10-Q

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, 2022

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: 001-37717

Senseonics Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 3841
(Primary Standard Industrial
Classification Code Number) 47-1210911
(I.R.S. Employer
Identification Number)

20451 Seneca Meadows Parkway

Germantown, MD 20876-7005

(301) 515-7260

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	SENS	NYSE American

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 ☒

There were 465,447,258 shares of common stock, par value $0.001, outstanding as of August 5, 2022.

TABLE OF CONTENTS

PART I: Financial Information
ITEM 1: Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for three and six months ended June 30, 2022 and 2021	4
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and 2021	5
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	6
Notes to Unaudited Condensed Consolidated Financial Statements	7
ITEM 2: Management Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3: Quantitative and Qualitative Disclosures about Market Risk	37
ITEM 4: Controls and Procedures	37
PART II: Other Information	37
ITEM 1: Legal Proceedings	37
ITEM 1A: Risk Factors	38
ITEM 2: Unregistered Sales of Equity and Securities and Use of Proceeds	39
ITEM 3: Defaults Upon Senior Securities	39
ITEM 4: Mine Safety Disclosures	39
ITEM 5: Other Information	39
ITEM 6: Exhibits	39
SIGNATURES	40

2

Senseonics Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	June 30,		December 31,
	2022		2021
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	45,425	$	33,461
Short term investments, net		93,758		96,445
Accounts receivable, net		220		205
Accounts receivable, net - related parties		3,824		1,768
Inventory, net		7,251		6,316
Prepaid expenses and other current assets		7,818		6,218
Total current assets		158,296		144,413
Option		1,085		239
Deposits and other assets		3,347		1,086
Long term investments, net		11,334		51,882
Property and equipment, net		1,263		1,308
Total assets	$	175,325	$	198,928
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	1,734	$	1,204
Accrued expenses and other current liabilities		10,731		10,667
Accrued expenses and other current liabilities- related parties		3,692		3,597
Note payable, current portion, net		14,874		—
Derivative liability, current portion		438		—
Term Loans, net		—		2,926
Total current liabilities		31,469		18,394
Long-term debt and notes payables, net		50,650		59,798
Derivative liabilities		54,737		236,291
Option		19,476		69,401
Other liabilities		3,052		579
Total liabilities		159,384		384,463
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock, $0.001 par value per share; 900,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 465,326,135 shares and 447,282,263 shares issued and outstanding as of June 30, 2022 and December 31, 2021		465		447
Additional paid-in capital		776,640		765,215
Accumulated other comprehensive loss		(1,128)		(212)
Accumulated deficit		(760,036)		(950,985)
Total stockholders' equity (deficit)		15,941		(185,535)
Total liabilities and stockholders’ equity (deficit)	$	175,325	$	198,928

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenue, net	$	137		433	$	429	$	920
Revenue, net - related parties		3,577		2,856		5,767		5,215
Total revenue		3,714		3,289		6,196		6,135
Cost of sales		2,890		2,897		4,845		5,217
Gross profit		824		392		1,351		918
Expenses:
Research and development expenses		9,299		7,107		17,103		12,362
Selling, general and administrative expenses		8,561		9,175		16,445		15,762
Operating loss		(17,036)		(15,890)		(32,197)		(27,206)
Other income (expense), net:
Interest income		241		247		334		256
Gain (Loss) on fair value adjustment of option		28,224		(35,730)		49,925		(88,405)
Gain on extinguishment of debt and option		—		—		—		330
Interest expense		(4,510)		(4,034)		(9,005)		(8,092)
Gain (Loss) on change in fair value of derivatives		96,548		(124,361)		181,117		(305,260)
Net gain (impairment)		816		(381)		846		(1,163)
Other expense		(52)		(157)		(71)		(280)
Total other income (expense), net		121,267		(164,416)		223,146		(402,614)
Net Income (Loss)		104,231		(180,306)		190,949		(429,820)
Other comprehensive loss
Unrealized loss on marketable securities		(291)		(16)		(916)		(16)
Total other comprehensive loss		(291)		(16)		(916)		(16)
Total comprehensive income (loss)	$	103,940	$	(180,322)	$	190,033	$	(429,836)
Basic net income (loss) per common share	$	0.22		(0.42)	$	0.42	$	(1.08)
Basic weighted-average shares outstanding		464,133,903		431,840,854		460,061,022		398,244,296
Diluted net income (loss) per common share	$	(0.03)		(0.42)	$	(0.06)	$	(1.08)
Diluted weighted-average shares outstanding		601,330,959		431,840,854		604,342,540		398,244,296

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (in thousands)

				Additional		Accumulated				Total		Series A
	Common Stock			Paid-In		Other		Accumulated		Stockholders'		Convertible
	Shares	Amount		Capital		Comprehensive Loss		Deficit		Equity (Deficit)		Preferred Stock Temporary Equity
Three months ended June 30, 2021:
Balance, March 31, 2021	427,915		428		711,698		—		(898,025)		(185,899)	$	—
Issuance of common stock, net	12,831		13		48,340		—		—		48,353		—
Exercise of stock options and warrants	1,588		1		2,190		—		—		2,191		—
Issued common stock for vested RSUs and ESPP purchase	2,791		3		—		—		—		3		—
Stock-based compensation expense	—		—		3,034		—		—		3,034		—
Net loss	—		—		—		—		(180,306)		(180,306)		—
Other comprehensive loss, net of tax	—		—		—		(16)		—		(16)		—
Balance, June 30, 2021	445,125	$	445	$	765,262	$	(16)	$	(1,078,331)	$	(312,640)	$	—
Six months ended June 30, 2021:
Balance, December 31, 2020	265,582		266		504,162		—		(648,511)		(144,083)	$	2,811
Issuance of convertible preferred stock, net	—		—		—						—		42,756
Conversion of preferred stock	54,166		54		45,512		—		—		45,566		(45,567)
Issuance of common stock, net	112,571		113		200,327		—		—		200,440		—
Exercise of stock options and warrants	5,027		4		3,885		—		—		3,889		—
Exchange and conversion of convertible notes, net	4,925		5		6,496		—		—		6,501		—
Issued common stock for vested RSUs and ESPP purchase	2,854		3		47		—		—		50		—
Stock-based compensation expense	—		—		4,833		—		—		4,833		—
Net loss	—		—		—		—		(429,820)		(429,820)		—
Other comprehensive loss, net of tax	—		—		—		(16)		—		(16)		—
Balance, June 30, 2021	445,125	$	445	$	765,262	$	(16)	$	(1,078,331)	$	(312,640)	$	—
Three months ended June 30, 2022:
Balance, March 31, 2022	463,229		463		775,172		(837)		(864,267)		(89,469)		—
Exercise of stock options and warrants	127		—		68		—		—		68		—
Issued common stock for vested RSUs and ESPP purchase	3,063		3		(2)		—		—		1		—
Stock-based compensation expense	—		—		2,585		—		—		2,585		—
Shares withheld related to net share settlement of equity awards	(1,093)		(1)		(1,183)		—		—		(1,184)		—
Net income	—		—		—		—		104,231		104,231		—
Other comprehensive loss, net of tax	—		—		—		(291)		—		(291)		—
Balance, June 30, 2022	465,326	$	465	$	776,640	$	(1,128)	$	(760,036)	$	15,941	$	—
Six months ended June 30, 2022:
Balance, December 31, 2021	447,282		447		765,215		(212)		(950,985)		(185,535)		—
Issuance of common stock	3,077		3		8,001		—		—		8,004		—
Exercise of stock options and warrants	9,211		9		230		—		—		239		—
Issuance of common stock for vested RSUs and ESPP purchase	6,849		7		56		—		—		63		—
Stock-based compensation expense	—		—		4,321		—		—		4,321		—
Shares withheld related to net share settlement of equity awards	(1,093)		(1)		(1,183)		—		—		(1,184)		—
Net income	—		—		—		—		190,949		190,949		—
Other comprehensive loss, net of tax	—		—		—		(916)		—		(916)		—
Balance, June 30, 2022	465,326	$	465	$	776,640	$	(1,128)	$	(760,036)	$	15,941	$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Senseonics Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended
	June 30,
	2022		2021
Cash flows from operating activities
Net income (loss)	$	190,949		(429,820)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		520		612
Non-cash interest expense (debt discount and deferred costs)		5,726		3,327
Change in fair value of derivatives		(181,117)		305,260
(Gain) Loss on fair value adjustment of option		(49,925)		88,405
Gain on extinguishment of debt and option		—		(330)
(Gain) Impairment of option, net		(846)		1,163
Stock-based compensation expense		4,321		4,721
Changes in assets and liabilities:
Accounts receivable		(2,070)		196
Prepaid expenses and other current assets		(1,600)		(761)
Inventory		(934)		(3,535)
Deposits and other assets		163		(30)
Accounts payable		530		1,269
Accrued expenses and other liabilities		44		(1,325)
Accrued interest		(102)		441
Net cash used in operating activities		(34,341)		(30,407)
Cash flows from investing activities
Capital expenditures		(211)		(47)
Sale of marketable securities		42,319		(145,271)
Net cash provided by (used in) investing activities		42,108		(145,318)
Cash flows from financing activities
Issuance of common stock, net		8,004		200,440
Proceeds from exercise of stock options, stock warrants and ESPP purchases		302		4,051
Taxes paid related to net share settlement of equity awards		(1,183)		—
Proceeds from issuance of Masters preferred stock, net		—		22,783
Repayment of term loans		(2,926)		—
Net cash provided by financing activities		4,197		227,274
Net increase in cash and cash equivalents		11,964		51,549
Cash and cash equivalents, at beginning of period		33,461		18,205
Cash and cash equivalents, at ending of period	$	45,425	$	69,754
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	3,381	$	4,310
Lease liabilities arising from obtaining right-of-use assets		2,944		—
Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock converted from preferred shares		—		54,166
Issuance of common stock converted from notes payables		—		4,925

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

Senseonics Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Nature of Operations

Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the development and commercialization of long-term, implantable continuous glucose monitoring (“CGM”) systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy.

Senseonics, Incorporated is a wholly owned subsidiary of Senseonics Holdings, Inc. and was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings, Inc. and Senseonics, Incorporated are hereinafter collectively referred to as the “Company” unless otherwise indicated or the context otherwise requires.

2. Liquidity and Capital Resources

From its founding in 1996 until 2010, the Company has devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the Company narrowed its focus to developing and refining a commercially viable glucose monitoring system. However, to date, the Company has not generated any significant revenue from product sales. The Company has incurred substantial losses and cumulative negative cash flows from operations since its inception in October 1996. The Company has never been profitable from operations, and its net losses were $302.5 million, $175.2 million, and $115.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of June 30, 2022, the Company had an accumulated deficit of $760.0 million. To date, the Company has funded its operations principally through the issuance of preferred stock, common stock, convertible notes and debt. As of June 30, 2022, the Company had cash, cash equivalents and marketable securities of $150.5 million.

In November 2021, the Company entered into an Open Market Sale Agreement, (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through Jefferies as its sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2022, the Company received $8.0 million in net proceeds from the sale of 3,077,493 shares of its common stock under the 2021 Sales Agreement.

In November 2019, the Company entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with Jefferies, under which the Company could offer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $50.0 million through Jefferies as its sales agent in an “at the market” offering. In June 2021, the Company received $48.4 million in net proceeds from the sale of 12,830,333 shares of its common stock utilizing the full capacity under the 2019 Sales Agreement.

On January 21, 2021, the Company entered into an underwriting agreement, which was subsequently amended and restated on the same day (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative of the underwriters (the “Underwriters”), to issue and sell 51,948,052 shares of common stock, in an underwritten public offering pursuant to effective registration statements on Form S-3, including a related prospectus and prospectus supplement, in each case filed with the United States Securities and Exchange Commission (“the SEC”) (the “2021 Public Offering”). The price to the public in the 2021 Public Offering was $1.925 per share of common stock. The Underwriters agreed to purchase the shares from the Company pursuant to the Underwriting Agreement at a price of $1.799875 per share and the Company also agreed to reimburse them for customary fees and expenses. The initial closing of the 2021 Public Offering occurred on January 26, 2021. Subsequent to the initial closing, the Underwriters exercised their option to purchase an additional 7,792,207 shares of common stock. Total net proceeds from the 2021 Public Offering were $106.1 million after deducting underwriting discounts and commissions and estimated offering expenses.

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On January 17, 2021, the Company entered into a Securities Purchase Agreement with certain institutional purchasers (the “Purchasers”), pursuant to which the Company sold to the Purchasers, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 40,000,000 shares (the “Shares”) of common stock, $0.001 par value per share. The Shares were sold at a purchase price of $1.25 per share for aggregate gross proceeds to the Company of $50.0 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the SEC on November 27, 2019. The net proceeds to the Company from the Registered Direct Offering, after deducting fees and expenses and the estimated offering expenses payable by the Company, were approximately $46.1 million.

On November 9, 2020, the Company entered into an Equity Line Agreement (the “Equity Line Agreement”) with Energy Capital, LLC, a Florida limited liability company (“Energy Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of the Company’s newly designated series B convertible preferred stock (the “Series B Preferred Stock”) at the Company’s request from time to time during the 24-month term of the Equity Line Agreement. Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including that the Company have less than $8.0 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company has the right, at its sole discretion, to present Energy Capital with a purchase notice (each, a “Regular Purchase Notice”) directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of the Company’s Series B Preferred Stock at a per share price (the “Purchase Price”) equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provides that the Company shall not affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the Company’s common stock on the NYSE American is less than $0.25 without the approval of Energy Capital. In addition, beginning on January 1, 2022, since there have been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital has the right, at its sole discretion, by its delivery to the Company of a Regular Purchase Notice, to purchase up to the $12.0 million of Series B Preferred Stock under the Equity Line Agreement at the Purchase Price. There have been no issuances of Series B Preferred Stock as of June 30, 2022.

On August 9, 2020, the Company entered into a financing agreement with the parent company of Ascensia Diabetes Care Holdings AG (“Ascensia”), PHC Holdings Corporation (“PHC”), pursuant to which the Company issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to PHC. The Company also issued 2,941,176 shares of common stock to PHC as a financing fee. The Company also has the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022, contingent upon obtaining approval for the 180-day Eversense product for marketing in the United States before such date.

Additionally, on August 9, 2020, the Company entered into a Stock Purchase Agreement with Masters Special Solutions, LLC and certain affiliates thereof (collectively, “Masters”), pursuant to which the Company issued and sold to Masters 3,000 shares of convertible preferred stock, designated as Series A Preferred Stock (the “Series A Preferred Stock”), at a price of $1,000 per share in an initial closing. Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000 per share in subsequent closings, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds to the Company of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All shares of Series A Preferred Stock have been converted to common stock.

8

Note 3.Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at June 30, 2022, and December 31, 2021, results of operations, comprehensive income (loss), and changes in stockholder’s deficit for the three and six month periods ended June 30, 2022, and 2021 and cash flows for the six months ended June 30, 2022, and 2021 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 1, 2022. The interim results for June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or for any future interim periods.

The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its wholly owned operating subsidiary Senseonics, Incorporated. The Company views its operations and manages its business in one segment, glucose monitoring products. Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. 

Certain prior year amounts have been reclassified to conform to the current-year presentation. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Income (Loss) to consolidate the line items Sales and marketing expenses and General and administrative expenses to Selling, general and administrative expenses in order to conform to current year presentation. These reclassifications had no effect on the reported results of operations.

Recent Accounting Pronouncements

Recently Adopted

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contract in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). This new guidance is intended to reduce the complexity of accounting for convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments. Entities may adopt ASU 2020-06 using either partial retrospective or fully retrospective method of transition. ASU 2020-06 is effective for public business entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2022 and its adoption did not have a material impact on the consolidated financial statements and related disclosures.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company currently holds investments in available-for-sale securities. The Company has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its

9

consolidated financial statements and related disclosures at this time. The Company will adopt this guidance on the effective date for smaller reporting companies, January 1, 2023.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying unaudited consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods due to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. Actual results could differ from those estimates.

Significant Accounting Policies

The accounting policies used by the Company in its presentation of interim financial results are consistent with those presented in Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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4. Revenue Recognition

The Company generates product revenue from sales of the Eversense system and related components and supplies to Ascensia, through a collaboration and commercialization agreement (the “Ascensia Commercialization Agreement”, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively, “the Customers”), who then resell the products to health care providers and patients. Customers pay the Company for sales, regardless of whether or not the Customers resell the products to health care providers and patients. The Company’s policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Revenue by Geographic Region

The following table sets forth net revenue derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,507	67.5	%	$	4,222	68.1	%
United States		1,207	32.5			1,974	31.9
Total	$	3,714	100.0	%	$	6,196	100.0	%
	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,310	70.2	%	$	4,843	78.9	%
United States		979	29.8			1,292	21.1
Total	$	3,289	100.0	%	$	6,135	100.0	%

Contract Assets

Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement. Accounts receivable as of June 30, 2022 and December 31, 2021 included unbilled accounts receivable of $1.1 million and $1.8 million, respectively. The Company expects to invoice and collect all unbilled accounts receivable within 12 months.

Concentration of Revenue and Customers

For the three months ended June 30, 2022 and 2021, the Company derived 96% and 87%, respectively, of its total revenue from one customer, Ascensia. For the six months ended June 30, 2022 and 2021, the Company derived 93% and 85%, respectively, of its total revenue from one customer, Ascensia. Revenues for these corresponding periods represent sales of sensors, transmitters and miscellaneous Eversense system components.

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5. Net Income (Loss) per Share

Basic net income per share attributable to common stockholders is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents. Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Potentially dilutive common shares consist of shares issuable from restricted stock units, warrants and the Company’s convertible notes. Potentially dilutive common shares issuable upon vesting of restricted stock units and exercise of stock options and warrants are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Company’s convertible notes are determined using the if converted method. In periods of net loss, all potentially dilutive common shares are excluded from the computation of the diluted net loss per share for those periods, as the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted net income per share for the periods shown:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Net income (loss)	104,231	(180,306)	190,949	(429,820)
Impact of conversion of dilutive securities	(124,010)	—	(228,614)	—
Dilutive Net income (loss)	(19,779)	(180,306)	(37,665)	(429,820)
Net income (loss) per share
Basic	0.22	(0.42)	0.42	(1.08)
Diluted	(0.03)	(0.42)	(0.06)	(1.08)
Basic weighted average shares outstanding	464,133,903	431,840,854	460,061,022	398,244,296
Dilutive potential common stock outstanding
Stock-based awards	4,649,548	—	7,003,387	—
2023 Notes	4,617,646	—	4,617,646	—
2025 Notes	39,689,142	—	39,689,142	—
PHC Notes	65,718,303	—	65,816,535	—
PHC Option	—	—	—	—
Energy Capital Option	21,164,986	—	23,690,945	—
Warrants	1,357,430	—	3,463,862	—
Diluted weighted average shares outstanding	601,330,959	431,840,854	604,342,540	398,244,296

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For the three and six months ended June 30, 2021, the Company operated at a loss. Accordingly, all potentially dilutive shares were considered antidilutive, and basic and diluted EPS are the same.

Outstanding anti-dilutive securities not included in the diluted net income per share attributable to common stockholders calculations were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Stock-based awards	13,900,070	28,974,297	11,142,459	28,974,297
2023 Notes	—	5,092,801	—	5,092,801
2025 Notes	—	39,689,142	—	39,689,142
PHC Notes	—	65,757,177	—	65,757,177
PHC Option	20,003,765	—	23,161,214	—
Warrants	427,821	13,334,739	260,251	13,334,739
Total anti-dilutive shares outstanding	34,331,656	152,848,156	34,563,924	152,848,156

6. Marketable Securities

Marketable securities available for sale, were as follows (in thousands):

	June 30, 2022
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Commercial Paper	$	14,532		—		—	$	14,532
Corporate debt securities	$	37,292		—		(395)	$	36,897
Asset backed securities	$	14,847		—		(113)	$	14,734
Government and agency securities	$	39,549		—		(620)	$	38,929
Total	$	106,220	$	—	$	(1,128)	$	105,092

	December 31, 2021
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Commercial Paper	$	57,369		—		—	$	57,369
Corporate debt securities	$	39,825		—		(77)	$	39,748
Asset backed securities	$	26,736		—		(29)	$	26,707
Government and agency securities	$	24,609		—		(106)	$	24,503
Total	$	148,539	$	—	$	(212)	$	148,327

The following are the scheduled maturities as of June 30, 2022 (in thousands):

2022 (remaining six months)	$	32,775
2023		62,013
2024		6,591
Thereafter		4,841
Total	$	106,220

The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, the Company assesses at the individual security level, for various quantitative factors including,

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but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale securities at June 30, 2022 were not significant and were primarily due to changes in interest rates and not due to increased credit risk associated with specific securities. The Company does not intend to sell these impaired investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

7. Inventory, net

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

	June 30,		December 31,
	2022		2021
Finished goods	$	1,020	$	1,012
Work-in-process		4,705		3,770
Raw materials		1,526		1,534
Total	$	7,251	$	6,316

The Company charged $0.6 million to cost of sales for the three and six months ended June 30, 2022, to reduce the value of inventory for items that are potentially obsolete due to expiry, in excess of product demand, or to adjust costs to their net realizable value. There was no corresponding charge for the three and six months ended June 30, 2021.

