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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
REGISTRATION STATEMENT
Under
The Securities Act of 1933
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from               to
Commission File Number   001-38847     
SILK ROAD MEDICAL, INC.
(Exact name of registrant as specified in its charter)

Delaware384120-8777622
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
1213 Innsbruck Dr. Sunnyvale, CA 94089 (408) 720-9002
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Erica J. Rogers
Chief Executive Officer
1213 Innsbruck Dr. Sunnyvale, CA 94089 (408) 720-9002
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act). Yes No
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockSILKNasdaq Global Select Market
As of October 31, 2020, the number of outstanding shares of the registrant's common stock, par value $0.001 per share, was 33,958,944.




TABLE OF CONTENTS
Page

1


CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.
These forward-looking statements include, but are not limited to, statements about:
our plans to conduct further clinical trials;
our plans and expected timeline related to our products, or developing new products, to address additional indications or otherwise;
the expected use of our products by physicians;
our expectations regarding the number of procedures performed with our products, the number of physicians we expect to train, and the number of our sales territories;
our ability to obtain, maintain and expand regulatory clearances for our products and any new products we create;
the expected growth of our business and our organization;
our expectations regarding government and third-party payer coverage and reimbursement;
our ability to retain and recruit key personnel, including the continued development of a sales and marketing infrastructure;
our ability to obtain an adequate supply of materials and components for our products from our third-party suppliers, most of whom are single-source suppliers;
our ability to manufacture sufficient quantities of our products with sufficient quality;
our ability to obtain and maintain intellectual property protection for our products and our business;
our ability to expand our business into new geographic markets;
our compliance with extensive Nasdaq requirements and government laws, rules and regulations both in the United States and internationally;
our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for, or ability to obtain, additional financing;
our ability to identify and develop new and planned products and/or acquire new products; 
our expectations regarding the impact of the COVID-19 pandemic on our business;
developments and projections relating to our competitors or our industry; and
2


our intended use of net proceeds from our public offerings.
We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.
These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
3


Part I. Financial Information
Item 1: Unaudited Condensed Financial Statements
Silk Road Medical, Inc.
Condensed Balance Sheets
(unaudited)


(in thousands, except share and per share data)September 30,December 31,
20202019
Assets
Current assets:
Cash and cash equivalents$62,468 $39,181 
Short-term investments91,442 51,508 
Accounts receivable, net9,398 8,601 
Inventories10,946 10,322 
Prepaid expenses and other current assets3,443 2,878 
Total current assets177,697 112,490 
Long-term investments 18,224 
Property and equipment, net2,824 2,734 
Restricted cash310 310 
Other non-current assets2,997 3,644 
Total assets$183,828 $137,402 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$2,046 $1,898 
Accrued liabilities13,008 15,034 
Total current liabilities15,054 16,932 
Long-term debt45,160 44,879 
Other liabilities3,876 3,700 
Total liabilities64,090 65,511 
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock, $0.001 par value
Shares authorized: 5,000,000 at September 30, 2020 and December 31, 2019
Shares issued and outstanding: none
  
Common stock, $0.001 par value
Shares authorized: 100,000,000 at September 30, 2020 and December 31, 2019
Shares issued and outstanding: 33,889,077 and 31,255,267 at September 30, 2020 and December 31, 2019, respectively
34 31 
Additional paid-in capital341,687 263,384 
Accumulated other comprehensive income152 2 
Accumulated deficit(222,135)(191,526)
Total stockholders' equity119,738 71,891 
Total liabilities and stockholders' equity$183,828 $137,402 

The accompanying notes are an integral part of these condensed financial statements.
4

Silk Road Medical, Inc.
Condensed Statements of Operations and Comprehensive Loss
(unaudited)

