APOLLO ENDOSURGERY, INC. The following discussion should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. This discussion includes both historical information and forward-looking statements based upon current expectations that involve risk, uncertainties and assumptions. Our actual results may differ materially from management's expectations and those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the continuing impact of the COVID-19 pandemic and macroeconomic uncertainty as well as those discussed in "Risk Factors" and elsewhere in this Annual Report on Form 10-K. We have omitted discussion of 2020 results where it would be redundant to the discussion previously included in Part II, Item 7 of our Annual Report on Form 10-K for the year endedDecember 31, 2021 . "Apollo ," Orbera®, OverStitch®, X-Tack®, OverStitch Sx™, Apollo ESG™, Apollo ESG Sx™, Apollo REVISE™,Apollo REVISE Sx™, theApollo logo and other trademarks, service marks and trade names ofApollo are registered marks ofApollo Endosurgery, Inc. in theU.S. and other jurisdictions. 51 --------------------------------------------------------------------------------
Overview
We are a medical technology company primarily focused on the development of
next-generation, minimally invasive medical devices to advance gastrointestinal
therapeutic endoscopy designed to treat a variety of gastrointestinal
conditions, including closure of gastrointestinal defects, managing
gastrointestinal complications, and weight loss as a treatment of obesity. Our
Endoscopy product portfolio consists of the OverStitch® Endoscopic Suturing
System, the OverStitch Sx™ Endoscopic Suturing System, X-Tack® Endoscopic HeliX
Tacking System, Apollo ESG™, Apollo ESG Sx™, Apollo REVISE™ and Apollo REVISE
Sx™ systems (collectively "ESS") and ORBERA® Intragastric Balloon ("IGB"). Our
products are used by gastroenterologists and bariatric surgeons in a variety of
settings to treat multiple gastrointestinal conditions including closure of
acute perforations and chronic fistulas; tissue closure after the removal of
abnormal lesions in the esophagus, stomach or colon (also known as endoscopic
submucosal dissections, endoscopic mucosal resections and endoscopic full
thickness resections); treatment of swallowing disorders (peroral endoscopic
myotomy); and esophageal stent fixation and obesity.
We have offices in the United Kingdom and Italy that oversee commercial
activities outside the U.S. ("OUS") and a products manufacturing facility in
Costa Rica . All other activities are managed and operated from facilities in
Austin, Texas .
Since its market introduction in 2008, over 100,000 OverStitch units have been
sold for procedures worldwide. Historically, we estimate that approximately 60%
of OverStitch uses in the United States have been for advanced gastrointestinal
therapies. The other uses were for endoscopic sleeve gastroplasty ("ESG")
approximately 25%, and bariatric revision, approximately 15%. Outside the United
States , we estimate that the majority of OverStitch uses, approximately 65%,
were for ESG. The other uses outside the United States were for bariatric
revision, approximately 20%, and for advanced gastrointestinal therapies,
approximately 15%. The procedural mix has shifted, and we expect will continue
to shift, to a higher percentage of endobariatric procedures.
Recent research suggests that there may be a significant untapped market for
applying the OverStitch Sx™ Endoscopic Suturing System, or OverStitch, to
obesity treatments, including endoscopic revisions of bariatric surgeries. In
the aggregate, over 200 published investigator-initiated clinical trials,
involving over 6,500 ESG procedures and conducted by a variety of physicians
around the world, have consistently demonstrated clinically significant excess
body weight loss (in excess of 50%) and low complication rates (0.8%). In
another recently conducted randomized controlled trial, participants were
assigned to either an ESG procedure or an ESG procedure plus taking the weight
loss drug semaglutide. Patients in the ESG-only arm demonstrated an 18.7% total
body weight loss at 12 months and patients undergoing ESG and taking semaglutide
had an average of 25.2% total body weight loss. We believe these results
demonstrate the potential for a meaningfully expanded market opportunity for
obesity treatment given the currently limited use in the United States of
OverStitch for ESG and bariatric revision, as well as the ability for ESG to be
performed in individuals with lower body mass indices, or BMI, thereby making
the option available to more people.