8. Prepaid Expenses, Other Current Assets, and Deposits and other assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	June 30,		December 31,
	2022		2021
Contract manufacturing⁽¹⁾	$	5,314	$	5,036
Insurance		913		74
Clinical and Preclinical		669		142
Interest receivable		319		443
Research and development		236		39
Accounting and Audit		138		—
Rent and utilities		107		105
IT and software		77		225
Sales and Marketing		45		98
Other		—		56
Total prepaid expenses and other current assets	$	7,818	$	6,218

(1) Includes deposits to contract manufacturers for manufacturing process.

Deposits and other assets as of June 30, 2022 and December 31, 2021, were $3.3 million and $1.1 million, respectively. As of June 30, 2022, deposits and other assets is mainly comprised of $3.2 million for our right-of-use asset related to our operating lease of 33,000 square feet of research and office space for our corporate headquarters. In June 2022, the Company extended our lease for an additional five-year term. We recorded a modification to our right-of-use asset for the right-to-use the underlying asset for the additional lease term.

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9. Accrued Expenses, Other Current Liabilities, and Other Liabilities

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

	June 30,		December 31,
	2022		2021
Compensation and benefits	$	3,251	$	3,484
Research and development		2,254		2,145
Interest on notes payable		2,042		2,144
Sales and marketing services		2,276		1,962
Product warranty and replacement obligations		1,463		1,697
Professional and administration services		1,456		1,011
Contract manufacturing		960		914
Operating lease		705		904
Other		16		3
Total accrued expenses and other current liabilities	$	14,423	$	14,264

Other liabilities as of June 30, 2022 and December 31, 2021, were $3.1 million and $0.6 million, respectively. Other liabilities is comprised of the non-current portion of our operating lease liability for our corporate headquarters. In June 2022, the Company extended our lease for an additional five-year term. We recorded a modification to the lease liability upon renewal to reflect our obligation to make the additional lease payments.

10. Product Warranty Obligations

The Company provides a warranty of one year on its smart transmitters. Additionally, the Company may also replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment as a charge to cost of sales in the consolidated statement of operations and are developed by analyzing product performance data and historical replacement experience, including comparing actual replacements to revenue.

At June 30, 2022, and December 31, 2021, the warranty reserve was $0.8 million and $0.7 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the six months ended June 30, 2022 and for the twelve months ended December 31, 2021 (in thousands):

	June 30,		December 31,
	2022		2021
Balance at beginning of the period	$	723	$	646
Provision for warranties during the period		47		781
Settlements made during the period		(6)		(704)
Balance at end of the period	$	764	$	723

11. Notes Payable, Preferred Stock and Stock Purchase Warrants

Term Loans

PPP Loan

On April 22, 2020, the Company received $5.8 million in loan funding from the PPP pursuant to the CARES Act, as amended by the Flexibility Act, and administered by the Small Business Administration (“SBA”). The unsecured

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loan (the “PPP Loan”) was evidenced by the PPP Note dated April 21, 2020 (the “PPP Note”) in the principal amount of $5.8 million with Silicon Valley Bank (“SVB”).

Under the terms of the PPP Note and the PPP Loan, interest accrued on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Note was two years. In April 2022, the Company repaid the outstanding principal and accrued interest in full.

Convertible Preferred Stock and Warrants

On November 9, 2020, the Company entered into the Equity Line Agreement with Energy Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of the Company’s Series B Preferred Stock at the Company’s request from time to time during the 24-month term of the Equity Line Agreement. Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including the Company having less than $8 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company has the right, at sole discretion, to present Energy Capital with a Regular Purchase Notice directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of the Company’s Series B Preferred Stock at the Purchase Price equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provides that the Company shall not affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the Company’s common stock on the NYSE American is less than $0.25 without the approval of Energy Capital. In addition, beginning on January 1, 2022, since there have been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital has the right, at its sole discretion, by its delivery to the Company of a Regular Purchase Notice, to purchase up to the $12.0 million of Series B Preferred Stock under the Equity Line Agreement at the Purchase Price. There have been no issuances of Series B Preferred Stock as of June 30, 2022.

The Company accounted for the Equity Line Agreement as a put/call option (the “Energy Capital Option”). This put/call option is classified as a liability in accordance with ASC 480, Distinguishing liabilities from equity, on the Company’s balance sheet and was recorded at the estimated fair value of $4.2 million upon issuance. The put/call option is required to be remeasured to fair value at each reporting period with the change recorded in change in fair value of derivatives that is a component of other income (expense). In connection with the execution of the Equity Line Agreement, the Company incurred $7.6 million in debt issuance costs in fiscal year 2020. The fair value of the Energy Capital Option as of June 30, 2022 and December 31, 2021 was $19.5 million and $69.4 million, respectively.

Concurrently with entry into the Equity Line Agreement, the Company issued a warrant to Energy Capital, exercisable beginning on May 9, 2021, to purchase up to 10,000,000 shares of common stock at an exercise price of $0.3951 per share (the “Warrant”). The Warrant was exercised in full in February 2022.

On August 9, 2020, the Company entered into a Stock Purchase Agreement with Masters, pursuant to which the Company issued and sold Masters 3,000 shares of Series A Preferred Stock, at a price of $1,000 per share in an initial closing. Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000 per share in subsequent closings, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All 25,783 shares of Series A Preferred Stock have been converted to shares of common stock. Masters’ option to purchase the remaining unissued shares of Series A Preferred Stock expired on January 11, 2021, resulting in a gain on extinguishment of $3.5 million.

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Convertible Notes

PHC Notes

On August 9, 2020, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with PHC, as the purchaser (together with the other purchasers from time to time party thereto, the “Note Purchasers”) and Alter Domus (US) LLC, as collateral agent. Pursuant to the Note Purchase Agreement, the Company borrowed $35.0 million in aggregate principal through the issuance and sale of the PHC Notes on August 14, 2020 (the “Closing Date”). The Company also issued 2,941,176 shares of its common stock, $0.001 par value per share to PHC as a financing fee (the “Financing Fee Shares”) on the Closing Date. The Financing Fee Shares are accounted for as debt discount in the amount of $1.5 million.

The PHC Notes are senior secured obligations of the Company and will be guaranteed on a senior secured basis by the Company’s wholly owned subsidiary, Senseonics, Incorporated. Interest at the initial annual rate of 9.5% is payable semi-annually in cash or, at the Company’s option, payment in kind. The interest rate decreased to 8.0% in April 2022 as a result of the Company having obtained FDA approval for the 180-day Eversense E3 system for marketing in the United States. The maturity date for the PHC Notes is October 31, 2024 (the “Maturity Date”). The obligations under the PHC Notes are secured by substantially all of the Company’s and its subsidiary’s assets.

The Note Purchasers are entitled to convert the PHC Notes to common stock at a conversion rate of 1,867.4136 shares per $1,000 principal amount of the PHC Notes (including any interest added thereto as payment in kind), equivalent to a conversion price of approximately $0.54 per share, subject to specified anti-dilution adjustments, including adjustments for the Company’s issuance of equity securities on or prior to April 30, 2022 below the conversion price. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its PHC Notes in connection with such notice of redemption or corporate event. In certain circumstances, the Company will be required to pay cash in lieu of delivering make whole shares unless the Company obtains stockholder approval to issue such shares.

Subject to specified conditions, on or after October 31, 2022, the PHC Notes are redeemable by the Company if the closing sale price of the common stock exceeds 275% of the conversion price for a specified period of time and subject to certain conditions upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest. On or after October 31, 2023, the PHC Notes are redeemable by the Company upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest, plus a call premium of 130% if redeemed at least six months prior to the Maturity Date or a call premium of 125% if redeemed within six months of the Maturity Date.

The Note Purchase Agreement contains customary terms and covenants, including financial covenants, such as operating within an approved budget and achieving minimum revenue and liquidity targets, and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Note Purchase Agreement also contains customary events of default, after which the PHC Notes become due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority.

The Company also has the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022 (the “PHC Option”), which was initially contingent upon obtaining FDA approval for the 180-day Eversense product for marketing in the United States before such date, and which approval the Company successfully obtained in February 2022. The PHC Option represents a freestanding financial instrument and is recognized as an asset in the Company’s consolidated balance sheets at fair value on the date of issuance and subject to

17

impairment testing in each reporting period prior to the options exercise or expiration. The Company acknowledges that while the PHC Option is subject to impairment testing, there is no explicit guidance regarding how impairment should be assessed and measured for the PHC Option. As such, the measurement alternative in ASC Topic 321, Investments—Equity Securities, for equity securities without readily determinable fair values can be applied by analogy to assess and measure impairment of the PHC Option. The Company developed an estimated fair value at June 30, 2022 and December 31, 2021 to be $1.1 million and $0.2 million, respectively, and a gain of less than $0.9 million was recognized in net income as the difference between the fair value of the investment and its carrying amount for the six months ended June 30, 2022

The Note Purchase Agreement also contained several provisions requiring bifurcation as a separate derivative liability including an embedded conversion feature, mandatory prepayment upon event of default that constitutes a breach of the minimum revenue financial covenant, optional redemption upon an event of default, change in interest rate after PMA approval and default interest upon an event of default. The Company recorded the fair value of the embedded features in the amount of $25.8 million as a derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded in change in fair value of derivatives that is a component of other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at June 30, 2022 and December 31, 2021 was $46.8 million and $149.1 million, respectively.

In connection with the issuance of the Note Purchase Agreement, the Company incurred $2.9 million in debt issuance costs and debt discounts. The associated debt issuance costs were recorded as a contra liability in the amount of $1.4 million and are deferred and amortized as additional interest expense over the term of the notes. There have been no conversions of PHC Notes since inception of the Note Purchase Agreement.

2025 Notes

In July 2019, the Company issued $82.0 million in aggregate principal amount of senior convertible notes that will mature on January 15, 2025 (the “2025 Notes”), unless earlier repurchased or converted. The 2025 Notes are convertible, at the option of the holders, into shares of the Company’s common stock, at an initial conversion rate of 757.5758 shares per $1,000 principal amount of the 2025 Notes (equivalent to an initial conversion price of approximately $1.32 per share).

The 2025 Notes also contained an embedded conversion option requiring bifurcation as a separate derivative liability, along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at June 30, 2022 and December 31, 2021 was $8 million and $81.4 million, respectively.

In connection with the Exchange on April 24, 2020, $24.0 million aggregate principal of the Company’s outstanding 2025 Notes held by Highbridge Capital Management, LLC (“Highbridge”) were exchanged for $15.7 million of Second Lien Notes (the “Second Lien Notes”), (i) 11,026,086 shares of common stock, (ii) warrants to purchase up to 4,500,000 shares of common stock at an exercise price of $0.66 per share, and (iii) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged (the “Exchange”). This transaction modified the original 2025 Notes outstanding with Highbridge and resulted in $13.2 million of deferred issuance fees and debt discounts associated with the exchanged 2025 Notes being transferred as a discount to the Second Lien Notes.

As of December 31, 2021, there were conversions of $6.5 million of outstanding principal amount of the 2025 notes for 4,924,998 shares of common stock. Accordingly, $3.2 million of allocated deferred issuance costs and debt discounts were recognized as a loss on extinguishment of debt as of December 31, 2021. There were no conversions of 2025 Notes for the six months ended June 30, 2022.

2023 Notes

In the first quarter of 2018, the Company issued $53.0 million in aggregate principal amount of senior convertible notes due February 1, 2023 (the “2023 Notes”). In July 2019, the Company used the net proceeds from the

18

issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the outstanding 2023 Notes. Each $1,000 of principal of the 2023 Notes is initially convertible into 294.1176 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $3.40 per share, subject to adjustment upon the occurrence of specified events. Holders may convert at any time prior to February 1, 2023. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock. If specific corporate events occur prior to the maturity date, the Company will increase the conversion rate pursuant to the make-whole fundamental change provision for a holder who elects to convert their 2023 Notes in connection with such an event in certain circumstances. Additionally, if a fundamental change occurs prior to the maturity date, holders of the 2023 Notes may require the Company to repurchase all or a portion of their 2023 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest.

The Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and in January 2018 recorded the embedded features as a debt discount and derivative liability in the Company’s consolidated balance sheets at its initial fair value of $17.3 million. Additionally, the Company incurred transaction costs of $2.2 million. The debt discount and transaction costs are being amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 9.30%. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at June 30, 2022 and December 31, 2021 was $0.4 million and $5.8 million, respectively.

There were no conversions of 2023 Notes for the six months ended June 30, 2022. As the 2023 Notes have a maturity date of February 1, 2023, they are classified as other current liability on the Company’s consolidated balance sheet at June 30, 2022.

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The following carrying amounts were outstanding under the Company’s notes payable as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(826)	-	14,874
2025 Notes	51,199	(17,910)	(300)	32,989
PHC Notes	35,000	(16,341)	(998)	17,661
PPP Loan	-	-	-	-
	December 31, 2021
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(1,499)	-	14,201
2025 Notes	51,199	(20,535)	(344)	30,320
PHC Notes	35,000	(18,587)	(1,136)	15,277
PPP Loan	2,926	-	-	2,926

Interest expense related to the notes payable for the six months ended June 30, 2022 and 2021 was as follows (dollars in thousands):

	Six Months Ended June 30, 2022
	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Loss on Extinguishment ($)	Total Interest Expense ($)
2023 Notes	5.25%	412	673	-	-	1,085
2025 Notes	5.25%	1,330	2,625	44	-	3,999
PHC Notes	8.00%	1,531	2,246	137	-	3,914
PPP Loan	1.00%	6	-	-	-	6
Total		3,279	5,545	181	-	9,005
	Six Months Ended June 30, 2021
	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Loss on Extinguishment ($)	Total Interest Expense ($)
2023 Notes	5.25%	412	614	-	-	1,026
2025 Notes	5.25%	1,372	2,210	36	3,183	6,801
PHC Notes	9.50%	1,625	1,677	102	-	3,404
PPP Loan	1.00%	29	-	-	-	29
Total		3,438	4,501	138	3,183	11,260

The following are the scheduled maturities of the Company’s notes payable as of June 30, 2022 (in thousands):

2022 (remaining six months)	$	—
2023		15,700
2024		35,000
2025		51,199
Total	$	101,899

12. Stockholders’ Equity (Deficit)

In November 2021, the Company entered into the 2021 Sales Agreement with Jefferies, under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through Jefferies as the sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2022, the Company received $8.0 million in net proceeds from the sale of 3,077,493 shares of its common stock under the 2021 Sales Agreement.

In November 2019, the Company entered into the 2019 Sales Agreement with Jefferies LLC which allowed the Company to issue and sell up to $50.0 million in gross proceeds of its common stock. During the six months ended June 30, 2021, the Company sold 12,830,333 shares of common stock under the 2019 Sales Agreement, resulting in gross proceeds of $48.4 million.

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During the six months ended June 30, 2021, the Company sold 99,740,259 shares of common stock, of which 59,740,259 shares of common stock were sold in the 2021 Public Offering and 40,000,000 shares of common stock were sold in the Registered Direct Offering. For additional information on the 2021 Public Offering and the Registered Direct Offering, see Note 2—Liquidity and Capital Resources.

13. Stock-Based Compensation

2015 Plan

In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), under which incentive stock options, non-qualified stock options and restricted stock units may be granted to the Company’s employees and certain other persons, such as officers and directors, in accordance with the 2015 Plan provisions. In February 2016, the Company’s Board of Directors adopted, and the Company’s stockholders approved, an Amended and Restated 2015 Equity Incentive Plan (the “Amended and Restated 2015 Plan”), which became effective on February 20, 2016. The Company’s Board of Directors may terminate the Amended and Restated 2015 Plan at any time. Options granted under the Amended and Restated 2015 Plan expire ten years after the date of grant.

Pursuant to the Amended and Restated 2015 Plan, the number of shares of the Company’s common stock reserved for issuance automatically increases on January 1 of each year, ending on January 1, 2026, by 3.5% of the total number of shares of its common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by its Board of Directors. As of June 30, 2022, 19,739,553 shares remained available for grant under the Amended and Restated 2015 Plan.

Inducement Plan

On May 30, 2019, the Company adopted the Senseonics Holdings, Inc. Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 1,800,000 shares of the Company’s common stock for issuance. The only persons eligible to receive grants of awards under the Inducement Plan are individuals who satisfy the standards for inducement grants in accordance with NYSE American Company Guide Section 711(a), including individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. An “Award” is any right to receive the Company’s common stock pursuant to the Inducement Plan, consisting of non-statutory options, restricted stock unit awards and other equity incentive awards. As of June 30, 2022, 846,571 shares remained available for grant under the Inducement Plan.

2016 Employee Stock Purchase Plan

In February 2016, the Company adopted the 2016 Employee Stock Purchase Plan, (the “2016 ESPP”). The 2016 ESPP became effective on March 17, 2016. The maximum number of shares of common stock that may be issued under the 2016 ESPP was initially 800,000 shares and automatically increases on January 1 of each year, ending on and including January 1, 2026, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, the Board of Directors may act prior to the first day of any calendar year to provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares of common stock. At June 30, 2022 there were 13,114,632 shares of common stock available for issuance under the 2016 ESPP. For the six months ended June 30, 2022, there were purchases of 28,944 shares of common stock pursuant to this plan.

The 2016 ESPP permits participants to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time and deductions not yet used in a purchase are refundable upon employment termination. The Company initiated its first 2016 ESPP offering period on August 1, 2019 and new offering periods occur every six months thereafter, each consisting of two purchase periods of six months in duration ending on or about January 31^st and July 31^st of each year. A participant may only be in one offering at a time. On

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February 1, 2020, there were 566,573 shares purchased in connection with the initial offering period. The 2016 ESPP contains an offering reset provision whereby if the fair market value of a share on offering date of an ongoing offering is less than or equal to the fair market value of a share on a new offering date, the ongoing offering will terminate immediately after the purchase date and rolls over to the new offering.

The 2016 ESPP is considered compensatory for financial reporting purposes.

1997 Plan

On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), under which incentive stock options, non-qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 1997 Plan provisions. Approximately 1,899,190 shares of the Company’s common stock underlying options have vested under the 1997 Plan. Upon the effectiveness of the 2015 Plan, the Company no longer grants any awards under the 1997 Plan.

14. Fair Value Measurements

The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	42,168	$	42,168		—		—
Commercial paper		14,532		—		14,532		—
Corporate debt securities		36,896		—		36,896		—
Asset backed securities		14,734		—		14,734		—
Government and agency securities		38,930		34,489		4,441		—
PHC Option		1,085		—		—		1,085
Liabilities
Energy Capital Option	$	19,476	$	—		—		19,476
Embedded features of the 2023 Notes		438		—		438		—
Embedded features of the PHC Notes		46,760		—		—		46,760
Embedded features of the 2025 Notes		7,977		—		7,977		—

	December 31, 2021
	Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	29,197	$	29,197		—		—
Corporate debt securities		39,748		—		39,748		—
Commercial paper		57,369		—		57,369		—
Asset backed securities		26,707		—		26,707		—
Government and agency securities		24,503		19,957		4,546		—
PHC Option		239		—		—		239
Liabilities
Energy Capital Option	$	69,401	$	—		—		69,401
Embedded features of the 2023 Notes		5,817		—		—		5,817
Embedded features of the PHC Notes		149,058		—		—		149,058
Embedded features of the 2025 Notes		81,417		—		81,417		—

(1)Classified as cash and cash equivalents due to their short-term maturity

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The following table provides a reconciliation of the beginning and ending net balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

	Level 3
	Instruments
December 31, 2021	$	224,037
Gain on fair value adjustment of option		(49,925)
Gain on change in fair value of derivatives		(107,677)
Gain on extinguishment of option		—
Financial asset (gain) impairment cost, net		(846)
Change in fair value hierarchy classification		(438)
June 30, 2022	$	65,151

The recurring Level 3 fair value measurements of the embedded features of the notes payable and preferred stock, include the following significant unobservable inputs at June 30, 2022:

	PHC Notes		PHC Option		Energy Capital Option
Unobservable Inputs	Assumptions		Assumptions		Assumptions
Stock price volatility	113.0	%	107.0	%	97.0	%
Probabilities of conversion provisions	5.0 - 10.0	%	5.0 - 10.0	%	5.0 - 10.0	%
Time period until maturity (yrs)	2.34		0.50		0.00 - 0.36
Dividend yield	—	%	—	%	—	%

15. Income Taxes

The Company has not recorded any tax provision or benefit for the six months ended June 30, 2022 or June 30, 2021. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, NOL carryforwards and research and development credits is not more-likely-than-not to be realized at June 30, 2022 and December 31, 2021.

On March 27, 2020, Congress enacted the CARES Act, as amended by the Flexibility Act, to provide certain relief as a result of the COVID-19 pandemic. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision or net deferred tax assets for the six months ended June 30, 2022.

16. Related Party Transactions

Ascensia, through the ownership interests of its parent company, PHC, has a noncontrolling ownership interest in the Company. Ascensia also has representation on the Company’s board of directors. Revenue from Ascensia during the six months ended June 30, 2022 and June 30, 2021 was $5.7 million and $5.2 million, respectively.

The amount due from Ascensia as of June 30, 2022 and December 31, 2021 was $4.3 million and $1.8 million, respectively. The amount due to Ascensia as of June 30, 2022 and December 31, 2021 was $3.6 million and $2.5 million, respectively.

17. Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks, uncertainties, and assumptions, including the duration and severity of the COVID-19 pandemic and its impact on our business and financial performance, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those described below and elsewhere in this Quarterly Report on Form 10-Q, and in our Annual Report on Form 10-K, particularly in Part I – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission. Statements made herein are as of the date of the filing of this Quarterly Report on Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2021, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022. Unless otherwise indicated or the context otherwise requires, all references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Senseonics Holdings, Inc. and its subsidiary.

