UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2021

Or

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

Commission file number: 001-37463 

GLAUKOS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	33-0945406
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
229 Avenida Fabricante San Clemente, California	92672
(Address of registrant’s principal executive offices)	(Zip Code)

(949) 367-9600

(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	GKOS	New York Stock Exchange

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 August 3, 2021, there were 46,561,062 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

GLAUKOS CORPORATION

Form 10-Q

For the Quarterly Period Ended June 30, 2021

Table of Contents

		Page
PART I: FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
PART II: OTHER INFORMATION		38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 6.	Exhibits	53
SIGNATURES		54

We use Glaukos, our logo, iStent, iStent inject, iStent inject W, iStent Infinite, iStent SA, iPrism, iDose, iPRIME, Avedro, Photrexa, iLink, KXL, Mosaic and other marks as trademarks. This report contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such 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. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.

References throughout this document to “we,” “us,” “our,” the “Company,” or “Glaukos” refer to Glaukos Corporation and its consolidated subsidiaries.

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

	June 30,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	118,296	$	96,596
Short-term investments		300,265		307,772
Accounts receivable, net		37,569		36,059
Inventory, net		17,500		15,809
Prepaid expenses and other current assets		16,905		13,206
Total current assets		490,535		469,442
Restricted cash		9,416		9,566
Property and equipment, net		54,380		24,008
Operating lease right-of-use asset		19,551		20,009
Finance lease right-of-use asset		50,232		51,443
Intangible assets, net		345,237		357,693
Goodwill		66,134		66,134
Deposits and other assets		8,240		7,207
Total assets	$	1,043,725	$	1,005,502
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	6,957	$	4,371
Accrued liabilities		63,181		45,331
Convertible senior notes		279,339		-
Total current liabilities		349,477		49,702
Convertible senior notes		-		189,416
Operating lease liability		20,139		20,704
Finance lease liability		72,905		60,690
Deferred tax liability, net		8,298		10,512
Other liabilities		8,581		7,029
Total liabilities		459,400		338,053
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding		-		-
Common stock, $0.001 par value; 150,000 shares authorized; 46,497 and 45,275 shares issued and 46,469 and 45,247 shares outstanding as of June 30, 2021 and December 31, 2020 respectively		46		45
Additional paid-in capital		933,328		976,590
Accumulated other comprehensive income		652		1,004
Accumulated deficit		(349,569)		(310,058)
Less treasury stock (28 shares as of June 30, 2021 and December 31, 2020)		(132)		(132)
Total stockholders' equity		584,325		667,449
Total liabilities and stockholders' equity	$	1,043,725	$	1,005,502

See accompanying notes to condensed consolidated financial statements.

3

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales	$	78,093	$	31,558	$	146,061	$	86,894
Cost of sales		17,759		21,668		34,392		54,197
Gross profit		60,334		9,890		111,669		32,697
Operating expenses:
Selling, general and administrative		45,300		38,116		87,221		88,662
Research and development		24,256		18,971		45,475		43,844
In-process research and development		5,000		-		5,000		-
Total operating expenses		74,556		57,087		137,696		132,506
Loss from operations		(14,222)		(47,197)		(26,027)		(99,809)
Non-operating expense:
Interest income		342		590		725		1,286
Interest expense		(3,306)		(1,872)		(6,535)		(2,753)
Other (expense) income, net		(88)		1,201		(1,627)		(510)
Total non-operating expense		(3,052)		(81)		(7,437)		(1,977)
Loss before taxes		(17,274)		(47,278)		(33,464)		(101,786)
Income tax provision (benefit)		208		(7,384)		487		(7,834)
Net loss	$	(17,482)	$	(39,894)	$	(33,951)	$	(93,952)
Basic and diluted net loss per share	$	(0.38)	$	(0.90)	$	(0.74)	$	(2.13)
Weighted average shares used to compute basic and diluted net loss per share		46,306		44,335		46,011		44,078

See accompanying notes to condensed consolidated financial statements.

4

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net loss	$	(17,482)	$	(39,894)	$	(33,951)	$	(93,952)
Other comprehensive income:
Foreign currency translation (loss) gain		(362)		(605)		179		564
Unrealized (loss) gain on short-term investments		(114)		1,053		(531)		573
Other comprehensive (loss) income		(476)		448		(352)		1,137
Total comprehensive loss	$	(17,958)	$	(39,446)	$	(34,303)	$	(92,815)

See accompanying notes to condensed consolidated financial statements.