In July 2022 , we received marketing authorization for the Apollo ESG™, Apollo
ESG Sx™, Apollo REVISE™ and Apollo REVISE Sx™ systems through the FDA's De Novo
Classification process. The Apollo ESG and Apollo ESG Sx Systems are intended to
be used by trained gastroenterologists or surgeons to facilitate weight loss in
adults with obesity with Body Mass Index (BMI) between 30 and 50 kg/m2 who have
not been able to lose weight or maintain weight loss through more conservative
measures. The Apollo REVISE and Apollo REVISE Sx Systems are intended to be used
by trained gastroenterologists or surgeons that perform bariatric procedures to
facilitate weight loss in adult patients with obesity with BMI between 30 and 50
kg/m2 by enabling transoral outlet reduction (TORe) as a revision to a previous
bariatric procedure. The De Novo was approved largely based on the MERIT trial,
a multi-center, prospective randomized clinical trial evaluating the safety and
effectiveness of ESG compared to a medically monitored regimen of diet and
healthy lifestyle.
In the third quarter 2022, we began education, marketing and training programs
to increase awareness, use and adoption of Apollo ESG™, Apollo ESG Sx™, Apollo
REVISE™ and Apollo REVISE Sx™ in weight loss procedures in the U.S. We have
initiated a limited launch and completed our first commercial sales of Apollo
ESG™ and Apollo REVISE™ in the first quarter of 2023.
Recent Developments
InNovember 2022 , the Company entered into a definitive merger agreement to be acquired by Boston Scientific Corporation ("Boston Scientific"), a global medical technology leader, in an all-cash transaction with an enterprise value of approximately$615 million . The Merger was approved by our stockholders onFebruary 9, 2023 . The consummation of the Merger is subject to a number of closing conditions, including, among others, the receipt of certain regulatory approvals, as well as other customary closing conditions. Upon the completion of the transaction,Apollo will become a wholly-owned subsidiary of Boston Scientific. 52 --------------------------------------------------------------------------------
Business and Macroeconomic Conditions
After the COVID-19 pandemic began inMarch 2020 , our business, financial condition, and results of operations were disrupted by the various measures to contain the pandemic, primarily during 2020. Demand for our products and our business generally recovered and been sustained over levels at the beginning of the COVID-19 pandemic in 2020, though there can be no assurance that recovery will continue or that current demand levels will be sustained. In particular, new variants or outbreaks of the virus have caused and may in the future cause health systems and other healthcare providers in our markets to restrict or limit procedures, which have harmed and may continue to harm our sales recovery or growth and result in fluctuation of our product sales. We cannot assure you that our recovery in sales will be indicative of future results or that we will not experience future sales or business disruptions due to COVID-19, including variants, which could be significant. See Item 1A. Risk Factors-Risks Related to Our Business-Our business will be adversely affected by the effects of the recent COVID-19 outbreak . Macroeconomic uncertainty, including inflationary pressures, supply chain challenges and foreign exchange fluctuations, as well as geopolitical events such as the war inUkraine , have also resulted and may continue to result in challenges to our business and results of operations and may harm our ability to predict our future results and performance. Our Endoscopy products, such as the Intragastric Balloon products and Apollo ESG systems, have limited reimbursement, and in most cases are not currently reimbursed by governmental or other health care plans and instead are partially or wholly paid for directly by patients. Sales of our products have been and may continue to be negatively affected by adverse economic conditions impacting consumer spending, including among others, inflationary pressures and higher interest rates, which have historically caused consumers to reassess their spending choices and reduce their likelihood to pursue elective surgical procedures. Foreign exchange fluctuations have also negatively impacted and may continue to negatively impact our revenue from international markets.
Financial Operations Overview
Revenues
Our principal source of revenues are sales of our endoscopy products. The majority of our sales come from direct markets where sales are made to the final end customers, typically healthcare providers and institutions. In other markets, we sell our products to distributors who resell our products to end users. Revenues between periods will be impacted by several factors, including new COVID-19 variants or outbreaks, physician procedures and therapy preferences, patient procedures and therapy preferences, buying patterns of distributors, other market trends, the stability of the average sales price we charge or realize on products and changes in foreign exchange rates used to translate foreign currency denominated sales intoU.S. dollars, which have recently come under pressure and have impacted and may continue to impact our reported OUS revenue, and inflationary pressures and macroeconomic uncertainty and their effect on consumer demand for the procedures that use our products.