(in thousands, except share and per share data)Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Revenue$20,067 $17,026 $54,093 $44,721 
Cost of goods sold5,488 4,170 16,074 11,206 
Gross profit14,579 12,856 38,019 33,515 
Operating expenses:
Research and development4,711 3,187 11,232 9,008 
Selling, general and administrative19,202 17,064 54,652 45,064 
Total operating expenses23,913 20,251 65,884 54,072 
Loss from operations(9,334)(7,395)(27,865)(20,557)
Interest income249 565 951 1,215 
Interest expense(1,215)(1,176)(3,620)(3,736)
Other income (expense), net(15)(1)(74)(21,046)
Net loss(10,315)(8,007)(30,608)(44,124)
Other comprehensive loss:
Unrealized gain (loss) on investments, net(164) 150  
Net change in other comprehensive loss(164) 150  
Net loss and comprehensive loss$(10,479)$(8,007)$(30,458)$(44,124)
Net loss per share, basic and diluted $(0.31)$(0.26)$(0.94)$(2.18)
Weighted average common shares used to compute net loss per share, basic and diluted33,757,599 30,764,354 32,597,007 20,249,580 

The accompanying notes are an integral part of these condensed financial statements.
5

Silk Road Medical, Inc.
Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
(unaudited)

(in thousands, except share data)Common StockAdditional
Paid-in Capital
Accumulated DeficitAccumulated Other Comprehensive IncomeTotal
SharesAmount
Balances at December 31, 2019
31,255,267 $31 $263,384 $(191,526)$2 $71,891 
Exercise of stock options
140,370 — 274 — — 274 
Stock-based compensation
— — 1,293 — — 1,293 
Net loss
— — — (9,941)— (9,941)
Unrealized gain on investments, net
— — — — 440 440 
Balances at March 31, 2020
31,395,637 31 264,951 (201,467)442 63,957 
Issuance of common stock in connection with public offering, net of underwriting discount, commissions and offering costs of $4,457
1,923,076 2 70,541 — — 70,543 
Exercise of stock options265,467 1 603 — — 604 
Issuance of common stock under employee stock purchase plan25,919 — 801 — — 801 
Stock-based compensation— — 1,654 — — 1,654 
Net loss— — — (10,353)— (10,353)
Unrealized loss on investments, net— — — — (126)(126)
Balances at June 30, 2020
33,610,099 34 338,550 (211,820)316 127,080 
Exercise of stock options278,978 — 1,131 — — 1,131 
Stock-based compensation— — 2,006 — — 2,006 
Net loss— — — (10,315)— (10,315)
Unrealized loss on investments, net— — — — (164)(164)
Balances at September 30, 202033,889,077 $34 $341,687 $(222,135)$152 $119,738 

The accompanying notes are an integral part of these condensed financial statements.
6

Silk Road Medical, Inc.
Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
(unaudited)
(in thousands, except share data)Redeemable Convertible
Preferred Stock
Common StockAdditional
Paid-in Capital
Accumulated DeficitTotal
SharesAmountSharesAmount
Balances at December 31, 201821,233,190 $105,235 1,135,310 $1 $4,557 $(139,111)$(134,553)
Exercise of Series C preferred stock warrants4,915 30 — — — — — 
Exercise of stock options
— — 251,305 — 375 — 375 
Stock-based compensation— — — — 262 — 262 
Net loss and comprehensive loss
— — — — — (24,158)(24,158)
Balances at March 31, 2019
21,238,105 105,265 1,386,615 1 5,194 (163,269)(158,074)
Exercise of Series C preferred stock warrants287,446 1,754 — — — — — 
Exercise of common stock warrants— — 3,764 — 31 — 31 
Issuance of common stock in IPO, net of underwriting discount, commissions and offering costs of $10,961
— — 6,000,000 6 109,033 — 109,039 
Conversion of preferred stock to common stock issued upon the conversion of preferred stock into common stock in IPO(23,178,555)(144,140)23,178,555 23 144,117 — 144,140 
Net exercise of Series C preferred stock warrants in connection with IPO1,653,004 37,121 — — — — — 
Net exercise of common stock warrants in connection with IPO— — 2,204 — — — — 
Exercise of stock options— — 176,576 1 363 — 364 
Stock-based compensation— — — — 836 — 836 
Net loss and comprehensive loss— — — — — (11,959)(11,959)
Balances at June 30, 2019
  30,747,714 31 259,574 (175,228)84,377 
Exercise of stock options— — 28,266 — 68— 68 
Decrease in IPO offering costs— — — — 80— 80 
Stock-based compensation— — — — 925— 925 
Net loss and comprehensive loss— — — — — (8,007)(8,007)
Balances at September 30, 2019 $ 30,775,980 $31 $260,647 $(183,235)$77,443 

The accompanying notes are an integral part of these condensed financial statements.
7

