XML 50 R23.htm IDEA: XBRL DOCUMENT v3.24.0.1
Commitments And Contingencies
12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 14. COMMITMENTS AND CONTIGENCIES

Leases

The Company determines if an arrangement is a lease at inception by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company determines the initial classification and measurement of its right-of-use (“ROU”) asset and lease liabilities at the lease commencement date and thereafter, if modified. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The Company leases certain office space and equipment under operating leases. The Company adopted ASC 842 as of January 1, 2022, and as of December 31, 2022, recorded a lease liability of $1,821 and corresponding right-of-use asset of $1,795 on its Consolidated Balance Sheet. The lease liability of $1,821 consisted of $447 of short-term lease liabilities and $1,374 of long-term lease liabilities, included in Other current liabilities and Other long-term liabilities, respectively.

As of December 31, 2023, right-of-use assets of $1,533 are included in Other assets and operating lease liabilities are included within the current and long-term portions of other liabilities of $543 and $1,048, respectively on the Consolidated Balance Sheet. During the years ended December 31, 2023 and 2022, the Company recorded lease expense of $574 and $408, respectively, as a component of Operating income (expense) in the Consolidated Statement of Operations and Comprehensive Loss Income.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. In order to apply the incremental borrowing rate, a portfolio approach with a collateralized rate was utilized wherein assets were grouped based on similar terms and economic environments in a manner whereby the Company reasonably expects that the application does not differ materially from a lease-by-lease approach.

Disclosures Related to Periods Prior to Adoption of ASC 842

Rent expense under operating leases totaled $1,369 for the year ended December 31, 2021, and is included in Selling, general, and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss. In January 2022, the Company purchased its corporate headquarters which was previously leased through 2029. Lease expense for the years ended December 31, 2023 and 2022 do not include expense associated with this lease while rent expense for the year ended December 31, 2021, does.

Legal Proceedings

The Company is involved in various lawsuits, claims, inquiries, and other regulatory and compliance matters, most of which are routine to the nature of our business. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future results of operations should the exposure be materially

different from the estimates or should liabilities be incurred that were not previously accrued. Potential insurance reimbursements are not offset against potential liabilities.

On November 28, 2022, the Company entered into a settlement agreement with Stryker Corp. to settle two complaints filed against the Company and any Company counter claims for a total amount of $26,000 paid by the Company to Stryker Corp (the “Settlement Amount”). In addition, the Company incurred $1,000 in legal fees associated with the settlement. The Settlement Amount was scheduled to be paid by the Company in three separate installments consisting of: (i) $5,000 on or by December 16, 2022, (ii) $8,000 at any time between January 1, 2023, and January 16, 2023, and (iii) $13,000 at any time between April 1, 2023, and April 17, 2023. The Company remitted all three payments in accordance with the installment schedule.

The settlement agreement did not impact the Company’s ability to continue operating its business and did not require any changes to the Company’s existing product lines. The Settlement Amount was the only consideration paid, and the Company is not required to make any future payments to Stryker Corp. The Company entered into the settlement agreement solely to eliminate the burden, expense, distraction, and uncertainties of litigation. The settlement agreement is not, and shall not be construed as, an admission of liability or that the Company engaged in any wrongful, tortious, or unlawful activity.

As of December 31 2023, the Company is not involved in any legal proceedings that could have a material adverse effect on its consolidated financial position.