the United States and Canada, our direct sales force markets and sells the GentleWave System to dental practitioners performing a high volume of root canals as part of their practice. Our commercial strategy and sales model involves a focus on driving adoption of our GentleWave System by increasing our installed base of consoles and maximizing recurring PI revenue through increased utilization. We have been and plan to continue to expand the size of our sales and clinician support teams to support our efforts of driving adoption and utilization of the GentleWave System. We plan to pursue marketing authorizations and similar certifications to enable marketing and engage in other market access initiatives over time in attractive international regions in which we see significant potential opportunity. We generated revenue of $31.7 million and a net loss of $33.5 million from continuing operations for the year ended December 31, 2024 compared to revenue of $34.6 million and a net loss of $62.5 million from continuing operations for the year ended December 31, 2023. As of December 31, 2024, we had cash and cash equivalents and short-term investments of $11.6 million, an accumulated deficit of $458.0 million, and $15.1 million in principal outstanding under our term loan facility. We expect to continue to incur net losses for the next several years. We expect to continue to make investments in our sales and marketing organization, including plans to expand our international marketing programs and expanding direct to clinician digital marketing efforts to help facilitate further adoption among existing accounts and to broaden awareness and adoption of our products to new clinicians. We also expect to continue to make investments in research and development, regulatory affairs and clinical studies to develop future generations of our GentleWave products, support regulatory submissions and demonstrate the clinical efficacy of our new products. For the time being, we will continue to incur expenses as a result of operating as a public company, including legal, 87 accounting, insurance, exchange listing and SEC compliance, investor relations, and other administrative and professional services expenses. As a result of these and other expenses, we require additional financing to fund our operations and planned growth. Our ability to continue as a going concern depends on our ability to successfully secure additional financing, continue to commercialize our products, achieve and maintain profitable operations, as well as the adherence to conditions of outstanding term loans (see Note 10 to the Consolidated Financial Statements). Without additional financing, we will have insufficient liquidity to achieve further commercialization of our products and maintain compliance with our loan covenants. There is a material uncertainty that raises substantial doubt about our ability to continue as a going concern and, therefore, that we may be unable to realize our assets and discharge our liabilities in the normal course of business (see Liquidity and Capital Resources section). Recent Developments Biolase Asset Purchase Agreement On September 30, 2024, the Company entered into an Asset Purchase Agreement (the “Biolase Asset Purchase Agreement”) with Biolase, Inc., a Delaware corporation (“Biolase”), BL Acquisition Corp., a Delaware corporation (“BL Acquisition”), BL Acquisition II, Inc., a Delaware corporation (“BL Acquisition II”), and Model Dental Office, LLC, a Delaware limited liability company (“MDO” and together with Biolase, BL Acquisition and BL Acquisition II, each a “Seller” and collectively, the “Sellers”), pursuant to which, subject to the terms and conditions set forth in the Biolase Asset Purchase Agreement, the Company was designated as the “stalking horse” bidder in connection with a sale of certain assets of Biolase under Section 363 of Title 11 of the United States Code for a total purchase price of (i) $14 million in cash subject to a downward working capital adjustment, (ii) the assumption of liabilities and (iii) the value of the Delaware Litigation (as defined in the Biolase Asset Purchase Agreement) (the “Purchase Price”). The Sellers conducted a bankruptcy auction on November 4, 2024. Based on the result of that auction, the Company was not the winning bidder. Accordingly, the Company did not proceed with the transaction described in the Biolase Asset Purchase Agreement. The Biolase Asset Purchase Agreement was terminated upon the sale of the Biolase assets to the prevailing bidder, and the Sellers paid the Company a break-up fee equal to approximately $0.4 million and an expense reimbursement of approximately $0.6 million, which were recorded as contra general and administrative expenses in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024. Additionally, $1.4 million, or 10% of the Purchase Price that was placed into escrow at the time of signing, was returned to the Company in December 2024. Divestiture of Software Segment On March 1, 2024, we divested our Software segment that we owned through TDO, by selling substantially all the assets and liabilities of TDO, our wholly owned subsidiary, for approximately $16.0 million, with $15.0 million received upon closing and the balance due approximately 12 months post-closing. A gain of $5.7 million on sale of the Software business was recorded in income from discontinued operations. We received the remaining payment of $1.0 million at the end of February 2025. Insurance Reimbursement Coverage for GentleWave Procedure Effective January 1, 2025, the American Dental Association (ADA) updated ADA Code 2940, a widely used procedure code previously associated with "protective restoration," to clarify that it should also be used to create an "endodontic seal." This change may be significant for the GentleWave procedure, an advanced endodontic treatment that requires an endodontic seal as part of its process. With this update, dental professionals performing the GentleWave procedure may utilize ADA Code 2940 for insurance reimbursement purposes, potentially improving patient access and provider adoption. Debt Amendment On February 28, 2025, we entered into the Fourth Amendment to amend our Credit Agreement. See “Management’s Discussion and Analysis – Liquidity and Capital Resources – Indebtedness” for additional information. Stock Listing and Reverse Stock Split 88 Due to our failure to comply with the continued listing standards set forth in the NYSE’s Listed Company Manual, our common stock was suspended from trading on the NYSE effective at the opening of business Eastern Standard Time on November 22, 2023. We commenced trading on the OTCQX on the same day. We withdrew our request for an appeal and our common stock was delisted from the NYSE on April 11, 2024. On June 4, 2024, we received notice from OTC that our common stock did not meet the Standards for Continued Qualification for the OTCQX per the OTCQX Rules for U.S. Companies section 2.1(A) because our stock’s bid price closed below $0.10 for more than 30 consecutive calendar days. We subsequently regained compliance for a period of time through the reverse stock split discussed in the following paragraphs. On June 10, 2024, our shareholders approved an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued shares of common stock, at a specific ratio, ranging from 1:10 to 1:200, at the discretion of our board of directors