0001551693 false --12-31 2021 Q1 P3Y P7Y P7Y P6M us-gaap:OtherNoncurrentAssetsMember us-gaap:OtherNoncurrentAssetsMember P10Y P12Y P2Y P1Y P11Y P19Y P10Y P12Y P2Y P1Y P11Y P19Y sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember P5Y P5Y P2Y P2Y us-gaap:OtherAssetsMember us-gaap:OtherAssetsMember us-gaap:OtherAssetsMember us-gaap:OtherAssetsMember sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember sien:WarrantyReserveAndOtherLongTermLiabilitiesMember sien:WarrantyReserveAndOtherLongTermLiabilitiesMember sien:WarrantyReserveAndOtherLongTermLiabilitiesMember sien:WarrantyReserveAndOtherLongTermLiabilitiesMember P5Y11M1D P5Y10M13D 0001551693 2021-01-01 2021-03-31 xbrli:shares 0001551693 2021-05-03 iso4217:USD 0001551693 2021-03-31 0001551693 2020-12-31 iso4217:USD xbrli:shares 0001551693 2020-01-01 2020-03-31 0001551693 us-gaap:CommonStockMember 2019-12-31 0001551693 us-gaap:TreasuryStockCommonMember 2019-12-31 0001551693 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001551693 us-gaap:RetainedEarningsMember 2019-12-31 0001551693 2019-12-31 0001551693 us-gaap:CommonStockMember sien:ATMMember 2020-01-01 2020-03-31 0001551693 us-gaap:AdditionalPaidInCapitalMember sien:ATMMember 2020-01-01 2020-03-31 0001551693 sien:ATMMember 2020-01-01 2020-03-31 0001551693 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001551693 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001551693 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001551693 us-gaap:CommonStockMember 2020-03-31 0001551693 us-gaap:TreasuryStockCommonMember 2020-03-31 0001551693 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001551693 us-gaap:RetainedEarningsMember 2020-03-31 0001551693 2020-03-31 0001551693 us-gaap:CommonStockMember 2020-12-31 0001551693 us-gaap:TreasuryStockCommonMember 2020-12-31 0001551693 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001551693 us-gaap:RetainedEarningsMember 2020-12-31 0001551693 us-gaap:CommonStockMember sien:FollowOnOfferingMember 2021-01-01 2021-03-31 0001551693 us-gaap:AdditionalPaidInCapitalMember sien:FollowOnOfferingMember 2021-01-01 2021-03-31 0001551693 sien:FollowOnOfferingMember 2021-01-01 2021-03-31 0001551693 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001551693 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001551693 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001551693 us-gaap:CommonStockMember 2021-03-31 0001551693 us-gaap:TreasuryStockCommonMember 2021-03-31 0001551693 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001551693 us-gaap:RetainedEarningsMember 2021-03-31 0001551693 sien:FollowOnOfferingMember us-gaap:CommonStockMember 2021-02-08 2021-02-08 0001551693 sien:FollowOnOfferingMember us-gaap:CommonStockMember 2021-02-08 0001551693 2021-04-01 sien:BreastProductsAndConsumableMiraDryProductsMember 2021-03-31 0001551693 2021-04-01 srt:MaximumMember sien:MiraDrySystemsMember 2021-03-31 0001551693 2021-04-01 us-gaap:FinancialServiceMember srt:MinimumMember 2021-03-31 0001551693 2021-04-01 srt:MaximumMember us-gaap:FinancialServiceMember 2021-03-31 0001551693 2021-04-01 sien:ProductReplacementMember 2021-03-31 0001551693 sien:ConvertibleNoteMember 2021-03-31 0001551693 us-gaap:LeaseholdImprovementsMember 2021-03-31 0001551693 us-gaap:LeaseholdImprovementsMember 2020-12-31 0001551693 sien:ManufacturingEquipmentAndToolingsMember 2021-03-31 0001551693 sien:ManufacturingEquipmentAndToolingsMember 2020-12-31 0001551693 us-gaap:ComputerEquipmentMember 2021-03-31 0001551693 us-gaap:ComputerEquipmentMember 2020-12-31 0001551693 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2021-03-31 0001551693 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2020-12-31 0001551693 us-gaap:OfficeEquipmentMember 2021-03-31 0001551693 us-gaap:OfficeEquipmentMember 