Property and equipment, net consist of the following (in thousands):


	June 30,			December 31,
	2023			2022
Leasehold improvements	$	6,361		$	6,264
Manufacturing equipment and tooling		11,714			11,259
Computer equipment		1,771			1,690
Software		6,668			6,393
Furniture and fixtures		1,200			1,205
		27,714			26,811
Less accumulated depreciation		(13,730	)		(11,870	)
	$	13,984		$	14,941

depreciation expense

Depreciation expense for the three months ended June 30, 2023 and 2022 was $0.9 million and $0.7 million, respectively. Depreciation expense for the six months ended June 30, 2023 and 2022 was $1.9 million and $1.5 million, respectively. There were no impairments recorded during the six months ended June 30, 2023 and 2022.

Following the sale of the miraDry business, the Company has one reporting unit, Plastic Surgery, formerly known as Breast Products. The Company evaluates goodwill for impairment at least annually on October 1st and whenever circumstances suggest that goodwill may be impaired.

The carrying amount of goodwill is $9.2 million for the years ended June 30, 2023 and December 31, 2022.

The components of the Company’s other intangible assets consist of the following (in thousands):


	Average
	Amortization		June 30, 2023
	Period		Gross Carrying		Accumulated			Intangible
	(in years)		Amount		Amortization			Assets, net
Intangibles with definite lives
Customer relationships		10	$	4,940	$	(4,592	)	$	348
Trade names - finite life		12		800		(489	)		311
Manufacturing know-how		19		8,240		(2,893	)		5,347
Developed technology		8		21,166		(3,741	)		17,425
Total definite-lived intangible assets			$	35,146	$	(11,715	)	$	23,431
Intangibles with indefinite lives
Total trade names - indefinite-lived				450		—			450
Total definite and indefinite-lived intangibles			$	35,596	$	(11,715	)	$	23,881


	Average
	Amortization		December 31, 2022
	Period		Gross Carrying		Accumulated			Intangible
	(in years)		Amount		Amortization			Assets, net
Intangibles with definite lives
Customer relationships		10	$	4,940	$	(4,493	)	$	447
Trade names - finite life		12		800		(456	)		344
Manufacturing know-how		19		8,240		(2,479	)		5,761
Developed technology		8		21,163		(2,489	)		18,674
Total definite-lived intangible assets			$	35,143	$	(9,917	)	$	25,226
Intangibles with indefinite lives
Total trade names - indefinite-lived				450		—			450
Total definite and indefinite-lived intangibles			$	35,593	$	(9,917	)	$	25,676

Amortization expense for both the three months ended June 30, 2023 and 2022 was $0.9 million respectively. Amortization expense for the six months ended June 30, 2023 and 2022 was $1.8 and $1.9 million respectively. Amortization expense is recorded in general and administrative expense in the condensed consolidated statement of operations, with the exception of manufacturing know-how and developed technology, which is recorded in cost of goods sold. The following table summarizes the future estimated amortization expense relating to the Company's definite-lived intangible assets as of June 30, 2023 (in thousands):

Accrued and other current liabilities consist of the following (in thousands):


	June 30,		December 31,
	2023		2022
Accrued payroll and bonuses	$	4,731	$	4,962
Accrued severance		589		1,232
Accrued commissions		1,405		3,017
Deferred and contingent consideration, current portion		3,031		3,030
Lease liabilities		2,053		1,823
Other		5,400		8,535
	$	17,209	$	22,599

The following table provides a rollforward of the accrued assurance-type warranties (in thousands):


	Six Months Ended June 30,
	2023			2022
Balance as of January 1	$	8,828		$	2,505
Warranty costs incurred during the period		(404	)		(266	)
Changes in accrual related to warranties issued during the period		902			513
Changes in accrual related to pre-existing warranties		(9	)		12
Balance as of June 30	$	9,317		$	2,764
Less short-term portion	$	(539	)	$	—
Long-term portion	$	8,778		$	2,764

As of June 30, 2023 and 2022, the liability for the long-term balance is included in “Warranty reserve”, and the short-term portion is included in “Accrued and other current liabilities”.

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

The contingent consideration balance consists of milestone payments related to the acquisition of Viality and future royalty payments related to the acquisition of BIOCORNEUM.

The Company assessed the fair value of all contingent consideration using a Monte-Carlo simulation model. The contingent consideration related to Viality is based on the achievement of certain clinical endpoints following the completion of a study measuring retention rates using the fat transfer products. The significant assumptions utilized in the fair value measurement was risk-free rate, the probable retention rate based on historical data and the Company's equity volatility of 125%. Any subsequent changes to the fair value of contingent consideration will be recorded as an adjustment to the carrying value of the assets acquired.

The contingent consideration related to the acquisition of BIOCORNEUM consists of royalty obligations based on future net sales for a defined term, beginning in 2024. The significant assumption utilized in the fair value measurement was the discount rate, which was 24.0%.

As these inputs are not observable, the overall fair value measurement of the contingent consideration is classified as Level 3.

The Company identified certain embedded derivatives related to the conversion features of the Convertible Notes. Refer to Note 7 to the unaudited condensed consolidated financial statements for further details on the Convertible Notes. In accordance with ASC 815-40, Derivatives and Hedging Activities, the embedded conversion options contained within the Convertible Notes were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through each reporting date. The Company utilized a binomial lattice model to calculate the fair value of the embedded derivatives. Significant observable and unobservable inputs include, conversion price, stock price, dividend rate, expected volatility, risk-free rate, and the probability of conversion to common shares at the Base Conversion Rate in the event of a major transaction (e.g., a change in control). The binomial lattice model is a Level 3 valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators.

On January 19, 2023, the Company effected a Reverse Stock Split, and upon the effectiveness of the Reverse Stock Split, the Company deemed it appropriate to reassess the conversion features of its Convertible Notes. As noted above, the conversion features were separately bifurcated and accounted for as embedded derivatives. Based on the Company’s reassessment, it has concluded that the conversion features meet the criteria for equity classification and has reclassified the fair value of the bifurcated conversion features to “Additional paid in capital” on the condensed consolidated balance sheet.

The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):


	Fair Value Measurements as of
	June 30, 2023 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Liability for contingent consideration	$	—	$	—	$	2,908	$	2,908
	$	—	$	—	$	2,908	$	2,908


	Fair Value Measurements as of
	December 31, 2022 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Liability for embedded derivative	$	—	$	—	$	880	$	880
Liability for contingent consideration	$	—	$	—	$	2,815	$	2,815
	$	—	$	—	$	3,695	$	3,695

The liability for the current portion of contingent consideration is included in “Accrued and other current liabilities” and the long-term portion is included in “Deferred and contingent consideration” in the condensed consolidated balance sheets.

The liability for the embedded derivative is recorded as “Derivative liability” in the consolidated balance sheet.

The Company recognizes changes in the fair value of the derivative liability as “Change in fair value of derivative liability” in the consolidated statement of operations and changes in the contingent consideration are recognized in “General and administrative” expense in the consolidated statement of operations.