Other revenue includes amounts recognized for our freight charged to customers, manufacturing services, and our digital aftercare support program, which we began to transfer to a third party at the beginning of 2021 and remaining deferred revenue will be fully recognized in the second quarter of 2023.
Cost of Sales
Cost of sales for purchased products consists of the actual purchase price from manufacturers plus an allocation of our internal manufacturing overhead cost. Cost of sales for products we manufacture include raw materials, labor, and manufacturing overhead. Raw materials used in our manufacturing activity are generally not subject to substantial commodity price volatility, and most of our manufacturing costs are incurred inU.S. dollars. Cost of sales also include royalties, shipping, warehousing, excess and obsolete inventory charges, inspection and related costs incurred in making our products available for sale or use. In periods of reduced production volume, unabsorbed manufacturing overhead costs are charged to expense when incurred. Manufacturing overhead as a percentage of revenue between periods can fluctuate as a result of manufacturing rates and the degree to which manufacturing overhead is allocated to production during the period. We expect to continue to improve gross margins as we complete certain identified gross margin improvement projects and improve capacity utilization of our manufacturing facility.
Sales and Marketing Expense
Sales and marketing expense primarily consists of salaries, commissions,
benefits and other related costs, including stock-based compensation, for
personnel employed in sales, marketing and medical education. In addition, our
sales and marketing expense includes costs associated with physician training,
industry events, advertising and other promotional activities.
53
--------------------------------------------------------------------------------General and Administrative Expense
General and administrative expense primarily consists of salaries, benefits and other related costs, including stock-based compensation, for personnel employed in corporate management, finance, legal, compliance, information technology and human resources. General and administrative expense also includes facility costs, insurance, audit fees, legal fees, bad debt expense and costs to develop and maintain our intellectual property portfolio.
Research and Development Expense
Research and development expense includes product development, clinical trial costs, reimbursement project costs, quality and regulatory compliance, consulting services, outside prototyping services, outside research activities, materials, and other costs associated with development of our products. Research and development expense also includes salaries, benefits and other related costs, including stock-based compensation expense, for personnel dedicated to these activities. Research and development expense may fluctuate between periods depending on the activity associated with our various product development, reimbursement project costs, and clinical obligations.
Amortization of Intangible Assets
Definite-lived intangible assets primarily consist of customer relationships, product technology, trade names, patents, trademarks and capitalized software. Intangible assets are amortized over the asset's estimated useful life.
Merger-related Expense
Merger-related expense primarily consists of legal fees and other professional services, associated with the pending merger with Boston Scientific, incurred in the fourth quarter of 2022.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which management has prepared in accordance with existingU.S. generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue and expenses during the reporting periods. Management evaluates estimates and judgments on an ongoing basis. Estimates relate to aspects of our revenue recognition, valuation of intangible assets, long-lived assets and goodwill, going concern assessment, stock-based compensation, allowance for doubtful accounts, and inventory valuation. We base our estimates on historical experience and on various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. The critical accounting policies addressed below reflect our most significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue Recognition Our principal source of revenues is from the sale of our products to hospitals, physician practices and distributors. We utilize a network of employee sales representatives in theU.S. and a combination of employee sales representatives, independent agents and distributors in OUS markets. Revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in an exchange for those goods. Generally, these conditions are met upon product shipment. Customers generally have the right to return or exchange products purchased from us for up to thirty days from the date of product shipment. Distributors, who resell the products to their customers, take title to products and assume all risks of ownership at the time of shipment and are obligated to pay within specified terms regardless of when, if ever, they sell their products. At the end of each period, we determine the extent to which our revenues need to be reduced to account for expected rebates, returns and exchanges. We classify any shipping and handling cost billed to customers as revenue and the related expenses as cost of sales. 54 --------------------------------------------------------------------------------
Inventory Valuation
Inventory is stated at the lower of cost or net realizable value. Inventory costs include raw materials, inbound freight charges, warehousing costs, labor, and overhead expenses related to the Company's manufacturing and processing facilities. The allocation of overhead costs requires significant estimates including the capitalization of related overhead costs and the utilization and efficiency of such cost inputs. Charges for excess and obsolete inventory are based on specific identification of excess and obsolete inventory items and an analysis of inventory items approaching expiration date. We evaluate the carrying value of inventory in relation to the estimated forecast of product demand. A significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand. When quantities on hand exceed estimated sales forecasts, we record estimated excess and obsolescence charges to cost of sales. Our inventories are stated using the weighted-average cost approach, which approximates actual costs.