2020-12-31 0001551693 us-gaap:FurnitureAndFixturesMember 2021-03-31 0001551693 us-gaap:FurnitureAndFixturesMember 2020-12-31 0001551693 sien:BreastProductMember 2020-12-31 0001551693 sien:MiradryMember 2020-12-31 0001551693 sien:BreastProductMember 2021-03-31 0001551693 sien:MiradryMember 2021-03-31 0001551693 us-gaap:CustomerRelationshipsMember 2021-01-01 2021-03-31 0001551693 us-gaap:TradeNamesMember 2021-01-01 2021-03-31 0001551693 us-gaap:NoncompeteAgreementsMember 2021-01-01 2021-03-31 0001551693 sien:RegulatoryApprovalMember 2021-01-01 2021-03-31 0001551693 sien:AcquiredFoodAndDrugAdministrationNonGelProductApprovalMember 2021-01-01 2021-03-31 0001551693 sien:ManufacturingKnowHowMember 2021-01-01 2021-03-31 0001551693 us-gaap:CustomerRelationshipsMember 2021-03-31 0001551693 us-gaap:TradeNamesMember 2021-03-31 0001551693 us-gaap:NoncompeteAgreementsMember 2021-03-31 0001551693 sien:RegulatoryApprovalMember 2021-03-31 0001551693 sien:AcquiredFoodAndDrugAdministrationNonGelProductApprovalMember 2021-03-31 0001551693 sien:ManufacturingKnowHowMember 2021-03-31 0001551693 us-gaap:TradeNamesMember 2021-03-31 0001551693 us-gaap:CustomerRelationshipsMember 2020-01-01 2020-12-31 0001551693 us-gaap:TradeNamesMember 2020-01-01 2020-12-31 0001551693 us-gaap:NoncompeteAgreementsMember 2020-01-01 2020-12-31 0001551693 sien:RegulatoryApprovalMember 2020-01-01 2020-12-31 0001551693 sien:AcquiredFoodAndDrugAdministrationNonGelProductApprovalMember 2020-01-01 2020-12-31 0001551693 sien:ManufacturingKnowHowMember 2020-01-01 2020-12-31 0001551693 us-gaap:CustomerRelationshipsMember 2020-12-31 0001551693 us-gaap:TradeNamesMember 2020-12-31 0001551693 us-gaap:NoncompeteAgreementsMember 2020-12-31 0001551693 sien:RegulatoryApprovalMember 2020-12-31 0001551693 sien:AcquiredFoodAndDrugAdministrationNonGelProductApprovalMember 2020-12-31 0001551693 sien:ManufacturingKnowHowMember 2020-12-31 0001551693 us-gaap:TradeNamesMember 2020-12-31 0001551693 sien:WarrantyReserveAndOtherLongTermLiabilitiesMember 2021-03-31 0001551693 sien:WarrantyReserveAndOtherLongTermLiabilitiesMember 2020-03-31 0001551693 sien:AccruedAndOtherCurrentLiabilitiesMember 2021-03-31 0001551693 sien:AccruedAndOtherCurrentLiabilitiesMember 2020-03-31 xbrli:pure 0001551693 us-gaap:MeasurementInputExpectedDividendRateMember 2021-03-31 0001551693 us-gaap:MeasurementInputDiscountRateMember sien:BIOCORNEUMMember sien:FutureRoyaltyPaymentsMember 2021-01-01 2021-03-31 0001551693 us-gaap:MeasurementInputDiscountRateMember sien:MiradryMember sien:FutureMilestonePaymentsMember 2021-01-01 2021-03-31 0001551693 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember sien:ContingentConsiderationLiabilityMember 2021-03-31 0001551693 us-gaap:FairValueMeasurementsRecurringMember sien:ContingentConsiderationLiabilityMember 2021-03-31 0001551693 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember 2021-03-31 0001551693 us-gaap:FairValueMeasurementsRecurringMember us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember 2021-03-31 0001551693 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001551693 us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001551693 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember sien:ContingentConsiderationLiabilityMember 2020-12-31 0001551693 us-gaap:FairValueMeasurementsRecurringMember sien:ContingentConsiderationLiabilityMember 2020-12-31 0001551693 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember 2020-12-31 0001551693 us-gaap:FairValueMeasurementsRecurringMember us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember 2020-12-31 0001551693 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001551693 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001551693 sien:ContingentConsiderationLiabilityMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-01-01 2021-03-31 0001551693 us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-01-01 2021-03-31 0001551693 us-gaap:OperatingExpenseMember 2021-01-01 2021-03-31 0001551693 us-gaap:OperatingExpenseMember 2020-01-01 2020-03-31 0001551693 us-gaap:InventoriesMember 2021-01-01 2021-03-31 0001551693 us-gaap:InventoriesMember 2020-01-01 2020-03-31 0001551693 us-gaap:OtherOperatingIncomeExpenseMember 2021-01-01 2021-03-31 0001551693 us-gaap:OtherOperatingIncomeExpenseMember 2020-01-01 2020-03-31 0001551693 2017-07-24 2017-07-25 0001551693 sien:TermLoanCreditAndSecurityAgreementAndRevolvingLoanCreditAndSecurityAgreementMember 2019-07-01 2019-07-01 0001551693 sien:RestatedTermLoanAgreementMember 2019-11-07 2019-11-07 0001551693 sien:RestatedTermLoanAgreementMember 2019-07-01 0001551693 sien:AdditionalTermLoanMember 2019-07-01 0001551693 sien:RestatedTermLoanAgreementMember 2020-12-31 0001551693 sien:AdditionalTermLoanMember 2019-07-01 2019-07-01 0001551693 sien:AdditionalTermLoanMember 2020-12-31 0001551693 sien:RestatedTermLoanAgreementMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-07-01 2019-07-01 0001551693 sien:RestatedTermLoanAgreementMember 2019-07-01 2019-07-01 0001551693 sien:TermAmendmentMember 2020-05-11 2020-05-11 0001551693 sien:TermAmendmentMember sien:TrancheThreeMember 2020-05-10 0001551693 sien:TermAmendmentMember sien:TrancheThreeMember 2020-05-11 0001551693 sien:TermAmendmentMember sien:TrancheThreeMember 2020-05-11 2020-05-11 0001551693 sien:TermAmendmentMember 2020-05-10 0001551693 sien:TermAmendmentMember 2020-05-11 0001551693 sien:RestatedTermLoanAgreementMember 2020-05-11 0001551693 sien:RestatedTermLoanAgreementMember 2021-02-05 sien:Tranche 0001551693 sien:RestatedTermLoanAgreementMember sien:TrancheFourMember srt:ScenarioForecastMember 2021-07-01 0001551693 sien:RestatedTermLoanAgreementMember sien:TrancheFiveMember srt:ScenarioForecastMember 2022-07-01 0001551693 sien:RestatedTermLoanAgreementMember 2021-02-05 2021-02-05 0001551693 sien:RestatedTermLoanAgreementMember 2021-03-31 0001551693 us-gaap:RevolvingCreditFacilityMember srt:MaximumMember 2019-07-01 0001551693 us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-07-01 2019-07-01 0001551693 us-gaap:RevolvingCreditFacilityMember 2019-07-01 2019-07-01 0001551693 2019-07-01 2019-07-01 0001551693 us-gaap:RevolvingCreditFacilityMember 2021-03-31 0001551693 us-gaap:RevolvingCreditFacilityMember us-gaap:OtherAssetsMember 2021-03-31 0001551693 sien:TermLoanAndRevolvingLoanMember 2021-01-01 2021-03-31 0001551693 sien:TermLoanAndRevolvingLoanMember 2020-01-01 2020-03-31 0001551693 sien:ConvertibleNoteMember sien:DeerfieldFacilityAgreementMember 2020-03-11 2020-03-11 0001551693 sien:ConvertibleNoteMember sien:DeerfieldFacilityAgreementMember 2020-03-11 0001551693 sien:ConvertibleNoteMember sien:DeerfieldFacilityAgreementMember 2020-07-01 0001551693 sien:ConvertibleNoteMember sien:DeerfieldFacilityAgreementMember 2021-03-31 0001551693 sien:ConvertibleNoteMember sien:DeerfieldFacilityAgreementMember 2020-01-01 2020-03-31 0001551693 sien:ConvertibleNoteMember sien:DeerfieldFacilityAgreementMember 2021-01-01 2021-03-31 0001551693 sien:PaycheckProtectionProgramMember 2020-04-20 0001551693 sien:PaycheckProtectionProgramMember 2020-04-20 2020-04-20 0001551693 sien:PaycheckProtectionProgramMember 2021-01-01 2021-03-31 0001551693 sien:PaycheckProtectionProgramMember us-gaap:LongTermDebtMember 2021-03-31 0001551693 sien:PaycheckProtectionProgramMember srt:MaximumMember 2020-04-20 2020-04-20 0001551693 sien:PaycheckProtectionProgramMember srt:MinimumMember 2020-04-20 2020-04-20 0001551693 sien:OxfordFinanceLlcMember sien:TrancheBAndCTermLoanMember 2013-01-17 2013-01-17 0001551693 