Silk Road Medical, Inc.
Condensed Statements of Cash Flows
(unaudited)

(in thousands)Nine Months Ended September 30,
20202019
Cash flows from operating activities
Net loss$(30,608)$(44,124)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense563 530 
Stock-based compensation expense4,953 2,023 
Change in fair value of redeemable convertible preferred stock warrant liability 21,030 
Amortization of premiums (accretion of discounts) on investments, net145  
Amortization of debt discount and debt issuance costs35 34 
Amortization of right-of-use asset447 440 
Non-cash interest expense249 595 
Loss on disposal of property and equipment51  
Change in provision for doubtful accounts receivable(26)641 
Provision for excess and obsolete inventories109 78 
Changes in assets and liabilities
Accounts receivable(771)(3,575)
Inventories(732)(3,609)
Prepaid expenses and other current assets(565)(2,096)
Other assets200 764 
Accounts payable29 712 
Accrued liabilities(2,054)2,777 
Other liabilities176 (569)
Net cash used in operating activities(27,799)(24,349)
Cash flows from investing activities
Purchases of property and equipment(587)(337)
Purchases of investments(58,884) 
Proceeds from maturity of investments37,180  
Net cash used in investing activities(22,291)(337)
Cash flows from financing activities
Proceeds from public offerings, net of underwriting discount, commissions and offering costs paid70,568 109,352 
Proceeds from issuance of common stock2,809 806 
Proceeds from exercise of redeemable convertible preferred stock warrants 1,784 
Proceeds from exercise of common stock warrants 31 
Net cash provided by financing activities73,377 111,973 
Net change in cash, cash equivalents and restricted cash23,287 87,287 
Cash, cash equivalents and restricted cash, beginning of period39,491 25,300 
Cash, cash equivalents and restricted cash, end of period$62,778 $112,587 
Supplemental disclosure of cash flow information
Cash paid for interest$3,336 $3,107 
Non-cash investing and financing activities:
Accounts payable and accrued liabilities for purchases of property and equipment$118 $9 
Offering costs in accounts payable and accrued liabilities$25 $ 
Right-of-use asset obtained in exchange for lease obligation$ $3,982 
Net exercise of convertible preferred stock warrants to preferred stock$ $37,121 
Conversion of convertible preferred stock to common stock upon initial public offering$ $144,140 

The accompanying notes are an integral part of these condensed financial statements.
8

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)


1.    Formation and Business of the Company
The Company
Silk Road Medical, Inc. (the “Company”) was incorporated in the state of Delaware on March 21, 2007. The Company has developed a technologically advanced, minimally-invasive solution for patients with carotid artery disease who are at risk for stroke. The Company's portfolio of TCAR products enable a new procedure, referred to as transcarotid artery revascularization, or TCAR, that combines the benefits of endovascular techniques and surgical principles. The Company manufactures and sells in the United States its portfolio of TCAR products which are designed to provide direct access to the carotid artery, effective reduction in stroke risk throughout the procedure, and long-term restraint of carotid plaque. The Company commercialized its products in the United States in late 2015.
Reverse Stock Split
On March 13, 2019, the Company’s Board of Directors approved an amendment to the Company’s amended and restated certificate of incorporation to effect a 1-for-2.7 reverse stock split of the Company’s common stock and redeemable convertible preferred stock to be consummated prior to the effectiveness of the Company’s planned initial public offering, or IPO. The reverse stock split was effected on March 27, 2019. The par values of the common stock and redeemable convertible preferred stock were not adjusted as a result of the reverse stock split. All the common stock, redeemable convertible preferred stock, stock options and warrants, and related per share amounts in the condensed financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split.
Public Offerings
In April 2019, the Company issued and sold 6,000,000 shares of its common stock in its IPO at a public offering price of $20.00 per share, for net proceeds of approximately $109,119,000 after deducting underwriting discounts and commissions of approximately $8,400,000 and expenses of approximately $2,481,000. Upon the closing of the IPO, all shares of redeemable convertible preferred stock then outstanding converted into shares of common stock and the Company's outstanding warrants to purchase shares of common and redeemable convertible preferred stock were exercised, or automatically net exercised absent a prior election. The exercises resulted in the reclassification of the fair value of the related redeemable convertible preferred stock warrant liability to additional paid-in capital.
In August 2019, the Company completed a secondary public offering of 4,200,000 shares of its common stock sold by certain selling stockholders, and the exercise in full of the underwriters' option to purchase 630,000 additional shares of its common stock from certain selling stockholders, at a public offering price of $39.50 per share. The Company did not receive any of the proceeds from the sale of the shares of its common stock by the selling stockholders.
In May 2020, the Company completed an underwritten public offering of 6,808,154 shares of its common stock, of which 1,923,076 shares were offered for sale by the Company and the remaining 4,885,078 shares were offered for sale by certain selling stockholders, at a public offering price of $39.00 per share. The Company received cash proceeds of approximately $70,543,000 after deducting underwriting discounts and commissions of approximately $3,750,000 and expenses of approximately $707,000. Also in May 2020, the underwriters fully exercised their option to purchase 1,021,223 additional shares of common stock from the selling stockholders. The Company did not receive any of the proceeds from the sale of the shares of its common stock by the selling stockholders.
9