at any time prior to our 2025 annual meeting of stockholders, with the exact ratio to be determined by our board of directors without further approval or authorization of the Company’s stockholders. In September 2024, the Board approved a 1-for-200 reverse stock split. On October 16, 2024, we filed an amendment to our Amended and Restated Certificate of Incorporation to implement a 1-for-200 reverse stock split of its issued and outstanding common stock, which was effected on October 18, 2024. The reverse stock split correspondingly adjusted the per share exercise price of all outstanding options and all shares underlying any of our outstanding warrants by reducing the conversion ratio for each outstanding warrant and increasing the applicable exercise price or conversion price in accordance with the terms of each outstanding warrant and based on the reverse stock split ratio. No fractional shares were issued in connection with the reverse stock split. Stockholders who were entitled to fractional shares received a cash payment in lieu of receiving fractional shares (after taking into account and aggregating all shares of our common stock then held by such stockholder) equal to the fractional share interest multiplied by $5.00 (the per share closing price of our common stock, on a post-split basis, as last reported on the OTCQX market on November 7, 2024). The reverse stock split was announced by FINRA on its OTC Daily List on November 7, 2024 and took effect at the open of trading on November 8, 2024 on the OTCQX. Upon the effectiveness of the reverse stock split, the Company became compliant with OTCQX Rule 2.1(A). The number of shares of common stock authorized under our Amended and Restated Certificate of Incorporation is unchanged at 500,000,000 shares. The accompanying consolidated financial statements reflect the 1-for-200 reverse split of our common stock. All share and per share information data herein that relates to our common stock prior to the effective date has been retroactively restated to reflect the reverse stock split. On November 7, 2024, we received notice from the OTC that our common stock no longer met the Standards for Continued Qualification for the OTCQX per the OTCQX Rules for U.S. Companies section 2.1(B) because our market capitalization has stayed below $5 million for the past 30 consecutive calendar days. After the 90 day grace period to regain compliance expired on February 10, 2025, our common stock was removed from OTCQX and moved to the OTC Pink market. Voluntary Suspension of SEC Reporting Obligations We decided to voluntarily suspend our reporting obligations with the U.S. Securities and Exchange Commission (“SEC”). On February 27, 2025, we filed a Form 15 certifying the deregistration of our common stock under Section 15(d) of the Exchange Act and suspension of our duty to file reports under Sections 13 and 15(d) of the Exchange Act. As a result, the Company will no longer file periodic reports, including Forms 10-K, 10-Q, and 8-K. The Company is filing this Form 10-K solely to comply with its obligation to file all reports required to be filed with the SEC not filed prior to the filing of the Form 15. This is the last report that the Company anticipates filing with the SEC. The Company’s shares will continue to trade on the OTC Pink market; however, there will be a significant reduction in public disclosures of the Company’s information, which may result in lower liquidity and less transparency regarding our financial condition and business operations. Factors Affecting Our Performance and Key Business Metrics We believe there are several important factors that impact our operating performance and results of operations. We also regularly review several operating and financial metrics to evaluate our business, measure our performance, 89 identify trends affecting our business, formulate our business plan and make strategic decisions. We believe the following factors and key business metrics are important indicators of our performance: •Installed base of GentleWave Systems: We have focused on driving adoption of the GentleWave Procedure among endodontists in the United States and Canada. To drive further adoption of our products, we may continue to restructure our team of sales representatives. We believe that our current targeting strategy identifies a well-defined customer base that is accessible by our direct sales organization. •System utilization: Our revenue is significantly impacted by the utilization of our GentleWave System. Our objective is to establish the GentleWave Procedure as the standard of care for RCT. We intend to increase awareness of the GentleWave Procedure among dental practitioners and, in select markets where we establish a large installed base, directly with patients through various targeted direct-to-patient marketing initiatives, showcasing the benefits and points of difference of the GentleWave Procedure. We believe that once patients become aware of the GentleWave Procedure, they will seek the GentleWave Procedure over conventional RCT. We believe these initiatives will drive a greater volume of root canal procedures to dental practitioners who offer the GentleWave Procedure, thereby increasing utilization of our system. •Gross margins: Our results of operations depend, in part, on our ability to increase our gross margins by more effectively managing our costs to produce our GentleWave Console and single-use PI, and to scale our manufacturing operations efficiently. We are undertaking continuous cost saving programs, including implementation of lean manufacturing methods and working with our suppliers to reduce material costs. We currently offer only CleanFlow PI to our customers. We phased out the legacy PI and accessories designed for molar teeth (a “Molar PI”) and anteriors and premolars (an “APM PI”) in 2024. CleanFlow PI has a lower cost to manufacture on per unit basis compared to the legacy Molar PI and APM PI. We anticipate that the combination of these strategies will continue driving gross margin improvement. •Commercial organization: As of December 31, 2024, our sales and customer support team consisted of approximately 35 employees. We intend to continue to re-prioritize our commercial organization to increase the adoption of our products among existing and new customer accounts. Successfully recruiting and training a sufficient number of sales and customer support employees is required to achieve growth at the rate we expect. The effectiveness of our commercial organization re-prioritization can impact our revenue growth and our costs incurred in anticipation of such growth. Components of Our Results of Operations As discussed in Note 3, “Discontinued Operations” to the accompanying Consolidated Financial Statements in Part II of this Annual Report on Form 10-K, we divested our Software segment by selling substantially all assets and liabilities of TDO. The sale met the criteria to be accounted for as a discontinued operation as required by Accounting Standards Codification (“ASC”) 205-20. Accordingly, the financial results of the Software business are reported as discontinued operations in the accompanying Consolidated Statements of Operations and Comprehensive Loss for all periods presented. Our Consolidated Statements of Cash Flows include the financial results of the Software business for the years ended December 31, 2024 and 2023. Revenue Our