Overview

We are a medical technology company focused on the development and manufacturing of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose management technology. Our Eversense, Eversense XL and Eversense E3 continuous glucose monitoring (“CGM”) systems are designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to six months in the case of Eversense E3 and Eversense XL, as compared to seven to 14 days for non-implantable CGM systems. We affixed the CE mark to the original Eversense CGM system in June 2016, which marked the first certification for the product to be sold within the European Economic Area (“EEA”). Subsequently, we affixed the CE mark to the extended life Eversense XL CGM system in September 2017 which is currently available in select markets in Europe and the Middle East. In June 2022, we affixed the CE mark to the extended life Eversense E3 CGM system and Ascensia will begin commercialization in select markets in Europe during the third quarter of 2022. In June 2018, the U.S. Food and Drug Administration (“FDA”), approved the Eversense CGM system and it is currently available throughout the United States. In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense system. With this approval and the availability of a new app in December 2019, the Eversense system can now be used as a therapeutic CGM in the United States to replace fingerstick blood glucose measurement to make treatment decisions, including insulin dosing. In February 2022, the 180-day extended life Eversense E3 CGM system was approved by the FDA and Ascensia Diabetes Care Holdings AG (“Ascensia”) began commercializing Eversense E3 in the United States in the second quarter of 2022.

Our net revenues are derived from sales of the Eversense system which is sold in two separate kits: the disposable Eversense Sensor Pack which includes the sensor, insertion tool, and adhesive patches, and the durable Eversense Smart Transmitter Pack which includes the transmitter and charger.

We sell directly to our network of distributors and strategic fulfillment partners, who provide the Eversense system to healthcare providers and patients through a prescribed request and invoice insurance payors for

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reimbursement. Sales of the Eversense system are widely dependent on the ability of patients to obtain coverage and adequate reimbursement from third-party payors or government agencies. We leverage and target regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment. We have reached approximately 250 million covered lives in the U.S. through positive insurance payor coverage decisions. We recently received positive payor coverage decision from Elevance Health, formerly Anthem, who has more than 45 million covered lives. On August 3, 2020, the Center for Medicare and Medicaid Services (“CMS”) released its Calendar Year 2021 Medicare Physician Fee Schedule Proposed Rule that announces proposed policy changes for Medicare payments, including the proposed establishment of national payment amounts for the three CPT© Category III codes describing the insertion (CPT 0446T), removal (0447T), and removal and insertion (0048T) of an implantable interstitial glucose sensor, which describes our Eversense CGM systems, as a medical benefit, rather than as part of the Durable Medical Equipment channel that includes other CGMs. In December 2021, CMS released its Calendar Year 2022 Medicare Physician Fee Schedule that updated global payments for the device cost and procedure fees. In July 2022, CMS provided temporary G-codes to enable immediate access to Eversense E3 for all eligible Medicare beneficiaries. In 2022, we have been working with payors to transition their policies to Eversense E3 and have confirmed immediate coverage policy transition from select payors.

We are in the early commercialization stages of the Eversense brand and are focused on driving awareness of our CGM system amongst intensively managed patients and their healthcare providers. In both the United States and our overseas markets, we have entered into strategic partnerships and distribution agreements that allow third party collaborators with direct sales forces and established distribution systems to market and promote Senseonics CGM systems, including Eversense, Eversense XL, Eversense E3 and future generation products.

COVID-19

The current COVID-19 pandemic (“COVID-19”) has presented a substantial public health and economic challenge around the world and is affecting our employees, customers, communities and business operations, as well as the U.S. economy and financial markets. We will continue to monitor the overall impact of the COVID-19 pandemic on our business, financial condition, liquidity, assets and operations, including our personnel, programs, expected timelines, expenses and third-party contract manufacturing and distribution.

As a result of the COVID-19 pandemic’s disruption to our operations, suppliers, employees, and the healthcare community in which we sell to and support, and our limited cash resources, in March 2020, we made significant reductions in our cost structure and operations to improve cash flow and generate future expenditure savings to ensure the long-term success of Eversense. Specifically, commercial sales and marketing of the Eversense CGM System were temporarily suspended and a strategic review of the business was performed.​ As a result of the strategic review, in the third quarter of 2020, we entered into the Ascensia Commercialization Agreement, granting commercial and distribution responsibilities of Eversense. As we continue to recover from the pandemic we have expanded operations focusing on the design, development and manufacturing of Eversense.

In addition, in response to the ongoing spread of COVID-19, we have established safety protocols for personnel access to our headquarter offices. The effects of the COVID-19 pandemic could adversely impact our business, assets, operations and sales, particularly if the COVID-19 pandemic continues to persist for an extended period of time. See “Our business, product sales and results of operations could be adversely affected by the effects of health epidemics, including the recent COVID-19 outbreak, in regions where we or third parties distribute our products or where we or third parties on which we rely have significant manufacturing facilities, concentrations, clinical trial sites or other business operations. The COVID-19 pandemic has and may continue to, materially affect our operations, including at our headquarters in Maryland and at our clinical trial sites, as well as the business or operations of our manufacturers, distributors or other third parties with whom we conduct business” in the Risk Factors section of our most recent Annual Report on Form 10-K for more information regarding the potential impact of the COVID-19 pandemic on our business and operations. We continue to actively monitor this situation and the possible effects on our business and operations.

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United States Development and Commercialization of Eversense

In 2016, we completed our PRECISE II pivotal clinical trial in the United States. This trial, which was fully enrolled with 90 subjects, was conducted at eight sites in the United States. In the trial, we measured the accuracy of Eversense measurements through 90 days after insertion. We also assessed safety through 90 days after insertion or through sensor removal. In the trial, we observed a mean absolute relative difference (“MARD”), of 8.5% utilizing two calibration points for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. Based on the data from this trial, in October 2016 we submitted a pre-market approval (“PMA”), application to the FDA to market Eversense in the United States for 90-day use. On June 21, 2018, we received PMA approval from the FDA for the Eversense system. In July 2018, we began distributing the Eversense system directly in the United States through our own direct sales and marketing organization. We have received Category III CPT codes for the insertion and removal of the Eversense sensor.

In December 2018, we initiated the PROMISE pivotal clinical trial to evaluate the safety and accuracy of Eversense for a period of up to six months in the United States and in September 30, 2019, we completed enrollment of the PROMISE trial. In the trial, we observed performance matching that of the then current Eversense 90-day product available in the United States, with a MARD of 8.5%. This result was achieved with reduced calibration, down to one per day, while also doubling the sensor life to six months. Following the results of the PROMISE trial, on September 30, 2020, a Premarket Approval, or PMA, supplement application to extend the wearable life of the Eversense CGM System to six months was submitted to the FDA. In February 2022, the extended life Eversense E3 CGM system was approved by the FDA.

In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense system and launched with an updated app in December 2019. With this approval, the Eversense system can be used as a therapeutic CGM to replace fingerstick blood glucose measurement for treatment decisions, including insulin dosing.

On February 26, 2020, we announced that the FDA approved a subgroup of PROMISE trial participants to continue for a total of 365 days to gather feasibility data on the safety and accuracy of a 365-day sensor. This sub-set of 30 participants were left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days. Following information gathered from this sub-set and continued development efforts, we target to begin enrollment of a clinical trial to explore the 365-day sensor, in which we intend to include a pediatric population, in the second half of 2022.

In April 2020, we announced that we received regulatory approval in Europe such that the Eversense XL is no longer contraindicated for MRI, which means the sensor does not need to be removed from under the skin during MRI scanning. We had previously obtained this indication for Eversense in the United States in 2019. This MRI approval is a first for the CGM category, as all other sensors are required to be removed during an MRI scan.

On August 9, 2020, we entered into a collaboration and commercialization agreement with Ascensia (the “Commercialization Agreement”) pursuant to which we granted Ascensia the exclusive right to distribute our 90-day Eversense CGM system and our 180-day Eversense CGM system worldwide, with the following initial exceptions: (i) until January 31, 2021, the territory did not include countries covered by our then existing distribution agreement with Roche Diagnostics International AG and Roche Diabetes Care GmbH (together “Roche”), which are the Europe, Middle East and Asia, excluding Scandinavia and Israel, and 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the Asia Pacific and Latin American regions; (ii) until September 13, 2021, the territory did not include countries covered by our current distribution agreement with Rubin Medical, which are Sweden, Norway and Denmark; and (iii) until May 31, 2022, the territory does not include Israel. Pursuant to the Commercialization Agreement, in the United States, Ascensia began providing sales support for the 90-day Eversense product on October 1, 2020 and Ascensia ramped up sales activities and assumed commercial responsibilities for the 90-day Eversense product during the second quarter of 2021.

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In February 2022, we received approval from the FDA for the Eversense E3 CGM System. The approval for our third-generation sensor, with proprietary sacrificial boronic acid (“SBA”) technology doubles the sensor life to six months with MARD of 8.5%. Ascensia began commercializing Eversense E3 in the second quarter of 2022.

European Commercialization of Eversense

In September 2017, we received the CE mark for Eversense XL which indicates that the product may be sold freely in any part of the European Economic Area (“EEA”). The Eversense XL is indicated for a sensor life of up to 180 days. Eversense XL began commercialization in Europe in the fourth quarter of 2017. All such commercialization and marketing activities remain subject to applicable government approvals.

In May 2016, we entered into a distribution agreement with Roche. Pursuant to the agreement, as amended, we had granted Roche the exclusive right to market, sell and distribute Eversense in Europe, Middle East and Asia (“EMEA”), excluding Scandinavia and Israel. In addition, Roche had exclusive distribution rights in 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the Asia Pacific and Latin American regions. Roche was obligated to purchase from us specified minimum volumes of Eversense XL CGM components at pre-determined prices. On December 12, 2019, we further amended the distribution agreement to lower minimum volumes for 2020 and increase pricing for the remaining period of the contract. On November 30, 2020 we entered into a final amendment and settlement agreement with Roche to facilitate the transition of distribution to Ascensia as sales concluded on January 31, 2021, including final purchases, and transition support activities. The distribution rights under the agreement expired January 31, 2021.

In June 2022, we affixed the CE mark to the extended life Eversense E3 CGM system, and Ascensia will begin commercialization in select European markets during the third quarter of 2022.

Financial Overview

Revenue

We generate product revenue from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively “Customers”), who then resell the products to health care providers and patients. We are paid for our sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients.

Revenue from product sales is recognized at a point in time when the Customers obtain control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product. Contracts with our distributors contain performance obligations, mostly for the supply of goods, and is typically satisfied upon transfer of control of the product. Customer contracts do not include the right to return unless there is a product issue, in which case we may provide replacement product. Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance.

Our contracts may contain some form of variable consideration such as prompt-pay discounts, tier-volume price discounts and for the Ascensia commercial agreement, revenue share. Variable consideration, such as discounts and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized. The amount of variable consideration that is included in the transaction price may be constrained and is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period, when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint requires the use of management judgment. Depending on the variable consideration, we develop estimates for

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the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates, and market conditions.

Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement.

Concentration of Revenue and Customers

For the three month and six months ended June 30, 2022 and 2021, we derived the majority of our total net revenue from one customer, Ascensia. During the three months ended June 30, 2022 and 2021, we derived 96% and 87%, respectively, of our total revenue from Ascensia. During the six months ended June 30, 2022 and 2021, we derived 93% and 85%, respectively, of our total revenue from Ascensia. Revenues for these corresponding periods represent sales of sensors, transmitters and miscellaneous Eversense system components.

Revenue by Geographic Region

The following table sets forth net revenue derived from our two primary geographical markets, the United States and outside of the United States, based on the geographic location to which we deliver the product, for three and six months ended June 30, 2022 and 2021:

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,507	67.5	%	$	4,222	68.1	%
United States		1,207	32.5			1,974	31.9
Total	$	3,714	100.0	%	$	6,196	100.0	%
	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,310	70.2	%	$	4,843	78.9	%
United States		979	29.8			1,292	21.1
Total	$	3,289	100.0	%	$	6,135	100.0	%

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Results of Operations for the Three Months Ended June 30, 2022 and 2021

	Three Months Ended
	June 30,				Period-to-
	2022		2021		Period Change
	(in thousands)					(in thousands)
Revenue, net	$	137	$	433	$	(296)
Revenue, net - related parties		3,577		2,856		721
Total revenue		3,714		3,289		425
Cost of sales		2,891		2,897		(6)
Gross profit		824		392		432
Expenses:
Research and development expenses		9,299		7,107		2,192
Selling, general and administrative expenses		8,561		9,175		(614)
Operating loss		(17,036)		(15,890)		(1,146)
Other (expense) income, net:
Interest income		241		247		(6)
Gain (Loss) on fair value adjustment of option		28,224		(35,730)		63,954
Interest expense		(4,510)		(4,034)		(476)
Gain (Loss) on change in fair value of derivatives		96,548		(124,361)		220,909
Net gain (impairment)		816		(381)		1,197
Other expense		(52)		(157)		105
Total other (expense) income, net		121,267		(164,416)		285,683
Net Income (loss)	$	104,231	$	(180,306)	$	284,537

Total revenue

Our total revenue increased to $3.7 million for the three months ended June 30, 2022, compared to $3.3 million for the three months ended June 30, 2021. This increase was primarily due to the launch of Eversense E3 in the United States partially offset by slightly lower sales outside of the United States.

Cost of sales and gross profit

Our cost of sales were consistent at $2.9 million for the three months ended June 30, 2022 and for the three months ended June 30, 2021. Our gross profit increased to $0.8 million for the three months ended June 30, 2022, compared to $0.4 million for the three months ended June 30, 2021. Gross profit as a percentage of revenue, or gross margin, was 22.2% and 11.9% for the three months ended June 30, 2022 and June 20, 2021, respectively. The increase in gross margin was primarily driven by the fulfillment of orders utilizing previously written off inventory and the benefit of sales mix in countries with favorable reimbursement rates.

Research and development expenses

Research and development expenses were $9.3 million for the three months ended June 30, 2022, compared to $7.1 million for the three months ended June 30, 2021, an increase of $2.2 million. The increase was due to investments for next generation technologies including a $1.2 million increase in clinical studies activities, an increase of $0.4 million in personnel related costs due to the expansion of our research and development workforce and an increase of $0.6 million for consulting, contract fabrication and other research and development support services.

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Selling, general and administrative expenses

Selling, general and administrative expenses were $8.6 million for the three months ended June 30, 2022, compared to $9.2 million for three months ended June 30, 2021, a decrease of $0.6 million. The decrease was primarily the result of reduced payroll expenses related to stock-based compensation.

Total other (expense) income, net

Total other income, net, was $121.3 million for the three months ended June 30, 2022, compared to other expense, net, of $164.4 million for the three months ended June 30, 2021, a change of $285.7 million. The change was primarily due to a $220.9 million change in fair value of derivatives and a $64.0 million change in fair value of option, a $1.2 million change in impairment cost related to the option and a decrease of $0.1 million in other expense, partially offset by a $0.5 million increase in interest expense.

Results of Operations for the Six Months Ended June 30, 2022 and 2021

	Six Months Ended
	June 30,				Period-to-
	2022		2021		Period Change
	(in thousands)
Revenue, net	$	429	$	920	$	(491)
Revenue, net - related parties		5,767		5,215		552
Total revenue		6,196		6,135		61
Cost of sales		4,845		5,217		(372)
Gross profit		1,351		918		433
Expenses:
Research and development expenses		17,103		12,362		4,741
Selling, general and administrative expenses		16,445		15,762		683
Operating loss		(32,197)		(27,206)		(4,991)
Other (expense) income, net:
Interest income		334		256		78
Gain (Loss) on fair value adjustment of option		49,925		(88,405)		138,330
Gain on extinguishment of debt and option		—		330		(330)
Interest expense		(9,005)		(8,092)		(913)
Gain (Loss) on change in fair value of derivatives		181,117		(305,260)		486,377
Net gain (impairment)		846		(1,163)		2,009
Other expense		(71)		(280)		209
Total other (expense) income, net		223,146	$	(402,614)	$	625,760
Net Income (loss)	$	190,949	$	(429,820)	$	620,769

Total revenue

Our total revenue of $6.2 million for the six months ended June 30,2022 is consistent when compared to the prior year period.

Cost of sales and gross profit

Our cost of sales were $4.8 million for the six months ended June 30, 2022 compared to $5.2 million for the six months ended June 30, 2021, a decrease of $0.4 million, primarily driven by reduced warranty expense. Our gross profit increased to $1.4 million for the six months ended June 30, 2022, compared to $0.9 million for the six months ended June 30, 2021. Gross profit as a percentage of revenue, or gross margin, was 21.8% and 15.0% for the six months ended June 30, 2022 and June 20, 2021, respectively. The increase in gross margin was primarily driven by the fulfillment of

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orders utilizing existing written off inventory and the benefit of sales mix in countries with favorable reimbursement rates.

Research and development expenses

Research and development expenses were $17.1 million for the six months ended June 30, 2022, compared to $12.4 million for the six months ended June 30, 2021, an increase of $4.7 million. The increase was due to investments for next generation technologies including a $2.2 million increase in clinical studies activities, an increase of $1.2 million in personnel related costs due to the expansion of our research and development workforce and an increase of $1.3 million for consulting, contract fabrication and other research and development support services.

Selling, general and administrative expenses

Selling, general and administrative expenses were $16.4 million for the six months ended June 30, 2022, compared to $15.8 million for six months ended June 30, 2021, an increase of $0.6 million. The increase was due primarily to an increase of $1.0 million in other general and administrative costs to include recruiting and associated employee overhead and local tax expenses, partially offset by $0.4 million of lower sales and marketing costs as Ascensia assumed commercialization responsibilities

Total other (expense) income, net

Total other income, net, was $223.1 million for the six months ended June 30, 2022, compared to other expense, net, of ($402.6) million for the six months ended June 30, 2021, a change of $625.7 million. The change was primarily due to a $486.4 million change in fair value of derivatives and a $138.3 million change in fair value of option.

Liquidity and Capital Resources

Sources of Liquidity

From our founding in 1996 until 2010, we devoted substantially all of our resources to researching various sensor technologies and platforms. Beginning in 2010, we narrowed our focus to developing and refining a commercially viable glucose monitoring system. However, to date, we have not generated any significant revenue from product sales. We have incurred substantial losses and cumulative negative cash flows from operations since our inception in October 1996. We have never been profitable and our net losses were $302.5 million, $175.2 million, and $115.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of June 30, 2022, we had an accumulated deficit of $760.0 million. To date, we have funded our operations principally through the issuance of preferred stock, common stock, convertible notes and debt. As of June 30, 2022, we had cash, cash equivalents and marketable debt securities of $150.5 million.

In November 2021, we entered into an Open Market Sale Agreement (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”), under which we could offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million through Jefferies as our sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. As of June 30, 2022, we received $8.0 million in net proceeds from the sale of 3,077,493 shares of our common stock under the 2021 Sales Agreement.

In November 2019, we entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with Jefferies, under which we could offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million through Jefferies as our sales agent in an “at the market” offering. In June 2021, we received $48.4 million in net proceeds from the sale of 12,830,333 shares of our common stock utilizing the full capacity under the 2019 Sales Agreement.

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On January 21, 2021, we entered into an underwriting agreement, which was subsequently amended and restated on the same day (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative of the underwriters (the “Underwriters”), to issue and sell 51,948,052 shares of common stock, in an underwritten public offering pursuant to effective registration statements on Form S-3, including a related prospectus and prospectus supplement, in each case filed with the Securities and Exchange Commission (the “2021 Public Offering”). The price to the public in the 2021 Public Offering was $1.925 per share of common stock. The Underwriters agreed to purchase the shares from us pursuant to the Underwriting Agreement at a price of $1.799875 per share and the Company also agreed to reimburse them for customary fees and expenses. The initial closing of the 2021 Public Offering occurred on January 26, 2021. Subsequent to the initial closing, the Underwriters exercised their option to purchase an additional 7,792,207 shares of Common Stock. Total net proceeds from the 2021 Public Offering were $106.1 million after deducting underwriting discounts and commissions and estimated offering expenses.

On January 17, 2021, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional purchasers (the “Purchasers”), pursuant to which we sold to the Purchasers, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 40,000,000 shares (the “Shares”) of common stock, $0.001 par value per share. The Shares were sold at a purchase price of $1.25 per share for aggregate gross proceeds to the Company of $50.0 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission on November 27, 2019. The net proceeds to the Company from the Registered Direct Offering, after deducting fees and expenses and the estimated offering expenses payable by us are approximately $46.1 million.

On November 9, 2020, we entered into an equity line agreement, (“Equity Line Agreement”), with Energy Capital, LLC (“Energy Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of our newly designated series B convertible preferred stock (“the Series B Preferred Stock”), at our request from time to time during the 24-month term of the Equity Line Agreement. There have been no issuances of Series B Preferred Stock as of June 30, 2022.

Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including that we have less than $8.0 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), we have the right, in our sole discretion, to present Energy Capital with a purchase notice (“Regular Purchase Notice”) directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of our Series B Preferred Stock at a per share price (the “Purchase Price”), equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share. The Equity Line Agreement provides that we shall not affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the common stock on the NYSE American is less than $0.25 without the approval of Energy Capital.

Concurrently with entry into the Equity Line Agreement, we issued a warrant to Energy Capital, exercisable beginning May 9, 2021, to purchase up to 10,000,000 shares of common stock at an exercise price of $0.3951 per share, (the “Warrant”). The Warrant was exercised in full in February 2022.