Results of Operations
Comparison of the Years Ended
Year Ended December 31, 2022 Year Ended December 31, 2021
Dollars % of Revenues Dollars % of Revenues
Revenues $ 76,856 100.0 % $ 62,989 100.0 %
Cost of sales 34,429 44.8 % 28,030 44.5 %
Gross margin 42,427 55.2 % 34,959 55.5 %
Operating expenses:
Sales and marketing 36,009 46.9 % 24,311 38.6 %
General and administrative 20,582 26.8 % 18,448 29.3 %
Research and development 11,908 15.5 % 9,524 15.1 %
Amortization of intangible assets 1,750 2.3 % 1,875 3.0 %
Merger-related expense 3,600 4.6 % - - %
Total operating expenses 73,849 96.1 % 54,158 86.0 %
Loss from operations (31,422) (40.9) % (19,199) (30.5) %
Other (income) expenses:
Interest expense, net 4,671 6.1 % 8,318 13.2 %
Gain on forgiveness of PPP loan - - % (2,852) (4.5) %
Other expense (income), net 3,162 4.1 % (139) (0.2) %
Net loss before income taxes (39,255) (51.1) % (24,526) (39.0) %
Income tax expense 584 0.8 % 156 0.2 %
Net loss $ (39,839) (51.9) % $ (24,682) (39.2) %
55--------------------------------------------------------------------------------
Revenues
Product sales by product group and geographic market for the periods shown were
as follows:
Year Ended December 31, 2022 Year Ended December 31, 2021 % Increase / (Decrease)
Total Total
U.S. OUS Revenues U.S. OUS Revenues U.S. OUS Total Revenues
ESS $ 35,519 $ 18,333 $ 53,852 $ 25,917 $ 14,048 $ 39,965 37.0 % 30.5 % 34.7 %
IGB 7,707 14,549 22,256 7,193 14,904 22,097 7.1 % (2.4) % 0.7 %
Other 735 13 748 894 33 927 (17.8) % (60.6) % (19.3) %
Total revenues $ 43,961 $ 32,895 $ 76,856 $ 34,004 $ 28,985 $ 62,989 29.3 % 13.5 % 22.0 %
% Total revenues 57.2 % 42.8 % 54.0 % 46.0 %
Total revenues in 2022 were $76.9 million , compared to $63.0 million in 2021, an
increase of 22.0% due to strong global demand for our ESS products. Our U.S.
market total sales increased $10.0 million or 29.3% in 2022. U.S. ESS sales grew
37.0%, as we continue to see increased utilization and demand for our OverStitch
product, moderate price increases, and higher demand for our X-Tack product. IGB
also grew 7.1% in the U.S. due to higher demand for this elective procedure
primarily in the first half of 2022. Total OUS sales increased $3.9 million , or
13.5%, in 2022 and were primarily driven by higher demand in our international
distributor markets for both ESS and IGB products, offset by $2.1 million in
unfavorable foreign currency translation impact and lower IGB sales in our OUS
direct markets during 2022.
Direct market product sales accounted for approximately 78.0% of total product sales in 2022 compared to 79.6% in 2021.
Non-GAAP Product Sales Percentage Change in Constant Currency
To supplement our financial results, we are providing a non-GAAP financial measure, product sales percentage change in constant currency, which removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of our product sales. Product sales percentage change in constant currency is calculated by translating current foreign currency sales using last year's exchange rate. This supplemental measure of our performance is not required by, and is not determined in accordance with GAAP.