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)

2.    Summary of Significant Accounting Policies
Basis of Preparation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2019, and related disclosures, have been derived from the audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed financial information. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other interim period or for any other future year.
The accompanying interim unaudited condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2019 included in the Company's annual report on Form 10-K filed with the SEC on March 2, 2020.
Adjustment to Prior Period Financial Statements
The Company has adjusted the accompanying Condensed Statement of Cash Flows for the nine months ended September 30, 2019 to increase each of the accounts receivable, net, and accrued liabilities amounts by $522,000 for an immaterial prior period error in the classification of provisions for returns from customers.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses judgment when making estimates related to provisions for accounts receivable and excess and obsolete inventories, the valuation of deferred tax assets, the provision for sales returns, stock-based compensation, and for periods prior to the Company's IPO, the valuation of common stock and redeemable convertible preferred stock warrants. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.
Due to the coronavirus (“COVID-19”) pandemic, there has been continued uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of September 30, 2020. The Company has also considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

10

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
Fair Value of Financial Instruments
The Company has evaluated the estimated fair value of its financial instruments as of September 30, 2020 and December 31, 2019. The carrying amounts of certain of the Company’s financial instruments, which include cash equivalents, short-term investments, long-term investments, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Management believes that its long-term debt bears interest at the prevailing market rates for instruments with similar characteristics (Level 2 within the fair value hierarchy); accordingly, the carrying value of this instrument approximates its fair value. Prior to the Company's IPO, fair value accounting was applied to the redeemable convertible preferred stock warrant liability.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are considered available-for-sale marketable securities and are recorded at fair value, based on quoted market prices. As of September 30, 2020 and December 31, 2019, the Company’s cash equivalents are entirely comprised of investments in money market funds.
Restricted cash as of September 30, 2020 and December 31, 2019 consists of a letter of credit of $310,000 representing collateral for the Company's facility lease.
Investments
Short-term investments consist of debt securities classified as available-for-sale and have original maturities greater than 90 days, but less than one year as of the balance sheet date. Long-term investments have maturities greater than one year as of the balance sheet date. All investments are recorded at fair value based on the fair value hierarchy. Money market funds and United States treasury bills with an original maturity less than 90 days are classified within Level 1 of the fair value hierarchy, and commercial paper, corporate bonds/notes, United States Government securities, and asset-backed securities are classified within Level 2 of the fair value hierarchy. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). The cost of available-for-sale investments sold is based on the specific-identification method. Realized gains and losses are included in earnings, and are derived for specific-identification method for determining the costs of investments sold. Amortization of premiums and accretion of discounts are reported as a component of interest income.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the investment.

Concentration of Credit Risk, and Other Risks and Uncertainties
The Company is subject to risks related to public health criseses such as the global pandemic associated with COVID-19, which has spread to most countries and all 50 states within the United States. The COVID-19 outbreak has negatively impacted, and may continue to negatively impact the Company’s operations, its revenue and overall financial condition by significantly decreasing the number of TCAR procedures performed. The number of TCAR procedures performed, similar to other surgical procedures, has significantly decreased as health care organizations globally have prioritized the treatment of patients with COVID-19. For example, in the United States, governmental authorities have recommended, and in certain cases required, that elective, specialty and other procedures and appointments, be suspended or canceled to focus limited resources and personnel and hospital capacity toward the treatment of COVID-19 and to avoid exposing patients to COVID-19. These measures and challenges will likely
11

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
continue for the duration of the pandemic, which is uncertain, and will continue to negatively impact the Company’s revenue while the pandemic continues.