On August 9, 2020, we entered into a financing agreement with Ascensia pursuant to which we issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to Ascensia’s parent company, PHC Holdings Corporation (“PHC”), on the Closing Date. We also issued PHC 2,941,176 shares of common stock to PHC as a financing fee. We also have the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022, contingent upon obtaining approval for the 180-day Eversense product for marketing in the United States before such date. Upon the closing of the PHC Notes, we prepaid in full the First Lien Notes, issued and sold pursuant a loan agreement with Highbridge Capital Management, LLC (“Highbridge”) (the “Highbirdge Loan Agreement”), in the amount of approximately $17.6 million.

Additionally, on August 9, 2020, we entered into a Stock Purchase Agreement with Masters Special Solutions,

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LLC and certain affiliates thereof (collectively, “Masters”), pursuant to which we issued and sold to Masters 3,000 shares of convertible preferred stock, designated as Series A Preferred Stock (the “Series A Preferred Stock”), at a price of $1,000.00 per share in an initial closing (“the Stock Purchase Agreement”). Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000.00 per share in subsequent closings, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds of $22.8 million. Each share of Series A Preferred Stock is initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All shares of Series A Preferred Stock have been converted to common stock.

We believe that these agreements provide the financial resources and mutual commitment to support the growth of Eversense and specifically for the Company, the manufacturing of Eversense and continued product development, including the U.S. launch of Eversense E3. The timing and success of these collaborations and financings are dependent on certain events occurring in accordance with our plans, and may be influenced by uncontrollable external factors, including restrictions or impacts of COVID-19. Management has concluded that based on our current operating plans, existing cash and cash equivalents and cash flows from our future operations will be sufficient to meet our anticipated operating needs through 2023.

Common Stock

In November 2021, we entered into the 2021 Sales Agreement with Jefferies, under which we could offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million through Jefferies as the sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2022, we received $8.0 million in net proceeds from the sale of 3,077,493 shares of our common stock under the 2021 Sales Agreement.

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Indebtedness

Term Loans

PPP Loan

On April 22, 2020, we received $5.8 million in loan funding from the PPP pursuant to the CARES Act, as amended by the Flexibility Act, and administered by the Small Business Administration (“SBA”). The unsecured loan (the “PPP Loan”) is evidenced by the PPP Note dated April 21, 2020 (the “PPP Note”), in the principal amount of $5.8 million with Silicon Valley Bank (“SVB”).

Under the terms of the PPP Note and the PPP Loan, interest accrues on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Note was two years. In April 2022, the Company repaid the outstanding principal and accrued interest in full.

Convertible Notes

The following table summarizes our outstanding convertible notes at June 30, 2022:

				Aggregate				Initial Conversion		Conversion Price
Convertible	Issuance			Principal		Maturity		Rate per $1,000		per Share of
Note	Date	Coupon		(in millions)		Date		Principal Amount		Common Stock
2023 Notes	January 1, 2018		5.25%	$	15.7		February 1, 2023		294.1176	$	3.40
2025 Notes	July 1, 2019		5.25%	$	51.2		January 15, 2025		757.5758	$	1.32
PHC Notes	August 14, 2020		8.00%	$	35.0		October 31, 2024		1867.4136	$	0.53

2023 Notes

In the first quarter of 2018, we issued $53.0 million in aggregate principal amount of senior convertible notes that will mature on February 1, 2023, (the “2023 Notes”), of which $15.7 million in aggregate principal remains outstanding as of June 30, 2022, after some of the holders exchanged their 2023 Notes for 2025 Notes, as defined below, in July 2019.

2025 Notes

In July 2019, we issued $82.0 million in aggregate principal amount of senior convertible notes that will mature on January 15, 2025 (the “2025 Notes”), unless earlier repurchased or converted. In connection with an exchange on April 24, 2020, $24.0 million in aggregate principal of Highbridge’s outstanding 2025 Notes were exchanged for (i) $15.7 million aggregate principal amount of Second Lien Notes (“Second Lien Notes”), (ii) 11,026,086 shares of our common stock, (iii) warrants to purchase up to 4,500,000 shares of our common stock at an exercise price of $0.66 per share, and (iv) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged (the “Exchange”).

For additional information on the 2025 Notes and the 2023 Notes, see Note 8—Notes Payable, Preferred Stock and Stock Purchase Warrants in the accompanying unaudited consolidated financial statements.

PHC Notes

On August 9, 2020, we entered into a note purchase agreement with PHC (the “Note Purchase Agreement”), pursuant to which we agreed to borrow $35.0 million in aggregate principal through the issuance and sale of PHC Notes on or prior to August 14, 2020. The PHC Notes will be senior secured obligations and will be guaranteed on a senior secured basis by our wholly owned subsidiary, Senseonics, Incorporated. Interest at the initial annual rate of 9.5% is payable semi-annually in cash or, at our option, payment in kind. The interest rate will decrease to 8.0% beginning in April 2022 because we obtained FDA approval for the 180-day Eversense E3 product for marketing in the United States.

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The maturity date for the PHC Notes will be October 31, 2024, provided that the maturity date will accelerate if we have not repaid our Second Lien Notes (other than an aggregate principal amount of up to $1.0 million) by 91 days prior to the maturity of the Second Lien Notes.

PHC will be entitled to convert the PHC Notes to common stock at a conversion rate of 1,867.4136 shares per $1,000 principal amount of the PHC Notes, equivalent to a conversion price of approximately $0.54 per share, subject to specified anti-dilution adjustments, including adjustments for our issuance of equity securities on or prior to April 30, 2022 below the conversion price. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such notice of redemption or corporate event. In certain circumstances, we will be required to pay cash in lieu of delivering make whole shares unless we obtain stockholder approval to issue such shares.

Subject to specified conditions, on or after October 31, 2022, the PHC Notes are redeemable by us if the closing sale price of the common stock exceeds 275% of the conversion price for a specified period of time and subject to certain conditions upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount, plus any accrued but unpaid interest. On or after October 31, 2023, the PHC Notes are redeemable by us upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount, plus any accrued but unpaid interest, plus a call premium of 130% if redeemed at least six months prior to the maturity date or a call premium of 125% if redeemed within six months of the maturity date.

The Note Purchase Agreement contains customary terms and covenants, including financial covenants, such as operating within an approved budget and achieving minimum revenue and liquidity targets, and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Note Purchase Agreement also contains customary events of default, after which the PHC Notes be due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, judgments against us, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority.

Funding Requirements and Outlook

Our ability to generate revenue and achieve profitability depends on the successful commercialization and adoption of our Eversense CGM systems by diabetes patients and healthcare providers, along with future product development, regulatory approvals, and post-approval requirements. These activities, including our ongoing focus to grow covered lives through positive insurance payor policy decisions and continued development of Eversense 365-day product, will require significant uses of working capital through 2022 and beyond.

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We expect that existing cash, cash equivalents and cash flows from our future operations will be sufficient to meet the Company’s current operating plans through 2023. As part of our liquidity strategy, we will continue to monitor our capital structure and operating plans and we may access the capital markets or debt markets for additional funding if the opportunity arises to enhance our capital structure for changes to our operating plans, for financing strategic initiatives and to provide financial flexibility.

Cash Flows

The following is a summary of cash flows for each of the periods set forth below (in thousands).

	Six Months Ended
	June 30,
	2022		2021
Net cash used in operating activities	$	(34,341)	$	(30,407)
Net cash provided by (used in) investing activities		42,108		(145,318)
Net cash provided by financing activities		4,197		227,274
Net increase in cash and cash equivalents	$	11,964	$	51,549

Net cash used in operating activities

Net cash used in operating activities was $34.3 million for the six months ended June 30, 2022 and consisted of an $181.1 million change in fair value of derivatives on convertible notes, a $49.9 million gain on fair value adjustment of the option, and a net change in operating assets and liabilities of $4.0 million (most notably increases in accounts receivable of $2.1 million and prepaid expenses and other assets of $1.6 million), partially offset by net income of $191.0 million, $5.4 million related to depreciation/amortization and non-cash items and $4.3 million of stock based compensation.

Net cash used in operating activities was $30.4 million for the six months ended June 30, 2021 and consisted of a net loss of $429.8 million, a net decrease in operating assets and liabilities of $3.7 million (mostly due to a reduction in inventory of $3.5 million, lower prepaid and other current assets of $0.8 million, and a $1.3 million decrease in accrued expenses, reflecting reduced operational activities, offset by an increase in accounts payable of $1.3 million, an increase in accrued interest of $0.4 million and an increase in accounts receivable of $0.2 million) and $0.3 million for gain on extinguishment for the convertible notes and options, offset by $305.3 million due to the change in fair value of derivatives on convertible notes, a $88.4 million loss on fair value adjustment of the option, $4.7 million for stock-based compensation and net for increased impairment reserves, depreciation/amortization and non-cash items of $5.0 million.

Net cash provided by (used in) investing activities

Net cash provided by investing activities was $42.1 million for the six months ended June 30, 2022 and primarily consisted of proceeds from the sale and maturity of marketable securities.

Net cash used in investing activities was $145.3 million for the six months ended June 30, 2021 and primarily consisted of the purchase of marketable securities.

Net cash provided by financing activities

Net cash provided by financing activities was $4.2 million for the six months ended June 30, 2022, and primarily consisted of $8.0 million from the issuance of common stock and $0.3 million for proceeds related to the exercise of stock options and warrants, partially offset by $2.9 million in repayment of the PPP loan and $1.2 million related to the settlement of equity awards.

Net cash provided by financing activities was $227.3 million for the six months ended June 30, 2021, primarily consisted of $200.4 million from issuance of common stock, proceeds of $22.8 million for the issuance of Series A preferred stock and $4.1 million for proceeds related to the exercise of stock options and warrants.

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Contractual Obligations

As of June 30, 2022, there were no material changes in our contractual obligations and commitments from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 1, 2022.

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk

Under SEC rules and regulations, because we are considered to be a “smaller reporting company”, we are not required to provide the information required by this item in this Quarterly Report on Form 10-Q.

ITEM 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the assistance of our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2022. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the periodic reports filed with the SEC is accumulated and communicated to our management, including our principal executive, financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving such control objectives. Based on the evaluation of our disclosure controls and procedures as of June 30, 2022, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1: Legal Proceedings

From time to time, we are subject to litigation and claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties.

In February 2021, we received notice and accepted service of a civil complaint that had been filed in the Western District of Texas and styled Carew ex rel. United States v. Senseonics, Inc., No. SA20CA0657DAE. The complaint was filed by a relator under seal in May 2020 pursuant to the qui tam provisions in the federal False Claims Act. Prior to the unsealing of the complaint, the government declined to intervene in the case. The case, therefore, is being pursued only by the relator. The complaint alleges the Company’s marketing practices with physicians for its product, Eversense Continuous Glucose Monitoring System, violated the False Claims Act, 31 U.S.C. § 3729 and the Texas Medicaid Fraud Prevention Law, Tex. Hum Res. Code § 36.002. Outside counsel, on behalf of the Company, filed a motion to dismiss the action for failure to state a claim. On March 31, 2022, the court granted the motion to dismiss the action without prejudice which allows the plaintiff 60 days to refile the complaint. On May 27, 2022, the plaintiff filed an amended

37

complaint and on July 11, 2022, the Company filed a motion to dismiss the action for failure to state a claim. Briefing on the motion is expected to be completed on or before August 29,2022, after which the motion will be ready for court consideration and decision.

As previously reported, since February 2021 the Company has been in communication with the Italian Data Protection Authority, or Garante, with respect to the Garante’s review of the Company’s unintended disclosure of certain Italian user e-mail addresses to other users in Italy and other GDPR-related obligations of the Company. On July 29, 2022 the Garante delivered its decision to the Company finding that the Company had breached certain provisions of the GDPR, assessing a fine of EUR 45,000 and directing the Company to make certain changes within three months to its European privacy notice, including simplifications to the privacy notice and the inclusion of certain references. In accordance with the Garante’s decision, the Company may settle the matter for EUR 22,500 if it makes the payment within 30 days, undertakes to update the privacy notice and does not appeal the decision. It is the Company’s current intention to resolve of the matter in this manner.

ITEM 1A: Risk Factors

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Other than the risk factors set forth below, our risk factors as of the date of this Quarterly Report on Form 10-Q have not changed materially from those described in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K.

The ongoing military action by Russia in Ukraine could have negative impact on the global economy which could materially adversely affect our business, operations, operating results and financial condition.

On February 24, 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is possible. The impact to Ukraine as well as actions taken by other countries, including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the U.S. and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and actions taken by Russia in response to such sanctions, and each country’s potential response to such sanctions, tensions, and military actions could adversely affect the global economy and financial markets and thus could affect our business, operations, operating results and financial condition as well as the price of our common stock and our ability to raise additional capital when needed on acceptable terms. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in our Annual Report on Form 10-K.

While our suppliers may source certain raw materials from Russia and Ukraine, to date we have not been notified that the supply of these materials has been significantly impacted by the conflict. We continue to monitor the situation closely and are proactively assessing and evaluating alternative sources to bolster supply of these materials moving forward, in addition to working closely with our suppliers in any product re-qualification that may be required. Revenue relating to products manufactured from raw materials sourced from this region does not constitute a material portion of our business. Further, there is uncertainty regarding the ultimate impact the conflict, including any escalation or further expansion of the conflict’s current scope, will have on our customers, the global economy, supply chains, logistics, fuel prices, raw material pricing and our business.

Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as the COVID-19 pandemic, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, which have in the past and may in the future negatively impact our business and financial performance.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions,

including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability. For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets. The Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any

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necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.

ITEM 2: Unregistered Sales of Equity and Securities and Use of Proceeds

Not applicable.

ITEM 3: Defaults Upon Senior Securities

Not applicable.

ITEM 4: Mine Safety Disclosures

Not applicable.

ITEM 5: Other Information

None.

ITEM 6: Exhibits

The exhibits listed on the Exhibit Index hereto are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

Exhibit No.	Document
3.1	Amended and Restated Certificate of Incorporation of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on March 23, 2016).
3.2	Amended and Restated Bylaws of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on March 23, 2016).
3.3	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2018 (File No. 001-37717), filed with the Commission on August 8, 2018).
3.4	Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on August 18, 2020).
3.5	Certificate of Designation of Series A Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717), filed with the Commission on August 18, 2020).
3.6	Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-37717) filed with the Commission on November 9, 2020).
3.7	Amendment to Bylaws of Senseonics Holdings, Inc. (incorporated herein by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K (File No. 001-37717) filed with the Commission on March 5, 2021).
10.1#	Second Amendment to Collaboration and Commercialization Agreement, by and between the Subsidiary and Ascensia Diabetes Care Holdings AG, dated as of June 21, 2022.
31.1*	Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act.
31.2*	Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act.
32.1**	Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act.
101.INS*	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document)
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

39

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*         Filed herewith.

**      These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

# Certain portions of this exhibit, indicated by asterisks, have been omitted because they are not material and are the type that the registrant treats s

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SENSEONICS HOLDINGS, INC.
Date: August 9, 2022	By:	/s/Nick B. Tressler
		Nick B. Tressler
		Chief Financial Officer
		(Principal Financial Officer)

40

EX-10.1

CERTAIN PORTIONS OF THIS EXHIBIT (INDICATED BY ***) HAVE BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10) OF REGULATION S-K BECAUSE THEY ARE BOTH NOT MATERIAL AND ARE THE TYPE THAT THE COMPANY TREATS AS PRIVATE AND CONFIDENTIAL.

EXHIBIT 10.1

SECOND AMENDMENT
TO
COLLABORATION AND COMMERCIALIZATION AGREEMENT

This Second Amendment (the “Second Amendment”) to the Collaboration and Commercialization Agreement is entered into by and between Senseonics Incorporated (“Senseonics”) and Ascensia Diabetes Care Holdings AG (“Ascensia”) (each of Senseonics and Ascensia, a “Party”, and together, the “Parties”) and is effective (except as otherwise provided herein) as of June 21, 2022 (the “Second Amendment Effective Date”).

WHEREAS, the Parties have entered into that certain Collaboration and Commercialization Agreement dated as of August 9, 2020, as subsequently amended and supplemented (the “Agreement”);

WHEREAS, the Parties desire to further amend the Agreement in accordance with Section 9.3 thereof in order to clarify certain accounting and other matters;

NOW THEREFORE, in consideration of the premises and mutual covenants contained in the Second Amendment, the parties agree as follows:

1. Product Warranty. Exhibit E to the Agreement will be deleted and replaced in its entirety by the Exhibit E attached to this Second Amendment. The reference to “warranty claims (as allowed by Exhibit E)” in Section 4.2 of the Agreement shall be deleted. For the avoidance of doubt, there shall be no adjustment to the amounts owed to Senseonics under Section 4.2 for any warranty claims as all warranty units will be included in Section 4.2 True Up Amount. The changes in this Section 1 shall be considered effective for true-up calculations for periods starting [***].

2. Pricing. Notwithstanding anything to the contrary in the Agreement (including Section 2.4(c) thereof), the minimum price (net of application of revenue sharing) in both the United States and outside the United States on a quarterly basis for sales from Senseonics to Ascensia of the 180-day Product will be set at [***], unless otherwise formally agreed by the Joint Alliance Committee for special situations. For the avoidance of doubt, this provision means that the true-up cannot result in adjustments which, after application of the revenue share and warranty, cause the realized transfer price of the sensor to be below such [***]. The Parties will continue to set a Minimum Annual Price in each market in accordance with Section 2.4(c). Ascensia will provide quarterly reports to Senseonics with updates on the average quarterly in market selling prices, net of replacement sensors of the 180-day Product in the [***], and a subtotal for all other relevant markets. If an additional market becomes substantial to results, the Parties will in good faith add quarterly reporting on such market. The changes in this Section 2 shall be considered effective for true up calculations for periods starting at [***].

3. Binding Commitment. Effective as of the next applicable Forecast period after the Second Amendment Effective Date, Section 2.3(c) of the Agreement will be replaced in its entirety as follows:

“2.3(c). Binding Commitment. In each Forecast, the following shall constitute a binding commitment for Ascensia to purchase, and for Senseonics to supply, the quantities of Products specified therein, and Ascensia shall order such quantities pursuant to Section 2.2(a) (the “Binding Commitment”):

(i) the first [***] of each 12-month Forecast – a binding commitment for [***] of the quantities of Products specified therein;

(ii) for [***] of the 12-month Forecast immediately following the Second Amendment Effective Date and effective as of [***] (i.e., [***]) – a binding commitment for [***] of the quantities of Products specified therein;

(iii) for [***] of each subsequent Forecast (i.e., starting in [***]) – a binding commitment for [***] of the quantities of Products specified therein;

(iv) for month #6 of each subsequent Forecast (i.e., starting in [***]) – a binding commitment for [***] of the quantities of Products specified therein; and

(v) for [***] of each subsequent Forecast (i.e., starting in [***]) – a binding commitment for [***] of the quantities of Products specified therein.

Such Binding Commitment will be subject to a limit established by the Joint Alliance Committee based on capacity and consistency with prior Forecasts, and reviewed every [***]. With respect to quantities of Products in the Binding Commitment, Senseonics shall not be required to ship more than [***] shipment per month to a single designated distribution facility and/or logistics and kitting provider within the European Union or more than [***] shipment per month to a single central distribution location in each country in the Territory located outside the United States and European Union, as agreed to by the Parties.”

For clarity, binding percentages shall not operate additively. As an example, if during the first year from the Second Amendment Effective Date, Ascensia’s forecast for month #8 was for [***] sensors, and Ascensia subsequently reduced its forecast to [***] sensors for the same month when it became month #7, it could not further reduce its binding forecast for that same month below [***] sensors. Additional illustrative examples for calculation of the Binding Commitment are attached hereto in Schedule A.

4. Certain Payments. The Parties acknowledge and agree that the following payments are due in connection with the operation of the Agreement:

(a) Ascensia and Senseonics agree to [***], as a result of which Ascensia will provide to Senseonics three quarterly payments of [***] to offset manufacturing costs;

(b) Senseonics owes Ascensia [***] as a one-time payment in respect of the reimbursement of the [***]; and

(c) Pursuant to the funding obligations described in Sections 5(v) and 5(vi) of the First Amendment, Senseonics owes Ascensia a one-time payment of [***].

The Parties agree to offset the amounts referred to in [***]. As a result, Senseonics will make a one-time payment of [***] to Ascensia no later than [***] after the Second Amendment Effective Date. The remaining [***] manufacturing offset amounts referenced in Section 4(a) above will be made from Ascensia to Senseonics within [***] of the start of [***].

5. True-up Mechanics. The Parties agree that for the calculation of the True-Up Amounts pursuant to Section 4.2 of the Agreement, (i) they shall use an agreed upon blended revenue share percentage based upon the estimated blended revenue share percentage resulting from the forecasted revenue for the year and (ii) in the final True-Up Statement for the year shall adjust to account for the difference between the estimated revenue share used for these estimated periods and the final revenue share calculated based on actual revenues for the year.

6. Confidentiality. The Parties acknowledge that the terms and conditions of this Second Amendment shall be treated as Confidential Information of both Parties, subject to Article 8 of the Agreement, provided that Senseonics may, if required by law, disclose this Second Amendment as part of its ongoing public reporting company filings.

