Restatement Of Previously Issued Consolidated Financial Statements (Tables)

12 Months Ended

Dec. 31, 2023

Accounting Changes and Error Corrections [Abstract]

Schedule of Restatement of Previously Issued Condensed Consolidated FInancial Statements

The following tables reflect the impact of the Restatement of the Company’s previously reported consolidated financial statements:

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

	Year ended December 31, 2023
	As Previously Reported			Adjustments			Ref	As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	75,639		$	—			$	75,639
Trade receivables, net of allowance for doubtful accounts of $1,339		37,323			—				37,323
Inventories, net		98,062			(8,016	)	(a)		90,046
Income taxes receivable		794			—				794
Other current assets		3,997			—				3,997
Total current assets		215,815			(8,016	)			207,799
Property and equipment, net		74,122			—				74,122
Intangible assets, net		21,674			—				21,674
Goodwill		25,465			—				25,465
Deferred income taxes		705			—				705
Other assets		2,918			—				2,918
Total assets	$	340,699		$	(8,016	)		$	332,683
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	21,696		$	—			$	21,696
Accrued expenses		27,781			—				27,781
Other current liabilities		883			—				883
Current maturities of long-term debt		640			—				640
Income taxes payable		243			—				243
Total current liabilities		51,243			—				51,243
Long-term liabilities:
Long-term debt net, less current maturities		109,799			—				109,799
Other long-term liabilities		1,048			—				1,048
Deferred income taxes		233			—				233
Income taxes payable		635			—				635
Total liabilities		162,958			—				162,958
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 300,000,000 shares authorized; 83,738,974 shares issued, and 82,825,455 shares outstanding as of December 31, 2023		827			—				827
Additional paid in capital		298,394			—				298,394
Accumulated deficit		(115,630	)		(8,016	)	(a)		(123,646	)
Accumulated other comprehensive income		132			—				132
Treasury stock, at cost; 913,519 shares as of December 31, 2023		(5,982	)		—				(5,982	)
Total stockholders’ equity		177,741			(8,016	)			169,725
Total liabilities & stockholders’ equity	$	340,699		$	(8,016	)		$	332,683

The description of the error is in the Description of Misstatement Adjustments provided herein this Note 3 Restatement of Previously Issued Consolidated Financial Statements. The impact of each error for the corresponding period in the above table is described below:

(a) Inventory Treatment - The correction of the misstatement resulted in a decrease to Inventories, net and an increase to Accumulated deficit of $8,016, including a decrease to the beginning balance of Accumulated deficit of $340 as of December 31, 2023.

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

	Year Ended December 31, 2023
	As Previously Reported			Adjustments			Ref	As Restated
Net revenue	$	216,389		$	—			$	216,389
Cost of goods sold		43,598			8,356		(a)		51,954
Gross profit		172,791			(8,356	)			164,435
Operating expenses:
Research and development costs		30,078			—				30,078
Selling, general, and administrative		180,022			—				180,022
Total operating expenses		210,100			—				210,100
Operating loss		(37,309	)		(8,356	)			(45,665	)
Other income (expense):
Other income (expense), net		154			(1,337	)	(b)		(1,183	)
Loss on early extinguishment of debt		(5,308	)		—				(5,308	)
Interest expense, net		(5,165	)		—				(5,165	)
Total other expense		(10,319	)		(1,337	)			(11,656	)
Loss before income taxes		(47,628	)		(9,693	)			(57,321	)
Income tax expense		213			—				213
Net loss	$	(47,841	)	$	(9,693	)		$	(57,534	)
Foreign currency translation adjustment		165			—				165
Comprehensive loss	$	(47,676	)	$	(9,693	)		$	(57,369	)
Weighted average number of shares of common stock outstanding:
Basic		82,087,329			—				82,087,329
Diluted		82,087,329			—				82,087,329
Net loss per share attributable to common stockholders:
Basic	$	(0.58	)	$	(0.12	)		$	(0.70	)
Diluted	$	(0.58	)	$	(0.12	)		$	(0.70	)

The description of each error is in the Description of Misstatement Adjustments provided herein this Note 3 Restatement of Previously Issued Consolidated Financial Statements. The impact of each error for the corresponding period in the above table is described below:

(a) Inventory Treatment - The correction of the misstatement resulted in an increase to Cost of goods sold of $8,356 for the period ended December 31, 2023.

(b) Interest Rate Swap - The correction of the misstatement resulted in a decrease to Other income (expense), net of $1,337 for the period ended December 31, 2023, and an equal impact to the beginning balance of Accumulated deficit.