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, investments and accounts receivable to the extent of the amounts recorded on the balance sheet. Cash, cash equivalents, and investments are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds and United States treasury bills. The Company invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate bonds/notes, United States Government securities, asset-backed securities and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments during the three and nine months ended September 30, 2020 and 2019.

The Company’s accounts receivable are due from a variety of health care organizations in the United States. At September 30, 2020 and December 31, 2019, no customer represented 10% or more of the Company’s accounts receivable. For the three and nine months ended September 30, 2020 and 2019, there were no customers that represented 10% or more of revenue.
The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts.
The Company manufactures certain of its commercial products in-house. Certain of the Company’s product components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE stent. Disruption in component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations.
The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, dependence upon government and third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations.
Existing or future devices developed by the Company may require approvals or clearances from the FDA or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio of products. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company.
Leases
The Company adopted Accounting Standards Codification (“ASC”) 842, "Leases," on January 1, 2019 and used the modified retrospective method for all leases not substantially completed as of the date of adoption and the package of practical expedients available in the standard. The Company considers if an arrangement is a lease at inception if it obtains the right to control the use of an identified asset under a leasing arrangement with an initial term greater than twelve months. The Company determines whether a contract conveys the right to control the use of an identified asset for a period of time if the contract
12

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
contains both the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset. The Company also evaluates the nature of each lease to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company’s considers renewal options in the determination of the lease term if the option to renew is reasonably certain. Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease costs, which consists primarily of taxes, insurance and common area maintenance costs, are expensed as incurred, as the Company has elected to account separately for contracts that contain lease and non-lease components, consistent with its historical practice. The Company does not have any finance leases.
Redeemable Convertible Preferred Stock Warrant Liability
Prior to its IPO, the Company accounted for its warrants for shares of redeemable convertible preferred stock as a liability based upon the characteristics and provisions of each instrument. Redeemable convertible preferred stock warrants classified as a liability were initially recorded at their fair value on the date of issuance and are subject to remeasurement at each subsequent balance sheet date. Any change in fair value as a result of a remeasurement was recognized as a component of other income (expense), net in the condensed statements of operations and comprehensive loss. The Company recorded adjustments to the estimated fair value of the redeemable convertible preferred stock warrants until they were exercised. Upon their exercise, the final fair value of the warrant liability was reclassified to stockholders’ equity. Subsequent to its IPO, the Company no longer recorded any related periodic fair value adjustments.
Redeemable Convertible Preferred Stock
Prior to its IPO, the Company recorded its redeemable convertible preferred stock at fair value on the dates of issuance, net of issuance costs, and classified the redeemable convertible preferred stock outside of stockholders’ equity on the condensed balance sheet as events triggering the liquidation preferences were not solely within the Company’s control. Upon the closing of the Company's IPO, all shares of convertible preferred stock then outstanding converted into an aggregate of 23,178,555 shares of common stock resulting in the reclassification of $144,140,000 from outside of stockholders’ equity to additional paid-in capital.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers."  Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:
(i) identify the contract(s) with a customer;
(ii) identify the performance obligations in the contract;
(iii) determine the transaction price;
(iv) allocate the transaction price to the performance obligations in the contract; and
(v) recognize revenue when (or as) the entity satisfies a performance obligation.
13

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
As of September 30, 2020 and December 31, 2019, the Company recorded $131,000 and $102,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period.  
The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer under the Company’s standard terms and conditions.  The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods.
For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center from the sales representative’s trunk stock inventory, the Company recognizes revenue upon delivery, which represents the point in time when control transfers to the customer. Upon delivery there are legally-enforceable rights and obligations between the parties which can be identified, commercial substance exists and collectability is probable. For sales which are sent directly from the Company to hospitals and medical centers, the transfer of control occurs at the time of shipment or delivery of the product.  There are no further performance obligations by the Company or the sales representative to the customer after delivery under either method of sale. As allowed under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.
The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.
Costs associated with product sales include commissions and royalties. The Company applies the practical expedient and recognizes commissions and royalties as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year.  Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed statements of operations and comprehensive loss.
The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience and considers other factors that it believes could significantly impact its expected returns, which provisions are classified within accrued liabilities on the condensed balance sheet.  The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. In those cases where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue.
Cost of Goods Sold
The Company manufactures certain of its portfolio of TCAR products at its facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, manufacturing overhead costs, direct labor, reserves for
14