7. Term. The pricing provisions in Section 2 hereof shall remain in effect until April 1, 2024, after which the parties will renegotiate in good faith the going forward minimum price set forth in Section 2 of this Second Amendment and the further term for the continuation of such minimum price and the amendments in Sections 1 and 3, provided that on or after April 1, 2023, the parties shall renegotiate such minimum price and such term extensions on a going forward basis in the event either [***] to in-market reimbursement rates in local currency averaged at a constant Euro-USD rate based on the relative dollar sales volumes of the relevant markets at the time.

8. Interpretation. Except as expressly provided in this Second Amendment, the Agreement shall continue in full force and effect. The Agreement, as supplemented, clarified or amended by the Letter Agreement of November 17, 2020, the First Amendment dated as of March 31, 2021, the Side Letter Agreement dated November 12, 2021, and the Second Side Letter Agreement dated April 5, 2022, constitute the entire agreement of the Parties with respect to the subject matter hereof. In the event of any conflict between the terms of this Second Amendment and the Agreement, the terms of this Second Amendment shall control. Except where expressly noted otherwise, the amendments made herein shall be effective as of the Second Amendment Effective Date. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. This Amendment may be executed in counterparts, each of which shall constitute an original and all of which shall together constitute a single agreement. This Amendment may be executed and delivered electronically, including via PDF format or DocuSign, and upon such delivery such electronic signature will be deemed to have the same effect as if the original signature had been delivered to the other Parties.

[Signature Page Follows]

IN WITNESS WHEREOF, each of the Parties has caused this Second Amendment to be executed by its duly authorized representatives as of the Second Amendment Effective Date.

Ascensia Diabetes Care Holdings AG

By: /s/ Elaine Anderson​ ​

Name: Elaine Anderson

Title: Head of Eversense CGM Business Unit

By: /s/ Robert Schumm​ ​

Name: Robert Schumm

Title: President

Senseonics, Incorporated

By: /s/ Tim Goodnow​ ​

Name: Tim Goodnow

Title: CEO

EXHIBIT E

Senseonics warrants to Ascensia that the Products will function in material conformance with its Specifications set forth in documentation provided by Senseonics. Ascensia’s sole and exclusive remedy for a breach of the foregoing warranty shall be Senseonics’ participation through the true-up in the process outlined below.

Country level end market warranty policies will be approved by the Joint Alliance Committee. The Parties intend that such warranty policies will not exceed [***] in any market for any 180-day sensor.

Any warranty claim by a user will be satisfied out of a sensor taken from Ascensia inventory. For bona fide warranty claims meeting the requirements and terms of the warranty agreed by the Joint Alliance Committee, subject to the minimum price set out in Section 2 hereof, these sensors will be included in the calculation for the true up as follows: replacement sensors will be included in the true up for cost purposes and such sensors that were subject to a bona fide warranty claim will only be included in revenue to the extent they generate revenue in accordance with the end-market warranty, unless otherwise formally agreed by the Joint Alliance Committee for special situations.

The Parties will determine a warranty for the 365-day Product in good faith prior to its launch.

Neither Party is liable for the cost of reinsertion. The Joint Alliance Committee may consider and discuss special situations.

This Amendment shall not affect the currently in-effect transmitter warranty.

SCHEDULE A

BINDING COMMITMENT EXAMPLE

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Binding Commitment

Notes:

Illustrative Year 1 Example

Jan

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

binding

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Feb

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

binding

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Mar

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

binding

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Illustrative Year 2 Example

Jan

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

binding

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Feb

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

binding

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Mar

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

B

[***]

[***]

A

[***]

binding

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

#1

#2

#3

#4

#5

#6

#7

#8

binding (yr 1)

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

binding (yr 2+)

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

A: [***].

B: [***].

[***]

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy T. Goodnow, Ph.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Senseonics Holdings, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2022

/s/ Timothy T. Goodnow, Ph.D. 

Timothy T. Goodnow, Ph.D.

President & Chief Executive Officer

(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nick Tressler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Senseonics Holdings, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2022

/s/ Nick B. Tressler

Nick B. Tressler

Chief Financial Officer

(principal financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS OF

PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Timothy T. Goodnow, Ph.D., President and Chief Executive Officer of Senseonics Holdings, Inc. (the “Company”), and Nick B. Tressler, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (the “Quarterly Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition of the Company as of the end of the period covered by the Quarterly Report and results of operations of the Company for the periods covered by the Quarterly Report.

In Witness Whereof, the undersigned have set their hands hereto as of the 9th day of August 2022.

/s/ Timothy T. Goodnow, Ph.D.	/s/ Nick B. Tressler
Timothy T. Goodnow, Ph.D.	Nick B. Tressler
President & Chief Executive Officer	Chief Financial Officer
(principal executive officer)	(principal financial officer)

*This Certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 05, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Entity File Number	001-37717
Entity Registrant Name	Senseonics Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1210911
Entity Address, Address Line One	20451 Seneca Meadows Parkway
Entity Address, City or Town	Germantown
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	20876-7005
City Area Code	301
Local Phone Number	515-7260
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	SENS
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		465,447,258
Entity Central Index Key	0001616543
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 45,425	$ 33,461
Short term investments, net	93,758	96,445
Accounts receivable, net	220	205
Accounts receivable, net - related parties	3,824	1,768
Inventory, net	7,251	6,316
Prepaid expenses and other current assets	7,818	6,218
Total current assets	158,296	144,413
Option	1,085	239
Deposits and other assets	3,347	1,086
Long term investments, net	11,334	51,882
Property and equipment, net	1,263	1,308
Total assets	175,325	198,928
Current liabilities:
Accounts payable	1,734	1,204
Accrued expenses and other current liabilities	10,731	10,667
Accrued expenses and other current liabilities- related parties	3,692	3,597
Note payable, current portion, net	14,874
Derivative liability, current portion	438
Term Loans, net		2,926
Total current liabilities	31,469	18,394
Long-term debt and notes payables, net	50,650	59,798
Derivative liabilities	54,737	236,291
Option	19,476	69,401
Other liabilities	3,052	579
Total liabilities	159,384	384,463
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.001 par value per share; 900,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 465,326,135 shares and 447,282,263 shares issued and outstanding as of June 30, 2022 and December 31, 2021	465	447
Additional paid-in capital	776,640	765,215
Accumulated other comprehensive loss	(1,128)	(212)
Accumulated deficit	(760,036)	(950,985)
Total stockholders' equity (deficit)	15,941	(185,535)
Total liabilities and stockholders' equity (deficit)	$ 175,325	$ 198,928

XML

Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Class of stock information
Common stock, par value per share (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	465,326,135	447,282,263
Common stock, shares outstanding	465,326,135	447,282,263

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Revenue, net	$ 137	$ 433	$ 429	$ 920
Revenue, net - related parties	3,577	2,856	5,767	5,215
Total revenue	3,714	3,289	6,196	6,135
Cost of sales	2,890	2,897	4,845	5,217
Gross profit	824	392	1,351	918
Expenses:
Research and development expenses	9,299	7,107	17,103	12,362
Selling, general and administrative expenses	8,561	9,175	16,445	15,762
Operating loss	(17,036)	(15,890)	(32,197)	(27,206)
Other income (expense), net:
Interest income	241	247	334	256
Gain (Loss) on fair value adjustment of option	28,224	(35,730)	49,925	(88,405)
Gain on extinguishment of debt and option				330
Interest expense	(4,510)	(4,034)	(9,005)	(8,092)
Gain (Loss) on change in fair value of derivatives	96,548	(124,361)	181,117	(305,260)
Net gain (impairment)	816	(381)	846	(1,163)
Other expense	(52)	(157)	(71)	(280)
Total other income (expense), net	121,267	(164,416)	223,146	(402,614)
Net Income (Loss)	104,231	(180,306)	190,949	(429,820)
Other comprehensive loss
Unrealized loss on marketable securities	(291)	(16)	(916)	(16)
Total other comprehensive loss	(291)	(16)	(916)	(16)
Total comprehensive income (loss)	$ 103,940	$ (180,322)	$ 190,033	$ (429,836)
Basic net income (loss) per common share	$ 0.22	$ (0.42)	$ 0.42	$ (1.08)
Basic weighted-average shares outstanding	464,133,903	431,840,854	460,061,022	398,244,296
Diluted net income (loss) per common share	$ (0.03)	$ (0.42)	$ (0.06)	$ (1.08)
Diluted weighted-average shares outstanding	601,330,959	431,840,854	604,342,540	398,244,296

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands	Preferred Stock Series A Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
Balance at Dec. 31, 2020	$ 2,811	$ 266	$ 504,162		$ (648,511)	$ (144,083)
Balance (in shares) at Dec. 31, 2020		265,582
Changes in Stockholders' Equity (Deficit)
Conversion of preferred stock		$ 54	45,512			45,566
Conversion of preferred stock (in shares)		54,166
Issuance of common stock, net		$ 113	200,327			200,440
Issuance of common stock (in shares)		112,571
Exercise of stock options and ESPP purchases		$ 4	3,885			3,889
Exercise of stock options and ESPP purchases (in shares)		5,027
Exchange and conversion of convertible notes, net		$ 5	6,496			6,501
Exchange and conversion of convertible notes, net (in shares)		4,925
Issuance of common stock for vested RSUs and ESPP purchase		$ 3	47			50
Issuance of common stock for vested RSUs and ESPP purchase (in shares)		2,854
Stock-based compensation expense			4,833			4,833
Net Income (Loss)					(429,820)	(429,820)
Other comprehensive loss, net of tax				$ (16)		(16)
Balance at Jun. 30, 2021		$ 445	765,262	(16)	(1,078,331)	(312,640)
Balance (in shares) at Jun. 30, 2021		445,125
Increase (Decrease) in Temporary Equity
Issuance of convertible preferred stock, net	42,756
Conversion of preferred stock	(45,567)
Balance at Dec. 31, 2020	$ 2,811	$ 266	504,162		(648,511)	(144,083)
Balance (in shares) at Dec. 31, 2020		265,582
Changes in Stockholders' Equity (Deficit)
Net Income (Loss)						(302,500)
Balance at Dec. 31, 2021		$ 447	765,215	(212)	(950,985)	(185,535)
Balance (in shares) at Dec. 31, 2021		447,282
Balance at Mar. 31, 2021		$ 428	711,698		(898,025)	(185,899)
Balance (in shares) at Mar. 31, 2021		427,915
Changes in Stockholders' Equity (Deficit)
Issuance of common stock, net		$ 13	48,340			48,353
Issuance of common stock (in shares)		12,831
Exercise of stock options and warrants		$ 1	2,190			2,191
Exercise of stock options and warrants (in shares)		1,588
Issuance of common stock for vested RSUs and ESPP purchase		$ 3				3
Issuance of common stock for vested RSUs and ESPP purchase (in shares)		2,791
Stock-based compensation expense			3,034			3,034
Net Income (Loss)					(180,306)	(180,306)
Other comprehensive loss, net of tax				(16)		(16)
Balance at Jun. 30, 2021		$ 445	765,262	(16)	(1,078,331)	(312,640)
Balance (in shares) at Jun. 30, 2021		445,125
Balance at Dec. 31, 2021		$ 447	765,215	(212)	(950,985)	(185,535)
Balance (in shares) at Dec. 31, 2021		447,282
Changes in Stockholders' Equity (Deficit)
Issuance of common stock, net		$ 3	8,001			8,004
Issuance of common stock (in shares)		3,077
Exercise of stock options and warrants		$ 9	230			239
Exercise of stock options and warrants (in shares)		9,211
Issuance of common stock for vested RSUs and ESPP purchase		$ 7	56			63
Issuance of common stock for vested RSUs and ESPP purchase (in shares)		6,849
Stock-based compensation expense			4,321			4,321
Shares withheld related to net share settlement of equity awards		$ (1)	(1,183)			(1,184)
Shares withheld related to net share settlement of equity awards (in shares)		(1,093)
Net Income (Loss)					190,949	190,949
Other comprehensive loss, net of tax				(916)		(916)
Balance at Jun. 30, 2022		$ 465	776,640	(1,128)	(760,036)	15,941
Balance (in shares) at Jun. 30, 2022		465,326
Balance at Mar. 31, 2022		$ 463	775,172	(837)	(864,267)	(89,469)
Balance (in shares) at Mar. 31, 2022		463,229
Changes in Stockholders' Equity (Deficit)
Exercise of stock options and warrants			68			68
Exercise of stock options and warrants (in shares)		127
Issuance of common stock for vested RSUs and ESPP purchase		$ 3	(2)			1
Issuance of common stock for vested RSUs and ESPP purchase (in shares)		3,063
Stock-based compensation expense			2,585			2,585
Shares withheld related to net share settlement of equity awards		$ (1)	(1,183)			(1,184)
Shares withheld related to net share settlement of equity awards (in shares)		(1,093)
Net Income (Loss)					104,231	104,231
Other comprehensive loss, net of tax				(291)		(291)
Balance at Jun. 30, 2022		$ 465	$ 776,640	$ (1,128)	$ (760,036)	$ 15,941
Balance (in shares) at Jun. 30, 2022		465,326

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities
Net income (loss)	$ 190,949	$ (429,820)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	520	612
Non-cash interest expense (debt discount and deferred costs)	5,726	3,327
Change in fair value of derivatives	(181,117)	305,260
(Gain) Loss on fair value adjustment of option	(49,925)	88,405
Gain on extinguishment of debt and option		(330)
(Gain) Impairment of option, net	(846)	1,163
Stock-based compensation expense	4,321	4,721
Changes in assets and liabilities:
Accounts receivable	(2,070)	196
Prepaid expenses and other current assets	(1,600)	(761)
Inventory	(934)	(3,535)
Deposits and other assets	163	(30)
Accounts payable	530	1,269
Accrued expenses and other liabilities	44	(1,325)
Accrued interest	(102)	441
Net cash used in operating activities	(34,341)	(30,407)
Cash flows from investing activities
Capital expenditures	(211)	(47)
Purchase of marketable securities		(145,271)
Sale of marketable securities	42,319
Net cash provided by (used in) investing activities	42,108	(145,318)
Cash flows from financing activities
Issuance of common stock, net	8,004	200,440
Proceeds from exercise of stock options, stock warrants and ESPP purchases	302	4,051
Taxes paid related to net share settlement of equity awards	(1,183)
Proceeds from issuance of Masters preferred stock, net		22,783
Repayment of term loans	(2,926)
Net cash provided by financing activities	4,197	227,274
Net increase in cash and cash equivalents	11,964	51,549
Cash and cash equivalents, at beginning of period	33,461	18,205
Cash and cash equivalents, at ending of period	45,425	69,754
Supplemental disclosure of cash flow information
Cash paid during the period for interest	3,381	4,310
Lease liabilities arising from obtaining right-of-use assets	$ 2,944
Supplemental disclosure of non-cash investing and financing activities
Issuance of common stock converted from preferred shares		54,166
Issuance of common stock converted from notes payables		$ 4,925

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Organization and Nature of Operations

6 Months Ended

Jun. 30, 2022

Organization and Nature of Operations

Organization and Nature of Operations

1. Organization and Nature of Operations

Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the development and commercialization of long-term, implantable continuous glucose monitoring (“CGM”) systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy.

Senseonics, Incorporated is a wholly owned subsidiary of Senseonics Holdings, Inc. and was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings, Inc. and Senseonics, Incorporated are hereinafter collectively referred to as the “Company” unless otherwise indicated or the context otherwise requires.

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Liquidity and Capital Resources

6 Months Ended

Jun. 30, 2022

Liquidity and Capital Resources

Liquidity and Capital Resources

2. Liquidity and Capital Resources

From its founding in 1996 until 2010, the Company has devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the Company narrowed its focus to developing and refining a commercially viable glucose monitoring system. However, to date, the Company has not generated any significant revenue from product sales. The Company has incurred substantial losses and cumulative negative cash flows from operations since its inception in October 1996. The Company has never been profitable from operations, and its net losses were $302.5 million, $175.2 million, and $115.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of June 30, 2022, the Company had an accumulated deficit of $760.0 million. To date, the Company has funded its operations principally through the issuance of preferred stock, common stock, convertible notes and debt. As of June 30, 2022, the Company had cash, cash equivalents and marketable securities of $150.5 million.

In November 2021, the Company entered into an Open Market Sale Agreement, (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through Jefferies as its sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2022, the Company received $8.0 million in net proceeds from the sale of 3,077,493 shares of its common stock under the 2021 Sales Agreement.

In November 2019, the Company entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with Jefferies, under which the Company could offer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $50.0 million through Jefferies as its sales agent in an “at the market” offering. In June 2021, the Company received $48.4 million in net proceeds from the sale of 12,830,333 shares of its common stock utilizing the full capacity under the 2019 Sales Agreement.

On January 21, 2021, the Company entered into an underwriting agreement, which was subsequently amended and restated on the same day (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative of the underwriters (the “Underwriters”), to issue and sell 51,948,052 shares of common stock, in an underwritten public offering pursuant to effective registration statements on Form S-3, including a related prospectus and prospectus supplement, in each case filed with the United States Securities and Exchange Commission (“the SEC”) (the “2021 Public Offering”). The price to the public in the 2021 Public Offering was $1.925 per share of common stock. The Underwriters agreed to purchase the shares from the Company pursuant to the Underwriting Agreement at a price of $1.799875 per share and the Company also agreed to reimburse them for customary fees and expenses. The initial closing of the 2021 Public Offering occurred on January 26, 2021. Subsequent to the initial closing, the Underwriters exercised their option to purchase an additional 7,792,207 shares of common stock. Total net proceeds from the 2021 Public Offering were $106.1 million after deducting underwriting discounts and commissions and estimated offering expenses.

On January 17, 2021, the Company entered into a Securities Purchase Agreement with certain institutional purchasers (the “Purchasers”), pursuant to which the Company sold to the Purchasers, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 40,000,000 shares (the “Shares”) of common stock, $0.001 par value per share. The Shares were sold at a purchase price of $1.25 per share for aggregate gross proceeds to the Company of $50.0 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the SEC on November 27, 2019. The net proceeds to the Company from the Registered Direct Offering, after deducting fees and expenses and the estimated offering expenses payable by the Company, were approximately $46.1 million.

On November 9, 2020, the Company entered into an Equity Line Agreement (the “Equity Line Agreement”) with Energy Capital, LLC, a Florida limited liability company (“Energy Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of the Company’s newly designated series B convertible preferred stock (the “Series B Preferred Stock”) at the Company’s request from time to time during the 24-month term of the Equity Line Agreement. Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including that the Company have less than $8.0 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company has the right, at its sole discretion, to present Energy Capital with a purchase notice (each, a “Regular Purchase Notice”) directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of the Company’s Series B Preferred Stock at a per share price (the “Purchase Price”) equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provides that the Company shall not affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the Company’s common stock on the NYSE American is less than $0.25 without the approval of Energy Capital. In addition, beginning on January 1, 2022, since there have been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital has the right, at its sole discretion, by its delivery to the Company of a Regular Purchase Notice, to purchase up to the $12.0 million of Series B Preferred Stock under the Equity Line Agreement at the Purchase Price. There have been no issuances of Series B Preferred Stock as of June 30, 2022.

On August 9, 2020, the Company entered into a financing agreement with the parent company of Ascensia Diabetes Care Holdings AG (“Ascensia”), PHC Holdings Corporation (“PHC”), pursuant to which the Company issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to PHC. The Company also issued 2,941,176 shares of common stock to PHC as a financing fee. The Company also has the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022, contingent upon obtaining approval for the 180-day Eversense product for marketing in the United States before such date.

Additionally, on August 9, 2020, the Company entered into a Stock Purchase Agreement with Masters Special Solutions, LLC and certain affiliates thereof (collectively, “Masters”), pursuant to which the Company issued and sold to Masters 3,000 shares of convertible preferred stock, designated as Series A Preferred Stock (the “Series A Preferred Stock”), at a price of $1,000 per share in an initial closing. Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000 per share in subsequent closings, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds to the Company of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All shares of Series A Preferred Stock have been converted to common stock.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 3.Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at June 30, 2022, and December 31, 2021, results of operations, comprehensive income (loss), and changes in stockholder’s deficit for the three and six month periods ended June 30, 2022, and 2021 and cash flows for the six months ended June 30, 2022, and 2021 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 1, 2022. The interim results for June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or for any future interim periods.

The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its wholly owned operating subsidiary Senseonics, Incorporated. The Company views its operations and manages its business in one segment, glucose monitoring products. Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. 

Certain prior year amounts have been reclassified to conform to the current-year presentation. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Income (Loss) to consolidate the line items Sales and marketing expenses and General and administrative expenses to Selling, general and administrative expenses in order to conform to current year presentation. These reclassifications had no effect on the reported results of operations.

Recent Accounting Pronouncements

Recently Adopted

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contract in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). This new guidance is intended to reduce the complexity of accounting for convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments. Entities may adopt ASU 2020-06 using either partial retrospective or fully retrospective method of transition. ASU 2020-06 is effective for public business entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2022 and its adoption did not have a material impact on the consolidated financial statements and related disclosures.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company currently holds investments in available-for-sale securities. The Company has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its

consolidated financial statements and related disclosures at this time. The Company will adopt this guidance on the effective date for smaller reporting companies, January 1, 2023.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying unaudited consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods due to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. Actual results could differ from those estimates.