revenue from continuing operations consists primarily of product and service revenue. We generate product revenue on the capital sale of our GentleWave Console and recurring sales of our single-use PIs and accessories. To a lesser extent, we also derive revenue from service and repair and extended warranty contracts with our existing customers. We expect our product and service revenue to increase in absolute dollars as we increase adoption and utilization of our GentleWave System, though revenues may fluctuate from quarter to quarter. We also expect the growth of recurring sales of our single-use PI and accessories to outpace the growth of capital sales of our 90 GentleWave Console. Prior period financial statements have been recast so that Software revenue is included in the discontinued operations. Cost of Sales and Gross Margin Cost of sales from continuing operations consists primarily of manufacturing overhead costs, material costs, and direct labor to produce our products, warranty, provisions for slow-moving and obsolete inventory, and other direct costs such as shipping and software support. A significant portion of our cost of sales currently consists of manufacturing overhead costs. These overhead costs include personnel compensation, including stock-based compensation expenses, facilities, production equipment depreciation, operations supervision, quality control, material procurement, intangible assets amortization and impairment of long-lived assets. We provide a one-year warranty on capital equipment upon initial sale, and we establish a reserve for warranty repairs based on historical warranty repair costs incurred. Provisions for warranty obligations, which are included in cost of sales, are provided for at the time of shipment. We expect our cost of sales to increase in absolute dollars for the foreseeable future primarily as, and to the extent, our revenue grows, partially offset by lower unit product manufacturing and warranty costs, though it may fluctuate from period to period. Prior period financial statements have been recast so that Software cost of sales is included in the discontinued operations. We calculate gross margin as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, primarily, product mix and the resulting average selling prices, production volumes, manufacturing costs and product yields, and the implementation of cost reduction strategies. Our former Software segment gross margin was generally higher than our product gross margin. Prior period financial statements have been recast to exclude the Software segment from continuing operations. We expect gross margin to fluctuate in the short term and to increase year over year. We are engaged in various efforts to improve our gross margin by reducing unit product costs to the extent our production volumes increase, as well as through product design improvements, reducing material costs through negotiations with suppliers and optimizing the manufacturing process and reducing the costs to service our installed base. Operating Expenses Selling and Marketing Selling and marketing expenses consist primarily of personnel compensation, including stock-based compensation, related to selling, marketing, and professional education functions. Selling and marketing expenses also include commissions, training, travel expenses, promotional activities, conferences, trade shows, and professional services fees. We expect our selling and marketing expenses to continue to decrease in absolute dollars in 2025 compared to the prior year periods due to the benefits derived from recently adopted cost saving measures and additional measures we expect to adopt in the future, including reductions in headcount, the reprioritization of our commercial infrastructure, and lower spending on sales and marketing programs and initiatives, though it may fluctuate from period to period. General and Administrative General and administrative (“G&A”) expenses consist primarily of personnel compensation, including stock-based compensation, related to administration, finance, information technology, legal, and human resource functions. G&A expenses also include travel expenses, professional services fees, audit fees, legal fees, insurance costs and general corporate expenses including allocated facilities-related expenses. We expect our G&A expenses to continue to decrease in absolute dollars in 2025 compared to the prior year periods due to the benefits derived from recently adopted cost saving measures and additional measures we expect to adopt in the future, including reductions in headcount and lower spending on general and administrative programs, though it may fluctuate from period to period. Research and Development Research and development (“R&D”) expenses consist primarily of costs incurred for proprietary R&D programs, and include costs of product engineering, product development, regulatory affairs, consulting services, materials, and depreciation, as well as other costs associated with products and technologies being developed. These expenses include employee and non-employee compensation, including stock-based compensation, supplies, materials, consulting, related travel expenses and facilities expenses. We expect our R&D expenses to continue to decrease in 91 absolute dollars in 2025 compared to the prior year periods due to the benefits derived from recently adopted cost saving measures and additional measures we expect to adopt in the future as we become more efficient in our efforts to develop, enhance, and commercialize new products and technologies. However, we expect our R&D expenses as a percentage of revenue to vary over time depending on the level and timing of initiating new product development efforts. Interest Expense and Other Income Interest expense and other income consists primarily of interest expense under our outstanding term loan and interest income from investments in marketable securities. Income from Discontinued Operations Income from discontinued operations consists primarily of income (loss) from TDO’s Software business and gain from sale of TDO’s assets and liabilities. Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table shows our results of operations for the years ended December 31, 2024 and 2023, together with the dollar and percentage change in those items: Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Revenue, net $ 31,702 $ 34,628 (2,926 ) (8 )% Cost of sales 19,860 29,959 (10,099 ) (34 )% Gross profit 11,842 4,669 7,173 154 % Gross margin 37 % 13 % Operating expenses: Selling and marketing 17,097 28,697 (11,600 ) (40 )% General and administrative 17,353 24,794 (7,441 ) (30 )% Research and development 6,758 10,443 (3,685 ) (35 )% Total operating expenses 41,208 63,934 (22,726 ) (36 )% Operating loss (29,366 ) (59,265 ) 29,899 (50 )% Interest expense and other income: Interest expense (5,471 ) (6,456 ) 985 (15 )% Other income 1,297 3,260 (1,963 ) (60 )% Total interest expense and other income (4,174 ) (3,196 ) (978 ) 31 % Loss before income tax expense (33,540 ) (62,461 ) 28,921 (46 )% Income tax expense (2 ) (2 ) — — Loss from continuing operations, net of tax (33,542 ) (62,463 ) 28,921 (46 )% Income from discontinued operations, net of tax 5,509 1,544 3,965 257 % Net loss $ (28,033 ) $ (60,919 ) 32,886 (54 )% Revenue Revenue from continuing operations decreased $2.9 million, or 8%, in 2024 from 2023, which was primarily driven