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED SERIES EQUITY & STOCKHOLDERS’ EQUITY

											Accumulated
		Common				Additional					Other						Total
		Stock				Paid-in-		Accumulated			Comprehensive			Treasury			Stockholders’
As Previously Reported	Ref	Shares		Amount		Capital		Deficit			Income (Loss)			Stock			Equity
Balance, December 31, 2022			77,770,588	$	776	$	213,956	$	(67,789	)	$	(33	)	$	(5,982	)	$	140,928
Net loss			—		—		—		(47,841	)		—			—			(47,841	)
Issuance of common stock net of issuance costs of $827			4,312,500		43		68,410		—			—			—			68,453
Options exercised			668,925		7		2,399		—			—			—			2,406
Foreign currency translation			—		—		—		—			165			—			165
Employee stock purchase plan			73,442		1		1,265		—			—			—			1,266
Stock-based compensation			—		—		12,364		—			—			—			12,364
Balance, December 31, 2023			82,825,455		827		298,394		(115,630	)		132			(5,982	)		177,741
Adjustments
Balance, December 31, 2022			—		—		—		1,677			—			—			1,677
Net loss	(a)(b)		—		—		—		(9,693	)		—			—			(9,693	)
Issuance of common stock net of issuance costs of $827			—		—		—		—			—			—			—
Options exercised			—		—		—		—			—			—			—
Foreign currency translation			—		—		—		—			—			—			—
Employee stock purchase plan			—		—		—		—			—			—			—
Stock-based compensation			—		—		—		—			—			—			—
Balance, December 31, 2023			—		—		—		(8,016	)		—			—			(8,016	)
As Restated
Balance, December 31, 2022			77,770,588		776		213,956		(66,112	)		(33	)		(5,982	)		142,605
Net loss			—		—		—		(57,534	)		—			—			(57,534	)
Issuance of common stock net of issuance costs of $827			4,312,500		43		68,410		—			—			—			68,453
Options exercised			668,925		7		2,399		—			—			—			2,406
Foreign currency translation			—		—		—		—			165			—			165
Employee stock purchase plan			73,442		1		1,265		—			—			—			1,266
Stock-based compensation			—		—		12,364		—			—			—			12,364
Balance, December 31, 2023			82,825,455	$	827	$	298,394	$	(123,646	)	$	132		$	(5,982	)	$	169,725

See descriptions of the Net loss impacts in the Consolidated Statement of Operations and Comprehensive Loss.

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2023
	As Previously Reported			Adjustments			Ref	As Restated
Cash flows from operating activities
Net loss	$	(47,841	)	$	(9,693	)	(a)(b)	$	(57,534	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		15,542			—				15,542
Allowance for doubtful accounts		614			—				614
Provision for excess and obsolete inventories		(352	)		4,389		(a)		4,037
Loss on early extinguishment of debt		1,881			—				1,881
Stock-based compensation		12,364			—				12,364
Change in fair value of financial instruments		(791	)		1,337		(b)		546
Other		984			—				984
Changes in other assets and liabilities, net of acquisitions:
Accounts receivable		(161	)		—				(161	)
Inventories		(36,595	)		3,967		(a)		(32,628	)
Accounts payable		6,742			—				6,742
Accrued expenses		6,428			—				6,428
Accrued legal settlement		(22,000	)		—				(22,000	)
Income tax receivable		(50	)		—				(50	)
Other assets and liabilities		(655	)		—				(655	)
Net cash used in operating activities		(63,890	)		—				(63,890	)
Cash flows from investing activities
Purchases of property and equipment		(26,716	)		—				(26,716	)
Proceeds from sale of property and equipment		1,043			—				1,043
Purchases of intangible assets		(1,314	)		—				(1,314	)
Net cash used in investing activities		(26,987	)		—				(26,987	)
Cash flows from financing activities
Proceeds from issuance of long-term debt		100,000			—				100,000
Payments on long-term debt		(30,727	)		—				(30,727	)
Payments of debt issuance costs		(4,423	)		—				(4,423	)
Proceeds from issuance of common stock, net of issuance costs		68,453			—				68,453
Proceeds from exercise of stock options		2,406			—				2,406
Proceeds from employee stock purchase plan		944			—				944
Payments on earnout liability		(8,000	)		—				(8,000	)
Net cash provided by financing activities		128,653			—				128,653
Effect of exchange rate changes on cash and cash equivalents		(605	)		—				(605	)
Net increase in cash and cash equivalents		37,171			—				37,171
Cash and cash equivalents at beginning of period		38,468			—				38,468
Cash and cash equivalents at end of period	$	75,639		$	—			$	75,639
Supplemental disclosures of cash flow information:
Restricted cash	$	1,000		$	—			$	1,000
Cash paid for income taxes		908			—				908
Cash paid for interest		4,271			—				4,271
Purchase of property and equipment included in accounts payable		3,402			—				3,402

See descriptions of the Net loss impacts in the Consolidated Statement of Operations and Comprehensive Loss.