Significant Accounting Policies

The accounting policies used by the Company in its presentation of interim financial results are consistent with those presented in Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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Revenue Recognition

6 Months Ended

Jun. 30, 2022

Revenue Recognition

Revenue Recognition

4. Revenue Recognition

The Company generates product revenue from sales of the Eversense system and related components and supplies to Ascensia, through a collaboration and commercialization agreement (the “Ascensia Commercialization Agreement”, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively, “the Customers”), who then resell the products to health care providers and patients. Customers pay the Company for sales, regardless of whether or not the Customers resell the products to health care providers and patients. The Company’s policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Revenue by Geographic Region

The following table sets forth net revenue derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,507	67.5	%	$	4,222	68.1	%
United States		1,207	32.5			1,974	31.9
Total	$	3,714	100.0	%	$	6,196	100.0	%
	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,310	70.2	%	$	4,843	78.9	%
United States		979	29.8			1,292	21.1
Total	$	3,289	100.0	%	$	6,135	100.0	%

Contract Assets

Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement. Accounts receivable as of June 30, 2022 and December 31, 2021 included unbilled accounts receivable of $1.1 million and $1.8 million, respectively. The Company expects to invoice and collect all unbilled accounts receivable within 12 months.

Concentration of Revenue and Customers

For the three months ended June 30, 2022 and 2021, the Company derived 96% and 87%, respectively, of its total revenue from one customer, Ascensia. For the six months ended June 30, 2022 and 2021, the Company derived 93% and 85%, respectively, of its total revenue from one customer, Ascensia. Revenues for these corresponding periods represent sales of sensors, transmitters and miscellaneous Eversense system components.

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Net Income (Loss) per Share

6 Months Ended

Jun. 30, 2022

Net Income (Loss) per Share

Net Income (Loss) per Share

5. Net Income (Loss) per Share

Basic net income per share attributable to common stockholders is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents. Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Potentially dilutive common shares consist of shares issuable from restricted stock units, warrants and the Company’s convertible notes. Potentially dilutive common shares issuable upon vesting of restricted stock units and exercise of stock options and warrants are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Company’s convertible notes are determined using the if converted method. In periods of net loss, all potentially dilutive common shares are excluded from the computation of the diluted net loss per share for those periods, as the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted net income per share for the periods shown:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Net income (loss)	104,231	(180,306)	190,949	(429,820)
Impact of conversion of dilutive securities	(124,010)	—	(228,614)	—
Dilutive Net income (loss)	(19,779)	(180,306)	(37,665)	(429,820)
Net income (loss) per share
Basic	0.22	(0.42)	0.42	(1.08)
Diluted	(0.03)	(0.42)	(0.06)	(1.08)
Basic weighted average shares outstanding	464,133,903	431,840,854	460,061,022	398,244,296
Dilutive potential common stock outstanding
Stock-based awards	4,649,548	—	7,003,387	—
2023 Notes	4,617,646	—	4,617,646	—
2025 Notes	39,689,142	—	39,689,142	—
PHC Notes	65,718,303	—	65,816,535	—
PHC Option	—	—	—	—
Energy Capital Option	21,164,986	—	23,690,945	—
Warrants	1,357,430	—	3,463,862	—
Diluted weighted average shares outstanding	601,330,959	431,840,854	604,342,540	398,244,296

For the three and six months ended June 30, 2021, the Company operated at a loss. Accordingly, all potentially dilutive shares were considered antidilutive, and basic and diluted EPS are the same.

Outstanding anti-dilutive securities not included in the diluted net income per share attributable to common stockholders calculations were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Stock-based awards	13,900,070	28,974,297	11,142,459	28,974,297
2023 Notes	—	5,092,801	—	5,092,801
2025 Notes	—	39,689,142	—	39,689,142
PHC Notes	—	65,757,177	—	65,757,177
PHC Option	20,003,765	—	23,161,214	—
Warrants	427,821	13,334,739	260,251	13,334,739
Total anti-dilutive shares outstanding	34,331,656	152,848,156	34,563,924	152,848,156

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Marketable Securities

6 Months Ended

Jun. 30, 2022

Marketable Securities

Marketable Securities

6. Marketable Securities

Marketable securities available for sale, were as follows (in thousands):

	June 30, 2022
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Commercial Paper	$	14,532		—		—	$	14,532
Corporate debt securities	$	37,292		—		(395)	$	36,897
Asset backed securities	$	14,847		—		(113)	$	14,734
Government and agency securities	$	39,549		—		(620)	$	38,929
Total	$	106,220	$	—	$	(1,128)	$	105,092

	December 31, 2021
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Commercial Paper	$	57,369		—		—	$	57,369
Corporate debt securities	$	39,825		—		(77)	$	39,748
Asset backed securities	$	26,736		—		(29)	$	26,707
Government and agency securities	$	24,609		—		(106)	$	24,503
Total	$	148,539	$	—	$	(212)	$	148,327

The following are the scheduled maturities as of June 30, 2022 (in thousands):

2022 (remaining six months)	$	32,775
2023		62,013
2024		6,591
Thereafter		4,841
Total	$	106,220

The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, the Company assesses at the individual security level, for various quantitative factors including,

but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale securities at June 30, 2022 were not significant and were primarily due to changes in interest rates and not due to increased credit risk associated with specific securities. The Company does not intend to sell these impaired investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

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Inventory, net

6 Months Ended

Jun. 30, 2022

Inventory, net

Inventory, net

7. Inventory, net

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

	June 30,		December 31,
	2022		2021
Finished goods	$	1,020	$	1,012
Work-in-process		4,705		3,770
Raw materials		1,526		1,534
Total	$	7,251	$	6,316

The Company charged $0.6 million to cost of sales for the three and six months ended June 30, 2022, to reduce the value of inventory for items that are potentially obsolete due to expiry, in excess of product demand, or to adjust costs to their net realizable value. There was no corresponding charge for the three and six months ended June 30, 2021.

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Prepaid Expenses, Other Current Assets, and Deposits and other assets

6 Months Ended

Jun. 30, 2022

Prepaid Expenses, Other Current Assets, and Deposits and other assets

Prepaid Expenses, Other Current Assets, and Deposits and other assets

8. Prepaid Expenses, Other Current Assets, and Deposits and other assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	June 30,		December 31,
	2022		2021
Contract manufacturing⁽¹⁾	$	5,314	$	5,036
Insurance		913		74
Clinical and Preclinical		669		142
Interest receivable		319		443
Research and development		236		39
Accounting and Audit		138		—
Rent and utilities		107		105
IT and software		77		225
Sales and Marketing		45		98
Other		—		56
Total prepaid expenses and other current assets	$	7,818	$	6,218

(1) Includes deposits to contract manufacturers for manufacturing process.

Deposits and other assets as of June 30, 2022 and December 31, 2021, were $3.3 million and $1.1 million, respectively. As of June 30, 2022, deposits and other assets is mainly comprised of $3.2 million for our right-of-use asset related to our operating lease of 33,000 square feet of research and office space for our corporate headquarters. In June 2022, the Company extended our lease for an additional five-year term. We recorded a modification to our right-of-use asset for the right-to-use the underlying asset for the additional lease term.

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Accrued Expenses, Other Current Liabilities, and Other Liabilities

6 Months Ended

Jun. 30, 2022

Accrued Expenses, Other Current Liabilities, and Other Liabilities

Accrued Expenses, Other Current Liabilities, and Other Liabilities

9. Accrued Expenses, Other Current Liabilities, and Other Liabilities

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

	June 30,		December 31,
	2022		2021
Compensation and benefits	$	3,251	$	3,484
Research and development		2,254		2,145
Interest on notes payable		2,042		2,144
Sales and marketing services		2,276		1,962
Product warranty and replacement obligations		1,463		1,697
Professional and administration services		1,456		1,011
Contract manufacturing		960		914
Operating lease		705		904
Other		16		3
Total accrued expenses and other current liabilities	$	14,423	$	14,264

Other liabilities as of June 30, 2022 and December 31, 2021, were $3.1 million and $0.6 million, respectively. Other liabilities is comprised of the non-current portion of our operating lease liability for our corporate headquarters. In June 2022, the Company extended our lease for an additional five-year term. We recorded a modification to the lease liability upon renewal to reflect our obligation to make the additional lease payments.

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Product Warranty Obligations

6 Months Ended

Jun. 30, 2022

Product Warranty Obligations

Product Warranty Obligations

10. Product Warranty Obligations

The Company provides a warranty of one year on its smart transmitters. Additionally, the Company may also replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment as a charge to cost of sales in the consolidated statement of operations and are developed by analyzing product performance data and historical replacement experience, including comparing actual replacements to revenue.

At June 30, 2022, and December 31, 2021, the warranty reserve was $0.8 million and $0.7 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the six months ended June 30, 2022 and for the twelve months ended December 31, 2021 (in thousands):

	June 30,		December 31,
	2022		2021
Balance at beginning of the period	$	723	$	646
Provision for warranties during the period		47		781
Settlements made during the period		(6)		(704)
Balance at end of the period	$	764	$	723

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Notes Payable, Preferred Stock and Stock Purchase Warrants

6 Months Ended

Jun. 30, 2022

Notes Payable, Preferred Stock and Stock Purchase Warrants

Notes Payable, Preferred Stock and Stock Purchase Warrants

11. Notes Payable, Preferred Stock and Stock Purchase Warrants

Term Loans

PPP Loan

On April 22, 2020, the Company received $5.8 million in loan funding from the PPP pursuant to the CARES Act, as amended by the Flexibility Act, and administered by the Small Business Administration (“SBA”). The unsecured

loan (the “PPP Loan”) was evidenced by the PPP Note dated April 21, 2020 (the “PPP Note”) in the principal amount of $5.8 million with Silicon Valley Bank (“SVB”).

Under the terms of the PPP Note and the PPP Loan, interest accrued on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Note was two years. In April 2022, the Company repaid the outstanding principal and accrued interest in full.

Convertible Preferred Stock and Warrants

On November 9, 2020, the Company entered into the Equity Line Agreement with Energy Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of the Company’s Series B Preferred Stock at the Company’s request from time to time during the 24-month term of the Equity Line Agreement. Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including the Company having less than $8 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company has the right, at sole discretion, to present Energy Capital with a Regular Purchase Notice directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of the Company’s Series B Preferred Stock at the Purchase Price equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provides that the Company shall not affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the Company’s common stock on the NYSE American is less than $0.25 without the approval of Energy Capital. In addition, beginning on January 1, 2022, since there have been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital has the right, at its sole discretion, by its delivery to the Company of a Regular Purchase Notice, to purchase up to the $12.0 million of Series B Preferred Stock under the Equity Line Agreement at the Purchase Price. There have been no issuances of Series B Preferred Stock as of June 30, 2022.

The Company accounted for the Equity Line Agreement as a put/call option (the “Energy Capital Option”). This put/call option is classified as a liability in accordance with ASC 480, Distinguishing liabilities from equity, on the Company’s balance sheet and was recorded at the estimated fair value of $4.2 million upon issuance. The put/call option is required to be remeasured to fair value at each reporting period with the change recorded in change in fair value of derivatives that is a component of other income (expense). In connection with the execution of the Equity Line Agreement, the Company incurred $7.6 million in debt issuance costs in fiscal year 2020. The fair value of the Energy Capital Option as of June 30, 2022 and December 31, 2021 was $19.5 million and $69.4 million, respectively.

Concurrently with entry into the Equity Line Agreement, the Company issued a warrant to Energy Capital, exercisable beginning on May 9, 2021, to purchase up to 10,000,000 shares of common stock at an exercise price of $0.3951 per share (the “Warrant”). The Warrant was exercised in full in February 2022.

On August 9, 2020, the Company entered into a Stock Purchase Agreement with Masters, pursuant to which the Company issued and sold Masters 3,000 shares of Series A Preferred Stock, at a price of $1,000 per share in an initial closing. Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000 per share in subsequent closings, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All 25,783 shares of Series A Preferred Stock have been converted to shares of common stock. Masters’ option to purchase the remaining unissued shares of Series A Preferred Stock expired on January 11, 2021, resulting in a gain on extinguishment of $3.5 million.

Convertible Notes

PHC Notes

On August 9, 2020, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with PHC, as the purchaser (together with the other purchasers from time to time party thereto, the “Note Purchasers”) and Alter Domus (US) LLC, as collateral agent. Pursuant to the Note Purchase Agreement, the Company borrowed $35.0 million in aggregate principal through the issuance and sale of the PHC Notes on August 14, 2020 (the “Closing Date”). The Company also issued 2,941,176 shares of its common stock, $0.001 par value per share to PHC as a financing fee (the “Financing Fee Shares”) on the Closing Date. The Financing Fee Shares are accounted for as debt discount in the amount of $1.5 million.

The PHC Notes are senior secured obligations of the Company and will be guaranteed on a senior secured basis by the Company’s wholly owned subsidiary, Senseonics, Incorporated. Interest at the initial annual rate of 9.5% is payable semi-annually in cash or, at the Company’s option, payment in kind. The interest rate decreased to 8.0% in April 2022 as a result of the Company having obtained FDA approval for the 180-day Eversense E3 system for marketing in the United States. The maturity date for the PHC Notes is October 31, 2024 (the “Maturity Date”). The obligations under the PHC Notes are secured by substantially all of the Company’s and its subsidiary’s assets.

The Note Purchasers are entitled to convert the PHC Notes to common stock at a conversion rate of 1,867.4136 shares per $1,000 principal amount of the PHC Notes (including any interest added thereto as payment in kind), equivalent to a conversion price of approximately $0.54 per share, subject to specified anti-dilution adjustments, including adjustments for the Company’s issuance of equity securities on or prior to April 30, 2022 below the conversion price. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its PHC Notes in connection with such notice of redemption or corporate event. In certain circumstances, the Company will be required to pay cash in lieu of delivering make whole shares unless the Company obtains stockholder approval to issue such shares.

Subject to specified conditions, on or after October 31, 2022, the PHC Notes are redeemable by the Company if the closing sale price of the common stock exceeds 275% of the conversion price for a specified period of time and subject to certain conditions upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest. On or after October 31, 2023, the PHC Notes are redeemable by the Company upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest, plus a call premium of 130% if redeemed at least six months prior to the Maturity Date or a call premium of 125% if redeemed within six months of the Maturity Date.

The Note Purchase Agreement contains customary terms and covenants, including financial covenants, such as operating within an approved budget and achieving minimum revenue and liquidity targets, and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Note Purchase Agreement also contains customary events of default, after which the PHC Notes become due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority.

The Company also has the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022 (the “PHC Option”), which was initially contingent upon obtaining FDA approval for the 180-day Eversense product for marketing in the United States before such date, and which approval the Company successfully obtained in February 2022. The PHC Option represents a freestanding financial instrument and is recognized as an asset in the Company’s consolidated balance sheets at fair value on the date of issuance and subject to

impairment testing in each reporting period prior to the options exercise or expiration. The Company acknowledges that while the PHC Option is subject to impairment testing, there is no explicit guidance regarding how impairment should be assessed and measured for the PHC Option. As such, the measurement alternative in ASC Topic 321, Investments—Equity Securities, for equity securities without readily determinable fair values can be applied by analogy to assess and measure impairment of the PHC Option. The Company developed an estimated fair value at June 30, 2022 and December 31, 2021 to be $1.1 million and $0.2 million, respectively, and a gain of less than $0.9 million was recognized in net income as the difference between the fair value of the investment and its carrying amount for the six months ended June 30, 2022

The Note Purchase Agreement also contained several provisions requiring bifurcation as a separate derivative liability including an embedded conversion feature, mandatory prepayment upon event of default that constitutes a breach of the minimum revenue financial covenant, optional redemption upon an event of default, change in interest rate after PMA approval and default interest upon an event of default. The Company recorded the fair value of the embedded features in the amount of $25.8 million as a derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded in change in fair value of derivatives that is a component of other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at June 30, 2022 and December 31, 2021 was $46.8 million and $149.1 million, respectively.

In connection with the issuance of the Note Purchase Agreement, the Company incurred $2.9 million in debt issuance costs and debt discounts. The associated debt issuance costs were recorded as a contra liability in the amount of $1.4 million and are deferred and amortized as additional interest expense over the term of the notes. There have been no conversions of PHC Notes since inception of the Note Purchase Agreement.

2025 Notes

In July 2019, the Company issued $82.0 million in aggregate principal amount of senior convertible notes that will mature on January 15, 2025 (the “2025 Notes”), unless earlier repurchased or converted. The 2025 Notes are convertible, at the option of the holders, into shares of the Company’s common stock, at an initial conversion rate of 757.5758 shares per $1,000 principal amount of the 2025 Notes (equivalent to an initial conversion price of approximately $1.32 per share).

The 2025 Notes also contained an embedded conversion option requiring bifurcation as a separate derivative liability, along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at June 30, 2022 and December 31, 2021 was $8 million and $81.4 million, respectively.

In connection with the Exchange on April 24, 2020, $24.0 million aggregate principal of the Company’s outstanding 2025 Notes held by Highbridge Capital Management, LLC (“Highbridge”) were exchanged for $15.7 million of Second Lien Notes (the “Second Lien Notes”), (i) 11,026,086 shares of common stock, (ii) warrants to purchase up to 4,500,000 shares of common stock at an exercise price of $0.66 per share, and (iii) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged (the “Exchange”). This transaction modified the original 2025 Notes outstanding with Highbridge and resulted in $13.2 million of deferred issuance fees and debt discounts associated with the exchanged 2025 Notes being transferred as a discount to the Second Lien Notes.

As of December 31, 2021, there were conversions of $6.5 million of outstanding principal amount of the 2025 notes for 4,924,998 shares of common stock. Accordingly, $3.2 million of allocated deferred issuance costs and debt discounts were recognized as a loss on extinguishment of debt as of December 31, 2021. There were no conversions of 2025 Notes for the six months ended June 30, 2022.

2023 Notes

In the first quarter of 2018, the Company issued $53.0 million in aggregate principal amount of senior convertible notes due February 1, 2023 (the “2023 Notes”). In July 2019, the Company used the net proceeds from the

issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the outstanding 2023 Notes. Each $1,000 of principal of the 2023 Notes is initially convertible into 294.1176 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $3.40 per share, subject to adjustment upon the occurrence of specified events. Holders may convert at any time prior to February 1, 2023. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock. If specific corporate events occur prior to the maturity date, the Company will increase the conversion rate pursuant to the make-whole fundamental change provision for a holder who elects to convert their 2023 Notes in connection with such an event in certain circumstances. Additionally, if a fundamental change occurs prior to the maturity date, holders of the 2023 Notes may require the Company to repurchase all or a portion of their 2023 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest.

The Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and in January 2018 recorded the embedded features as a debt discount and derivative liability in the Company’s consolidated balance sheets at its initial fair value of $17.3 million. Additionally, the Company incurred transaction costs of $2.2 million. The debt discount and transaction costs are being amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 9.30%. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative at June 30, 2022 and December 31, 2021 was $0.4 million and $5.8 million, respectively.

There were no conversions of 2023 Notes for the six months ended June 30, 2022. As the 2023 Notes have a maturity date of February 1, 2023, they are classified as other current liability on the Company’s consolidated balance sheet at June 30, 2022.

The following carrying amounts were outstanding under the Company’s notes payable as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(826)	-	14,874
2025 Notes	51,199	(17,910)	(300)	32,989
PHC Notes	35,000	(16,341)	(998)	17,661
PPP Loan	-	-	-	-
	December 31, 2021
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(1,499)	-	14,201
2025 Notes	51,199	(20,535)	(344)	30,320
PHC Notes	35,000	(18,587)	(1,136)	15,277
PPP Loan	2,926	-	-	2,926

Interest expense related to the notes payable for the six months ended June 30, 2022 and 2021 was as follows (dollars in thousands):

	Six Months Ended June 30, 2022
	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Loss on Extinguishment ($)	Total Interest Expense ($)
2023 Notes	5.25%	412	673	-	-	1,085
2025 Notes	5.25%	1,330	2,625	44	-	3,999
PHC Notes	8.00%	1,531	2,246	137	-	3,914
PPP Loan	1.00%	6	-	-	-	6
Total		3,279	5,545	181	-	9,005
	Six Months Ended June 30, 2021
	Interest Rate	Interest ($)	Debt Discount and Fees ($)	Issuance Costs ($)	Loss on Extinguishment ($)	Total Interest Expense ($)
2023 Notes	5.25%	412	614	-	-	1,026
2025 Notes	5.25%	1,372	2,210	36	3,183	6,801
PHC Notes	9.50%	1,625	1,677	102	-	3,404
PPP Loan	1.00%	29	-	-	-	29
Total		3,438	4,501	138	3,183	11,260

The following are the scheduled maturities of the Company’s notes payable as of June 30, 2022 (in thousands):

2022 (remaining six months)	$	—
2023		15,700
2024		35,000
2025		51,199
Total	$	101,899

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Stockholders' Equity (Deficit)

6 Months Ended

Jun. 30, 2022

Stockholders' Equity (Deficit)

Stockholders' Equity (Deficit)

12. Stockholders’ Equity (Deficit)

In November 2021, the Company entered into the 2021 Sales Agreement with Jefferies, under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through Jefferies as the sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. During the six months ended June 30, 2022, the Company received $8.0 million in net proceeds from the sale of 3,077,493 shares of its common stock under the 2021 Sales Agreement.

In November 2019, the Company entered into the 2019 Sales Agreement with Jefferies LLC which allowed the Company to issue and sell up to $50.0 million in gross proceeds of its common stock. During the six months ended June 30, 2021, the Company sold 12,830,333 shares of common stock under the 2019 Sales Agreement, resulting in gross proceeds of $48.4 million.