by decrease in PI sales volume of approximately 16% and lower average selling price of GentleWave consoles, partially offset by an increase in extended service contracts revenue. For the year ended December 31, 2024, we generated $8.7 million and $18.5 million from the sale of GentleWave Consoles and PIs, respectively, compared to $9.2 million and $21.6 million, respectively, for the year ended December 31, 2023. Cost of sales and Gross margin 92 Cost of sales decreased $10.1 million, or 34%, in 2024 from 2023, which was primarily driven by lower manufacturing costs for PIs and lower excess and obsolete inventory charges. During 2024, we recorded $0.3 million of excess and obsolete inventory charges related to phasing out our legacy GentleWave Console (“Gen3”) and our legacy molar and anterior pre-molar procedure instruments, as well as a $0.2 million charge due to impairment of long-lived assets. During 2023, we recorded $2.9 million of excess and obsolete inventory charges due to reduced sales volumes of our Gen3 and the phasing out of our legacy molar and anterior pre-molar procedure instruments, as well as a $1.6 million charge due to impairment of long-lived assets. Due to the aforementioned decrease in cost of sales, gross margin for 2024 increased to 37% from 13% in 2023. Selling and marketing expenses Selling and marketing expenses decreased $11.6 million, or 40%, in 2024 from 2023, primarily driven by an approximately $4.9 million decrease in employee-related compensation and benefit expenses, including stock-based compensation, as a result of the previously disclosed reduction in headcount, and lower marketing spending as we re-prioritize our commercial organization to increase the adoption of our products among existing and new customer accounts. The decrease is partially offset by expenses of $0.6 million recognized relating to the accelerated vesting of restricted stock units (“RSUs”) granted to certain non-executive employees 2024. The decrease is also partially offset by a higher charge of impairment of long-lived assets in 2024 compared to 2023. In 2024, we recorded an impairment charge of $0.6 million of long-lived assets, as compared to $0.4 million impairment charges in 2023. G&A expenses G&A expenses decreased $7.4 million, or 30%, in 2024 from 2023, primarily driven by an approximately $4.5 million decrease in employee-related compensation and expenses, including stock-based compensation, recruiting, travel and office expenses, as a result of the reduction in headcount. This decrease was also driven by an impairment charge of $1.4 million of long-lived assets in 2023. The decrease was partially offset by expenses of $0.2 million recognized relating to the accelerated vesting of RSUs granted to certain non-executive employees in 2024. In addition, during 2024, we incurred expenses of $1.1 million related to the Biolase assets auction, and recorded a contra expenses totaling $1.0 million related to the break-up fee and expense reimbursement from Biolase. R&D expenses R&D expenses decreased $3.7 million, or 35%, in 2024 from 2023, primarily driven by a decrease in employee related compensation and benefit expenses due to lower headcount. This decrease was also driven by an impairment charge of $0.2 million of long-lived assets in 2023. The decrease is partially offset by expenses of $0.4 million recognized relating to the accelerated vesting of RSUs granted to certain non-executive employees in 2024. Interest expense and other income Interest expense decreased $1.0 million, or 15%, in 2024 from 2023, primarily due to principal repayments on our term loan beginning March 2024. No principal repayment was made in 2023. Other income decreased $2.0 million, or 60%, in 2024 from 2023, primarily resulting from lower amounts of short-term investments. Income from Discontinued Operations, net of tax Income from discontinued operations, net of tax, for 2024 consisted primarily of gain of $5.7 million from sale of TDO’s assets and liabilities and loss from TDO’s Software business for the period from January 1, 2024 to March 1, 2024, which includes expenses of $0.3 million recognized relating to the accelerated vesting of RSUs granted to certain non-executive employees. Liquidity and Capital Resources Sources of liquidity 93 We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will continue to incur net losses for the next several years. As of December 31, 2024, we had cash and cash equivalents and short-term investments of $11.6 million, an accumulated deficit of $458.0 million, and $15.1 million in principal outstanding under our term loan facility, of which $10.8 million will be repaid by the end of 2025 if various financing transactions as outlined in Amendment No. 4 to the Amended Perceptive Loan Agreement are not timely executed (see below for further details). For the years ended December 31, 2024 and 2023, our net losses from operations were $28.0 million and $60.9 million, respectively, and our net cash used in operating activities was $24.7 million and $46.1 million, respectively. Funding requirements We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will continue to incur losses for the next several years. We expect our operating expenses from continuing operations to continue to decrease in 2025 based on the benefits derived from recently adopted cost saving measures and additional measures we expect to adopt in the future, including reductions in headcount and the reprioritization of our commercial infrastructure, and lower spending on selling, marketing, R&D and general and administrative programs and functions, though it may fluctuate from period to period. The timing and amount of our operating expenditures will depend on many factors, including: •the degree and rate of market acceptance of our current and future products and the GentleWave Procedure; •the scope and timing of investment in our sales force; •the cost of our research and development activities; •the cost and timing of additional regulatory clearances or approvals; •the costs associated with any product recall that may occur; •the costs associated with the manufacturing of our products at increased production levels; •the costs of attaining, defending and enforcing our intellectual property rights; •the terms and timing of any other collaborative, licensing and other arrangements that we may establish; •the scope, rate of progress and cost of our current or future clinical trials and registries; •the emergence of competing new products, technologies or alternative treatments or other adverse market developments; •our ability to raise additional funds to finance our operations; •debt service requirements; •the costs associated with being a public company; and •the impact of the macroeconomic environment, including as a result of inflation and rising interest rates, the war in Ukraine and the Gaza strip, or any other pandemic, epidemic or infectious disease outbreak, on our business. Our consolidated financial statements included elsewhere in this Annual Report have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to continue to commercialize our products, achieve and maintain profitable operations, as well as the adherence to conditions of the outstanding term loan (see Note 10 to the Consolidated Financial Statements). Without additional financing, we will have insufficient liquidity to achieve further commercialization of our products