sien:OxfordFinanceLlcMember sien:TrancheDTermLoanMember 2014-06-01 2014-06-30 0001551693 sien:OxfordFinanceLlcMember 2013-01-17 0001551693 sien:OxfordFinanceLlcMember 2014-06-30 0001551693 sien:OxfordFinanceLlcMember sien:TrancheDTermLoanMember 2021-03-31 0001551693 sien:EquityIncentivePlan2007Member 2007-04-30 0001551693 sien:EquityIncentivePlan2014Member 2014-11-03 0001551693 sien:EquityIncentivePlan2014Member 2021-03-31 0001551693 sien:InducementPlanMember 2021-01-01 2021-03-31 0001551693 sien:InducementPlanMember 2021-03-31 0001551693 sien:EquityIncentivePlan2007AndEquityIncentivePlan2014Member sien:EmployeeAndNonEmployeeStockOptionMember 2021-01-01 2021-03-31 0001551693 sien:EquityIncentivePlan2007AndEquityIncentivePlan2014Member srt:MinimumMember sien:EmployeeAndNonEmployeeStockOptionMember 2021-01-01 2021-03-31 0001551693 sien:EquityIncentivePlan2007AndEquityIncentivePlan2014Member srt:MinimumMember sien:EmployeeAndNonEmployeeStockOptionMember 2021-03-31 0001551693 sien:EquityIncentivePlan2007AndEquityIncentivePlan2014Member srt:MaximumMember sien:EmployeeAndNonEmployeeStockOptionMember 2021-01-01 2021-03-31 0001551693 sien:InducementPlanMember srt:MinimumMember 2021-01-01 2021-03-31 0001551693 sien:InducementPlanMember srt:MinimumMember sien:ShareBasedCompensationAwardAnnualVestingProvisionsOfIndividualOptionsMember 2021-01-01 2021-03-31 0001551693 sien:InducementPlanMember srt:MaximumMember 2021-01-01 2021-03-31 0001551693 sien:InducementPlanMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2021-01-01 2021-03-31 0001551693 sien:EmployeeAndNonEmployeeStockOptionMember 2020-12-31 0001551693 sien:EmployeeAndNonEmployeeStockOptionMember 2021-01-01 2021-03-31 0001551693 sien:EmployeeAndNonEmployeeStockOptionMember 2021-03-31 0001551693 sien:EmployeeAndNonEmployeeStockOptionMember 2020-01-01 2020-12-31 0001551693 sien:EmployeeAndNonEmployeeStockOptionMember 2020-01-01 2020-03-31 0001551693 us-gaap:RestrictedStockUnitsRSUMember sien:EquityIncentivePlan2014Member 2021-01-01 2021-03-31 0001551693 us-gaap:RestrictedStockUnitsRSUMember sien:EquityIncentivePlan2014Member 2020-12-31 0001551693 us-gaap:RestrictedStockUnitsRSUMember sien:EquityIncentivePlan2014Member 2021-03-31 0001551693 us-gaap:RestrictedStockUnitsRSUMember sien:EquityIncentivePlan2014Member 2020-01-01 2020-03-31 0001551693 sien:EmployeeStockPurchasePlan2014Member srt:MaximumMember 2021-01-01 2021-03-31 0001551693 sien:EmployeeStockPurchasePlan2014Member 2021-01-01 2021-03-31 0001551693 sien:EmployeeStockPurchasePlan2014Member srt:MaximumMember 2014-10-31 0001551693 sien:EmployeeStockPurchasePlan2014Member 2021-03-31 0001551693 sien:EmployeeStockPurchasePlan2014Member 2020-01-01 2020-03-31 0001551693 us-gaap:StockOptionMember 2021-01-01 2021-03-31 0001551693 us-gaap:StockOptionMember 2020-01-01 2020-03-31 0001551693 us-gaap:WarrantMember 2021-01-01 2021-03-31 0001551693 us-gaap:WarrantMember 2020-01-01 2020-03-31 0001551693 sien:EquityContingentConsiderationMember 2021-01-01 2021-03-31 0001551693 sien:EquityContingentConsiderationMember 2020-01-01 2020-03-31 0001551693 us-gaap:ConvertibleDebtSecuritiesMember 2021-01-01 2021-03-31 0001551693 us-gaap:ConvertibleDebtSecuritiesMember 2020-01-01 2020-03-31 sien:Segment 0001551693 sien:BreastProductMember 2021-01-01 2021-03-31 0001551693 sien:BreastProductMember 2020-01-01 2020-03-31 0001551693 sien:MiradryMember 2021-01-01 2021-03-31 0001551693 sien:MiradryMember 2020-01-01 2020-03-31 0001551693 us-gaap:SubsequentEventMember sien:MiradryMember 2021-05-11 2021-05-11 0001551693 sien:MiradryMember srt:ScenarioForecastMember srt:MinimumMember 2021-04-01 2021-06-30 0001551693 sien:MiradryMember srt:ScenarioForecastMember srt:MaximumMember 2021-04-01 2021-06-30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-36709