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	Year ended December 31, 2022
	As Previously Reported			Adjustments		Ref	As Restated
ASSETS
Current assets:
Cash	$	38,468		$	—		$	38,468
Trade receivables, net of allowance for doubtful accounts of $1,688		37,687			—			37,687
Inventories, net		60,948			340	(a)		61,288
Income taxes receivable		615			—			615
Other current assets		4,658			—			4,658
Total current assets		142,376			340			142,716
Property and equipment, net		61,938			—			61,938
Intangible assets, net		22,387			—			22,387
Goodwill		25,465			—			25,465
Deferred income taxes		148			—			148
Other assets		1,795			1,337	(b)		3,132
Total assets	$	254,109		$	1,677		$	255,786
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	14,939		$	—		$	14,939
Accrued expenses		26,807			—			26,807
Accrued legal settlement		22,000			—			22,000
Other current liabilities		3,844			—			3,844
Current maturities of long-term debt		728			—			728
Income taxes payable		184			—			184
Total current liabilities		68,502			—			68,502
Long-term liabilities:
Long-term debt net, less current maturities		42,182			—			42,182
Other long-term liabilities		1,628			—			1,628
Deferred income taxes		342			—			342
Income taxes payable		527			—			527
Total liabilities		113,181			—			113,181
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 300,000,000 shares authorized; 78,684,107 shares issued, and 77,770,588 shares outstanding as of December 31, 2022		776			—			776
Additional paid in capital		213,956			—			213,956
Accumulated deficit		(67,789	)		1,677	(a)(b)		(66,112	)
Accumulated other comprehensive loss		(33	)		—			(33	)
Treasury stock, at cost; 913,519 shares as of December 31, 2022		(5,982	)		—			(5,982	)
Total stockholders’ equity		140,928			1,677			142,605
Total liabilities & stockholders’ equity	$	254,109		$	1,677		$	255,786

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Year Ended December 31, 2022
	As Previously Reported			Adjustments			Ref	As Restated
Net revenue	$	181,383		$	—			$	181,383
Cost of goods sold		32,457			(340	)	(a)		32,117
Gross profit		148,926			340				149,266
Operating expenses:
Research and development costs		24,650			—				24,650
Selling, general, and administrative		159,323			—				159,323
Legal settlement		27,000			—				27,000
Total operating expenses		210,973			—				210,973
Operating loss		(62,047	)		340				(61,707	)
Other income (expense):
Other income (expense), net		(1,214	)		1,337		(b)		123
Interest expense, net		(4,129	)		—				(4,129	)
Total other expense		(5,343	)		1,337				(4,006	)
Loss before income taxes		(67,390	)		1,677				(65,713	)
Income tax benefit		(64	)		—				(64	)
Net loss	$	(67,326	)	$	1,677			$	(65,649	)
Foreign currency translation adjustment		(41	)		—				(41	)
Comprehensive loss	$	(67,367	)	$	1,677			$	(65,690	)
Weighted average number of shares of common stock outstanding:
Basic		76,766,100			—				76,766,100
Diluted		76,766,100			—				76,766,100
Net loss per share attributable to common stockholders:
Basic	$	(0.88	)	$	0.02			$	(0.86	)
Diluted	$	(0.88	)	$	0.02			$	(0.86	)

The description of each error is in the Description of Misstatement Adjustments provided herein this Note 3 Restatement of Previously Issued Consolidated Financial Statements. The impact of each error for the corresponding period in the above table is described below:

(a) Inventory Treatment - The correction of the misstatement resulted in a decrease to Cost of Sales of $340 for the period ended December 31, 2022.

(b) Interest Rate Swap - The correction of the out of period misstatement resulted in an increase to Other income (expense), net of $1,337, and impacted opening accumulated deficit, for the period ended December 31, 2022.