and maintain compliance with our loan covenants. Due to these conditions, there is a material uncertainty that raises substantial doubt about our ability to continue as a going concern and, therefore, we may be unable to realize our assets and discharge our liabilities in the normal course of business. We will require additional financing in order to fund future expected negative cash flows. Due to our failure to comply with the continued listing standards set forth in the NYSE’s Listed Company Manual, our common stock was suspended from trading on the NYSE effective at the opening of business Eastern Standard Time on November 94 22, 2023. We commenced trading on the OTCQX on the same day. In April 2024, we withdrew the request to appeal the NYSE’s delisting determination and our common stock was delisted from the NYSE, which may negatively impact our stockholders and the trading price and liquidity of our common stock. On June 4, 2024, we received notice from OTC that our common stock did not meet the Standards for Continued Qualification for the OTCQX per the OTCQX Rules for U.S. Companies section 2.1(A) because our stock’s bid price closed below $0.10 for more than 30 consecutive calendar days. We subsequently regained compliance for a period of time through the reverse stock split discussed in the following paragraphs. On June 10, 2024, our shareholders approved an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s issued shares of common stock, at a specific ratio, ranging from 1:10 to 1:200, at the discretion of our board of directors at any time prior to the 2025 annual meeting of stockholders, with the exact ratio to be determined by our board of directors without further approval or authorization of our stockholders. On October 16, 2024, we filed an amendment to our Amended and Restated Certificate of Incorporation to implement a 1-for-200 reverse stock split of its issued and outstanding common stock. The reverse stock split of our outstanding common stock was effected at a ratio of 1 post-split share for every 200 pre-split shares as of 12:01 a.m. Eastern Time on October 18, 2024. The reverse stock split correspondingly adjusted the per share exercise price of all outstanding options and all shares underlying any of our outstanding warrants by reducing the conversion ratio for each outstanding warrant and increasing the applicable exercise price or conversion price in accordance with the terms of each outstanding warrant and based on the reverse stock split ratio. No fractional shares were issued in connection with the reverse stock split. Stockholders who were entitled to fractional shares received a cash payment in lieu of receiving fractional shares (after taking into account and aggregating all shares of our common stock then held by such stockholder) equal to the fractional share interest multiplied by $5.00 (the per share closing price of our common stock, on a post-split basis, as last reported on the OTCQX market on November 7, 2024). The reverse stock split was announced by FINRA on its OTC Daily List on November 7, 2024 and took effect at the open of trading on November 8, 2024 on the OTCQX. Upon the effectiveness of the reverse stock split, the Company became compliant with OTCQX Rule 2.1(A). The number of shares of common stock authorized under our Amended and Restated Certificate of Incorporation is unchanged at 500,000,000 shares. The accompanying consolidated financial statements reflect the 1-for-200 reverse split of our common stock. All share and per share information data herein that relates to our common stock prior to the effective date has been retroactively restated to reflect the reverse stock split. On November 7, 2024, we received notice from the OTC that our common stock no longer met the Standards for Continued Qualification for the OTCQX per the OTCQX Rules for U.S. Companies section 2.1(B) because our market capitalization has stayed below $5 million for the past 30 consecutive calendar days. After the 90 day grace period to regain compliance expired on February 10, 2025, our common stock was removed from OTCQX and moved to the OTC Pink market, which may further negatively impact our stockholders, the trading price and the liquidity of our common stock. Over-the-counter markets are more limited than the NYSE, and it is likely that there will be significantly less liquidity in the trading of our common stock. The delisting of our common stock from the NYSE, and the move from the OTCQX to the OTC Pink market, could have material adverse effects on our business, financial condition and results of operations due to, among other things: •reduced trading liquidity and market prices for our common and preferred stock; •decreased number of institutional and other investors willing to hold or acquire our stock, coverage by securities analysts, market making activity and information available concerning trading prices and volume, as well as fewer broker-dealers willing to execute trades in our stock, thereby further restricting our ability to obtain equity financing; •resulting event of default or noncompliance under certain of our debt facilities and other agreements; and •reduced ability to retain, attract and motivate our directors, officers and employees by means of equity compensation. 95 The Company decided to voluntarily suspend its reporting obligations with the SEC. On February 27, 2025, we filed a Form 15 certifying the deregistration of our common stock under Section 15(d) of the Exchange Act and suspension of our duty to file reports under Sections 13 and 15(d) of the Exchange Act. As a result, the Company will no longer file periodic reports, including Forms 10-K, 10-Q, and 8-K. The Company’s shares will continue to trade on the OTC Pink market; however, investors should be aware that reduced public disclosures may result in lower liquidity and less transparency regarding our financial condition and business operations. Delisting our common stock from the NYSE, the move from the OTCQX to the OTC Pink market, and the suspension of reporting obligations with the SEC may adversely impact our liquidity, impair our stockholders’ ability to buy and sell our common stock, impair our ability to raise capital, and the market price of our common stock could decrease. Delisting our common stock, the move from the OTCQX to the OTC Pink market, and the suspension of reporting obligations with the SEC could also adversely impact the perception of our financial condition and have additional negative ramifications, including further loss of confidence by our employees, the loss of institutional investor interest and fewer business opportunities. We have active plans to mitigate these conditions, including plans to further reduce negative cash flow through additional operating expense reductions. We are also actively exploring financing options, including a combination of debt, equity, and non-dilutive sources. Additionally, as detailed in Note 3 to the Consolidated Financial Statements, we closed on the sale of TDO in March 2024, and renegotiated our covenant requirements with our lender, among other terms, which resulted in us remitting $15 million of principal payments on our outstanding borrowings. Our plans are subject to inherent risks and uncertainties and there can be no assurance that our plans can be effectively implemented and, therefore, that the conditions can be effectively