 

SIENTRA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

(State or Other Jurisdiction of

Incorporation or Organization)

 

20-5551000

(I.R.S. Employer

Identification No.)

 

420 South Fairview Avenue, Suite 200

Santa Barbara, California

(Address of Principal Executive Offices)

 

93117

(Zip Code)

 

(805) 562-3500

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

SIEN

 

The Nasdaq Stock Market LLC

 

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 filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

As of May 3, 2021, the number of outstanding shares of the registrant’s common stock, par value $0.01 per share, was 57,520,682.

 

 

 

 


 

 

SIENTRA, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2021

TABLE OF CONTENTS

 

 

 

Page

 

 

 

Part I — Financial Information

 

3

 

 

 

Item 1. Condensed Consolidated Financial Statements - Unaudited

 

3

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

 

3

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020

 

4

Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the Period from December 31, 2019 through March 31, 2020 and December 31, 2020 through March 31, 2021

                  

5

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

 

6

Notes to the Condensed Consolidated Financial Statements

 

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

34

Item 4. Controls and Procedures

 

34

 

 

 

Part II — Other Information

 

35

 

 

 

Item 1. Legal Proceedings

 

35

Item 1A. Risk Factors

 

35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

35

Item 3. Defaults Upon Senior Securities

 

35

Item 4. Mine Safety Disclosures

 

35

Item 5. Other Information

 

35

Item 6. Exhibits

 

36

 

 

 

 

 

“Sientra”, “Sientra Platinum20”, “Sientra Full Circle”, “Sientra OPUS”, “OPUS”, “OPUS Curve”, “OPUS Luxe”, “ACX”, “Allox”, “Allox2”, “Anatomical Controlled”, “BIOCORNEUM”, “Curve”, “Dermaspan”, “Luxe”, “Softspan”, “Silishield”, “miraDry”, “miraDry and Design”, “miraDry Fresh”, “bioTip”, “The Sweat Stops Here”, “No Sweat No Stress”, “Sweat Less Live More”, “Drop Design”, “freshRewards”, “freshNet”, “freshEquity”, “freshConnect”, and “ML Stylized mark” are trademarks of our company. Our logo and our other trade names, trademarks and service marks appearing in this document are our property. Other trade names, trademarks and service marks appearing in this document are the property of their respective owners. Solely for convenience, our trademarks and trade names referred to in this document appear without the TM or the (R) symbol, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the rights of the applicable licensor to these trademarks and trade names.

2


 

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIENTRA, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share and share amounts)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

80,372

 

 

$

54,967

 

Accounts receivable, net of allowances of $3,658 and $4,464 at March 31, 2021 and December 31, 2020, respectively

 

 

25,438

 

 

 

23,503

 

Inventories, net

 

 

50,556

 

 

 

48,648

 

Prepaid expenses and other current assets

 

 

2,803

 

 

 

2,154

 

Total current assets

 

 

159,169

 

 

 

129,272

 

Property and equipment, net

 

 

13,388

 

 

 

13,106

 

Goodwill

 

 

9,202

 

 

 

9,202

 

Other intangible assets, net

 

 

9,081

 

 

 

9,387

 

Other assets

 

 

7,573

 

 

 

8,011

 

Total assets

 

$

198,413

 

 

$

168,978

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

5,820

 

 

$

4,670

 

Accounts payable

 

 

3,845

 

 

 

6,504

 

Accrued and other current liabilities

 

 

26,935

 

 

 

32,389

 

Customer deposits

 

 

21,956

 

 

 

17,905

 

Sales return liability

 

 

11,020

 

 

 

9,192

 

Total current liabilities

 

 

69,576

 

 

 

70,660

 

Long-term debt

 

 

60,540

 

 

 

60,500

 

Derivative liability

 

 

69,310

 

 

 

26,570

 

Deferred and contingent consideration

 

 

2,467

 

 

 

2,350

 

Warranty reserve and other long-term liabilities

 

 

9,461

 

 

 

9,455

 

Total liabilities

 

 

211,354

 

 

 

169,535

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value – Authorized 10,000,000 shares; none issued or outstanding

 

 

 

 

 

 

Common stock, $0.01 par value — Authorized 200,000,000 shares; issued 57,515,085 and 50,712,151 and outstanding 57,442,358 and 50,639,424 shares at March 31, 2021 and December 31, 2020, respectively

 

 

574

 

 

 

506

 

Additional paid-in capital

 

 

600,297

 

 

 

558,059

 

Treasury stock, at cost (72,727 shares at March 31, 2021 and December 31, 2020)

 

 

(260

)

 

 

(260

)

Accumulated deficit

 

 

(613,552

)

 

 

(558,862

)

Total stockholders’ equity (deficit)

 

 

(12,941

)

 

 

(557

)

Total liabilities and stockholders’ equity

 

$

198,413

 

 

$

168,978

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

SIENTRA, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share and share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Net sales

 

$

23,236

 

 

$

16,932

 

Cost of goods sold

 

 

10,935

 

 

 

6,792

 

Gross profit

 

 

12,301

 

 

 

10,140

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

12,375

 

 

 

16,763

 

Research and development

 

 

2,392

 

 

 

2,908

 

General and administrative

 

 

7,354

 

 

 

9,304

 

Restructuring

 

 

 

 

 

1,739

 

Impairment

 

 

 

 

 

6,432

 

Total operating expenses

 

 

22,121

 

 

 

37,146

 

Loss from operations

 

 

(9,820

)

 

 

(27,006

)

Other income (expense), net:

 

 

 

 

 

 

 

 

Interest income

 

 

2

 

 

 

180

 

Interest expense

 

 

(2,004

)

 

 

(1,623

)

Change in fair value of derivative liability

 

 

(42,740

)

 

 

(130

)

Other income (expense), net

 

 

(128

)

 

 

(33

)

Total other income (expense), net

 

 

(44,870

)

 

 

(1,606

)

Loss before income taxes

 

 

(54,690

)

 

 

(28,612

)

Income tax

 

 

 

 

 

 

Net loss

 

$

(54,690

)

 

$

(28,612

)

Basic and diluted net loss per share attributable to common stockholders

 

$

(1.01

)

 

$

(0.57

)

Weighted average outstanding common shares used for net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

54,321,146

 

 

 

49,916,412

 

 

See accompanying notes to condensed consolidated financial statements.