5

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

						Accumulated
				Additional		other
	Common stock			paid-in		comprehensive		Accumulated		Treasury stock			Total
	Shares	Amount		capital		income		deficit		Shares	Amount		equity
Balance at December 31, 2020	45,275	$	45	$	976,590	$	1,004	$	(310,058)	(28)	$	(132)	$	667,449
Effect of adoption of ASU 2020-06	—		—		(81,553)		—		(5,560)	—		—		(87,113)
Common stock issued under stock plans	741		1		17,034		—		—	—		—		17,035
Stock-based compensation	—		—		8,748		—		—	—		—		8,748
Other comprehensive income	—		—		—		124		—	—		—		124
Net loss	—		—		—		—		(16,469)	—		—		(16,469)
Balance at March 31, 2021	46,016	$	46	$	920,819	$	1,128	$	(332,087)	(28)	$	(132)	$	589,774
Common stock issued under stock plans	481		—		4,525		—		—	—		—		4,525
Stock-based compensation	—		—		7,984		—		—	—		—		7,984
Other comprehensive loss	—		—		—		(476)		—	—		—		(476)
Net loss	—		—		—		—		(17,482)	—		—		(17,482)
Balance at June 30, 2021	46,497	$	46	$	933,328	$	652	$	(349,569)	(28)	$	(132)	$	584,325

						Accumulated
				Additional		other
	Common stock			paid-in		comprehensive		Accumulated		Treasury stock			Total
	Shares	Amount		capital		income		deficit		Shares	Amount		equity
Balance at December 31, 2019	43,530	$	44	$	861,740	$	1,330	$	(189,710)	(28)	$	(132)	$	673,272
Common stock issued under stock plans	589		—		4,220		—		—	—		—		4,220
Stock-based compensation	—		—		17,176		—		—	—		—		17,176
Other comprehensive income	—		—		—		689		—	—		—		689
Net loss	—		—		—		—		(54,058)	—		—		(54,058)
Balance at March 31, 2020	44,119	$	44	$	883,136	$	2,019	$	(243,768)	(28)	$	(132)	$	641,299
Common stock issued under stock plans	459		1		1,633		—		—	—		—		1,634
Stock-based compensation	—		—		13,062		—		—	—		—		13,062
Equity component of convertible senior notes, net of transaction costs of $3,267 and taxes of $12,891	—		—		81,554		—		—	—		—		81,554
Purchase of capped calls related to issuance of convertible senior notes	—		—		(35,679)		—		—	—		—		(35,679)
Other comprehensive income	—		—		—		448		—	—		—		448
Net loss	—		—		—		—		(39,894)	—		—		(39,894)
Balance at June 30, 2020	44,578	$	45	$	943,706	$	2,467	$	(283,662)	(28)	$	(132)	$	662,424

See accompanying notes to condensed consolidated financial statements.

6

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six Months Ended June 30,
	2021		2020
Operating Activities
Net loss	$	(33,951)	$	(93,952)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		2,313		2,188
Amortization of intangible assets		12,456		12,456
Amortization of lease right-of-use assets		2,287		2,577
Amortization of debt issuance costs		687		557
Deferred income tax benefit		(48)		(8,254)
Loss on disposal of fixed assets		-		15
Stock-based compensation		16,732		28,073
Change in fair value of cash settled stock options		-		(3,172)
Unrealized foreign currency losses		827		-
Amortization of premium (discount) on short-term investments		516		33
Other liabilities		1,551		2,324
Changes in operating assets and liabilities:
Accounts receivable, net		(1,679)		11,556
Inventory, net		(1,863)		21,396
Prepaid expenses and other current assets		(3,758)		(1,606)
Accounts payable and accrued liabilities		15,324		1,998
Other assets		175		(211)
Net cash provided by (used in) operating activities		11,569		(24,022)
Investing activities
Purchases of short-term investments		(97,233)		(60,883)
Proceeds from sales and maturities of short-term investments		103,692		45,011
Purchases of property and equipment		(28,542)		(3,509)
Proceeds from disposal of property and equipment		3		-
Investment in company-owned life insurance		(1,217)		(658)
Net cash used in investing activities		(23,297)		(20,039)
Financing activities
Proceeds from convertible senior notes		-		287,500
Payment of convertible senior notes transaction costs		-		(9,614)
Purchase of capped calls related to issuance of convertible senior notes		-		(35,679)
Proceeds from exercise of stock options		22,824		6,590
Proceeds from share purchases under Employee Stock Purchase Plan		1,549		1,278
Payment of employee taxes related to vested restricted stock units		(2,812)		(2,013)
Principal paid on finance lease		(453)		-
Proceeds from tenant improvement allowance		12,668		-
Net cash provided by financing activities		33,776		248,062
Effect of exchange rate changes on cash and cash equivalents		(498)		543
Net decrease in cash, cash equivalents and restricted cash		21,550		204,544
Cash, cash equivalents and restricted cash at beginning of period		106,162		71,756
Cash, cash equivalents and restricted cash at end of period	$	127,712	$	276,300
Supplemental disclosures of cash flow information
Taxes paid	$	220	$	294

See accompanying notes to condensed consolidated financial statements.