During the six months ended June 30, 2021, the Company sold 99,740,259 shares of common stock, of which 59,740,259 shares of common stock were sold in the 2021 Public Offering and 40,000,000 shares of common stock were sold in the Registered Direct Offering. For additional information on the 2021 Public Offering and the Registered Direct Offering, see Note 2—Liquidity and Capital Resources.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Stock-Based Compensation

Stock-Based Compensation

13. Stock-Based Compensation

2015 Plan

In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), under which incentive stock options, non-qualified stock options and restricted stock units may be granted to the Company’s employees and certain other persons, such as officers and directors, in accordance with the 2015 Plan provisions. In February 2016, the Company’s Board of Directors adopted, and the Company’s stockholders approved, an Amended and Restated 2015 Equity Incentive Plan (the “Amended and Restated 2015 Plan”), which became effective on February 20, 2016. The Company’s Board of Directors may terminate the Amended and Restated 2015 Plan at any time. Options granted under the Amended and Restated 2015 Plan expire ten years after the date of grant.

Pursuant to the Amended and Restated 2015 Plan, the number of shares of the Company’s common stock reserved for issuance automatically increases on January 1 of each year, ending on January 1, 2026, by 3.5% of the total number of shares of its common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by its Board of Directors. As of June 30, 2022, 19,739,553 shares remained available for grant under the Amended and Restated 2015 Plan.

Inducement Plan

On May 30, 2019, the Company adopted the Senseonics Holdings, Inc. Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 1,800,000 shares of the Company’s common stock for issuance. The only persons eligible to receive grants of awards under the Inducement Plan are individuals who satisfy the standards for inducement grants in accordance with NYSE American Company Guide Section 711(a), including individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. An “Award” is any right to receive the Company’s common stock pursuant to the Inducement Plan, consisting of non-statutory options, restricted stock unit awards and other equity incentive awards. As of June 30, 2022, 846,571 shares remained available for grant under the Inducement Plan.

2016 Employee Stock Purchase Plan

In February 2016, the Company adopted the 2016 Employee Stock Purchase Plan, (the “2016 ESPP”). The 2016 ESPP became effective on March 17, 2016. The maximum number of shares of common stock that may be issued under the 2016 ESPP was initially 800,000 shares and automatically increases on January 1 of each year, ending on and including January 1, 2026, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, the Board of Directors may act prior to the first day of any calendar year to provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares of common stock. At June 30, 2022 there were 13,114,632 shares of common stock available for issuance under the 2016 ESPP. For the six months ended June 30, 2022, there were purchases of 28,944 shares of common stock pursuant to this plan.

The 2016 ESPP permits participants to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time and deductions not yet used in a purchase are refundable upon employment termination. The Company initiated its first 2016 ESPP offering period on August 1, 2019 and new offering periods occur every six months thereafter, each consisting of two purchase periods of six months in duration ending on or about January 31^st and July 31^st of each year. A participant may only be in one offering at a time. On

February 1, 2020, there were 566,573 shares purchased in connection with the initial offering period. The 2016 ESPP contains an offering reset provision whereby if the fair market value of a share on offering date of an ongoing offering is less than or equal to the fair market value of a share on a new offering date, the ongoing offering will terminate immediately after the purchase date and rolls over to the new offering.

The 2016 ESPP is considered compensatory for financial reporting purposes.

1997 Plan

On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), under which incentive stock options, non-qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 1997 Plan provisions. Approximately 1,899,190 shares of the Company’s common stock underlying options have vested under the 1997 Plan. Upon the effectiveness of the 2015 Plan, the Company no longer grants any awards under the 1997 Plan.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Measurements

Fair Value Measurements

14. Fair Value Measurements

The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	42,168	$	42,168		—		—
Commercial paper		14,532		—		14,532		—
Corporate debt securities		36,896		—		36,896		—
Asset backed securities		14,734		—		14,734		—
Government and agency securities		38,930		34,489		4,441		—
PHC Option		1,085		—		—		1,085
Liabilities
Energy Capital Option	$	19,476	$	—		—		19,476
Embedded features of the 2023 Notes		438		—		438		—
Embedded features of the PHC Notes		46,760		—		—		46,760
Embedded features of the 2025 Notes		7,977		—		7,977		—

	December 31, 2021
	Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	29,197	$	29,197		—		—
Corporate debt securities		39,748		—		39,748		—
Commercial paper		57,369		—		57,369		—
Asset backed securities		26,707		—		26,707		—
Government and agency securities		24,503		19,957		4,546		—
PHC Option		239		—		—		239
Liabilities
Energy Capital Option	$	69,401	$	—		—		69,401
Embedded features of the 2023 Notes		5,817		—		—		5,817
Embedded features of the PHC Notes		149,058		—		—		149,058
Embedded features of the 2025 Notes		81,417		—		81,417		—

(1)Classified as cash and cash equivalents due to their short-term maturity

The following table provides a reconciliation of the beginning and ending net balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

	Level 3
	Instruments
December 31, 2021	$	224,037
Gain on fair value adjustment of option		(49,925)
Gain on change in fair value of derivatives		(107,677)
Gain on extinguishment of option		—
Financial asset (gain) impairment cost, net		(846)
Change in fair value hierarchy classification		(438)
June 30, 2022	$	65,151

The recurring Level 3 fair value measurements of the embedded features of the notes payable and preferred stock, include the following significant unobservable inputs at June 30, 2022:

	PHC Notes		PHC Option		Energy Capital Option
Unobservable Inputs	Assumptions		Assumptions		Assumptions
Stock price volatility	113.0	%	107.0	%	97.0	%
Probabilities of conversion provisions	5.0 - 10.0	%	5.0 - 10.0	%	5.0 - 10.0	%
Time period until maturity (yrs)	2.34		0.50		0.00 - 0.36
Dividend yield	—	%	—	%	—	%

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Income Taxes

6 Months Ended

Jun. 30, 2022

Income Taxes

Income Taxes

15. Income Taxes

The Company has not recorded any tax provision or benefit for the six months ended June 30, 2022 or June 30, 2021. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, NOL carryforwards and research and development credits is not more-likely-than-not to be realized at June 30, 2022 and December 31, 2021.

On March 27, 2020, Congress enacted the CARES Act, as amended by the Flexibility Act, to provide certain relief as a result of the COVID-19 pandemic. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision or net deferred tax assets for the six months ended June 30, 2022.

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Related Party Transactions

6 Months Ended

Jun. 30, 2022

Related Party Transactions

Related Party Transactions

16. Related Party Transactions

Ascensia, through the ownership interests of its parent company, PHC, has a noncontrolling ownership interest in the Company. Ascensia also has representation on the Company’s board of directors. Revenue from Ascensia during the six months ended June 30, 2022 and June 30, 2021 was $5.7 million and $5.2 million, respectively.

The amount due from Ascensia as of June 30, 2022 and December 31, 2021 was $4.3 million and $1.8 million, respectively. The amount due to Ascensia as of June 30, 2022 and December 31, 2021 was $3.6 million and $2.5 million, respectively.

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events

Subsequent Events

17. Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the SEC. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at June 30, 2022, and December 31, 2021, results of operations, comprehensive income (loss), and changes in stockholder’s deficit for the three and six month periods ended June 30, 2022, and 2021 and cash flows for the six months ended June 30, 2022, and 2021 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 1, 2022. The interim results for June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, or for any future interim periods.

The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its wholly owned operating subsidiary Senseonics, Incorporated. The Company views its operations and manages its business in one segment, glucose monitoring products. Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. 

Certain prior year amounts have been reclassified to conform to the current-year presentation. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Income (Loss) to consolidate the line items Sales and marketing expenses and General and administrative expenses to Selling, general and administrative expenses in order to conform to current year presentation. These reclassifications had no effect on the reported results of operations.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying unaudited consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods due to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contract in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). This new guidance is intended to reduce the complexity of accounting for convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments. Entities may adopt ASU 2020-06 using either partial retrospective or fully retrospective method of transition. ASU 2020-06 is effective for public business entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2022 and its adoption did not have a material impact on the consolidated financial statements and related disclosures.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company currently holds investments in available-for-sale securities. The Company has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its

consolidated financial statements and related disclosures at this time. The Company will adopt this guidance on the effective date for smaller reporting companies, January 1, 2023.

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2022

Revenue Recognition

Schedule of revenue by geographic region

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,507	67.5	%	$	4,222	68.1	%
United States		1,207	32.5			1,974	31.9
Total	$	3,714	100.0	%	$	6,196	100.0	%
	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
			%				%
(Dollars in thousands)	Amount		of Total		Amount		of Total
Revenue, net:
Outside of the United States	$	2,310	70.2	%	$	4,843	78.9	%
United States		979	29.8			1,292	21.1
Total	$	3,289	100.0	%	$	6,135	100.0	%

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Net Income (Loss) per Share (Tables)

6 Months Ended

Jun. 30, 2022

Net Income (Loss) per Share

Schedule of computation of basic and diluted net income per share

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Net income (loss)	104,231	(180,306)	190,949	(429,820)
Impact of conversion of dilutive securities	(124,010)	—	(228,614)	—
Dilutive Net income (loss)	(19,779)	(180,306)	(37,665)	(429,820)
Net income (loss) per share
Basic	0.22	(0.42)	0.42	(1.08)
Diluted	(0.03)	(0.42)	(0.06)	(1.08)
Basic weighted average shares outstanding	464,133,903	431,840,854	460,061,022	398,244,296
Dilutive potential common stock outstanding
Stock-based awards	4,649,548	—	7,003,387	—
2023 Notes	4,617,646	—	4,617,646	—
2025 Notes	39,689,142	—	39,689,142	—
PHC Notes	65,718,303	—	65,816,535	—
PHC Option	—	—	—	—
Energy Capital Option	21,164,986	—	23,690,945	—
Warrants	1,357,430	—	3,463,862	—
Diluted weighted average shares outstanding	601,330,959	431,840,854	604,342,540	398,244,296

Schedule of anti-dilutive shares which have been excluded from the computation of diluted net loss per share

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Stock-based awards	13,900,070	28,974,297	11,142,459	28,974,297
2023 Notes	—	5,092,801	—	5,092,801
2025 Notes	—	39,689,142	—	39,689,142
PHC Notes	—	65,757,177	—	65,757,177
PHC Option	20,003,765	—	23,161,214	—
Warrants	427,821	13,334,739	260,251	13,334,739
Total anti-dilutive shares outstanding	34,331,656	152,848,156	34,563,924	152,848,156

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Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2022

Marketable Securities

Schedule of marketable securities available for sale

Marketable securities available for sale, were as follows (in thousands):

	June 30, 2022
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Commercial Paper	$	14,532		—		—	$	14,532
Corporate debt securities	$	37,292		—		(395)	$	36,897
Asset backed securities	$	14,847		—		(113)	$	14,734
Government and agency securities	$	39,549		—		(620)	$	38,929
Total	$	106,220	$	—	$	(1,128)	$	105,092

	December 31, 2021
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Commercial Paper	$	57,369		—		—	$	57,369
Corporate debt securities	$	39,825		—		(77)	$	39,748
Asset backed securities	$	26,736		—		(29)	$	26,707
Government and agency securities	$	24,609		—		(106)	$	24,503
Total	$	148,539	$	—	$	(212)	$	148,327

Schedule of maturities of marketable securities

The following are the scheduled maturities as of June 30, 2022 (in thousands):

2022 (remaining six months)	$	32,775
2023		62,013
2024		6,591
Thereafter		4,841
Total	$	106,220

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Inventory, net (Tables)

6 Months Ended

Jun. 30, 2022

Inventory, net

Schedule of Inventory, net

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

	June 30,		December 31,
	2022		2021
Finished goods	$	1,020	$	1,012
Work-in-process		4,705		3,770
Raw materials		1,526		1,534
Total	$	7,251	$	6,316

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Prepaid Expenses, Other Current Assets, and Deposits and other assets (Tables)

6 Months Ended

Jun. 30, 2022

Prepaid Expenses, Other Current Assets, and Deposits and other assets

Schedule of prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	June 30,		December 31,
	2022		2021
Contract manufacturing⁽¹⁾	$	5,314	$	5,036
Insurance		913		74
Clinical and Preclinical		669		142
Interest receivable		319		443
Research and development		236		39
Accounting and Audit		138		—
Rent and utilities		107		105
IT and software		77		225
Sales and Marketing		45		98
Other		—		56
Total prepaid expenses and other current assets	$	7,818	$	6,218

(1) Includes deposits to contract manufacturers for manufacturing process.

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Accrued Expenses, Other Current Liabilities, and Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Accrued Expenses, Other Current Liabilities, and Other Liabilities

Schedule of accrued expenses and other current liabilities

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

	June 30,		December 31,
	2022		2021
Compensation and benefits	$	3,251	$	3,484
Research and development		2,254		2,145
Interest on notes payable		2,042		2,144
Sales and marketing services		2,276		1,962
Product warranty and replacement obligations		1,463		1,697
Professional and administration services		1,456		1,011
Contract manufacturing		960		914
Operating lease		705		904
Other		16		3
Total accrued expenses and other current liabilities	$	14,423	$	14,264

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Product Warranty Obligations (Tables)

6 Months Ended

Jun. 30, 2022

Product Warranty Obligations

Schedule of estimated warranty liabilities

	June 30,		December 31,
	2022		2021
Balance at beginning of the period	$	723	$	646
Provision for warranties during the period		47		781
Settlements made during the period		(6)		(704)
Balance at end of the period	$	764	$	723

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Notes Payable, Preferred Stock and Stock Purchase Warrants (Tables)

6 Months Ended

Jun. 30, 2022

Notes Payable, Preferred Stock and Stock Purchase Warrants

Schedule of carrying amounts outstanding under the Company's notes payable

The following carrying amounts were outstanding under the Company’s notes payable as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(826)	-	14,874
2025 Notes	51,199	(17,910)	(300)	32,989
PHC Notes	35,000	(16,341)	(998)	17,661
PPP Loan	-	-	-	-
	December 31, 2021
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(1,499)	-	14,201
2025 Notes	51,199	(20,535)	(344)	30,320
PHC Notes	35,000	(18,587)	(1,136)	15,277
PPP Loan	2,926	-	-	2,926

Schedule of interest expense related to the notes payable

	June 30, 2022
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(826)	-	14,874
2025 Notes	51,199	(17,910)	(300)	32,989
PHC Notes	35,000	(16,341)	(998)	17,661
PPP Loan	-	-	-	-
	December 31, 2021
	Principal ($)	Debt Discount ($)	Issuance Costs ($)	Carrying Amount ($)
2023 Notes	15,700	(1,499)	-	14,201
2025 Notes	51,199	(20,535)	(344)	30,320
PHC Notes	35,000	(18,587)	(1,136)	15,277
PPP Loan	2,926	-	-	2,926

Schedule of future maturities

The following are the scheduled maturities of the Company’s notes payable as of June 30, 2022 (in thousands):

2022 (remaining six months)	$	—
2023		15,700
2024		35,000
2025		51,199
Total	$	101,899

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Measurements

Schedule of fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis

The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	42,168	$	42,168		—		—
Commercial paper		14,532		—		14,532		—
Corporate debt securities		36,896		—		36,896		—
Asset backed securities		14,734		—		14,734		—
Government and agency securities		38,930		34,489		4,441		—
PHC Option		1,085		—		—		1,085
Liabilities
Energy Capital Option	$	19,476	$	—		—		19,476
Embedded features of the 2023 Notes		438		—		438		—
Embedded features of the PHC Notes		46,760		—		—		46,760
Embedded features of the 2025 Notes		7,977		—		7,977		—

	December 31, 2021
	Total		Level 1		Level 2		Level 3
Assets
Money market funds⁽¹⁾	$	29,197	$	29,197		—		—
Corporate debt securities		39,748		—		39,748		—
Commercial paper		57,369		—		57,369		—
Asset backed securities		26,707		—		26,707		—
Government and agency securities		24,503		19,957		4,546		—
PHC Option		239		—		—		239
Liabilities
Energy Capital Option	$	69,401	$	—		—		69,401
Embedded features of the 2023 Notes		5,817		—		—		5,817
Embedded features of the PHC Notes		149,058		—		—		149,058
Embedded features of the 2025 Notes		81,417		—		81,417		—

(1)Classified as cash and cash equivalents due to their short-term maturity

Schedule of changes in the fair value of Level 3 derivative liability measured at fair value

The following table provides a reconciliation of the beginning and ending net balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

	Level 3
	Instruments
December 31, 2021	$	224,037
Gain on fair value adjustment of option		(49,925)
Gain on change in fair value of derivatives		(107,677)
Gain on extinguishment of option		—
Financial asset (gain) impairment cost, net		(846)
Change in fair value hierarchy classification		(438)
June 30, 2022	$	65,151

Schedule of assumptions used to determine fair value

The recurring Level 3 fair value measurements of the embedded features of the notes payable and preferred stock, include the following significant unobservable inputs at June 30, 2022:

	PHC Notes		PHC Option		Energy Capital Option
Unobservable Inputs	Assumptions		Assumptions		Assumptions
Stock price volatility	113.0	%	107.0	%	97.0	%
Probabilities of conversion provisions	5.0 - 10.0	%	5.0 - 10.0	%	5.0 - 10.0	%
Time period until maturity (yrs)	2.34		0.50		0.00 - 0.36
Dividend yield	—	%	—	%	—	%

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Liquidity and Capital Resources (Details) - USD ($) $ / shares in Units, $ in Thousands								1 Months Ended				3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 01, 2022	Jan. 31, 2021	Jan. 27, 2021	Jan. 21, 2021	Jan. 17, 2021	Nov. 09, 2020	Aug. 09, 2020	Nov. 30, 2021	Jun. 30, 2021	Jan. 21, 2021	Nov. 30, 2019	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Net Income (Loss)												$ 104,231	$ (180,306)	$ 190,949	$ (429,820)	$ (302,500)	$ (175,200)	$ (115,500)
Accumulated deficit												(760,036)		(760,036)		$ (950,985)
Issuance of common stock, net													$ 48,353	8,004	$ 200,440
Cash, cash equivalents and marketable securities												$ 150,500		$ 150,500
Common stock, par value per share (in dollars per share)												$ 0.001		$ 0.001		$ 0.001
PHC Notes
Aggregate principal amount							$ 35,000					$ 35,000		$ 35,000		$ 35,000
Financing fee shares issued							2,941,176
Conversion price							$ 0.54
Common stock, par value per share (in dollars per share)							$ 0.001
Masters Capital
Proceeds from issuance of stock		$ 22,800
Ascensia | PHC Notes
Aggregate principal amount							$ 35,000
Energy Capital, LLC
Cash and cash equivalents and other available credit				$ 8,000						$ 8,000
Energy Capital, LLC | Maximum
Issuance of convertible preferred stock, net				$ 4,000						$ 12,000
Share price				$ 0.25						$ 0.25
Convertible Preferred Equity
Amount of possible additional debt principal amount							$ 15,000
Convertible Preferred Equity | Masters Capital
Shares issued							3,000
Convertible Preferred Equity | Energy Capital, LLC
Issuance of convertible preferred stock, net						$ 12,000
Price per share (in dollars per share)				1,000						1,000
Collaboration and commercialization agreement term						24 months
Share price				1,000						$ 1,000
Threshold redemption period of temporary equity										6 months
Conversion price				0.3951						$ 0.3951
Series A Preferred Stock | Masters Capital
Shares issued		22,783
Price per share (in dollars per share)		$ 1,000					$ 1,000
Conversion price		$ 0.476
Series A Preferred Stock | Masters Capital | Maximum
Shares issued							27,000
Series B Preferred Stock
Maximum amount of shares that can be purchased under the equity line agreement at purchase price	$ 12,000
Regular Purchase, Shares Sold	0
Purchasers
Shares issued					40,000,000
Price per share (in dollars per share)					$ 1.25
Common stock, par value per share (in dollars per share)					$ 0.001
Net proceeds					$ 46,100
Proceeds from issuance of stock					$ 50,000
Overallotment | Purchasers
Price per share (in dollars per share)				1.925						$ 1.925
Underwriters Share Price				$ 1.799875
Overallotment | 2021 Public Offering
Shares issued			7,792,207	51,948,052
Net proceeds			$ 106,100
Open Market Sale Agreement
Shares issued									12,830,333					3,077,493
Proceeds from issuance of stock									$ 48,400					$ 8,000
Open Market Sale Agreement | Maximum
Issuance of common stock, net								$ 150,000			$ 50,000
Percentage of commission on proceeds from common stock								3.00%

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Revenue Recognition - Revenue by Geographic Region (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) item	Jun. 30, 2021 USD ($)
Revenue, net:
Revenue	$ 3,714	$ 3,289	$ 6,196	$ 6,135
Percent of total revenue	1.00%	1.00%	1.00%	1.00%
Number of geographical markets | item			2
Outside of the United States
Revenue, net:
Revenue	$ 2,507	$ 2,310	$ 4,222	$ 4,843
Percent of total revenue	0.675%	0.702%	0.681%	0.789%
United States
Revenue, net:
Revenue	$ 1,207	$ 979	$ 1,974	$ 1,292
Percent of total revenue	0.325%	0.298%	0.319%	0.211%

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Revenue Recognition - Contract Assets (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Revenue Recognition
Unbilled receivables from customers	$ 1.1	$ 1.8

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Revenue Recognition - Concentration of Revenue and Customers (Details) - Customer concentration risk - Ascensia - customer	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Concentration Risk [Line Items]
Number of customers	1	1	1	1
Revenue
Concentration Risk [Line Items]
Concentration Risk, Percentage	0.96%	0.87%	0.93%	0.85%