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
excess, obsolete and non-sellable inventories as well as distribution-related expenses. A significant portion of the Company’s cost of goods sold currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties.
Stock–Based Compensation
The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options, restricted stock units and shares issued under its employee stock purchase plan. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. For performance-based stock options, the Company will assess the probability of performance conditions being achieved in each reporting period. The amount of stock-based compensation expense recognized in any one period related to performance-based stock options can vary based on the achievement or anticipated achievement of the performance conditions. The Company accounts for option forfeitures as they occur.
The Company accounts for stock-based compensation for restricted stock units at their fair value, based on the closing market price of the Company's common stock on the date of grant. These costs are recognized on a straight-line basis over the requisite service period, which is usually the vesting period.
The Company accounts for stock-based compensation for its employee stock purchase plan based on the estimated fair value of the options on the date of grant. The Company estimates the grant date fair value using an option pricing model for each purchase period. These costs are recognized on a straight-line basis over the offering period.
Income Taxes
The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the condensed financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes.
The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes.
Comprehensive Loss
Comprehensive loss consists of net loss and changes in unrealized gains and losses on investments classified as available-for-sale. For the three and nine months ended September 30, 2020, the Company’s unrealized gains and losses on available-for-sale investments represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the
15

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
condensed statements of operations and comprehensive loss. Accumulated other comprehensive income or loss is presented in the accompanying condensed balance sheet as a component of stockholders' equity. For the three and nine months ended September 30, 2019, there was no difference between the Company's comprehensive loss and its net loss.
Net Loss per Share
Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock and warrants, common stock options, and restricted stock units are considered to be potentially dilutive securities. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.
The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s redeemable convertible preferred stock participate in any dividends declared by the Company and were therefore considered to be participating securities.
Net loss per share was determined as follows (in thousands, except share and per share data):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Net loss$(10,315)$(8,007)$(30,608)$(44,124)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted33,757,599 30,764,354 32,597,007 20,249,580 
Net loss, basic and diluted$(0.31)$(0.26)$(0.94)$(2.18)

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss:
September 30,
20202019
Common stock options4,451,768 4,677,878 
Restricted stock units44,109  
4,495,877 4,677,878 

Segment and Geographical Information
The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. All of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment and the Company's right-of-use asset. All of the Company’s revenue was in the United States for the three and nine months ended September 30, 2020 and 2019, based on the shipping location of the external customer.
16

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)

3.    Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement," which changed the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures. The Company adopted the new standard effective January 1, 2020. The adoption did not have a material impact on the Company's financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-15, "Cloud Computing Arrangements," which aligns the requirements for capitalizing implementation costs in a Cloud Computing Arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. The Company adopted the new standard effective January 1, 2020 on a prospective basis. The adoption did not have a material impact on the Company's financial statements and related disclosures.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements." This update provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The update replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In October 2019, the FASB delayed the effective date of this standard for smaller reporting companies, as such ASU 2016-13 would originally be effective for the Company on January 1, 2023. As of June 30, 2020, the Company no longer qualified as a smaller reporting company, accordingly ASU 2016-13 will become effective for the Company on January 1, 2021. The Company is evaluating the impact of adopting this guidance to the Company's financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intra-period tax allocation, interim period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim period tax accounting. ASU 2019-12 also amends other aspects of the guidance to reduce complexity in certain areas. ASU 2019-12 will become effective for the Company on January 1, 2021. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance to the Company's financial statements and related disclosures.