7

GLAUKOS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1.  Organization and Basis of Presentation

Organization and business

Glaukos Corporation (Glaukos or the Company), incorporated in Delaware on July 14, 1998, is an ophthalmic medical technology and pharmaceutical company focused on developing novel therapies for the treatment of glaucoma, corneal disorders, and retinal disease. The Company developed Micro-Invasive Glaucoma Surgery (MIGS) to serve as an alternative to the traditional glaucoma treatment paradigm and launched its first MIGS device commercially in 2012. The Company also offers commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a corneal disorder, keratoconus, that was approved by the U.S. Food and Drug Administration (FDA) in 2016 and is developing a pipeline of surgical devices, sustained pharmaceutical therapies, and implantable biosensors intended to treat glaucoma progression, corneal disorders such as keratoconus, dry eye and refractive vision correction, and retinal diseases such as neovascular age-related macular degeneration, diabetic macular edema and retinal vein occlusion.

The accompanying condensed consolidated financial statements include the accounts of Glaukos and its wholly-owned subsidiaries. All significant intercompany balances and transactions among the consolidated entities have been eliminated in consolidation.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted (GAAP) in the United States of America (U.S.) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.

The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements.  As permitted under those rules, certain footnotes and other financial information that are normally required by GAAP have been condensed or omitted.  In the opinion of management, the unaudited interim financial statements reflect all adjustments necessary for the fair presentation of the Company’s financial information contained herein. All such adjustments are of a normal and recurring nature. The condensed consolidated balance sheet as of December 31, 2020 has been derived from audited financial statements at that date, but excludes disclosures required by GAAP for complete financial statements.  These interim financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2020, which are contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on March 1, 2021. The Company’s results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period.

Recent Developments

Acquisition of Avedro, Inc.

On November 21, 2019, the Company acquired Avedro, Inc. (Avedro), a hybrid ophthalmic pharmaceutical and medical technology company focused on developing therapies designed to treat corneal diseases and disorders and correct refractive conditions, in a stock-for-stock transaction (Avedro Merger). Avedro developed novel bio-activated drug formulations used in combination with proprietary systems for the treatment of progressive keratoconus and corneal ectasia following refractive surgery. The therapy is the first and only minimally invasive anterior segment product offering approved by the FDA shown to halt the progression of keratoconus.

Amendment to Intratus License Agreement

On April 22, 2021, the Company announced that it entered into an amendment of our exclusive licensing agreement with Intratus, Inc. (Intratus). The amendment expanded the existing agreement, a global licensing arrangement to research, develop, manufacture and commercialize Intratus’ patented, non-invasive drug delivery platform for use in the treatment of dry eye disease, glaucoma and other corneal disorders, to also include the treatment of presbyopia. In connection with the execution of the amendment, the Company made a one-time payment to Intratus of $5.0 million.

8

Santen License Agreement

On May 18, 2021, the Company announced that it entered into a new development and commercialization license agreement with Santen Pharmaceutical Co., Ltd. (Santen) for the PRESERFLO™ MicroShunt, superseding the previous collaboration and distribution agreements between the two parties. Under the new agreement, the Company obtains exclusive commercialization rights for the MicroShunt in the United States, Australia, New Zealand, Canada, Brazil, Mexico and the remainder of Latin America. The new agreement also provides the Company with full control over all development activities for the MicroShunt in these same territories, including all clinical development and regulatory affairs activities in the U.S. following a transition period. Santen submitted a premarket approval (PMA) application to the U.S. Food and Drug Administration (FDA) in June 2020 and discussions with the FDA remain ongoing. The Company did not make any payment in connection with the execution of the license agreement; however, should the Company be successful in obtaining regulatory approval for the PRESERFLO™ MicroShunt, it would be required to pay Santen a milestone payment, followed by royalties and other potential future milestones depending on the success of the commercialization of the product.

Note 2.  Summary of Significant Accounting Policies

There have been no significant changes in the Company’s significant accounting policies during the six months ended June 30, 2021, as compared with those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021, including in connection with the Company’s adoption of the accounting pronouncements noted below in the sub-heading “Recently Adopted Accounting Pronouncements” with the exception of the adoption of Accounting Standards Update (ASU) No. 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 (ASU 2020-06). See Recently Adopted Accounting Pronouncements and Note 9. Convertible Senior Notes for more detail.

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 in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. The most significant estimates in the accompanying condensed consolidated financial statements relate to revenue recognition, the fair value of the liability component of the Company’s 2.75% convertible notes due 2027 (Convertible Notes), the incremental borrowing rate related to the Company’s leased assets, stock-based compensation expense and the valuation of certain intangible assets related to the Company’s acquisition of Avedro. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, this process may result in actual results differing materially from those estimated amounts used in the preparation of the condensed consolidated financial statements.