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED SERIES EQUITY & STOCKHOLDERS’ EQUITY

												Accumulated
		Common				Additional						Other						Total
		Stock				Paid-in-			Accumulated			Comprehensive			Treasury			Stockholders’
As Previously Reported	Ref	Shares		Amount		Capital			Deficit			Income (Loss)			Stock			Equity
Balance, December 31, 2021			76,447,287	$	763	$	197,868		$	(463	)	$	8		$	(5,982	)	$	192,194
Net loss			—		—		—			(67,326	)		—			—			(67,326	)
Offering costs associated with initial public offering			—		—		(266	)		—			—			—			(266	)
Options exercised			1,284,333		13		5,258			—			—			—			5,271
Foreign currency translation			—		—		—			—			(41	)		—			(41	)
Employee stock purchase plan			38,968		—		731			—			—			—			731
Stock-based compensation			—		—		10,365			—			—			—			10,365
Balance, December 31, 2022			77,770,588		776		213,956			(67,789	)		(33	)		(5,982	)		140,928
Adjustments
Balance, December 31, 2021			—		—		—			—			—			—			—
Net loss	(a)(b)		—		—		—			1,677			—			—			1,677
Offering costs associated with initial public offering			—		—		—			—			—			—			—
Options exercised			—		—		—			—			—			—			—
Foreign currency translation			—		—		—			—			—			—			—
Employee stock purchase plan			—		—		—			—			—			—			—
Stock-based compensation			—		—		—			—			—			—			—
Balance, December 31, 2022			—		—		—			1,677			—			—			1,677
As Restated
Balance, December 31, 2021			76,447,287		763		197,868			(463	)		8			(5,982	)		192,194
Net loss			—		—		—			(65,649	)		—			—			(65,649	)
Offering costs associated with initial public offering			—		—		(266	)		—			—			—			(266	)
Options exercised			1,284,333		13		5,258			—			—			—			5,271
Foreign currency translation			—		—		—			—			(41	)		—			(41	)
Employee stock purchase plan			38,968		—		731			—			—			—			731
Stock-based compensation			—		—		10,365			—			—			—			10,365
Balance, December 31, 2022			77,770,588	$	776	$	213,956		$	(66,112	)	$	(33	)	$	(5,982	)	$	142,605

See descriptions of the Net loss impacts in the Consolidated Statement of Operations and Comprehensive Loss.

PARAGON 28, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2022
	As Previously Reported			Adjustments			Ref	As Restated
Cash flows from operating activities
Net loss	$	(67,326	)	$	1,677		(a)(b)	$	(65,649	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		13,728			—				13,728
Allowance for doubtful accounts		155			—				155
Provision for excess and obsolete inventories		485			—				485
Stock-based compensation		10,365			—				10,365
Change in fair value of financial instruments		1,280			(1,337	)	(b)		(57	)
Other		704			—				704
Changes in other assets and liabilities, net of acquisitions:
Accounts receivable		(12,013	)		—				(12,013	)
Inventories		(21,512	)		(340	)	(a)		(21,852	)
Accounts payable		1,895			—				1,895
Accrued expenses		2,317			—				2,317
Accrued legal settlement		22,000			—				22,000
Income tax receivable/payable		391			—				391
Other assets and liabilities		(1,650	)		—				(1,650	)
Net cash used in operating activities		(49,181	)		—				(49,181	)
Cash flows from investing activities
Purchase of office building		(18,300	)		—				(18,300	)
Purchases of property and equipment		(22,813	)		—				(22,813	)
Proceeds from sale of property and equipment		897			—				897
Purchases of intangible assets		(1,973	)		—				(1,973	)
Acquisitions, net of cash received		(18,504	)		—				(18,504	)
Net cash used in investing activities		(60,693	)		—				(60,693	)
Cash flows from financing activities
Proceeds from draw on term loan		20,000			—				20,000
Proceeds from issuance of long-term debt		16,000			—				16,000
Payments on long-term debt		(570	)		—				(570	)
Payments of debt issuance costs		(732	)		—				(732	)
Proceeds from exercise of stock options		5,271			—				5,271
Proceeds from employee stock purchase plan		518			—				518
Payments on earnout liability		(1,000	)		—				(1,000	)
Net cash provided by financing activities		39,487			—				39,487
Effect of exchange rate changes on cash		(497	)		—				(497	)
Net decrease in cash		(70,884	)		—				(70,884	)
Cash at beginning of period		109,352			—				109,352
Cash at end of period	$	38,468		$	—			$	38,468
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	1,103		$	—			$	1,103
Cash paid for interest		3,073			—				3,073
Purchase of property and equipment included in accounts payable		3,402			—				3,402