4.    Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, investments, and the Company's previously outstanding preferred stock warrants. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
Level 1 – quoted prices in active markets for identical assets or liabilities;
Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities;
Level 3 – unobservable inputs.
17

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The corporate bonds/notes, commercial paper, asset-backed securities and U.S. government securities are classified as Level 2 as they are valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

The following tables sets forth by level within the fair value hierarchy the Company’s assets that are reported at fair value as of September 30, 2020 and December 31, 2019, using the inputs defined above (in thousands):


September 30, 2020
Level 1Level 2Level 3Total
Assets:
Money market funds$61,078 $ $ $61,078 
U.S. treasury bills 9,999  9,999 
Commercial paper 31,863  31,863 
Corporate bonds/notes 16,186  16,186 
U.S. government securities 33,394  33,394 
$61,078 $91,442 $ $152,520 

December 31, 2019
Level 1Level 2Level 3Total
Assets:
Money market funds$34,363 $ $ $34,363 
Commercial paper 9,919  9,919 
Corporate bonds/notes 10,176  10,176 
U.S. government securities 44,456  44,456 
Asset-backed securities 5,181  5,181 
$34,363 $69,732 $ $104,095 


There were no transfers between fair value hierarchy levels during the three and nine months ended September 30, 2020 and 2019.
18

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)

5.    Balance Sheet Components
Investments
The fair value of the Company's available-for-sale investments as of September 30, 2020 and December 31, 2019 are as follows (in thousands):


September 30, 2020
Gross UnrealizedEstimated
Amortized CostGainsLossesFair Value
Money market funds$61,078 $ $ $61,078 
U.S. treasury bills9,998 1  9,999 
Commercial paper31,863   31,863 
Corporate bonds/notes16,179 7  16,186 
U.S. government securities33,250 144  33,394 
Asset-backed securities    
$152,368 $152 $ $152,520 
Classified as:
Cash equivalents$61,078 
Short-term investments91,442 
$152,520 

December 31, 2019
Gross UnrealizedEstimated
Amortized CostGainsLossesFair Value
Money market funds$34,363 $ $ $34,363 
Commercial paper9,919   9,919 
Corporate bonds/notes10,180  (4)10,176 
U.S. government securities44,450 9 (3)44,456 
Asset-backed securities5,181   5,181 
$104,093 $9 $(7)$104,095 
Classified as:
Cash equivalents$34,363 
Short-term investments51,508 
Long-term investments18,224 
$104,095 

19

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
The following table summarizes the fair value of the Company’s cash equivalents, short-term and long-term investments classified by maturity as of September 30, 2020 and December 31, 2019 (in thousands):

September 30,December 31,
20202019
Amounts maturing within one year$152,520 $85,871 
Amounts maturing after one year through two years 18,224 
$152,520 $104,095 

Available-for-sale investments held as of September 30, 2020 had a weighted average days to maturity of 136 days.

The following table presents the Company's available-for-sale investments that were in an unrealized loss position as of September 30, 2020 and December 31, 2019 (in thousands):


September 30, 2020December 31, 2019
Less than 12 monthsLess than 12 months
Assets:Fair ValueUnrealized LossFair ValueUnrealized Loss
Corporate bonds/notes$ $ $10,128 $(4)
U.S. government securities  19,067 (3)
$ $ $29,195 $(7)

Inventories
Components of inventories were as follows:
(in thousands)September 30,December 31,
20202019
Raw materials$1,725 $1,203 
Finished products9,221 9,119 
Total$10,946 $10,322 

As of September 30, 2020 and December 31, 2019, there were no work-in-process inventories.
20

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
Accrued Liabilities
Accrued liabilities consist of the following:
(in thousands)September 30,December 31,
20202019
Accrued payroll and related expenses$8,538 $9,151 
Provision for sales returns1,109 2,419 
Accrued professional services942 682 
Operating lease liability829 769 
Accrued royalty expense491 470 
Deferred revenue384 304 
Accrued travel expenses259 431 
Accrued clinical expenses169 241 
Accrued other expenses287 567 
Total$13,008 $15,034 