 

4


 

 

SIENTRA, INC.

Condensed Consolidated Statement of Stockholders' Equity (Deficit)

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Preferred stock

 

 

Common stock

 

 

Treasury stock

 

 

paid-in

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

equity

 

Balances at December 31, 2019

 

 

 

 

$

 

 

 

49,612,907

 

 

$

495

 

 

 

72,727

 

 

$

(260

)

 

$

550,562

 

 

$

(468,915

)

 

$

81,882

 

Issuance of common stock through ATM

 

 

 

 

 

 

 

 

37,000

 

 

 

1

 

 

 

 

 

 

 

 

 

263

 

 

 

 

 

 

264

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

 

 

2,000

 

Employee stock purchase program (ESPP)

 

 

 

 

 

 

 

 

113,615

 

 

 

1

 

 

 

 

 

 

 

 

 

533

 

 

 

 

 

 

534

 

Vested restricted stock

 

 

 

 

 

 

 

 

472,914

 

 

 

5

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

Shares withheld for tax obligations on vested RSUs

 

 

 

 

 

 

 

 

(157,412

)

 

 

(2

)

 

 

 

 

 

 

 

 

(1,199

)

 

 

 

 

 

(1,201

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,612

)

 

 

(28,612

)

Balances at March 31, 2020

 

 

 

 

$

 

 

 

50,079,024

 

 

$

500

 

 

 

72,727

 

 

$

(260

)

 

$

552,154

 

 

$

(497,527

)

 

$

54,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Preferred stock

 

 

Common stock

 

 

Treasury stock

 

 

paid-in

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

equity

 

Balances at December 31, 2020

 

 

 

 

$

 

 

 

50,712,151

 

 

$

506

 

 

 

72,727

 

 

$

(260

)

 

$

558,059

 

 

$

(558,862

)

 

$

(557

)

Proceeds from follow-on offering, net of costs

 

 

 

 

 

 

 

 

6,222,222

 

 

 

62

 

 

 

 

 

 

 

 

 

39,164

 

 

 

 

 

 

39,226

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,163

 

 

 

 

 

 

3,163

 

Stock option exercises

 

 

 

 

 

 

 

 

12,727

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

51

 

Employee stock purchase program (ESPP)

 

 

 

 

 

 

 

 

95,919

 

 

 

1

 

 

 

 

 

 

 

 

 

322

 

 

 

 

 

 

323

 

Vested restricted stock

 

 

 

 

 

 

 

 

554,896

 

 

 

6

 

 

 

 

 

 

 

 

 

752

 

 

 

 

 

 

758

 

Shares withheld for tax obligations on vested RSUs

 

 

 

 

 

 

 

 

(82,830

)

 

 

(1

)

 

 

 

 

 

 

 

 

(1,214

)

 

 

 

 

 

(1,215

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54,690

)

 

 

(54,690

)

Balances at March 31, 2021

 

 

 

 

$

 

 

 

57,515,085

 

 

$

574

 

 

 

72,727

 

 

$

(260

)

 

$

600,297

 

 

$

(613,552

)

 

$

(12,941

)

 

 

See accompanying notes to condensed consolidated financial statements.

 

5


 

 

SIENTRA, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(54,690

)

 

$

(28,612

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Impairment

 

 

 

 

 

6,432

 

Depreciation and amortization

 

 

1,384

 

 

 

1,228

 

Provision for doubtful accounts

 

 

(386

)

 

 

357

 

Provision for warranties

 

 

332

 

 

 

236

 

Provision for inventory

 

 

26

 

 

 

1,081

 

Fair value adjustments to derivative liability

 

 

42,740

 

 

 

130

 

Fair value adjustments of other liabilities held at fair value

 

 

17

 

 

 

(39

)

Amortization of debt discount and issuance costs

 

 

848

 

 

 

290

 

Stock-based compensation expense

 

 

3,163

 

 

 

2,133

 

Other non-cash adjustments

 

 

213

 

 

 

107

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,544

)

 

 

1,766

 

Inventories

 

 

(1,933

)

 

 

(3,720

)

Prepaid expenses, other current assets and other assets

 

 

(268

)

 

 

(587

)

Accounts payable, accrueds, and other liabilities

 

 

(8,443

)

 

 

(9,867

)

Customer deposits

 

 

4,051

 

 

 

1,284

 

Sales return liability

 

 

1,823

 

 

 

592

 

Net cash used in operating activities

 

 

(12,667

)

 

 

(27,189

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,321

)

 

 

(1,206

)

Net cash used in investing activities

 

 

(1,321

)

 

 