Non-GAAP product sales percentage change in constant currency for the year ended
% Increase/Decrease in Constant Currency
Non-GAAP
Foreign Total
OUS Reported Exchange Non-GAAP OUS Revenues OUS Total Revenues
ESS $ 18,333 $ 1,285 $ 19,618 $ 55,137 39.7 % 38.0 %
IGB 14,549 768 15,317 23,024 2.8 % 4.2 %
Total revenues $ 32,895 $ 2,053 $ 34,948 $ 78,909 20.6 % 25.3 %
We believe the non-GAAP financial measure included herein is helpful in
understanding our current financial performance. We use this supplemental
non-GAAP financial measure internally to understand, manage and evaluate our
business, and make operating decisions. We believe that making non-GAAP
financial information available to investors, in addition to GAAP financial
information, may facilitate more consistent comparisons between our performance
over time with the performance of other companies in the medical device
industry, which may use similar financial measures to supplement their GAAP
financial information. However, our non-GAAP financial measure is not meant to
be considered in isolation or as a substitute for the comparable GAAP metric.
Cost of Sales
Costs of product sales for the periods shown were as follows:
Year Ended December 31, 2022 Year Ended December 31, 2021
Dollars % Total Revenues Dollars % Total Revenues
Materials, labor and purchased goods 23,842 31.0 % $ 19,628 31.2 %
Overhead 6,260 8.1 % 5,167 8.2 %
Other indirect costs 4,327 5.7 % 3,235 5.1 %
Total cost of sales $ 34,429 44.8 % $ 28,030 44.5 %
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Gross Margin
Gross margin was 55.2% for 2022 compared to 55.5% for 2021. The decline in gross margin as a percentage of revenue was primarily due to the impact of foreign currency changes on revenue, increased shipping costs, lower IGB product sales which have a higher gross margin profile, and a higher percentage of revenues from OUS distributors, which have a lower gross margin profile. These decreases were partially offset by the positive gross margin impact of cost improvement projects and price increases, primarily related to our OverStitch products.
Operating Expenses
Sales and Marketing Expense. Sales and marketing expense increased$11.7 million in 2022 as compared to 2021 primarily due to higher compensation, marketing spend, and increased travel compared to 2021 as we expanded ourU.S. salesforce headcount and invested in our marketing programs and initiatives. We expect our marketing expenses to increase in future periods as we continue to invest in our marketing programs targeting sales growth. General and Administrative Expense. General and administrative expense increased$2.1 million in 2022 as compared to 2021 primarily due to higher compensation, professional services, software costs and insurance coverage. Research and Development Expense. Research and development expense increased$2.4 million in 2022 as compared to 2021 primarily due to higher compensation due to expansion of our team to address key clinical needs, continued product development, and enhancing capabilities in reimbursement and market access. We expect research and development expenses to increase in future periods as we continue to invest in our product pipeline and reimbursement initiatives.
Amortization of Intangible Assets. Amortization of intangible assets decreased
Merger-related Expense. In connection with the pending merger with Boston
Scientific, we incurred expense of
Loss from Operations.
Loss from operations in 2022 was
Other Expenses
Interest Expense, net. Net interest expense decreased$3.6 million in 2022 primarily due to the extinguishment of our term loan with Solar inDecember 2021 , including prepayment and final fees, and write-off of related deferred financing costs. We also had higher interest income due to the interest earned on the net proceeds from the issuance and sale of common shares of common stock in ourOctober 2021 public offering. Other Expense (Income), net. Other expense (income) primarily consists of realized and unrealized foreign exchange gains or losses on short-term intercompany loans denominated in theU.S. dollars payable by our foreign subsidiaries. Fluctuations in currency exchange rates resulted in an unrealized loss of$2.8 million in 2022 compared to the unrealized gain of$0.4 million in 2021. Income Tax Expense. Income tax expense related to foreign income taxes on income generated in our OUS tax jurisdictions was$0.6 million in 2022 compared to$0.2 million in 2021.