6.    Long-term Debt
In October 2015, the Company entered into a term loan agreement with CRG. The term loan agreement provides for up to $30,000,000 in term loans split into two tranches as follows: (i) the Tranche A Loans provided for $20,000,000 in term loans, and (ii) the Tranche B Loans provided for up to $10,000,000 in term loans. The Company drew down the Tranche A Loans on October 13, 2015. The Tranche B Loans were available to be drawn prior to March 29, 2017. In January 2017, the term loan agreement was amended to extend the commitment period of the Tranche B Loans to April 28, 2017. In April 2017, the Company drew down $5,000,000 of the available Tranche B Loans.
In September 2018, the Company entered into Amendment No. 5 to the term loan agreement with CRG. Under the amended terms of the amended loan agreement the maturity date was extended to December 31, 2022 and the repayment schedule of the existing term loans were changed to interest only so that the outstanding principal amount of the term loans will be payable in a single installment at maturity. The related fixed interest rate was changed to equal 10.75% per annum, due and payable quarterly in arrears. At the election of the Company, 2.75% of the interest due and payable may be “paid in kind” and added to the then outstanding principal and 8.0% of the interest due and payable paid in cash. All unpaid principal, and accrued and unpaid interest, is due and payable in full on December 31, 2022. The amended term loan agreement also provided for additional term loans in an aggregate principal amount of up to $25,000,000 and allowed for the conversion into shares of common stock, at the Company’s option, of up to 25% of the outstanding loans under the term loan agreement in connection with an initial public offering of the Company’s common stock which results in market capitalization of at least $250,000,000. In September 2018, the Company drew down an additional $15,000,000 under the term loan agreement with CRG. As provided for under the terms of the amended term loan agreement, the related fixed interest rate was further reduced to 10.0% upon the consummation of the Company's IPO in April 2019. Also, post consummation of the Company's IPO, 8.0% of the interest is due and payable in cash and at the election of the Company, 2.0% of the interest due and payable may be "paid in kind".
In June 2019, the Company entered into Amendment No. 7 to the term loan agreement with CRG to reflect flexibility with respect to permitted cash investments.
The Company may voluntarily prepay the borrowings in full. The Tranche A borrowing required a payment, on the borrowing date, of a financing fee equal to 1.75% of the borrowed loan principal, which is
21

Silk Road Medical, Inc.
Notes to Condensed Financial Statements
(unaudited)
recorded as a discount to the debt. In addition, a facility fee equal to 5.0% of the amounts borrowed plus any "paid in kind" is payable at the end of the term or when the borrowings are repaid in full. A long-term liability is being accreted using the effective interest method for the facility fee over the term of the loan agreement. The borrowings are collateralized by a security interest in substantially all of the Company’s assets.
The Company is subject to financial covenants related to liquidity and minimum trailing revenue targets that began in December 31, 2016 and are tested on an annual basis. The liquidity covenant requires the Company to maintain an amount which shall exceed the greater of (i) $3,000,000 and (ii) the minimum cash balance, if any, required of the Company by a creditor to the extent the Company has incurred permitted priority debt. The Company had to achieve minimum net revenue of $1,000,000 in 2016, $5,000,000 in 2017, $15,000,000 in 2018, $30,000,000 in 2019 and must achieve minimum net revenue of $40,000,000 in 2020. The liquidity financial covenant has a 90-day equity cure period following end of the calendar year to issue additional shares of equity interests in exchange for cash, or to borrow permitted cure debt. In addition, the term loan agreement prohibits the payment of cash dividends on the Company’s capital stock and also places restrictions on mergers, sales of assets, investments, incurrence of liens, incurrence of indebtedness and transactions with affiliates. CRG may accelerate the payment terms of the term loan agreement upon the occurrence of certain events of default set forth therein, which include the failure of the Company to make timely payments of amounts due under the term loan agreement, the failure of the Company to adhere to the covenants set forth in the term loan agreement, the insolvency of the Company or upon the occurrence of a material adverse change. As of September 30, 2020, the Company was in compliance with all applicable financial covenants. As of September 30, 2020, management does not believe that it is probable that the above clauses will be triggered within the next twelve months, and therefore, the debt is classified as long-term on the condensed balance sheet. See Note 12.
Future maturities under the term loan agreement as of September 30, 2020 are as follows (in thousands):
Period Ending December 31:Amount
2020$1,120 
20214,442 
202248,255 
53,817 
Add: Accretion of closing fees1,452 
55,269 
Less: Amount representing interest(10,004)
Less: Amount representing debt discount and debt issuance costs(105)
Present value of minimum payments$45,160 

In October 2015, CRG purchased 327,759 shares of the Company’s Series C redeemable convertible preferred stock at $6.11 per share. In addition, CRG received warrants to purchase 163,877 shares of the Company’s Series C redeemable convertible preferred stock at an exercise price of $6.11 per share. Upon the closing of the IPO, the warrants were net exercised, based on the initial public offering price of $20.00 per share, into shares