mitigated. Indebtedness On January 13, 2023, we entered into the Amendment No. 2 (the “Second Amendment”) to the Credit Agreement and Guaranty by and among us, PIPStek, as the Subsidiary Guarantor, and Perceptive Credit Holdings III, LP, as the Collateral Agent and the Required Lender (the “Amended Perceptive Loan Agreement”)to replace the existing benchmark rate from the one-month LIBOR with a one-month Secured Overnight Financing Rate (“SOFR”). All other terms remain unchanged on the original agreement. For the years ended December 31, 2024 and 2023, the interest rate for amounts borrowed under the Amended Perceptive Loan Agreement was the greater of the one-month SOFR and 2.00% plus the applicable margin of 9.25%. On March 1, 2024, we entered to the Amendment No. 3 to the Amended Perceptive Loan Agreement (the “Third Amendment”). Pursuant to the Third Amendment, we made a one-time $15.0 million principal repayment on March 1, 2024, and made an amortization payment of $1.8 million on the outstanding principal on March 31, 2024 and we agreed to make monthly amortization payments on the outstanding principal amount each in the amount of $0.9 million on each payment date commencing on April 30, 2024. Accordingly, $1.0 million of the unamortized debt issuance costs were expensed. In addition, the Third Amendment also modified certain covenants included in the Amended Perceptive Loan Agreement and released all liens granted to the TDO’s software assets. On February 28, 2025, we entered into the Fourth Amendment to the Credit Agreement. The Fourth Amendment amended the Credit Agreement, to, among other things, (i) initially defer the February Amortization Payment due February 28, 2025 to March 31, 2025; (ii) waive the February Amortization payment and each other amortization payment which would come due on or prior to September 30, 2025 so long the Company completed one or more issuances or sales of its common stock, par value, $0.001 per share, aggregating not less than $8.0 million in gross cash proceeds to the Company by March 31, 205 (the “Equity Offering Transaction”) (iii) waive each amortization payment which would come due after September 30, 2025 until March 31, 2026 so long as the Equity Offering Transaction is completed by March 31, 2025 and a subsequent transaction resulting in not less than $5.0 million of gross cash proceeds to the Borrower pursuant to documentation approved by the Collateral Agent in writing is completed by September 30, 2025 (the “Subsequent Financing Transaction”), (iv) require one or more mandatory prepayments in amounts equal to (x) 100% of the amount of net proceeds from the Subsequent Financing Transaction in excess of $10.0 million and up to $15.0 million and (y) 50% of the net proceeds resulting from the Subsequent Financing Transaction in excess of $15.0 million and (v) reset required levels in the Minimum Revenue covenant so long as the Equity Offering Transaction is consummated by March 31, 2025. Any remaining outstanding principal amount of the term loans shall be due and payable in full in cash on August 23, 2026, the maturity date. 96 For the year ended December 31, 2024 and 2023, the effective interest rate of the loan pursuant to the Credit Agreement, was 20.31% and 17.41%, respectively. As of December 31, 2024 and 2023, the fair value of the loan pursuant to the Credit Agreement approximates its carrying amount. Future principal repayments and the net carrying value of the Credit Agreement, as of December 31, 2024, were as follows: Principal (in thousands) 2025 $ 10,800 2026 4,300 Total principal payment 15,100 Debt discounts (663 ) Net carrying value $ 14,437 We are permitted to make voluntary prepayments, subject to a scaled prepayment premium that ranges from 7.0% to 1.0% of the aggregate principal amount outstanding on such prepayment date for prepayments made after August 23, 2022 and before August 23, 2025. No prepayment premium is required for payments made after August 23, 2025. The Credit Agreement contains events of default, including, without limitation, upon: (i) failure to make a payment pursuant to the terms of the agreement; (ii) violation of certain covenants; (iii) payment or other defaults on other indebtedness; (iv) material adverse change in the business or change in control; (v) insolvency; (vi) significant judgments; (vii) incorrectness of representations and warranties; (viii) regulatory matters; and (ix) failure by us to maintain a valid and perfected lien on the collateral securing the borrowing. Based on the Credit Agreement, we have granted a security interest in substantially all of our assets. The Credit Agreement includes financial covenants that require us to (i) maintain, at all times, a minimum aggregate balance of $3.0 million in cash in one or more controlled accounts, and (ii) pursuant to the Fourth Amendment, satisfy certain minimum revenue thresholds, measured for the consecutive 12-month periods ending on each calendar quarter-end until December 31, 2026 as follows: For 12-month Period Ending Revenue (in thousands) December 31, 2024 $ 31,500 March 31, 2025 $ 30,028 June 30, 2025 $ 28,916 September 30, 2025 $ 27,858 December 31, 2025 $ 27,604 March 31, 2026 $ 28,261 June 30, 2026 $ 28,966 September 30, 2026 $ 29,660 December 31, 2026 $ 30,420 Pursuant to the Third Amendment, the lender also waived the covenant requiring the absence of any “going concern” or like qualification or exception or any qualification or exception as to the scope of the audit, solely with respect to the fiscal year ending on December 31, 2023. Pursuant to the Fourth Amendment, the lender also waived the covenant requiring the absence of any “going concern” or like qualification, solely with respect to the fiscal year ending on December 31, 2024. Failure to satisfy any covenants would constitute an event of default under the Credit Agreement. In the event of an event of default, the lender may terminate its commitments and declare all amounts outstanding under the Credit Agreement immediately due and payable, together with accrued interest and all fees and other obligations. The amount of such repayment will include payment of any prepayment premium applicable due to the time of such payment. In addition, upon the occurrence and during the continuance of any event of default, the applicable margin will increase by 3.00% per annum to 12.25%. 