Liquidity and Capital Resources
We have experienced operating losses since inception and have an accumulated deficit of$337.3 million as ofDecember 31, 2022 . To date, we have funded our operating losses and acquisitions through equity offerings, term loans, and the issuance of debt instruments. Our ability to fund future operations and meet debt covenant requirements will depend upon our level of future revenue and operating cash flow and our ability to access future draws on our existing credit facility, or additional funding through either equity offerings, issuances of debt instruments or both. 57 -------------------------------------------------------------------------------- Management believes its existing cash and cash equivalents, additional term loans available upon certain thresholds under the Term Loans and access to financing sources will be sufficient to meet covenant, liquidity and capital requirements for the next twelve months and beyond. Management periodically evaluates our liquidity requirements, alternative uses of capital, capital needs and available resources. Any future cash requirements will depend on many factors including market acceptance of our products, the cost of our research and development activities, the cost and timing of additional regulatory clearance and approvals, the cost and timing of identified gross margin improvement projects, the cost and timing of clinical programs and reimbursement projects, the ability to maintain covenant compliance with our lending facility, and the cost of sales, marketing, and manufacturing activities. We may be required to seek additional equity or debt financing. As a result of this process, we have in the past, and may in the future, explore alternatives to finance our business plan, including, but not limited to, sales of common stock, preferred stock, convertible securities or debt financings, reduction of planned expenditures, or other sources, although there can be no assurances that such additional funding could be obtained. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected. Cash Flows
The following table provides information regarding our cash flows for the years
ended
2022 2021
Net cash used in operating activities$ (31,262) $ (14,454) Net cash (used in)/provided by investing activities (2,745)
1,561
Net cash provided by financing activities 349
67,582
Effect of exchange rate changes on cash (142)
(77)
Net change in cash, cash equivalents and restricted cash
$ 54,612 Operating Activities Cash used in operating activities of$31.3 million for 2022 was primarily the result of a net loss of$39.8 million plus non-cash items of$15.5 million primarily related to depreciation, amortization, unrealized foreign exchange on intercompany loans, non-cash interest, and stock-based compensation. Additionally, cash used by operating assets and liabilities of$6.9 million primarily related to higher accounts receivable in correlation with the increase in revenues, increase in raw materials and finished goods inventory with the upward trend in sales, increase in certain prepaid items, which was partially offset by an increase in accounts payable and accrued expenses. Cash used in operating activities of$14.5 million for 2021 was primarily the result of a net loss of$24.7 million plus non-cash items of$9.5 million primarily related to gain on forgiveness of PPP loan, depreciation, amortization, non-cash interest, and stock-based compensation. Additionally, cash used by operating assets and liabilities of$0.7 million primarily related to accounts receivable due to the increase in revenues, increase in inventory purchases, and the increase in certain prepaid expenses which was partially offset by changes in accounts payable and accrued expenses.
Investing Activities
Cash used in investing activities in 2022 was primarily related to equipment purchases and ongoing investments in our intellectual property portfolio. Cash provided by investing activities in 2021 was related to the installment payment received from the sale of the Surgical product line partially offset by investments in property and equipment and in our intellectual property portfolio.
Financing Activities
Cash provided by financing activities of$0.3 million for 2022 primarily related to proceeds from option exercises of$0.8 million , partially offset by shares withheld to satisfy the tax obligation in connection with vesting of restricted stock units of$0.5 million . Cash provided by financing activities of$67.6 million for 2021 primarily related to net proceeds received from the issuance of common stock inOctober 2021 of$69.8 million , proceeds from option exercises of$2.5 million , partially offset by the prepayment and final fees of$3.2 million and the payment of deferred financing costs of$1.5 million for the Term Loan executed inDecember 2021 .
Contractual and Other Obligations
Innovatus Term Loans. As ofDecember 31, 2022 , we had$35.0 million outstanding principal amount drawn under Term Loan A. See Note 9 to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further information. 58 -------------------------------------------------------------------------------- Solar Capital Exit Fee. We remain obligated to pay$1.9 million upon the earlier to occur of (i) certain exit or change in control events, including the proposed merger with Boston Scientific Corporation, or (ii) our achievement of trailing twelve-month revenue of$100.0 million . Operating Leases. Our operating lease commitments related primarily to our office space. As ofDecember 31, 2022 , we had fixed lease payment obligations of$4.3 million , with$0.9 million expected to be paid within 12 months and the remainder thereafter. See Note 5 to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further information.
Recent Accounting Pronouncements
See Note 2(r) to the Consolidated Financial Statements in Part II, Item 8
of
this Annual Report for a discussion of recently enacted accounting pronouncements.
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