(1,206

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock for employee stock-based plans

 

 

1,132

 

 

 

534

 

Net proceeds from issuance of common stock

 

 

39,226

 

 

 

264

 

Tax payments related to shares withheld for vested restricted stock units (RSUs)

 

 

(1,215

)

 

 

(1,201

)

Gross borrowings under the Term Loan

 

 

1,000

 

 

 

 

Repayment of the Revolving Loan

 

 

 

 

 

(6,508

)

Net proceeds from issuance of the Convertible Note

 

 

 

 

 

60,000

 

Deferred financing costs

 

 

(750

)

 

 

(240

)

Net cash provided by financing activities

 

 

39,393

 

 

 

52,849

 

Net increase in cash, cash equivalents and restricted cash

 

 

25,405

 

 

 

24,454

 

Cash, cash equivalents and restricted cash at:

 

 

 

 

 

 

 

 

Beginning of period

 

 

55,310

 

 

 

87,951

 

End of period

 

$

80,715

 

 

$

112,405

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

80,372

 

 

$

112,062

 

Restricted cash included in other assets

 

 

343

 

 

 

343

 

Total cash, cash equivalents and restricted cash

 

$

80,715

 

 

$

112,405

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$

1,058

 

 

$

1,067

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Property and equipment in accounts payable and accrued liabilities

 

 

400

 

 

 

222

 

Deferred follow-on offering costs in accounts payable and accrued liabilities

 

 

122

 

 

 

 

Deferred financing costs in accounts payable and accrued liabilities

 

 

50

 

 

 

1,275

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

SIENTRA, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

 

1.

Summary of Significant Accounting Policies

 

a.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Sientra, Inc. (“Sientra”, the “Company”, “we”, “our”, or “us”) in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial reporting. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021, or the Annual Report. The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

 

b.

Liquidity

Since the Company’s inception, it has incurred significant net operating losses and the Company anticipates that losses will continue in the near term. The Company expects its operating expenses will continue to decrease following the completion of the organizational efficiency initiative in 2020 and the sale of the miraDry business but will need to generate significant net sales to achieve profitability. To date, the Company has funded operations primarily with proceeds from the sales of preferred stock, borrowings under term loans and the convertible note, sales of products since 2012, and the proceeds from the sale of common stock in public offerings. To fund ongoing operating and capital needs, the Company may need to raise additional capital in the future through the sale of equity securities and incremental debt financing.

Debt financing – recent developments

On February 5, 2021, the Company entered into a Second Amended and Restated Credit and Security Agreement (Term Loan), by and among the Company, certain of the Company’s wholly-owned subsidiaries (together with Sientra, the “Borrowers”), the lenders party thereto from time to time and MidCap Financial Trust, as administrative agent and collateral agent (“Agent”) (the “Restated Term Loan Agreement”). The Restated Term Loan Agreement amends and restates the Company’s existing Amended and Restated Credit and Security Agreement (Term Loan), dated as of July 1, 2019.

Also on February 5, 2021, the Company entered in to a Third Amendment to Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the Borrowers, the lenders party thereto from time to time, and the Agent (the “Revolving Loan Amendment”). The Revolving Loan Amendment modified the Net Revenue (as defined therein) requirement in a manner consistent with the modification under the Restated Term Loan Agreement. In addition, the Revolving Loan Amendment made other conforming changes to the Restated Term Loan Agreement.

See Note 6 to the condensed consolidated financial statements for a full description of all of the Company’s long-term debt, revolving line of credit, convertible note, and PPP loan.

7


 

Equity financing – recent developments

On February 8, 2021, the Company completed a follow-on public offering of 5,410,628 shares of common stock at $6.75 per share, as well as 811,594 additional shares of common stock pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds were approximately $39.2 million after deducting underwriting discounts and commissions of approximately $2.5 million and offering expenses of approximately $0.3 million.

As of March 31, 2021, the Company had cash and cash equivalents of $80.4 million. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company believes that its cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months.

 

c.

Use of Estimates

The preparation of the condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

d.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendment removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. The amendment also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption was permitted. The Company adopted the applicable amendments within ASU 2019-12 in the first quarter of 2021 and there was no material impact on its condensed consolidated financial statements from the adoption.

 

Recently Issued Accounting Standards

 

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment eliminates certain accounting models and simplifies the accounting for convertible instruments and enhances disclosures for convertible instruments and earnings per share. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact that adoption of the standard will have on the consolidated financial statements.  

 

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment provides optional expedients and exceptions for contract modifications that replace a reference rate affected by reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022, and entities may elect to apply by Topic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is currently evaluating the impact the election of the optional expedient will have on the consolidated financial statements.

 

8


 

 

 

e.