97 Revenue generated from continuing and discontinued operations for the 12-months period ended December 31, 2024 was $33.2 million, and the cash and cash equivalents and short term investment balance was $11.6 million as of December 31, 2024. As such, we were in compliance with all financial covenants and conditions under the Credit Agreement as of December 31, 2024. Divestiture of the TDO Software segment On March 1, 2024, we divested our TDO Software segment by selling substantially all assets and liabilities of TDO Software, Inc, our wholly owned subsidiary, for approximately $16.0 million, with $15.0 million received upon closing and the remaining balance received in February 2025. Summary statement of cash flows The following table summarizes our statement of cash flows: Year Ended December 31, 2024 2023 (in thousands) Net cash provided by (used in) : Operating activities $ (24,652 ) $ (46,062 ) Investing activities 45,814 42,402 Financing activities (24,945 ) 4 Net decrease in cash and cash equivalents $ (3,783 ) $ (3,656 ) Operating Activities Net cash used in operating activities during 2024 was $24.7 million, primarily consisting of net loss of $28.0 million and gain on sales of discontinued operations of $5.7 million, as adjusted for non-cash items of $8.8 million, partially offset by a net change in our net operating assets and liabilities of $0.3 million. Non-cash items primarily consisted of $4.8 million in stock-based compensation and $2.0 million of amortization of debt issuance costs. Changes in our net operating assets and liabilities year-over-year, was primarily due to a $3.7 million decrease in accrued expenses and other liabilities on payments to vendors, partially offset by changes in accounts receivable, prepaid expenses and other assets and accounts payable attributable to timing of payment. Net cash used in operating activities during 2023 was $46.1 million, primarily consisting of net loss of $60.9 million as adjusted for non-cash items of $15.6 million, partially offset by a net change in our net operating assets and liabilities of $0.8 million. Non-cash items primarily consisted of $7.3 million in stock-based compensation, $3.7 million impairment of long-lived assets and $1.7 million in depreciation and amortization. Changes in our net operating assets and liabilities year-over-year, were primarily due to a $4.4 million cash receipts of ERC refund and a $3.7 million decrease in inventory due to managing production level, including a $2.9 million charge related to inventory due to phasing out our legacy Gen 3, partially offset by changes in accounts receivable, prepaid expenses, accrued compensation and accounts payable attributable to timing of payments. Investing Activities Net cash provided by investing activities during 2024 was $45.8 million as a result of $14.2 million net proceeds from sale of discontinued operations and $36.3 million proceeds from maturity of available-for-sale securities, partially offset by purchases of available-for-sale securities and purchases of property and equipment. Net cash provided by investing activities during 2023 was $42.4 million as a result of maturity of available-for-sale securities, partially offset by proceeds from maturities of available-for-sale securities and purchases of property and equipment. Financing Activities Net cash used in financing activities was $24.9 million for 2024, primarily due to principal repayments on our term loan. Net cash used in financing activities for 2023 was immaterial. 98 Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, the revenue generated, and expenses incurred, and related disclosures, during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. While our significant accounting policies are more fully described in Note 2 of our consolidated financial statements included in Part II, Item 8 of this Annual Report, we believe the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements and understanding and evaluating our reported financial results. Revenue Recognition We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. Specifically, we apply the following five core principles to recognize revenue: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, we satisfy a performance obligation. Our performance obligations primarily arise from the manufacture and delivery of the GentleWave System, single-use PIs and other accessories and services as well as software license sales related to our practice management platform. Payment terms are typically on open credit terms consistent with industry practice and do not have significant financing components. We consider the individual deliverables in our product offering as separate performance obligations and assess whether each promised good or service is distinct. The total contract transaction price is determined based on the consideration expected to be received, based on the stated value in contractual arrangements or the estimated cash to be collected in no-contracted arrangements, and is allocated to the identified performance obligations based upon the relative standalone selling prices of the performance obligations. The stand-alone selling price (“SSP”) is based on an observable price offered to other comparable customers. We estimate the SSP using the market assessment approach considering market conditions and entity-specific factors including, but not limited to, features and functionality of the products and services, geographies, type of customer and market conditions. We regularly review and update SSP as necessary. The consideration we receive in exchange for our goods or services is only recognized when it is probable that a significant reversal will not occur. The consideration to which we expect to be entitled includes a stated list price, less various forms of variable consideration. We estimate related variable consideration at the point of sale, including discounts, product returns, refunds, and other similar obligations. Revenue is recognized over time when the customer simultaneously receives and consumes the benefits provided by our performance. Revenue is recognized at a point in time if the criteria for recognizing revenue over time are not met, and we transferred control of the goods to the customer. Product revenue is recognized at a point in time when we have transferred control to the customer, which is generally when title of the goods transfers to the customer. Revenue from support and maintenance contracts and software license revenue is recognized as the output of the service is transferred to the customer over time, typically evenly over the contract term. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We also sell extended service contracts on the GentleWave System. Sales of extended service contracts are recorded as deferred revenue until such time as the standard warranty expires, which is generally up to two years from the date of sale. Service contract revenue is recognized on a straight-line basis over time consistent with the life of the related service contract in proportion to the costs incurred in fulfilling performance obligations under the service 99 contract. The Company estimates related variable consideration at the point of sale, including discounts, product returns, refunds, and other similar obligations. Revenue for technical support and other services is recognized ratably over the performance obligation period. Valuation of Goodwill Our goodwill represents the excess of cost over fair value of identified assets acquired and liabilities we assume in an acquisition of a business. We recorded $8.5 million of goodwill in conjunction with the acquisition of TDO in October 2018. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized; however, it is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of the reporting unit exceeds its fair value. We perform our goodwill impairment analysis at the reporting unit level, which aligns with our reporting structure and availability of discrete financial information. We perform our annual impairment analysis by either doing a qualitative assessment of the reporting unit’s fair value from the last quantitative assessment to determine if there is potential impairment, or comparing the reporting unit’s estimated fair value to its carrying amount. We may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit’s estimated fair value was significantly in excess of the carrying value of its net assets and we do not believe there have been significant changes in the reporting unit’s operations that would significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies. We estimate the fair value of the TDO reporting unit using the income approach and market approach. For the purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. Key assumptions for these projections require significant judgments by management and include revenue growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The revenue and margin growth is based on increased sales of new and existing products as we maintain investment in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation. Actual results may differ from those assumed in our forecasts. We also reconcile our discounted cash flow analysis to our indicated equity value allowing for a reasonable control premium. For purposes of the market approach, fair value is determined based on the guideline public company method and utilizes a number of factors such as publicly available information regarding the market capitalization of the selected guideline companies, as well as operating results, market multiples, and present value techniques. Under the market-based fair value methodology, judgment is required in evaluating market multiples and recent transactions. Management believes that the assumptions used for its impairment test are representative of those that would be used by market participants performing similar valuations of the TDO reporting unit. Our evaluation for goodwill impairment, which is completed annually as of October 31, consists of the TDO reporting unit from which goodwill originated. In the second half of 2023, we identified indicators of impairment related to the decline in our share price. We completed an evaluation using a quantitative method as of September 30, 2023, the annual evaluation using a qualitative method as of October 31, 2023 and an evaluation using a quantitative method as of December 31, 2023, and determined that no impairment existed at each evaluation date. Valuation and Impairment of Long-Lived Assets Our long-lived assets comprises definite-lived intangibles, property and equipment, and lease right-of-use assets. Our intangible assets with a finite life are primarily composed of developed technology, customer relationships, and 100 tradenames acquired in conjunction with the acquisition of TDO in October 2018. We make significant judgments in relation to the valuation of intangible assets resulting from business combinations and asset acquisitions. Intangible assets are generally amortized on a straight-line basis over their estimated useful lives of 5 to 10 years. We base the useful lives and related amortization expense on the period of time we estimate the assets will generate revenue or otherwise be used. We also periodically review the lives assigned to our intangible assets to ensure that our initial estimates do not exceed any revised estimated periods from which we expect to realize cash flows from the assets. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase. Property and equipment are recorded at cost, net of accumulated depreciation. The Company records depreciation over the estimated useful lives of the assets, typically three to five years, using the straight-line method, and amortizes leasehold improvements using a straight-line method over the shorter of the estimated economic lives or the related remaining lease term. Repairs and maintenance expenditures that do not significantly add value to property and equipment, or prolong the useful lives of the assets, are charged to expense as incurred. Gains and losses on dispositions of property and equipment are included in the operating results of the related period. We review our long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of our use of the acquired assets or the strategy for our overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the long-lived asset may be impaired, we make an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the long-lived asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining useful life, we reduce the net carrying value of the related asset to fair value and may adjust the remaining useful life. An impairment analysis is subjective and assumptions regarding future growth rates and operating expense levels can have a significant impact on the expected future cash flows and impairment analysis. In the second half of 2023, the significant decline in our market capitalization was a triggering event, which resulted in the performance of long-lived assets impairment assessments. The assessments indicated that the carrying amount of our long-lived fixed assets in the Product segment would not be recoverable as of December 31, 2023. As a result, in the year ended December 31, 2023, the Company recognized impairment charges of $1.0 million to a definite-lived intangible, developed technology, which was recorded in operating expenses on the Consolidated Statements of Operations and Comprehensive Loss, and impairment charges of $2.6 million to property and equipment, of which $1.6 million was recorded in cost of sales and the remainder was recorded in operating expenses, on the Consolidated Statements of Operations and Comprehensive Loss. In the fourth quarter of 2024, the Company recorded $0.6 million impairment charges to property and equipment, which was recorded in selling and marketing on the consolidated statements of operations and comprehensive loss. Significant judgment is required in the forecasts of future operating results that are used in the discounted cash flow valuation models. It is possible that plans may change and estimates used may prove to be inaccurate. If our actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges. JOBS Act Accounting Election and Smaller Reporting Company Status For the year ended December 31, 2024, we were an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act”). As such, we were eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, presenting only two years of audited financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this Annual Report, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or golden parachute arrangements. We have elected to take advantage of certain of the reduced disclosure obligations in this Annual Report and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC, to the extent applicable. As a result, the 101 information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests. In addition, the JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to avail ourselves of this exemption and, therefore, for new or revised accounting standards applicable to public companies, we will be subject to an extended transition period until those standards would otherwise apply to private companies. We will remain an emerging growth company until the earliest of (1) the last day of our first fiscal year (a) following the fifth anniversary of our IPO, which closed on November 2, 2021, (b) in which we have total annual gross revenues of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, as defined in Rule 12b-2 under the Exchange Act, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we no longer qualify as an emerging growth company. To the extent we are subject to the reporting requirements of the Exchange Act, we may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report for additional information.