The Company’s condensed consolidated financial statements as of and for the three and six months ended June 30, 2021 reflect the Company’s estimates of the impact of the ongoing 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, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are uncertain, including the duration and severity of the COVID-19 outbreak, the severity and transmission rates of new and more contagious and/or vaccine-resistant variants of COVID-19, and the actions taken to contain it or treat COVID-19, including the availability, distribution, rate of public acceptance and efficacy of vaccines for COVID-19, as well as the economic impact on local, regional, national and international customers and markets. As a result, there may be changes to the Company’s estimates regarding the impact of COVID-19 in future periods.

9

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statement of cash flows as of the beginning and end of the six months ended June 30, 2021 (in thousands):

	June 30,		December 31,
	2021		2020
Cash and cash equivalents	$	118,296	$	96,596
Restricted cash		9,416		9,566
Cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows	$	127,712	$	106,162

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-06, which simplifies accounting for convertible instruments. The embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under ASU 2020-06, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to compute diluted earnings per share to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective adoption approach. The cumulative effect of the change was recognized as an adjustment to the opening balance of retained earnings at the date of adoption. The comparative prior year information has not been restated and continues to be presented according to accounting standards in effect for those periods.

The adoption of ASU 2020-06 resulted in an increase to accumulated deficit of $5.5 million, a decrease to additional paid-in capital of $81.6 million, a decrease in the deferred tax liability of $2.2 million and an increase to convertible notes, net of $89.2 million. Interest expense recognized in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. Lastly, the Company derecognized deferred income taxes associated with the Convertible Notes and adjusted the deferred tax liability associated with the embedded conversion feature and corresponding change in the valuation allowance.

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company reviewed recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.

10

Note 3.  Balance Sheet Details

Short-term Investments

Short-term investments consisted of the following (in thousands):

	At June 30, 2021
	Maturity	Amortized cost		Unrealized		Unrealized		Estimated
	(in years)	or cost		gains		losses		fair value
U.S. government bonds	less than 2	$	9,973	$	6	$	-	$	9,979
U.S. government agency bonds	less than 3		173,030		62		(54)		173,038
Bank certificates of deposit	less than 2		19,800		6		(3)		19,803
Corporate notes	less than 3		65,897		152		(35)		66,014
Asset-backed securities	less than 2		13,614		110		-		13,724
Municipal bonds	less than 3		17,725		15		(33)		17,707
Total		$	300,039	$	351	$	(125)	$	300,265
	At December 31, 2020
	Maturity	Amortized cost		Unrealized		Unrealized		Estimated
	(in years)	or cost		gains		losses		fair value
U.S. government agency bonds	less than 3		206,704		223		(3)		206,924
Bank certificates of deposit	less than 1		20,700		8		-		20,708
Commercial paper	less than 1		1,500		-		-		1,500
Corporate notes	less than 3		54,866		308		(1)		55,173
Asset-backed securities	less than 2		13,290		205		-		13,495
Municipal bonds	less than 3		9,954		21		(3)		9,972
Total		$	307,014	$	765	$	(7)	$	307,772

Accounts Receivable, Net

Accounts receivable consisted of the following (in thousands):

	June 30,		December 31,
	2021		2020
Accounts receivable	$	38,740	$	37,729
Allowance for credit losses		(1,171)		(1,670)
	$	37,569	$	36,059

The Company’s allowance for credit losses represents management’s estimate of current expected credit losses and there were immaterial bad-debt write offs charged during the three and six months ended June 30, 2021.

As of June 30, 2021, the Company evaluated the current and expected future economic and market conditions surrounding the COVID-19 pandemic as it relates to collectability of its accounts receivable and determined the estimate of expected credit losses was not materially impacted. The Company will continue to re-evaluate the estimate of credit losses related to COVID-19 in conjunction with its assessment of expected credit losses in subsequent quarters.

Additionally, no customers accounted for more than 10% of net accounts receivable as of June 30, 2021 or December 31, 2020.

Inventory, Net

Inventory, net consisted of the following (in thousands):

	June 30,		December 31,
	2021		2020
Finished goods	$	5,843	$	5,346
Work in process		5,246		3,584
Raw material		6,411		6,879
	$	17,500	$	15,809

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Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2021		2020
Accrued bonuses	$	7,833	$	10,815
Accrued vacation benefits		4,286		3,728
Accrued Employee Stock Purchase Plan liability		3,834		1,733
Accrued payroll taxes		13,958		3,198
Other accrued liabilities		33,270		25,857
	$	63,181	$	45,331

Note 4.  Fair Value Measurements

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 liability.

The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.

The valuation of assets and liabilities is subject to fair value measurements using a three-tiered approach and fair value measurements are classified and disclosed by the Company in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

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The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):