Risks and Uncertainties

 

The rapid, global spread of COVID-19 has resulted in significant economic uncertainty, significant declines in business and consumer confidence and global demand in the non-essential healthcare industry (among others), a global economic slowdown, and could lead to a global recession. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, and employee-related amounts, will depend on future developments that are highly uncertain. The Company continues to monitor and assess new information related to the COVID-19 pandemic, the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

 

As an aesthetics company, surgical procedures involving the Company’s breast and miraDry products are susceptible to local and national government restrictions, such as social distancing, “shelter in place” orders and business closures, due to the economic and logistical impacts these measures have on consumer demand as well as the practitioners’ ability to administer such procedures. The inability or limited ability to perform such non-emergency procedures significantly harmed the Company’s revenues since the second quarter of 2020 and continued to harm the Company’s revenues during the three months ended March 31, 2021. While some states have lifted certain restrictions on non-emergency procedures, the Company will likely continue to experience future harm to its revenues while existing or new restrictions remain in place. It is not possible to accurately predict the length or severity of the COVID-19 pandemic or the timing for a broad and sustained ability to perform non-emergency procedures involving the Company’s products.

 

Further, the spread of COVID-19 has caused the Company to modify workforce practices, and the Company may take further actions determined to be in the best interests of the Company’s employees or as required by governments. In addition, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that this can lead to a local and/or global economic recession, which may result in further harm to the aesthetics market. Such economic disruption could adversely affect the Company’s business. The continued spread of COVID-19, or another infectious disease, could also result in delays or disruptions in the Company’s supply chain or adversely affect the Company’s manufacturing facilities and personnel. Further, trade and/or national security protection policies may be adjusted as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic.

 

The estimates used for, but not limited to, determining the collectability of accounts receivable, fair value of long-lived assets and goodwill, and sales returns liability required could be impacted by the pandemic. While the full impact of COVID-19 is unknown at this time, the Company has made appropriate estimates based on the facts and circumstances available as of the reporting date. These estimates may change as new events occur and additional information is obtained.

 

 

f.

Reclassifications

 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

2.

Revenue

The Company generates revenue primarily through the sale and delivery of promised goods or services to customers. Sales prices are documented in the executed sales contract, purchase order or order acknowledgement prior to the transfer of control to the customer. Typical payment terms are 30 days for Breast Products and direct sales of consumable miraDry products and tend to be longer for capital sales of miraDry Systems and sales to miraDry distributors, but do not extend beyond one year.

Revenue contracts may include multiple products or services, each of which is considered a separate performance obligation. Performance obligations typically include the delivery of promised products, such as breast implants, tissue expanders, BIOCORNEUM, miraDry Systems and bioTips, along with service-type warranties. Other

9


 

deliverables are sometimes promised but are ancillary and insignificant in the context of the contract as a whole. Revenue is allocated to each performance obligation based on its relative standalone selling price. The Company determines standalone selling prices based on observable prices for all performance obligations with the exception of the service-type warranty under the Platinum20 Limited Warranty Program, or Platinum20.

The liability for unsatisfied performance obligations under the service warranty as of March 31, 2021 were as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

Balance as of December 31, 2020

 

$

2,618

 

Additions and adjustments

 

 

427

 

Revenue recognized

 

 

(373

)

Balance as of March 31, 2021

 

$

2,672

 

 

Revenue for service warranties are recognized ratably over the term of the agreements. Specifically for Platinum20, the performance obligation is satisfied at the time that the benefits are provided and are expected to be satisfied over the following 3 to 24 month period for financial assistance and 20 years for product replacement.

 

For delivery of promised products, control transfers and revenue is recognized upon shipment, unless the contractual arrangement requires transfer of control when products reach their destination, for which revenue is recognized once the product arrives at its destination. For Breast Products, a portion of the Company’s revenue is generated from the sale of consigned inventory of breast implants maintained at doctor, hospital, and clinic locations. For these products, revenue is recognized at the time the Company is notified by the customer that the product has been implanted, not when the consigned products are delivered to the customer’s location.

For miraDry, in addition to domestic and international direct sales, the Company leverages a distributor network for selling the miraDry System internationally. The Company recognizes revenue when control of the goods or services is transferred to the distributors. Standard terms in both direct sales agreements (domestic and international), and international distributor agreements do not allow for trial periods, right of return, refunds, payment contingent on obtaining financing or other terms that could impact the customer’s payment obligation.

Sales Return Liability

 

For Breast Products, with the exception of the Company’s BIOCORNEUM scar management products, the Company allows for the return of products from customers within six months after the original sale, which is accounted for as variable consideration. A sales return liability is established based on estimated returns using relevant historical experience taking into consideration recent gross sales and notifications of pending returns, as adjusted for changes in recent industry events and trends. The estimated sales returns are recorded as a reduction of revenue and as a sales return liability in the same period revenue is recognized. Actual sales returns in any future period are inherently uncertain and thus may differ from the estimates. If actual sales returns differ significantly from the estimates, an adjustment to revenue in the current or subsequent period would be recorded. The following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Beginning balance

 

$

9,192

 

 

$

8,116

 

Addition to reserve for sales activity

 

 

36,386