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Net Income (Loss) per Share - Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net loss	$ 104,231	$ (180,306)	$ 190,949	$ (429,820)	$ (302,500)	$ (175,200)	$ (115,500)
Impact of conversion of dilutive securities	(124,010)		(228,614)
Dilutive Net income (loss)	$ (19,779)	$ (180,306)	$ (37,665)	$ (429,820)
Net income (loss) per share
Basic	$ 0.22	$ (0.42)	$ 0.42	$ (1.08)
Diluted	$ (0.03)	$ (0.42)	$ (0.06)	$ (1.08)
Basic weighted average shares outstanding	464,133,903	431,840,854	460,061,022	398,244,296
Dilutive potential common stock outstanding
Stock-based awards	4,649,548		7,003,387
Warrants	1,357,430		3,463,862
Diluted weighted average shares outstanding	601,330,959	431,840,854	604,342,540	398,244,296
Total anti-dilutive shares outstanding	34,331,656	152,848,156	34,563,924	152,848,156
Stock-based awards
Dilutive potential common stock outstanding
Total anti-dilutive shares outstanding	13,900,070	28,974,297	11,142,459	28,974,297
2023 Notes
Dilutive potential common stock outstanding
Convertible Notes	4,617,646		4,617,646
Total anti-dilutive shares outstanding		5,092,801		5,092,801
2025 Notes
Dilutive potential common stock outstanding
Convertible Notes	39,689,142		39,689,142
Total anti-dilutive shares outstanding		39,689,142		39,689,142
PHC Notes
Dilutive potential common stock outstanding
Convertible Notes	65,718,303		65,816,535
Total anti-dilutive shares outstanding		65,757,177		65,757,177
PHC Option
Dilutive potential common stock outstanding
Total anti-dilutive shares outstanding	20,003,765		23,161,214
Energy Capital Option
Dilutive potential common stock outstanding
Convertible Notes	21,164,986		23,690,945
Warrants
Dilutive potential common stock outstanding
Total anti-dilutive shares outstanding	427,821	13,334,739	260,251	13,334,739

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Marketable Securities - AFS Debt Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Marketable securities available for sale, consisting of debt securities:
Amortized Cost	$ 106,220	$ 148,539
Gross Unrealized Losses	(1,128)	(212)
Estimated Market Value	105,092	148,327
Commercial paper
Marketable securities available for sale, consisting of debt securities:
Amortized Cost	14,532	57,369
Estimated Market Value	14,532	57,369
Corporate debt securities
Marketable securities available for sale, consisting of debt securities:
Amortized Cost	37,292	39,825
Gross Unrealized Losses	(395)	(77)
Estimated Market Value	36,897	39,748
Asset backed Securities
Marketable securities available for sale, consisting of debt securities:
Amortized Cost	14,847	26,736
Gross Unrealized Losses	(113)	(29)
Estimated Market Value	14,734	26,707
Government and agency securities
Marketable securities available for sale, consisting of debt securities:
Amortized Cost	39,549	24,609
Gross Unrealized Losses	(620)	(106)
Estimated Market Value	$ 38,929	$ 24,503

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Marketable Securities - AFS Debt Securities - Maturities (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Debt Securities, Available-for-sale, Fair Value, Fiscal Year Maturity [Abstract]
2022 (remaining six months)	$ 32,775
2023	62,013
2024	6,591
Thereafter	4,841
Total	$ 106,220

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Inventory, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Finished goods	$ 1,020		$ 1,020		$ 1,012
Work-in-process	4,705		4,705		3,770
Raw materials	1,526		1,526		1,534
Total	7,251		7,251		$ 6,316
Inventory Valuation and Obsolescence
Inventory adjustments included in cost of sales
Cost	$ 600	$ 0	$ 600	$ 0

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Prepaid Expenses, Other Current Assets, and Deposits and other assets (Details) $ in Thousands	Jun. 30, 2022 USD ($) ft²	Dec. 31, 2021 USD ($)
Prepaid Expenses, Other Current Assets, and Deposits and other assets
Contract manufacturing	$ 5,314	$ 5,036
Insurance	913	74
Clinical and Preclinical	669	142
Interest receivable	319	443
Research and development	236	39
Accounting and Audit	138
Rent and utilities	107	105
IT and software	77	225
Sales and Marketing	45	98
Other		56
Total prepaid expenses and other current assets	7,818	6,218
Deposits and other assets	3,347	$ 1,086
Right of use asset, building	$ 3,200
Leased space, in square feet | ft²	33,000
Renewal term of lease	5 years

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Accrued Expenses, Other Current Liabilities, and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accrued Expenses, Other Current Liabilities, and Other Liabilities
Compensation and benefits	$ 3,251	$ 3,484
Research and development	2,254	2,145
Interest on notes payable	2,042	2,144
Sales and marketing services	2,276	1,962
Product warranty and replacement obligations	1,463	1,697
Professional and administration services	1,456	1,011
Contract manufacturing	960	914
Operating lease	705	904
Other	16	3
Total accrued expenses and other current liabilities	14,423	14,264
Non-current operating lease liabilities	$ 3,100	$ 600
Renewal term of lease	5 years

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Product Warranty Obligations (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Product Warranty Obligations
Warranty term	1 year
Warranty reserve	$ 764	$ 723
Reconciliation of the change in estimated warranty liabilities
Balance at beginning of the period	723	646
Provision for warranties during the period	47	781
Settlements made during the period	(6)	(704)
Balance at end of the period	$ 764	$ 723

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Notes Payable, Preferred Stock and Stock Purchase Warrants (Details)								6 Months Ended
	Jan. 01, 2022 USD ($) shares	Jan. 31, 2021 USD ($) $ / shares shares	Jan. 21, 2021 USD ($) $ / shares shares	Nov. 09, 2020 USD ($) $ / shares	Aug. 09, 2020 USD ($) $ / shares shares	Apr. 24, 2020 USD ($) $ / shares shares	Apr. 22, 2020 USD ($)	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2021 USD ($)	Apr. 30, 2022	Dec. 31, 2021 USD ($) $ / shares	May 09, 2021 $ / shares shares	Dec. 31, 2020 USD ($)	Mar. 31, 2018 USD ($)
Debt Instrument [Line Items]
Loss on extinguishment									$ (3,183,000)
Notes payable
Derivative assets								$ 1,085,000			$ 239,000
Carrying Amount								50,650,000			59,798,000
Derivative liabilities								$ 54,737,000			$ 236,291,000
Common stock, par value per share (in dollars per share) | $ / shares								$ 0.001			$ 0.001
Exchange Agreement with Highbridge
Debt Instrument [Line Items]
Warrants to purchase shares | shares						4,500,000
Exercise price of warrant (in dollars per share) | $ / shares						$ 0.66
Notes payable
Shares issued | shares						11,026,086
Accrued and unpaid interest						$ 300,000
2023 Notes.
Notes payable
Fair value of the embedded conversion option								$ 400,000			$ 5,800,000
Derivative liabilities														$ 17,300,000
PHC Notes
Notes payable
Principal amount					$ 35,000,000.0			35,000,000			35,000,000
Interest rate (as a percent)					9.50%					8.00%
Carrying Amount								17,661,000			15,277,000
Debt issuance costs and discounts					$ 1,400,000
Fair value of the embedded conversion option					$ 25,800,000			$ 46,800,000			149,100,000
Effective Interest Rate								8.00%	9.50%
Original debt conversion amount								$ 0
Financing fee shares issued | shares					2,941,176
Common stock, par value per share (in dollars per share) | $ / shares					$ 0.001
Debt discount of financing fee shares					$ 1,500,000
Conversion rate					1,867.4136
Conversion price | $ / shares					$ 0.54
Conversion of Stock, Amount Issued					$ 15,000,000.0
Issuance costs incurred					2,900,000			998,000			1,136,000
Amount of principal which is converted to shares					$ 1,000
PHC Notes | Debt Redemption on or After October 31, 2022
Notes payable
Threshold percentage of stock trigger					275.00%
Notice period					10 days
PHC Notes | Debt Redemption on or After October 31, 2023
Notes payable
Notice period					10 days
PHC Notes | Debt Redemption Six Months Prior to Maturity Date
Notes payable
Call premium percentage					130.00%
PHC Notes | Debt Redemption Within Six Months of Maturity Date
Notes payable
Call premium percentage					125.00%
2025 Notes
Notes payable
Fair value of the embedded conversion option								$ 8,000,000			81,400,000
2025 Notes | Exchange Agreement with Highbridge
Notes payable
Principal amount						24,000,000.0
Deferred issuance costs and debt discounts						13,200,000
PPP Loan
Notes payable
Amount received from loan funding							$ 5,800,000
Principal amount											2,926,000
Interest rate (as a percent)							1.00%
Note term							2 years
Carrying Amount											2,926,000
Effective Interest Rate								1.00%	1.00%
PPP Loan | Silicon Valley Bank
Notes payable
Principal amount							$ 5,800,000
Second Lien Notes | Exchange Agreement with Highbridge
Notes payable
Principal amount						$ 15,700,000
PHC Option | Put option
Notes payable
Derivative assets								$ 1,100,000			200,000
PHC Option | Put option | Maximum
Notes payable
Gain on fair value adjustment of derivatives								900,000
Energy Capital Facility
Debt Instrument [Line Items]
Exercise price of warrant (in dollars per share) | $ / shares												$ 0.3951
Notes payable
Deferred issuance costs and debt discounts													$ 7,600,000
Period to purchase stock				24 months
Derivative liabilities				$ 4,200,000				$ 19,500,000			$ 69,400,000
Energy Capital Facility | Maximum
Debt Instrument [Line Items]
Warrants to purchase shares | shares												10,000,000
Notes payable
Share price for debt conversion | $ / shares			$ 0.25
Cash Cash Equivalents and Other Available Credit Threshold			$ 8,000,000
Series B Preferred Stock
Notes payable
Number of shares sold pursuant to regular purchases | shares	0
Maximum amount of shares that can be purchased under the equity line agreement at purchase price	$ 12,000,000.0
Series B Preferred Stock | Energy Capital Facility
Notes payable
Preferred stock value				$ 12,000,000.0
Share price for debt conversion | $ / shares			$ 1,000
Number of shares sold pursuant to regular purchases | shares			0
Maximum amount of shares that can be purchased under the equity line agreement at purchase price			$ 12,000,000.0
Period to purchase stock			6 months
Daily limit			$ 4,000,000.0
Conversion price | $ / shares				$ 0.3951
Series A Preferred Stock
Notes payable
Debt converted, Shares issued | shares								25,783
Gain on extinguishment								$ 3,500,000
Series A Preferred Stock | Masters Capital
Notes payable
Shares issued | shares		22,783
Conversion price | $ / shares		$ 0.476
Amount of principal which is converted to shares		$ 1,000
Number of shares issued and sold | shares					3,000
Price per share (in dollars per share) | $ / shares		$ 1,000			$ 1,000
Additional shares issued | shares		22,783
Gross proceeds from stock		$ 22,800,000
Series A Preferred Stock | Masters Capital | Maximum
Notes payable
Shares issued | shares					27,000
Number of shares issued and sold | shares					27,000

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Notes Payable, Preferred Stock and Stock Purchase Warrants - Term Notes Payable (Details)	1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Jul. 31, 2019 USD ($) $ / shares	Mar. 31, 2018 USD ($) $ / shares	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) shares
Long term debt
Loss on extinguishment of debt and issuance of debt				$ (3,183,000)
2023 Notes.
Long term debt
Fair value of the embedded conversion option			$ 400,000		$ 5,800,000
2023 Notes
Long term debt
Principal amount		$ 53,000,000.0	15,700,000		15,700,000
Conversion rate (per $1,000 of principal)		294.1176
Conversion price (in dollars per share) | $ / shares		$ 3.40
Repurchase price as a percent of principal amount		100.00%
Transaction costs		$ 2,200,000
Amortization percent		9.30%
Repurchase amount	$ 37,000,000.0
Amount of principal which is converted to shares		$ 1,000
Original debt conversion amount			0
2025 Notes.
Long term debt
Principal amount	$ 82,000,000.0		51,199,000		51,199,000
Conversion rate (per $1,000 of principal)	757.5758
Conversion price (in dollars per share) | $ / shares	$ 1.32
Amount of principal which is converted to shares	$ 1,000
Original debt conversion amount			$ 0		$ 6,500,000
Debt converted, Shares issued | shares					4,924,998
Loss on extinguishment of debt and issuance of debt				$ (3,183,000)	$ (3,200,000)

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Notes Payable, Preferred Stock and Stock Purchase Warrants - Carrying amount of notes payable (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Aug. 09, 2020	Jul. 31, 2019	Mar. 31, 2018
Debt Instrument [Line Items]
Carrying Amount	$ 50,650	$ 59,798
2023 Notes
Debt Instrument [Line Items]
Aggregate principal amount	15,700	15,700			$ 53,000
Debt Discount	(826)	(1,499)
Carrying Amount	14,874	14,201
2025 Notes.
Debt Instrument [Line Items]
Aggregate principal amount	51,199	51,199		$ 82,000
Debt Discount	(17,910)	(20,535)
Issuance Costs	(300)	(344)
Carrying Amount	32,989	30,320
PHC Notes
Debt Instrument [Line Items]
Aggregate principal amount	35,000	35,000	$ 35,000
Debt Discount	(16,341)	(18,587)
Issuance Costs	(998)	(1,136)	$ (2,900)
Carrying Amount	$ 17,661	15,277
PPP Loan
Debt Instrument [Line Items]
Aggregate principal amount		2,926
Carrying Amount		$ 2,926

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Notes Payable, Preferred Stock and Stock Purchase Warrants - Interest expense (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Long term debt
Interest	$ 3,279	$ 3,438
Debt Discount and Fees	5,545	4,501
Issuance Costs	181	138
Loss on Extinguishment		3,183
Total Interest Expense	$ 9,005	$ 11,260
2023 Notes
Long term debt
Effective Interest Rate	5.25%	5.25%
Interest	$ 412	$ 412
Debt Discount and Fees	673	614
Total Interest Expense	$ 1,085	$ 1,026
2025 Notes.
Long term debt
Effective Interest Rate	5.25%	5.25%
Interest	$ 1,330	$ 1,372
Debt Discount and Fees	2,625	2,210
Issuance Costs	44	36
Loss on Extinguishment		3,183	$ 3,200
Total Interest Expense	$ 3,999	$ 6,801
PHC Notes
Long term debt
Effective Interest Rate	8.00%	9.50%
Interest	$ 1,531	$ 1,625
Debt Discount and Fees	2,246	1,677
Issuance Costs	137	102
Total Interest Expense	$ 3,914	$ 3,404
PPP Loan
Long term debt
Effective Interest Rate	1.00%	1.00%
Interest	$ 6	$ 29
Total Interest Expense	$ 6	$ 29

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Notes Payable, Preferred Stock and Stock Purchase Warrants - Scheduled Maturities (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Scheduled maturities
2023	$ 15,700
2024	35,000
2025	51,199
Total	$ 101,899

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Stockholders' Equity (Deficit) (Details) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended	6 Months Ended
	Nov. 30, 2021	Jun. 30, 2021	Nov. 30, 2019	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Class of Stock [Line Items]
Proceeds from offering				$ 48,353	$ 8,004	$ 200,440
Open Market Sale Agreement
Class of Stock [Line Items]
Proceeds from issuance of common stock, net		$ 48,400			$ 8,000
Number of additional shares issued						99,740,259
Shares issued		12,830,333			3,077,493
Open Market Sale Agreement | Maximum
Class of Stock [Line Items]
Proceeds from offering	$ 150,000		$ 50,000
Percentage of commission on proceeds from common stock	3.00%
2019 Sales Agreement
Class of Stock [Line Items]
Proceeds from issuance of common stock, net					$ 48,400
Shares issued					12,830,333
2019 Sales Agreement | Maximum
Class of Stock [Line Items]
Proceeds from offering			$ 50,000
Offering
Class of Stock [Line Items]
Shares issued						59,740,259
Registered Direct Offering
Class of Stock [Line Items]
Shares issued						40,000,000

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Stock-Based Compensation (Details)		1 Months Ended		6 Months Ended
	Feb. 01, 2020 shares	Feb. 29, 2016 shares	Dec. 31, 2015	Jun. 30, 2022 item shares	May 30, 2019 shares
2015 Equity Incentive Plan
Stock-based compensation
Expiration period			10 years
Automatic annual increase in shares authorized, percent of common stock outstanding				3.50%
Shares available for grant				19,739,553
Inducement Plan
Stock-based compensation
Shares available for grant				846,571
Total shares that may be issued					1,800,000
2016 Employee Stock Purchase Plan
Stock-based compensation
Shares available for grant		800,000		13,114,632
Share increase (as a percent)		1.00%
Payroll deductions for ESPP participants (as a percent)				15.00%
Percentage on share price issued				85.00%
Offering period duration				6 months
Purchase periods | item				2
Stock issued	566,573			28,944
1997 Stock Option Plan
Stock-based compensation
Options vested and expected to vest				1,899,190

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Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021	Nov. 09, 2020
Fair Value Measurements
Cash and cash equivalents	$ 45,425	$ 33,461
Marketable securities	105,092	148,327
Derivative assets	1,085	239
Derivative liabilities	54,737	236,291
Energy Capital Facility
Fair Value Measurements
Derivative liabilities	19,500	69,400	$ 4,200
Recurring | Embedded conversion option | 2023 Notes
Fair Value Measurements
Derivative liabilities	438	5,817
Recurring | Embedded conversion option | PHC Notes
Fair Value Measurements
Derivative liabilities	46,760	149,058
Recurring | Embedded conversion option | 2025 Notes.
Fair Value Measurements
Derivative liabilities	7,977	81,417
Recurring | Money market funds
Fair Value Measurements
Cash and cash equivalents	42,168	29,197
Recurring | Corporate debt securities
Fair Value Measurements
Marketable securities	36,896	39,748
Recurring | Commercial paper
Fair Value Measurements
Marketable securities	14,532	57,369
Recurring | Asset backed Securities
Fair Value Measurements
Marketable securities	14,734	26,707
Recurring | Government and agency securities
Fair Value Measurements
Marketable securities	38,930	24,503
Recurring | PHC Option
Fair Value Measurements
Derivative assets	1,085	239
Recurring | Put Or Call Option | Energy Capital Facility
Fair Value Measurements
Derivative liabilities	19,476	69,401
Recurring | Level 1 | Money market funds
Fair Value Measurements
Cash and cash equivalents	42,168	29,197
Recurring | Level 1 | Government and agency securities
Fair Value Measurements
Marketable securities	34,489	19,957
Recurring | Level 2 | Embedded conversion option | 2023 Notes
Fair Value Measurements
Derivative liabilities	438
Recurring | Level 2 | Embedded conversion option | 2025 Notes.
Fair Value Measurements
Derivative liabilities	7,977	81,417
Recurring | Level 2 | Corporate debt securities
Fair Value Measurements
Marketable securities	36,896	39,748
Recurring | Level 2 | Commercial paper
Fair Value Measurements
Marketable securities	14,532	57,369
Recurring | Level 2 | Asset backed Securities
Fair Value Measurements
Marketable securities	14,734	26,707
Recurring | Level 2 | Government and agency securities
Fair Value Measurements
Marketable securities	4,441	4,546
Recurring | Level 3
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3)
Balance at the beginning of the period	224,037
Gain on fair value adjustment of option	(49,925)
Gain on change in fair value of derivatives	(107,677)
Financial asset (gain) impairment cost, net	(846)
Change in fair value hierarchy classification	(438)
Balance at the end of the period	65,151
Recurring | Level 3 | Embedded conversion option | 2023 Notes
Fair Value Measurements
Derivative liabilities		5,817
Recurring | Level 3 | Embedded conversion option | PHC Notes
Fair Value Measurements
Derivative liabilities	46,760	149,058
Recurring | Level 3 | PHC Option
Fair Value Measurements
Derivative assets	1,085	239
Recurring | Level 3 | Put Or Call Option | Energy Capital Facility
Fair Value Measurements
Derivative liabilities	$ 19,476	$ 69,401

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Fair Value Measurements - Valuation Assumptions (Details) - Recurring - Level 3	Jun. 30, 2022 Y
Stock price volatility | PHC Option
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	107.0
Probabilities of conversion provisions | Minimum | PHC Option
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	5.0
Probabilities of conversion provisions | Maximum | PHC Option
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	10.0
Time period until maturity (yrs) | PHC Option
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	0.50
PHC Notes | Stock price volatility
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	113.0
PHC Notes | Probabilities of conversion provisions | Minimum
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	5.0
PHC Notes | Probabilities of conversion provisions | Maximum
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	10.0
PHC Notes | Time period until maturity (yrs)
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	2.34
Energy Capital Facility | Stock price volatility
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	97.0
Energy Capital Facility | Probabilities of conversion provisions | Minimum
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	5.0
Energy Capital Facility | Probabilities of conversion provisions | Maximum
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	10.0
Energy Capital Facility | Time period until maturity (yrs) | Minimum
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	0.00
Energy Capital Facility | Time period until maturity (yrs) | Maximum
Fair value valuation assumptions
Embedded Derivative Liability, Measurement Input	0.36

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Income Taxes - Tax Provision (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Income Taxes
Income tax provision	$ 0	$ 0

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Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Related party transactions
Revenue	$ 3,577	$ 2,856	$ 5,767	$ 5,215
Due from related party	3,824		3,824		$ 1,768
Due to related party	3,692		3,692		3,597
Ascensia
Related party transactions
Revenue			5,700	$ 5,200
Due from related party	4,300		4,300		1,800
Due to related party	$ 3,600		$ 3,600		$ 2,500